May 24, 2020

HAD 1 to appeal ruling on financial disclosure

LINCOLN – The Lincoln area hospital district is appealing a recent Superior Court ruling requiring it to make certain financial information public.

The Hospital Administrative District 1 board of directors on Monday endorsed the hospital administrator’s action to appeal the recent ruling to the Maine Supreme Judicial Court, by a vote of 15 to 1.

The board’s action came after meeting with its attorney, Michael Duddy of Portland, for nearly two hours in executive session.

“The board is demonstrating its commitment to protecting the reasonable privacy of the hospital’s patients, employees and medical providers,” said Alan Brown, a board member, who read the resolution. “This appeal is also important to protect the long-term financial health of the hospital and its ability to fairly compete in today’s health care market,” he said.

HAD 1 is one of only two hospital districts in Maine. It was created through special legislation in 1967. The district was created to provide the financial collateral to help finance construction of Penobscot Valley Hospital in Lincoln. PVH is a public nonprofit health care facility. HAD 1 has the authority to tax its 14-member communities to support the hospital, but has never done so.

Earlier this month, Superior Court Justice Jeffrey Hjelm ruled in favor of the town of Burlington in its civil suit against the hospital district.

More than a year ago, the town sued HAD 1, charging it had violated the Freedom of Access law by failing to provide public information about the pay rates and benefits of its top administrators along with other financial information. In its suit , Burlington officials said a 1993 amendment to the district’s operating charter made the salary and benefits of the hospital’s top two administrators a matter of public information.

The 1993 amendment to the 33-year old law creating the hospital district made the financial and compensation records of any agent employed by or under contract with the hospital district public. Two of the hospital’s top administrators are paid by Quorum, a private management services company. In turn, the hospital district challenged the validity of the 1993 amendment and asked the court to rule on it. Superior Court Justice Hjelm ruled the information was public.

On Monday, board members said the 1993 amendment, which they knew nothing about until 1999 when Burlington asked for the financial information, was passed without democratic process.

Phil Dawson Jr., president of the board, said the board opposed the 1993 amendment. He said board members had a fiduciary responsibility to not only represent the interests of the towns but also to represent the interests of the hospital.

Paul Smith, the hospital’s director of support services, said the hospital has leveraged some good prices in its contracts with private vendors for services and materials. “If that information was shared with other hospitals it would jeopardize our competitive edge. I believe there is a disadvantage to making all of our records public,” said Smith.

Board president Dawson asked the district’s attorney to respond to recent comments about the district changing its legal strategy.

He was referring to comments Burlington First Selectman Roland Minott made last week to members of the Lincoln Town Council. Minott said Burlington through its attorney earlier proposed the case be taken directly to the Maine Supreme Judicial Court, but hospital officials did not believe it was an appropriate case to take to the law court. The selectman questioned why it was suddenly appropriate and asked whether hospital officials were trying to drive up costs and stall for time. Later, hospital officials said that was not the case.

“There has been no change in strategy,” said Duddy. He said the district first needed to go to Superior Court to create a record of facts, which could only be done at the Superior Court level.

“There has been no change in the direction that we have taken from the beginning to the current position of the lawsuit. We have made our record and can move onto the appeal,” said Duddy.

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