1. 1 Public Hospital District Governance and Management By Brad Berg May 3, 2006 Association of Washington Public Hospital Districts Retreat for CEOs and Administrators “Leading Wisely, Living Well” Cave B Inn at SageCliffe, Quincy, Washington May 2-4, 2006

2. 2 OVERVIEW OF PHD GOVERNANCE & MANAGEMENT  Legal duties and responsibilities  Legal powers and authority  Legal rights  Liabilities and penalties

3. 3 LEGAL CHARACTERISTICS OF PHDs  PHDs are municipal corporations and political subdivisions of the State  Powers are limited to those expressly granted by the legislature and those necessarily implied  Limitations on both what PHDs are permitted to do and how they do it

4. 4 LEGAL NATURE OF A PUBLIC HOSPITAL DISTRICT, cont.  PHDs are similar to other governmental subdivisions (e.g., cities, counties, school districts, port districts, public utility districts), but there are differences  PHDs are significantly different than non- profit and for-profit corporations

5. 5  State Constitution  PHD statute  Other applicable statutes –Open Public Meetings Act –Public Records Act –Code of Ethics –Etc. SOURCES OF LAW AND GUIDANCE

6. 6  Common law  Governing board bylaws  Board resolutions  Board policies and procedures SOURCES OF LAW AND GUIDANCE, continued

7. 7  PHD Board is the legislative body responsible for all legislative or general policy matters  Superintendent is the administrative officer responsible for all administrative matters GOVERNANCE AND MANAGEMENT FRAMEWORK

8. 8 Corporate entity versus Board and Superintendent:  Some powers are granted to (and duties imposed on) the corporate entity  Others are granted to or imposed on the Board or Superintendent GOVERNANCE AND MANAGEMENT FRAMEWORK, cont.

9. 9  Generally, the powers of a municipal corporation are vested in the governing body unless expressly delegated to some other officer or body by statute or action of the governing body

10. 10  The Board may act only as a collective body – Commissioners have no individual legal authority to act on behalf of the PHD  The Board’s actions may have no legal effect and may be void if the Board fails to comply with applicable laws, PHD bylaws, resolutions, policies and procedures AUTHORITY OF THE BOARD AND ITS COMMISSIONERS

11. 11 Open Public Meetings Act  Regular meetings  Special meetings  Adjourned meetings  Public hearing requirements  Executive sessions  Use of board committees CRITICAL LAWS AND PROCEDURES

12. 12  Approval by majority vote of entire Commission (RCW 70.44.050)  Approval at the proper type of meeting (e.g., regular vs. special meeting) following presentation at prior meeting if required by statute  Approval following statutorily mandated procedures -- e.g., notice, public hearing, etc. CRITICAL LAWS AND PROCEDURES, cont.

13. 13  Approval in compliance with any special procedure established by bylaws, resolution, motion or other policy  Action and approval must be in the form of a motion or resolution  Minutes of regular and special meetings must be recorded promptly and be open to public inspection CRITICAL LAWS AND PROCEDURES, cont.

14. 14 PHD actions requiring approval of the Commission by resolution (Ch. 70.44 RCW): 1. Abolishing commissioner districts (RCW 70.44.042) 2. Filling vacancies on Commission (RCW 70.44.045) 3. Establishing commissioner compensation (RCW 70.44.050) STATUTORY DUTIES OF COMMISSIONERS

15. 15 4.Electing the Commission president and secretary (RCW 70.44.050) 5.Adopting bylaws governing the Commission’s business (RCW 70.44.050) 6.Increasing size of Commission (RCW 70.44.053) 7.Exercising power of eminent domain and condemnation (RCW 70.44.060) STATUTORY DUTIES OF COMMISSIONERS, cont.

16. 16 8.Leasing of hospital or other health care facilities (RCW 70.44.060(3)) 9.Establishing rates for the services provided by the district (RCW 70.44.060(3)) 10.Incurring debt (RCW 70.44.060(5)) 11.Levying taxes (RCW 70.44.060(6)) 12.Increases in regular levy (RCW 84.55.120) STATUTORY DUTIES OF COMMISSIONERS, cont.

17. 17 13.Preparing an annual budget, holding a hearing on the budget and approving the budget (RCW 70.44.060(6)) 14.Appointing a superintendent, removing the superintendent and establishing the superintendent’s compensation (RCW 70.44.060) 15.Approving plans to acquire or construct district facilities (RCW 70.44.110) STATUTORY DUTIES OF COMMISSIONERS, cont.

18. 18 16.Awarding construction contracts that have an estimated cost in excess of $50,000 (RCW 70.44.140) 17.Appointing the district’s treasurer and internal auditor (RCW 70.44.171) 18.Approving orders or vouchers pursuant to which district funds are disbursed (RCW 70.44.171) STATUTORY DUTIES OF COMMISSIONERS, cont.

19. 19 19.Designating the bank at which all district funds are deposited (RCW 70.44.171) 20.Approving consolidation of a district with another district (RCW 70.44.190) 21.Approving the annexation of additional territory into the district (RCW 70.44.200) STATUTORY DUTIES OF COMMISSIONERS, cont.

20. 20 22.Approving the sale of surplus real or personal property (RCW 70.44.300 and RCW 70.44.320) 23. Approving lease of surplus real property (RCW 70.44.310) 24.Approving the dividing of a district into two or more districts (RCW 70.44.350) STATUTORY DUTIES OF COMMISSIONERS, cont.

21. 21 25.Calling for an election (RCW 29A.04.330) 26.Other statutory requirements applicable to municipal corporations generally STATUTORY DUTIES OF COMMISSIONERS, cont.

22. 22  Generally, officers of municipal corporations have only such duties as are conferred upon them expressly or by necessary implication by applicable statutes  Courts have held public office to be synonymous with public trust and that a public officer’s relationship with the public is that of a fiduciary COMMON LAW DUTIES OF COMMISSIONERS

23. 23 Statutory rights of commissioners:  Compensation  Health, life and other insurance RIGHTS OF COMMISSIONERS

24. 24 Other rights of commissioners:  Indemnification  Liability insurance RIGHTS OF COMMISSIONERS

25. 25  The superintendent “shall be the chief administrative officer of the public hospital district and shall have control of the administrative functions of the district.”  The superintendent “shall be responsible to the commission for the efficient administration of all affairs of the district.” STATUTORY POWERS AND DUTIES OF SUPERINTENDENT

26. 26 The PHD Statute provides that the superintendent shall have the power and duty to do the following: 1. Carry out the orders of the commission, and see that all the laws of the state pertaining to matters within the functions of the district are duly enforced STATUTORY DUTIES OF SUPERINTENDENT, cont.

27. 27 2.Keep commission fully advised as to the financial condition and needs of district 3.Prepare, each year, an estimate for the ensuing fiscal year of the probable expenses of district 4.Recommend to commission what develop- ment work should be undertaken and what extensions and additions, if any, should be made during ensuing fiscal year, and estimate cost of same STATUTORY DUTIES OF SUPERINTENDENT, cont.

28. 28 5.Certify to commission all bills, allowances and payrolls, including the claims due to contractors of public works 6.Recommend to commission a range of salaries to be paid to district employees STATUTORY DUTIES OF SUPERINTENDENT, cont.

29. 29 Similar to commissioners, the legal duties of superintendents are generally limited to those specified by statute or action of the board COMMON LAW DUTIES OF SUPERINTENDENT

30. 30  Compensation fixed by resolution of the board  Appointment and removal must be by resolution introduced at one regular meeting and before being adopted at a subsequent regular meeting  Other rights specified by contract or other action of the board RIGHTS OF SUPERINTENDENT

31. 31 Public officers and employees, like other persons, are generally accountable for their actions under civil and criminal laws LIABILITIES AND IMMUNITIES OF COMMISSIONERS AND SUPERINTENDENT

32. 32 Certain statutes create unique liabilities for public officers and employees:  Criminal statutes: –Bribery –Bidding offenses –Delegation of powers for profit –Filing false report or making false certificate –Falsely auditing and paying claims LIABILITIES AND IMMUNITIES, cont.

33. 33 LIABILITIES AND IMMUNITIES, cont. –Misappropriation and falsification of accounts –Willfully disobeying any provision of law –Willful neglect of duty imposed by law –Approving or paying a false claim –Making a false claim

34. 34 LIABILITIES AND IMMUNITIES, cont. Open Public Meetings Act violations: “Each member of the governing body who attends a meeting of such governing body where action is taken in violation of any provision of this chapter with knowledge of the fact that the meeting is in violation thereof, shall be subject to personal liability in the form of a civil penalty in the amount of $100.”

35. 35 LIABILITIES AND IMMUNITIES, cont. Violations of Public Bid Statute: – Any commissioner or officer who knowingly makes any false entry in any account or record required by the public bid statute or who knowingly certifies any false statement in any certificate required by the statute will be guilty of a misdemeanor

36. 36 LIABILITIES AND IMMUNITIES, cont. Violations of Conflict of Interest Statute: –Any officer violating the conflict of interest statute is liable to the municipality of which he or she is an officer for a penalty in the amount of $500, in addition to such other civil or criminal liability of penalty as may otherwise be imposed by law –May also be grounds for forfeiture of office

37. 37 LIABILITIES AND IMMUNITIES, cont. Other prohibited acts under the Code of Ethics Statute: –No municipal officer may use his or her position to secure special privileges or exemptions for himself, herself, or others

38. 38 LIABILITIES AND IMMUNITIES, cont. –No municipal officer may, directly or indirectly, give or receive or agree to receive any compensation, gift, reward or gratuity from a source except the employing municipality, for a matter connected with or related to the officer's services as such an officer unless otherwise provided for by law

39. 39 LIABILITIES AND IMMUNITIES, cont. –No municipal officer may accept employment or engage in business or professional activity that the officer might reasonably expect would require or induce him or her by reason of his or her official position to disclose confidential information acquired by reason of his or her official position

40. 40 LIABILITIES AND IMMUNITIES, cont. –No municipal officer may disclose confidential information gained by reason of the officer's position, nor may the officer otherwise use such information for his or her personal gain or benefit

41. 41 LIABILITIES AND IMMUNITIES, cont.  A vacancy in the office of commissioner shall occur by nonattendance at meetings of the commission for sixty days, unless excused by the commission - Misfeasance - Malfeasance - Tort Claims

42. 42 LIABILITIES AND IMMUNITIES, cont.  State and federal civil rights laws such as 42 U.S.C. § 1983: - Violations of other federal or state laws

43. 43 RCW 4.24.470 provides immunity for discretionary decisions An appointed or elected official or member of the governing body of a public agency is immune from civil liability for damages for any discretionary decision or failure to make a discretionary decision within his or her official capacity, but liability shall remain on the public agency for the tortious conduct of its officials or members of the governing body LIABILITIES AND IMMUNITIES, cont.

44. 44 LIABILITIES AND IMMUNITIES, cont. Other forms of protection  Indemnification  Directors and Officers Liability Insurance

45. 45 BEST PRACTICES FOR GOVERNANCE AND MANAGEMENT  Understand statutory legal powers, duties and liabilities and the division of responsibility  Where statutes are silent regarding allocation of responsibilities, expressly address same in bylaws, policies and other procedures  Consider preparing and adopting a detailed authority grid  Consider using the annual budget as a means of delegating authority to management

46. 46 Questions?

47. 47 CONTACT INFORMATION Bradley J. Berg Telephone: 206-447-8970 Email: Bergb@Foster.com Foster Pepper PLLC 1111 Third Avenue, Suite 3400 Seattle, WA 98101 www.foster.com