Fairmont must stop appointing members to Fairmont General's board of directors

 

CHARLESTON – The state Supreme Court has put an end to the squabble between the City of Fairmont and Fairmont General Hospital over the right to sit members on the hospital's board of directors.

The Court ruled recently that since the hospital is no longer a “municipal hospital,” the city charter does not apply to its actions.

“The Supreme Court’s ruling allows Fairmont General to continue to operate independently from the city government,” said Spilman Thomas & Battle, PLLC attorney Michael S. Garrison, who represented FGH in the suit.

The court issued the per curiam opinion on June 5.

From 1938 through 1985, the City of Fairmont owned and operated Fairmont General Hospital and several times during that period, the facility was upgraded through public finding. In 1984, the Fairmont City Council adopted language into the City Charter, providing for an 11-member board of directors to be appointed by the council and consisting of two members of the council.

The next year, however, on September 17, 1985, the hospital became a private, non-stock, not-for-profit corporation. As part of this process, the City conveyed the City’s real and personal property interests in the hospital to the Building Commission, which then leased the property to the hospital for a nominal amount.

On Sept. 19, 1985, the hospital filed Articles of Incorporation and the City divested itself of the daily operations of the hospital. For the next 25 years, Fairmont General Hospital board members continued to be appointed by the Fairmont City Council and at all times two of the directors were members of the council, according to the opinion.

In August 2010, the hospital amended its bylaws to provide for appointment of its board members by the board itself, rather than by the council. This move came following years of unsuccessful negotiations with the City in an attempt to resolve the appointment issue.

The hospital made two appointments to its board on Jan. 24, 2011, and in response the City Council appointed two individuals to sit on the board as well. The hospital refused to seat the council’s appointees and sought a declaratory judgment and an injunction to settle the matter.

Numerous moves were made by each party, including further amendment of its Articles of Incorporation by the hospital and counterclaims and motions by the City and the council. Finally, the Circuit Court of Marion County granted the hospital’s motion for summary judgment and dismissed the City’s and council’s motions.

The circuit court held that neither the City nor the council had standing to challenge the hospital board’s amending of its bylaws. On appeal to the state Supreme Court, the City and council agreed that if this issue was decided against them, the case was be disposed.

“First, the City and the Council contend that Council’s right to appoint the FGH board members ‘was and continues to be a quid pro quo for nominal rent of one hundred dollars a year.’ This assertion is not supported by any evidence in the appendix record; the first mention of a so-called quid pro quo arrangement is contained in a letter dated November 19, 2010, twenty-five years after the fact,” the opinion states.

“Further, in any event, petitioners’ motivations are irrelevant to a determination of the definition of ‘municipal hospital’; that the City wished to retain power over the hospital does not constitute proof that it had the right to do so. We find this argument to be without merit.”

The court then dispatched of a statutory argument where the City argued that municipal officials should be able to sit on the hospital’s board of directors as “members of the community” as provided in West Virginia statute when hospitals are owned by local governments.

“Next, the City and the Council contend that section 4.06 of the City Charter is supported by public policy considerations and that it should be held applicable to FGH for this reason. This argument misses the mark; the issue before this Court is not whether section 4.06 is a wise exercise of municipal power, but rather whether FGH is a'“municipal hospital' as the term is used," the opinion says.

“In summary, this Court finds that the petitioners, City of Fairmont and Fairmont City Council, have no standing under West Virginia Code § 31E-3-304(a) & (b) to challenge the actions of Fairmont General Hospital as ultra vires; and that the petitioners cannot base a challenge upon section 4.06 of the City Charter, because Fairmont General Hospital, Inc. is no longer a 'municipal hospital' governed by section 4.06.”