Health Care Authority for Baptist Health, an affiliate of UAB Health System d/b/a Baptist Medical Center East v. Kay E. Davis, as executrix of the estate of Lauree Durden Ellison, deceased
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REL: 05/13/2013
REL: 02/28/2014 As Modified on Denial of Rehearing
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2012-2013
____________________
1090084
____________________
Health Care Authority for Baptist Health,
an affiliate of UAB Health System,
d/b/a Baptist Medical Center East
v.
Kay E. Davis, as executrix of the estate of
Lauree Durden Ellison, deceased
Appeal from Montgomery Circuit Court
(CV-06-1475)
On Application for Rehearing
MURDOCK, Justice.
This medical-malpractice case is before us on rehearing.
This Court previously issued an opinion (1) vacating the
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judgment of the Montgomery Circuit Court in favor of Kay E.
Davis, as executrix of the estate of Lauree Durden Ellison,
deceased, and against the Health Care Authority for Baptist
Health, an affiliate of UAB Health System ("the Authority"),
and (2) dismissing the Authority's appeal and the case on the
ground that the Authority was entitled to State immunity under
§ 14, Ala. Const. 1901.
rehearing.
Davis filed an application for
We withdraw the January 14, 2011, opinion, and
substitute the following opinion.
I.
Background Facts and Procedural History
On September 3, 2005, Lauree Durden Ellison visited the
emergency room of Baptist Medical Center East (hereinafter
"BMCE"), a hospital operated by the Authority and formerly
operated by Baptist Health, a private nonprofit corporation.
Ellison's visit was for an evaluation after she had fallen at
home.
At the time of the visit, Ellison was 73 years old, and
she suffered from a number of chronic preexisting medical
conditions,
hypertension,
including
chronic
respiratory
pain,
problems,
gastrointestinal
stroke-related problems.
2
diabetes,
bleed,
and
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The initial examination of Ellison did not indicate that
she had an infection, and all other tests and X-rays were
unremarkable for injuries caused by the fall.
While she was
in the emergency room, however, Ellison mentioned that she had
a sore throat. The emergency-room doctor ordered a test for
streptococcus.
Thereafter, Ellison was discharged from the
emergency room to return home.
After Ellison was discharged, the BMCE laboratory grew
the culture taken from the streptococcus test.
The culture
reflected the presence of methicillin-resistant staphylococcus
aureus (hereinafter "MRSA").
Although the BMCE laboratory
recorded the results in its electronic medical-records system,
the results were not reported directly to Ellison's treating
physician.
Over
the
next
two
months,
Ellison
received
medical
treatment for other medical conditions from providers other
than BMCE.
She did not complain of a sore throat during that
period. On November 3, 2005, however, she returned to BMCE's
emergency room complaining of a cough and moderate to severe
respiratory distress.
Ellison died on November 8, 2005.
3
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On May 25, 2006, Davis, as executrix of Ellison's estate,
filed a complaint in the trial court, naming as defendants the
Authority and two physicians at BMCE.1
Before trial, the
Authority asserted that any damages awarded against it were
subject to the $100,000 statutory cap on damages set out in
§ 11-93-2, Ala. Code 1975, which it argued was applicable to
the Authority pursuant to § 22-21-318(a)(2) of the Health Care
Authorities Act of 1982, Ala. Code 1975, § 22-21-310 et seq.
("the HCA Act").
At
trial,
Davis
presented
the
testimony
of
expert
witnesses who opined that BMCE had breached the applicable
standard of care by not reporting its finding of MRSA directly
to Ellison's attending physician.
Davis's expert witnesses
opined that Ellison died from MRSA-related pneumonia and that
the failure of the BMCE laboratory to report the finding of
MRSA to Ellison's doctor caused her death.
Conversely, the
Authority offered the testimony of several expert witnesses
1
In her initial complaint, Davis used an incorrect name
for the Authority.
She corrected the name in an amended
complaint.
Also, each of the two physicians filed a motion for a
summary judgment.
The trial court granted both motions.
Davis has not filed a cross-appeal as to the judgment in favor
of the two physicians.
4
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who testified that MRSA does not cause a sore throat; that,
because Ellison was not suffering from a throat infection when
the streptococcus culture was taken, the standard of care did
not require that anyone be notified of the presence of MRSA,
which is present in a large part of the population without
symptoms or consequences; that notifying Ellison's doctor of
the finding of MRSA would not have changed Ellison's course of
treatment; and that Ellison died of congestive heart failure
unrelated to the MRSA, and not of MRSA-related pneumonia.
The jury returned a verdict in favor of Davis and against
the Authority in the amount of $3,200,000, and the trial court
entered a judgment for Davis in that amount.
The Authority
filed a postjudgment motion seeking, in part, a remittitur of
the
judgment
statutory
cap
from
for
$3,200,000
damages
set
to
$100,000
forth
in
§
based
on
11-93-2.
the
On
September 29, 2009, the trial court entered an order denying
the Authority's postjudgment motion.
The Authority appealed.
On appeal, it argues that it
possesses State immunity, also known as sovereign immunity,
pursuant to § 14, Ala. Const. 1901, which provides "[t]hat the
State of Alabama shall never be made a defendant in any court
5
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of law or equity."
Also, the Authority argues that the trial
court erred by not remitting the $3,200,000 damages award to
$100,000 pursuant to § 11-93-2.
In response, Davis contends
that the Authority does not qualify for State immunity and,
further, does not qualify for the protection of the $100,000
damages cap in § 11-93-2.
II.
Discussion
As noted above, Baptist Health at one time operated
certain hospitals in Montgomery, including BMCE. When Baptist
Health encountered financial problems in conjunction with the
operation of those hospitals, it sought the assistance of the
University of Alabama Board of Trustees ("the Board").2
In
June 2005, the Board adopted a resolution authorizing the
formation of the Authority:
"WHEREAS, The Board of Trustees of The
University of Alabama ('the Board') owns University
of Alabama Hospital and related health care
facilities
located
in
Birmingham,
Alabama
('Hospital'); and
"WHEREAS, the Hospital is managed by the UAB
Health System ('UABHS'), pursuant to an Amended and
2
In Cox v. Board of Trustees of University of Alabama, 161
Ala. 639, 648, 49 So. 814, 817 (1909), this Court held that
for purposes of § 14, Ala. Const. 1901, the University of
Alabama "is a part of the [S]tate."
6
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Restated Joint Operating Agreement dated effective
January 1, 2003 ('JOA'); and
"....
"WHEREAS, after careful consideration, UABHS and
Baptist [Health] desire to affiliate for the purpose
of improving the overall efficiency of Baptist
[Health's] clinical operations and for arranging for
Baptist [Health] financial support of the Board's
academic and research mission through contributions
to UABHS; and
"WHEREAS, by separate resolution on this same
date, The Board of Trustees of The University of
Alabama approved an Affiliation Agreement between
the UA Board, UABHS and Baptist [Health]; and
"WHEREAS, the Affiliation Agreement provides for
the establishment of a health care authority by the
UA Board, under the terms and conditions set forth
in the Affiliation Agreement; ...
"....
"NOW, THEREFORE, BE IT RESOLVED that The Board
of Trustees of The University of Alabama hereby
declares that it is wise, expedient, and necessary
that a health care authority be formed."
After explaining that the purpose of the Authority is "to
own and operate one or more hospitals and a health care
delivery system," the certificate of incorporation states:
"Pursuant to an Affiliation Agreement dated July 1,
2005 (the 'Affiliation Agreement') by and among the
... Board, Baptist Health, ... and UAB Health
System, an Alabama nonprofit corporation ('UABHS'),
Baptist Health will transfer its hospitals and
related assets to the Authority.
The Authority
7
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shall have full governance powers with respect to
its business and affairs, subject to the provisions
of the Affiliation Agreement, including without
limitation the provisions related to 'Restricted
Transactions'
contained
in
the
Affiliation
Agreement. The Affiliation Agreement, including any
amendments made to such Agreement from time to time
in accordance with the terms thereof, are hereby
incorporated by reference in this certificate of
incorporation."
(Emphasis added.)
The certificate of incorporation also
states:
"Subject to the provisions of the Affiliation
Agreement, the Authority shall have and may exercise
all of the powers and authorities set out in the
Enabling Law [i.e., the HCA Act], for corporations
organized thereunder, together with such additional
powers, rights, and prerogatives as are now or may
hereafter be provided by law. In addition thereto,
the Authority shall have the extraordinary powers
set out in Section 22-21-319 of the Enabling Law
(eminent domain)."
(Emphasis added.)
The certificate further states:
"Subject to the Authority's obligations under the
Affiliation Agreement with respect to reconveyance
of assets upon termination of the Affiliation
Agreement, upon dissolution of the Authority, the
title to all of the assets and property of the
Authority at the time of such dissolution shall be
transferred to the ... Board."
(Emphasis added.)
The
certificate
of
incorporation
11-member board of directors.
8
provides
for
an
Six directors (and their
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respective successors) are chosen by the Board; five directors
(and
their
Health.
respective
successors)
are
chosen
by
Baptist
In this respect, the certificate complies with § 22-
21-316(a), Ala. Code 1975, which states that "no fewer than a
majority of the directors shall be elected by the governing
body
or
bodies
subdivisions."
of
one
or
more
of
the
authorizing
Neither the certificate of incorporation for
the Authority nor the HCA Act requires that a director who is
chosen by the Board have any other relationship with the
Board.
In July 2005, the Board, the University of Alabama at
Birmingham Health System, an Alabama nonprofit corporation
("UABHS"), and Baptist Health entered into the aforementioned
affiliation agreement ("the affiliation agreement").
affiliation agreement states:
"A. The ... Board owns University of Alabama
Hospital in Birmingham, Alabama, an operating
division of the University of Alabama at Birmingham,
and various other entities and assets engaged in the
delivery of healthcare services.
University of
Alabama Health Services Foundation, P.C., an Alabama
nonprofit corporation ('UAHSF'), owns the Kirklin
Clinic in Birmingham, Alabama and various other
entities and assets engaged in the delivery of
healthcare services. UAHSF and the ... Board have
established UABHS to provide common management of
their respective health care delivery operations.
9
The
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"B. Baptist Health owns and operates a health
care delivery system (the 'Baptist Healthcare
System') in the Montgomery, Alabama area that
includes three acute care hospitals (the 'Baptist
System Hospitals').
"C.
The [HCA Act] permits the ... Board to
organize a health care authority.
Health care
authorities are public corporations with authority
to operate hospital and health care delivery
systems. Pursuant to this Agreement ... [the] Board
will organize a health care authority that will own
and operate the Baptist Health System assets during
the term of this agreement.
"D.
The parties have determined that the
consummation of the transactions contemplated by
this Agreement will further their mutual goals of
(i) providing community-based health care in the
Montgomery area, (ii) promoting efficiency and
quality in the delivery of health care services to
the
people
of
the
State
of
Alabama,
and
(iii) supporting the academic and research mission
of [the Board and UABHS] with respect to health care
services and the science of medicine."
(Emphasis added.)
A.
State Immunity
The Authority is a public corporation.
It is an entity
separate from the State and from the persons and entities who
participated in its creation.
See Alabama Hosp. Ass'n v.
Dillard, 388 So. 2d 903, 905 (Ala. 1980) ("We simply hold, as
we have so often, 'that a public corporation is a separate
entity
from
the
state
and
10
from
any
local
political
1090084
subdivision, including a city or county within which it is
organized.'" (citation omitted)).
Nonetheless, the Authority argues that it is immune from
liability
pursuant
to
the
doctrine
of
State
immunity.
Although the Authority raises this argument for the first time
on appeal, "[t]he assertion of State immunity challenges the
subject-matter jurisdiction of the court; therefore, it may be
raised at any time by the parties or by a court ex mero motu."
Atkinson v. State, 986 So. 2d 408, 411 (Ala. 2007); see also
Ex parte Alabama Dep't of Transp., 978 So. 2d 17, 21 (Ala.
2007).
Because this argument, if correct, would preclude our
deciding the merits of this appeal, we address this issue
first.
Section 14 of the Alabama Constitution of 1901 states
that "[t]he State of Alabama shall never be made a defendant
in any court of law or equity."
It is well established that
"'the use of the word "State" in Section 14 was intended to
protect from suit only immediate and strictly governmental
agencies of the State.'"
Tallaseehatchie Creek Watershed
Conservancy Dist. v. Allred, 620 So. 2d 628, 631 (Ala. 1993)
(quoting Thomas v. Alabama Mun. Elec. Auth., 432 So. 2d 470,
11
1090084
480 (Ala. 1983)); see also Ex parte Greater Mobile-Washington
County Mental Health-Mental Retardation Bd., Inc., 940 So. 2d
990, 997 (Ala. 2006) (also quoting Thomas, 432 So. 2d at 480).
Tallaseehatchie
Creek
and
Greater
Mobile-Washington
County Mental Health Board relied on Armory Commission of
Alabama v. Staudt, 388 So. 2d 991 (Ala. 1980), in which this
Court identified three factors that determine whether an
action against a body created by legislative enactment is an
action against the State for purposes of the doctrine of State
immunity:
"Whether a lawsuit against a body created by
legislative enactment is a suit against the state
depends on [1] the character of power delegated to
the body, [2] the relation of the body to the state,
and [3] the nature of the function performed by the
body.
All factors in the relationship must be
examined to determine whether the suit is against an
arm of the state or merely against a franchisee
licensed for some beneficial purpose."
388 So. 2d at 993 (emphasis added).
In Ex parte Department of Human Resources, 999 So. 2d
891, 897 (Ala. 2008), this Court stated "that the same factors
('the Staudt factors') are informative in determining whether
an entity established by a State agency at the direction of
the
legislature
is part
sovereign immunity."
of
that
agency
for
purposes
of
Likewise, in Vandenberg v. Aramark
12
1090084
Educational Services, Inc., 81 So. 3d 326, 339 (Ala. 2011),
this Court explained:
"The immunity that comes from § 14 and that is
associated with being part of the State ... does not
automatically attach to all public corporations;
some public corporations are entitled to it while
others are not. In Armory Commission of Alabama v.
Staudt, 388 So. 2d 991, 993 (Ala.1980), we explained
what more is required before a public corporation
may claim that immunity ...."
When
applying
the
three
Staudt
factors,
this
Court
"emphasizes substance over form."3 Tallaseehatchie Creek, 620
So.2d at 630. As this Court noted in Alabama Girls' Industrial
School v. Reynolds, 143 Ala. 579, 583, 42 So. 114, 115 (1904):
"If the suit instituted against it is practically
and really against the State -- if the judgment and
decree obtained against it must be satisfied, if at
all, out of the property held by it, and this
property belongs to the State, though the title is
eo nomine in the [defendant] as an agent of the
State -- then clearly to permit an action or suit
against it would be doing by indirection that which
cannot be done directly.
In other words, if the
[defendant]
is
a
mere
State
agency
-a
representative
of
the
State,
instituted
and
maintained by the sovereignty for the exercise of a
3
Accordingly, after examining the Staudt factors, the
Court in Greater Mobile-Washington County Mental Health Board
concluded that the public corporation at issue there was not
an "immediate and strictly governmental agency of the State,"
940 So. 2d at 997, and therefore was not entitled to immunity.
The Court reached the same conclusion as to the State agency
at issue claiming immunity in the Tallaseehatchie Creek case.
13
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governmental function -- a suit against it is a suit
against the State ...."
(Emphasis added.)
1.
The Character of Power Delegated to, and the
Nature of the Function Performed by, the
Authority4
In adopting the HCA Act, the legislature stated:
"[P]ublicly-owned
(as
distinguished
from
investor-owned and community-nonprofit) hospitals
and other health care facilities furnish a
substantial part of the indigent and reduced-rate
care and other health care services furnished to
residents of the state by hospitals and other health
care facilities generally ...."
Ala.
Code
1975,
§
22-21-312(1).
The
legislature
also
concluded that,
"as a result of current significant fiscal and
budgetary limitations or restrictions, the state and
the
various
counties,
municipalities,
and
educational institutions therein are no longer able
to provide, from taxes and other general fund
moneys, all the revenues and funds necessary to
operate ... publicly-owned hospitals and other
health care facilities adequately and efficiently
...."
Ala. Code 1975, § 22-21-312(2).
Accordingly, "to enable such
publicly-owned hospitals and other health care facilities to
continue
to
operate
adequately
4
and
efficiently,"
the
Given the similarity and overlap of these two Staudt
factors, the following discussion serves to address both of
them.
14
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legislature enacted the HCA Act "to provide a corporate
structure somewhat more flexible than those ... provided for
in
existing
health-care
agencies
laws
relating
authorities"
operating
to
and
[public
the
to
public
give
"the
hospitals
hospital
and
entities
and
and
health-care
authorities] ... significantly greater powers with respect to
health care facilities than now vested in various public
hospital
or
health-care
authorities."
Ala.
Code
1975,
§ 22-21-312(3).
Although the powers to arrange for the provision of
health-care services to the indigent and to promote public
health are legitimate ends of government, they certainly are
not functions unique to government.
authorities
under
the
HCA
Act
in
Thus, the power granted
this
regard,
and
in
particular by the Board to the Authority, is not of the same
character, for example, as the power granted an entity that is
charged with a strictly governmental function, e.g., law
enforcement.
Compare, e.g., Ex parte Board of Dental Exam'rs
of Alabama, 102 So. 3d 368 (Ala. 2012) (citing and quoting
Ala. Code 1975, §§ 34-9-40(a), 34-9-43, 34-9-46, and 34-9-5),
with Ala. Code 1975, § 22-21-318.
15
Clearly, the nature of the
1090084
authority to operate a public hospital is not such as to
dictate an affirmative answer to the question whether the
entity who holds that authority is entitled to immunity.5
5
In a number of cases this Court has held that a State
university is entitled to immunity in relation to a public
hospital that is part of a college of medicine within the
university. The hospitals in those cases, however, were owned
and operated directly by the universities as part of their
operations.
See, e.g., Sarradett v. University of South
Alabama Med. Ctr., 484 So. 2d 426, 427 (Ala. 1986) (holding
that sovereign immunity protected an existing public hospital
that was acquired by the University of South Alabama and
thereafter "owned and operated by the University of South
Alabama in conjunction with its college of medicine" (emphasis
added)).
Irrespective of the function in which they were
engaged, those universities were "part of the [S]tate." See,
e.g., Cox v. Board of Trs. of Univ. of Alabama, 161 Ala. 639,
648, 49 So. 814, 817 (1909). The hospitals, in turn, were
simply a component part of these universities. See, e.g.,
Liberty Nat'l Life Ins. Co. v. University of Alabama Health
Servs. Found., P.C., 881 So. 2d 1013, 1027 (Ala. 2003)
(quoting with approval the explanation in the complaint that
"UAB Hospital is 'a division (and/or component) of the
University of Alabama at Birmingham'"); Hutchinson v. Board of
Trs. of Univ. of Alabama, 288 Ala. 20, 24, 256 So. 2d 281, 284
(1971) (plurality opinion). See also Recital "A" of the
affiliation agreement, explaining that "the University of
Alabama Hospital in Birmingham, Alabama, [is] an operating
division of the University of Alabama at Birmingham."
Thus, the immunity of the universities in these hospital
cases was not determined by the nature of the activity in
which they were engaged. The ownership and operation of a
public hospital, including those run for the benefit of the
indigent and to promote public health, are by no means
functions unique to government. Compare University of Alabama
Health Servs. Found., 881 So. 2d at 1028 (holding that the
University
of
Alabama
at
Birmingham
Health
Services
Foundation, "a nonprofit, independent professional corporation
16
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Also, a review of the powers that may be granted a
health-care authority under the HCA Act reflects, with a few
exceptions, powers that legally may be exercised by any number
of private or for profit business entities. Compare Ala. Code
1975, § 22-21-318, with, e.g., Ala. Code 1975, § 10-2B-3.02
(general powers of corporations), and Ala. Code 1975, § 10-3A20 (general powers of nonprofit corporations).
Beyond the general power to operate a public hospital, we
note that a health-care authority created under the HCA Act
may,
if
so
provided
in
the
authority's
certificate
of
incorporation, exercise a right of eminent domain, namely,
that, in part, attends to the billing for UAB Hospital," and
UABHS, an Alabama nonprofit corporation, as "entities separate
and distinct from UAB Hospital," were "not ... shown to
qualify for" immunity pursuant to § 14); Ex parte Cranman, 792
So. 2d 392, 406 (Ala. 2000) (plurality opinion) (concluding
that services rendered by a hospital in the treatment of
patients was "too remote from governmental policy" to warrant
the provision of immunity to a University employee providing
that treatment).
Instead, the dispositive factor in these
cases was the character of the universities themselves as
"part of the [S]tate":
"'Our cases are clear that the operation of a
hospital is a "governmental function," but even if
we should classify the operation of University
Hospital
as
being
a
"business
function,"
nevertheless, the State could not be sued.'"
Sarradett, 484 So. 2d at 427 (quoting Hutchinson, 288 Ala. at
24, 256 So. 2d at 284).
17
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"the same power of eminent domain as is vested by
law in any authorizing subdivision, in the same
manner and under the same conditions as are provided
by law for the exercise of the power of eminent
domain by such authorizing subdivision; provided
however, that under no circumstances may an
authority exercise the power of eminent domain for
the purposes of providing office facilities for any
physician, dentist or other health care professional
primarily for use in his private practice."
See Ala. Code 1975, § 22-21-319.
The Authority's certificate
of incorporation provides it with the power of eminent domain.
Although that power is among powers that belong to the State,
this Court has not found the possession of the power of
eminent domain to be determinative, in and of itself, of the
issue
whether
immunity.
a
particular
entity
is
entitled
to
State
Clearly, the power of eminent domain is a power
enjoyed by entities such as municipalities and counties,
public corporations, and other agencies that are not part of
the State and that do not enjoy State immunity.
Greater
Mobile-Washington
Cnty.
Mental
Health
See, e.g.,
Board,
940
So. 2d at 994; Tallaseehatchie Creek, 620 So. 2d at 630; and
Thomas v. Alabama Mun. Elec. Auth., 432 So. 2d at 481 (see
Ala. Code 1975, § 11-50A-8(4)).
The Authority also possesses certain powers under the HCA
Act that pose difficulty in reaching a conclusion that the
18
1090084
Authority has State immunity. In particular, it is especially
hard for this Court to overlook the fact that the legislature,
which
is
responsible
for
the
creation
of
health-care
authorities, expressly contemplated that such authorities
would be entities subject to suit:
"(a) In addition to all other powers granted
elsewhere in this article, and subject to the
express
provisions
of
its
certificate
of
incorporation, an authority shall have the following
powers, together with all powers incidental thereto
or necessary to the discharge thereof in corporate
form:
"....
"(2) To sue and be sued in its own
name in civil suits and actions, and to
defend suits and actions against it,
including suits and actions ex delicto and
ex contractu, subject, however, to the
provisions of Chapter 93 of Title 11, which
chapter is hereby made applicable to the
authority."
Ala.
Code
1975,
§
22-21-318.
"Although,
such
a
clause
is
This
not
language
is
determinative
plain.
of
an
Authority's status, it does show the intent of the legislature
to create a separate entity rather than an agency or an arm of
the state." Stallings & Sons, Inc. v. Alabama Bldg. Renovation
Fin. Auth., 689 So. 2d 790, 792 (Ala. 1996). See also Wassman
v. Mobile Cnty. Commc'ns Dist., 665 So. 2d 941, 943 (Ala.
19
1090084
1995) (applying Staudt and concluding that the Communications
District did not possess State immunity; "the 'power to sue
and
to
be
sued'
language
in
the
empowering
statute
is
incompatible with the constitutional immunity with which state
agencies are cloaked").6
In addition, Ala. Code 1975, § 22-21-318(a)(5), provides
that a health-care authority has the power
"[t]o acquire, construct, reconstruct, equip,
enlarge, expand, alter, repair, improve, maintain,
equip, furnish and operate health care facilities at
such place or places, within and without the
boundaries of its authorizing subdivisions and
within and without the state, as it considers
necessary or advisable ...."
(Emphasis added.)
If a health-care authority created under
the HCA Act is a State agency, the legislature, by this
6
Also, a health-care authority has the power under the HCA
Act
"[t]o assume any obligations of any entity that
conveys and transfers to the authority any health
care facilities or other property, or interest
therein, provided that such obligations appertain to
the health care facilities, property or interest so
conveyed and transferred to the authority."
Ala. Code 1975, § 22-21-318(a)(23).
least consistent with the notion that
tort creditor who has filed a judgment
that is transferred to an authority
against the authority.
20
This provision is at
an obligation owed a
lien against property
is to be enforceable
1090084
provision, has authorized a State agency to own a health-care
facility located in another state, a state in which the
Authority would not possess State immunity like it has in
Alabama. Under such a scenario the legislature would have, in
effect, preferred the claims of injured patients who are
citizens of other states to those of Alabama citizens.
Finally, any discussion of the first Staudt factor -"the character of power delegated to the body" -– in the
present case must consider the control retained by Baptist
Health in relation to the operation of the Authority and the
reservation
by
Authority's
assets.
agreement,
Baptist
which
is
As
Health
to
of
the
incorporated
an
interest
former,
by
the
in
the
affiliation
reference
in
the
Authority's certificate of incorporation, reserves to Baptist
Health the right to approve certain significant transactions
and operational changes.7
7
Section 1.2 of the affiliation agreement states:
"(a)
The Authority may not engage in any
Restricted Transaction without the prior written
consent of ... [the] Board and Baptist Health.
"(b) Each of the following shall be deemed to
be a 'Restricted Transaction':
"(i)
any
capital
21
expenditure
in
1090084
excess of $10,000,000, either with respect
to a single project or in the aggregate
with respect to a related group of
projects;
"(ii)
elimination of any services
that, as of the Closing, are provided at
the Baptist System Hospitals;
"(iii) any transaction involving the
transfer, sale or other disposition of
assets of the Authority to any person or
entity (including without limitation [the
Board and UABHS] or an affiliate of [the
Board and UABHS]) other than in the
ordinary course of business or as otherwise
expressly permitted by this Agreement;
"(iv)
the incurring of new debt in
excess of $10,000,000, either in a single
transaction or in the aggregate with
respect
to
a
related
series
of
transactions;
"(v)
the appointment or removal of
the
chief
executive
officer
of
the
Authority;
"(vi)
the amendment of the mission
statement for the Authority, as set forth
in this Agreement;
"(vii)
any
amendment
to
the
certificate of incorporation or bylaws of
the Authority; and
"(viii)
any transfer of funds from
the Authority to [the Board and UABHS] or
an affiliate of [the Board and UABHS]
through contribution, grant, dividend or
otherwise, except such transfers as are
22
1090084
Additionally, § 1.3 of the affiliation agreement provides
for Baptist Health to transfer to the Authority all its assets
and all interest in any subsidiaries or other affiliates; the
affiliation agreement does not appear to require any payment
by the Authority in return for those assets and affiliates.
Although § 1.4 of the affiliation agreement states that
"[e]ffective as of the Closing Date, the Authority will assume
all
debts,
liabilities
and
other
obligations
of
Baptist
Health," it continues by stating:
"Baptist Health shall not be released from any of
such debts, liabilities and other obligations.
Neither UABHS nor its sponsors ([University of
Alabama Health Services Foundation, P.C.,] and the
... Board) will assume or be required to guarantee
any debts, liabilities, or other obligations of
Baptist Health or the Authority."
(Emphasis added.)
The affiliation agreement further provides in § 3.3 that,
upon
the
termination
of
the
affiliation
agreement,
the
Authority is to transfer its assets back to Baptist Health,
specifically authorized by this Agreement
or transactions in the ordinary course of
business of the Authority."
(Emphasis added.)
[substituted p. 23]
1090084
either entirely or in substantial part.8
Termination of the
affiliation agreement for this purpose includes termination by
Baptist Health or any other party, either with or without
cause.
As to termination by Baptist Health, § 3.4 of the
affiliation agreement provides that "cause" includes
"(i) the conduct of affiliation activities or
the business of the Authority in a manner contrary
to the mission of Baptist Health; (ii) the benefits
of the Authority structure are eliminated; or (iii)
breach by the [Board and UABHS] of the material
terms of this Agreement and the continuation of such
breach for 60 days after written notice of such
breach is delivered to the [Board and UABHS] by
Baptist Health."
2.
The Relation of the Authority to the State
According to the Authority's brief, "the legislature has
determined
that
the
Authority
'acts
as
an
agency
or
instrumentality of its authorizing subdivisions and as a
political subdivision of the state.'
21-318(c)."
Ala. Code [1975,] § 22-
Thus, the Authority contends, it shares the
immunity of its "authorizing subdivision," the Board. See Cox
8
If Baptist Health terminates the affiliation agreement
other than for cause, § 3.4 provides that Baptist Health must
pay as "compensation" to UABHS an amount equal to a percentage
of between 33% and 50% of any increase in the value of those
assets during the term of the affiliation agreement, plus an
additional amount in the event Baptist Health were to then
sell or otherwise dispose of those assets within three years
of the termination of the affiliation agreement.
[substituted p. 24]
1090084
v. Board of Trs. of Univ. of Alabama, 161 Ala. 639, 648, 49
So. 814, 817 (1909) (University's board of trustees "are but
agents appointed by the state to manage the affairs of the
University," which possesses immunity under § 14).
The specific context of the above-quoted language from
Ala. Code 1975, § 22-21-318(c), however, is as follows:
"(c) As a basis for the power granted in
subdivision (31) of the preceding subsection (a),
the Legislature hereby:
"(1) Recognizes and contemplates that
the nature and scope of the powers
conferred on authorities hereunder are such
as may compel each authority, in the course
of exercising its other powers or by virtue
of such exercise of such powers, to engage
in activities that may be characterized as
'anticompetitive' within the contemplation
of the antitrust laws of the state or of
the United States; and
"(2) Determines, as an expression of
the public policy of the state with respect
to the displacement of competition in the
field of health care, that each authority,
when exercising its powers hereunder with
respect to the operation and management of
health care facilities, acts as an agency
or instrumentality of its authorizing
subdivisions and as a political subdivision
of the state."
(Emphasis added.)
Section 22-21-318(a)(31), Ala. Code 1975,
provides that a health-care authority created under the HCA
Act can
[substituted p. 25]
1090084
"exercise all powers granted hereunder in such
manner as it may determine to be consistent with the
purposes of this article, notwithstanding that as a
consequence of such exercise of such powers it
engages
in
activities
that
may
be
deemed
'anticompetitive' within the contemplation of the
antitrust laws of the state or of the United
States."
Based
on
the
foregoing,
it
is
apparent
that
the
legislature has stated that a health-care authority acts as an
agency or instrumentality of its authorizing subdivision and
as a political subdivision of the State only in connection
with its engagement in anticompetitive conduct.
What the
Authority's argument glosses over is that the issues of
immunity from antitrust laws and of State immunity are two
different things.
The former is a legislatively controlled
immunity related to a particular activity; the latter is a
blanket immunity provided by the Alabama Constitution of 1901.
An
entity
may
be
authorized
by
the
State
to
engage
in
anticompetitive activity and be immune from suit for doing so
but still not possess State immunity.
This is evident from
considering the antitrust precedents themselves.
To the extent the Authority argues that the legislature's
articulation
of
a
policy
that
it
should
have
antitrust
immunity is an "indication" that supports the conclusion that
it should be viewed as the
State for purposes of § 14
[substituted p. 26]
1090084
immunity, it is a very weak "indication."
It is well settled
that even "local governmental entities" may "'engage[] in
anticompetitive conduct pursuant to a 'clearly expressed state
policy.'"
Todorov v. DCH Healthcare Auth., 921 F.2d 1438,
1460 (11th Cir. 1991) (quoting Town of Hallie v. City of Eau
Claire, 471 U.S. 34, 40 (1985)) (emphasis added).
As the
United States Supreme Court has stated:
"Municipalities ... are not beyond the reach of the
antitrust laws by virtue of their status because
they are not themselves sovereign.
Rather, to
obtain exemption, municipalities must demonstrate
that
their
anticompetitive
activities
were
authorized by the State 'pursuant to state policy to
displace competition with regulation or monopoly
public service.'"
Town of Hallie, 471 U.S. at 38-39 (citations omitted); see
also
Mobile Cnty. Water, Sewer & Fire Prot. Auth., Inc. v.
Mobile Area Water & Sewer Sys., Inc., 567 F. Supp. 2d 1342,
1349 (S.D. Ala. 2008) (noting that immunity from prosecution
under federal antitrust law "is not confined to states, but
has been extended to municipalities and instrumentalities of
states, albeit under a different legal test. ... '[P]olitical
subdivisions such as municipalities are immune from antitrust
liability if their anticompetitive acts follow a clearly
articulated
and
affirmatively
expressed
state
policy.'"
(quoting Bankers Ins. Co. v. Florida Residential Prop. & Cas.
[substituted p. 27]
1090084
Joint Underwriting Ass'n, 137 F.3d 1293, 1296 (11th Cir.
1998))).
Even
anticompetitive
a
private
conduct
entity
when
the
may
engage
restraint
in
on
certain
trade
is
"'clearly articulated and affirmatively expressed as state
policy'" and "the policy [is] 'actively supervised' by the
State itself."
California Retail Liquor Dealers Ass'n v.
Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980).
Despite the potential availability to them of immunity as
to certain anticompetitive conduct, however, neither counties
nor municipalities nor private entities are part of the State
or enjoy State immunity.
See, e.g., Parker v. Jefferson
Cnty., 796 So. 2d 1071, 1072 n.2 (Ala. 2000); Knight v. West
Alabama Envtl. Imp. Auth., 287 Ala. 15, 20, 246 So. 2d 903,
906 (1971); Ex parte Tuscaloosa Cnty., 796 So. 2d 1100, 1103
(Ala. 2000); and Ex parte Hale Cnty. Bd. of Educ., 14 So. 3d
844 (Ala. 2009).9
Pursuant to Ala. Code 1975, § 22-21-318(a)(7), a healthcare authority created under the HCA Act has the power to sell
and otherwise to dispose of personal and real property without
the permission of the "authorizing subdivision" that sponsored
9
It is unnecessary to cite authority for the proposition
that a private entity does not possess State immunity.
[substituted p. 28]
1090084
its
formation.
The
only
caveat
prescribed
by
§
22-21-
318(a)(7) is that the health-care authority may not exercise
this power in a manner that would materially impair its
ability to provide the health-care services for which it was
created.
Further, the legislature has provided that certain laws
that normally apply to the State or its agencies are not to be
applied to a health-care authority created under the HCA Act.
See
Tennessee Valley Printing Co. v. Health Care Auth. of
Lauderdale Cnty., 61 So. 3d 1027, 1033 (Ala. 2010) (noting
that "health-care authorities are exempt from certain laws
applicable to governmental entities").
Thus, unlike certain
entities that have been held to possess State immunity, a
health-care authority created under the HCA Act is not subject
to State ethics laws.
Compare Ex parte Board of Dental
Exam'rs, 102 So. 3d at 376 ("'The board [of dental examiners]
... shall adhere to guidelines and proceedings of the State
Ethics Commission as provided in Chapter 25 of Title 36.'"
(quoting Ala. Code 1975, § 34-9-43(b))), with Ala. Code 1975,
§ 22-21-334 ("The provisions of Chapter 25 of Title 36 shall
... not apply to any authority, the members of its board or
[substituted p. 29]
1090084
any
of
its
officers
or
employees."10).
Likewise,
the
legislature provided that the board of directors' meetings of
a health-care authority formed pursuant to the HCA Act are not
subject to the provisions of the Alabama Open Meetings Act,
Ala. Code 1975, § 36-25A-1 et seq.
21-316(c).11
Further,
the
See Ala. Code 1975, § 22-
legislature
10
provided
Section
36-25-1(16),
Ala.
Code
1975,
"governmental corporations and authorities" as
that
the
defines
"[p]ublic or private corporations and authorities,
including but not limited to, hospitals or other
health care corporations, established pursuant to
state law by state, county or municipal governments
for the purpose of carrying out a specific
governmental
function.
Notwithstanding
the
foregoing,
all
employees,
including
contract
employees, of hospitals or other health care
corporations and authorities are exempt from the
provisions of this chapter."
11
The Open Meetings Act provides:
"It is the policy of this state that the
deliberative process of governmental bodies shall be
open to the public during meetings as defined in
Section 36-25A-2(6). Except for executive sessions
permitted in Section 36-25A-7(a) or as otherwise
expressly provided by other federal or state
statutes, all meetings of a governmental body shall
be open to the public and no meetings of a
governmental body may be held without providing
notice pursuant to the requirements of Section
36-25A-3."
Ala. Code 1975, § 36-25A-1(a)(emphasis added). Section 3625A-2(4), Ala. Code 1975, defines "governmental body" as
[substituted p. 30]
1090084
competitive-bid laws set forth in Ala. Code 1975, § 41-16-20
through § 41-16-63, which are applicable to public contracts,
do not apply to a health-care authority created under the HCA
Act.
See Ala. Code 1975, § 22-21-335; Rodgers v. Hopper, 768
So. 2d 963 (Ala. 2000) (holding that leases entered into by
the Alabama Corrections Institute Finance Authority, which was
held
not
to
have
State
immunity,
are
exempt
from
the
competitive-bid law, see Ala. Code 1975, § 14-2-36); Thomas,
supra
(holding
that
contracts
of
the
Alabama
Municipal
Electric Authority, which was held not to have State immunity,
are not subject to the public-contract statutes, see Ala. Code
"All boards, bodies, and commissions of the
executive and legislative departments of the state
or its political subdivisions or municipalities
which expend or appropriate public funds; all
multimember
governing
bodies
of
departments,
agencies, institutions, and instrumentalities of the
executive and legislative departments of the state
or its political subdivisions or municipalities,
including, without limitation, all corporations and
other instrumentalities whose governing boards are
comprised of a majority of members who are appointed
or
elected
by
the
state
or
its
political
subdivisions, counties, or municipalities; and all
quasi-judicial
bodies
of
the
executive
and
legislative departments of the state and all
standing, special, or advisory committees or
subcommittees of, or appointed by, the body."
(Emphasis added.)
[substituted p. 31]
1090084
1975, § 41-16-1 et seq., which include the competitive-bid
statutes, see Ala. Code 1975, § 11-50A-29).
In regard to other provisions of the HCA Act, we note
that the legislature provided limited guidance as to who may
serve as members of the board of directors of a health-care
authority.
Section 22-21-316(a) provides that "no fewer than
a majority of the directors shall be elected by the governing
body
or
bodies
subdivisions."12
of
one
or
more
of
the
authorizing
Provisions regarding the composition of a
board of directors have not precluded us from determining that
an entity was not entitled to State immunity.
See Stallings
& Sons, 689 So. 2d at 793 ("We have found no precedent holding
that membership on an authority's board of directors of the
governor, the finance director, the state treasurer, or, for
that matter, any state officer is determinative of whether an
authority is an entity that could be sued or one that is
immune from suit."); see also Thomas, supra, and the relevant
statutory provision governing the Alabama Municipal Electric
Authority, Ala. Code 1975, § 11-50A-6. Also, we note that the
12
In this case, the certificate of incorporation of the
Authority does provide, in accordance with the statute, that
six directors are to be chosen by the Board. The remaining
five directors are to be chosen by Baptist Health.
[substituted p. 32]
1090084
HCA Act does not require that any director be employed by or
otherwise
associated
authorizing
with
subdivision.
the
Thus,
governing
the
body
legislature
of
the
did
not
require that the board of directors of a health-care authority
be
composed
entirely
of
individuals,
or
indeed
of
any
individuals, who are subject to the daily control of the
authorizing subdivision that created it.13
Significantly, there is no indication that the Authority
receives appropriations from the State or from the Board.
Compare Sarradett v. University of South Alabama Med. Ctr.,
484 So. 2d 426, 427 (Ala. 1986) ("[Counterclaim defendant] has
cited us to numerous acts of the legislature appropriating
money to the University of South Alabama for operation of the
medical center [it owned and operated].
Therefore, and
notwithstanding the ad valorem tax and any other sources of
income for [counterclaim defendant], it appears to us that a
judgment against [counterclaim defendant] in this case would
directly affect the financial status of the State treasury.");
13
The legislature did provide that members of the board of
directors of the Authority could be "impeached and removed
from office in the same manner and on the same grounds" as
certain public officials.
Ala. Code 1975, § 22-21-316(d)
(citing Ala. Const. 1901, § 175). That, however, is simply
one factor in the equation before us.
[substituted p. 33]
1090084
Staudt, 388 So. 2d at 993 ("Substantial appropriations for the
Armory Commission are made through the Military Department and
are payable from funds in the state treasury to the credit of
the Armory Commission. See, e.g., 1979 Ala. Acts, No. 79-124,
p. 192.
Additionally, the governor is authorized to use any
appropriation
for
military
purposes
obligations of the Commission.
to
pay
expenses
or
Code 1975, § 31-4-6.").
In
addition to the significance of this factor in its own right,
it
supports
the
conclusion
that
a
judgment
against
the
Authority would not directly affect the State treasury.
A health-care authority created under the HCA Act has no
authority or power to levy any taxes.
21-318(d).
Ala. Code 1975, § 22-
Nor has the legislature provided that the State,
or the Board, must make any provision for a health-care
authority out of tax revenues (except under circumstances that
are not before us, see Ala. Code 1975, § 22-21-330).
See Ala.
Code 1975, § 22-21-344 ("Nothing in this article shall be
construed to permit the use, by or for the benefit of any
authority,
of
the
proceeds
of
any
hospital
tax
for
any
purpose, at any place, or in connection with any health care
facilities, not permitted or described in the constitutional,
statutory
or
other
provision
of
law
[substituted p. 34]
authorizing
the
1090084
imposition, levy and collection of such hospital tax or the
use of the proceeds therefrom.").
We also note that the
legislature has not required that a health-care authority
deliver any specific level of medical services to the public,
particularly to the indigent.
A health-care authority created pursuant to the HCA Act
is a tax-exempt entity.
See Ala. Code 1975, § 22-21-333.
Although this Court has recognized that an entity's exemption
from state and local taxation might suggest that the entity is
an
agency
of
the
State,
we
have
not
found
that
factor
determinative for purposes of our State-immunity analysis.
See, e.g., Greater Mobile-Washington Cnty. Mental Health Bd.,
940 So. 2d at 994; Tallaseehatchie Creek, 620 So. 2d at 630.14
As previously referenced, and as is discussed in more
detail below, we note that, subject to compensation to be paid
to UABHS under limited circumstances of an amount equal to
only a portion of those assets, the Authority must return all
14
Section 22-21-337, Ala. Code 1975, provides that "[a]n
authority shall be a public corporation or authority and no
part of its net earnings remaining after payment of its
expenses shall inure to the benefit of any individual, firm or
corporation."
The restriction as to the inurement of net
earnings, however, is also part of what distinguishes a public
corporation from a private corporation and is consistent with
the fact that a health-care authority created pursuant to the
HCA Act is a tax-exempt entity.
[substituted p. 35]
1090084
the assets of the Authority, including any transferred to it
by Baptist Health, to Baptist Health upon the termination of
the affiliation agreement.
The same return of assets to
Baptist Health is contemplated in the event of a dissolution
of
the
Authority.
In
the
latter
regard,
although
the
certificate of incorporation provides for the transfer of
assets to the Board in the event of a dissolution of the
Authority, it also specifically states that this transfer is
"subject to the Authority's obligations under the Affiliation
Agreement
with
respect
to
reconveyance
termination of the Affiliation Agreement."
of
assets
upon
As previously
noted, section 3.4 of the affiliation agreement includes,
among
other
"for
cause"
reasons
for
termination
of
the
agreement by Baptist Health, the following:
"(i) the conduct of affiliation activities or
the business of the Authority in a manner contrary
to the mission of Baptist Health; (ii) the benefits
of the Authority structure are eliminated; or (iii)
breach by the [Board and UABHS] of the material
terms of this Agreement and the continuation of such
breach for 60 days after written notice of such
breach is delivered to the [Board and UABHS] by
Baptist Health."15
15
Further, section 1.2(a) of the affiliation agreement
states that "[t]he Authority may not engage in any Restricted
Transaction without the prior written consent of the ... Board
and Baptist Health." Section 1.2(b)(iii) provides that the
restricted transactions include "any transaction involving the
[substituted p. 36]
1090084
During oral argument, the Authority correctly noted that,
although it was required to make a contribution to UABHS each
year in an amount generally equal to 25% of the Authority's
net operating income, no part of its net earnings could be
distributed as such to Baptist Health.
Section 22-21-337,
Ala. Code 1975, provides:
"An authority shall be a public corporation or
authority and no part of its net earnings remaining
after payment of its expenses shall inure to the
benefit of any individual, firm or corporation,
except in the event the board shall determine that
sufficient provision has been made for the full
payment of the expenses, securities and other
obligations of the authority, then any portion, as
determined by the board, of the net earnings of the
authority thereafter accruing may, in the discretion
of the board, be paid to one or more of its
authorizing subdivisions."
Nonetheless, because all or a substantial part of the assets
held by the Authority at the time of the termination of the
affiliation agreement are to be transferred to Baptist Health,
to the extent that the operation of the health-care facility
results in any growth in the value of the assets during the
term of the affiliation agreement, that growth will inure to
transfer, sale or other disposition of assets of the Authority
to any person or entity (including without limitation the
[Board and UABHS] ...) other than in the ordinary course of
business or as otherwise expressly permitted by this
Agreement."
[substituted p. 37]
1090084
the benefit of Baptist Health upon the termination of the
affiliation agreement.16
16
Nor does the fact that the Authority is to make a
"contribution" to UABHS in most years, or that a payment
representing part of the value of the assets of the Authority
may, under limited circumstances, be due to UABHS upon
termination of the affiliation agreement, support the
extension of § 14 immunity to the Authority. Even in cases in
which all the assets of a public corporation must, upon
dissolution of the corporation, be transferred back to the
State itself, our cases do not consider the diminution in
income or assets of the corporation to be an invasion of the
State treasury in the sense necessary to deem that corporation
a part of the State and trigger § 14 immunity. See Greater
Mobile-Washington Cnty. Mental Health Bd., 940 So. 2d at 996
(holding that board was not entitled to State immunity even
though upon dissolution its assets vested in the Department of
Mental Health); see also Rodgers, supra (noting that, upon
dissolution, the assets of the Alabama Corrections Institute
Finance Authority revert to the State, see Ala. Code 1975, §
14-2-25); Stallings & Sons, 689 So. 2d at 793 ("[T]he
Authority holds title to the property it is charged with
maintaining and, in effect, has rights separate from the
state, affecting that property and those rights are subject
only to the dissolution of the Authority. The conveyance in
Section 41-10-470, Ala. Code 1975, provides that the Authority
'shall be invested with all rights and title that the State of
Alabama had in the property conveyed ... thereby, subject to
the right of reverter to the state upon dissolution of the
authority.'
Moreover, a separate account in the state
treasury was created for all proceeds derived from the sale of
any bonds issued by the Authority and it is 'subject to be
drawn on by the authority' for the purposes described therein.
§ 41-10-468, Ala. Code 1975.
Based on the foregoing, we
believe that it is clear that the Authority was created as a
separate entity, that it is not an arm of the state, and that
it is not, therefore, immune from suit under § 14." (emphasis
omitted)); Thomas, supra (involving the Alabama Municipal
Electric Authority, whose governing statute, Ala. Code 1975,
§ 11-50A-1 et seq., provides that, upon dissolution, "all the
projects, buildings, properties and other assets then owned by
[substituted p. 38]
1090084
In addition, we note that, unlike certain entities that
have been held to possess State immunity, a health-care
authority created under the HCA Act is not required to file
with the State an audit or report of the authority's income
and expenditures.
102
So.
3d
at
Compare Ex parte Board of Dental Exam'rs,
383
(citing
Ala.
Code
1975,
§
34-9-42).
Likewise, the legislature has not restricted a health-care
authority created under the HCA Act to hiring only attorneys
who are approved by the attorney general. Compare id. (citing
Ala. Code 1975, § 34-9-43(a)(8)b.), with Ala. Code 1975, § 2221-318(a)(25).
the [AMEA]" are to "be conveyed to the municipalities at that
time represented on the election committee." Ala. Code 1975,
§ 11-50A-27.).
Moreover, in this case, the aforementioned payments are
payments to be made only to UABHS, not the Board. UABHS is a
separate corporation formed by the Board and University of
Alabama Health Services Foundation, P.C. ("UAHSF") (itself a
separate corporation). UABHS is not the Board. As this Court
specifically has held, UABHS is not part of the State so as to
qualify for immunity under § 14.
See note 5, supra (also
noting our holding that UAHSF is not part of the State so as
to qualify for § 14 immunity).
The fact that some amount
might be paid to UABHS by the Authority under limited
circumstances surrounding the termination of the affiliation
agreement or the dissolution of the Authority simply holds no
import for whether the Authority itself is part of the State
for purposes of § 14 immunity.
[substituted p. 39]
1090084
Significantly, although a health-care authority created
under the HCA Act may issue bonds and incur indebtedness, the
legislature
authority's
specifically
debts
and
has
provided
obligations
that
are
a
not
health-care
debts
and
obligations of the State or of an authorizing subdivision.
Section 22-21-325, Ala. Code 1975, states:
"All agreements and obligations undertaken, and
all securities issued, by an authority shall be
solely and exclusively an obligation of the
authority and shall not create an obligation or debt
of the state, any authorizing subdivision or any
other county or municipality within the meaning of
any constitutional or statutory provision.
The
faith and credit of the state, any authorizing
subdivision or any other county or municipality
shall never be pledged for the payment of any
securities issued by an authority; nor shall the
state, any authorizing subdivision or any other
county or municipality be liable in any manner for
the payment of the principal of or interest on any
securities of an authority or for the performance of
any pledge, mortgage, obligation or agreement of any
kind whatsoever that may be undertaken by an
authority."
Compare Ex parte Board of Dental Exam'rs, supra, with Ala.
Code
1975,
§§
22-21-318(a)(9)
and
22-21-325.
See
also
Rodgers, supra (citing Ala. Code 1975, § 14-2-24, which
states:
"No obligation incurred by the [Alabama Corrections
Institute Finance Authority] ... shall create an obligation or
debt of the state."); Tallaseehatchie Creek, 620 So. 2d at 630
(obligations
of
Watershed
Conservancy
[substituted p. 40]
District
are
not
1090084
obligations of the State, county, or municipality, see Ala.
Code 1975, § 9-8-61(3)); Stallings & Sons, 689 So. 2d at 792
("Stallings argues that, in light of the inclusion of this
language in the enabling legislation, the Authority, if it is
an arm of the state, cannot perform its necessary functions
without violating § 213, Ala. Const. 1901, which provides that
'any act creating or incurring any new debt against the state,
except as herein provided for, shall be absolutely void.'
We
agree." (footnote omitted)); and Thomas, 432 So. 2d at 481
("[T]he Authority exists as a public corporation separate and
apart from the State.
Any liabilities the Authority might
incur would never be payable out of the State Treasury.").
3.
Weighing the Staudt Factors Against Each Other
In Rodgers, supra, this Court concluded that the Alabama
Corrections
Institute
Finance
Authority
("the
ACIFA"),
a
public corporation formed pursuant to Ala. Code 1975, § 14-2-1
et seq., was not entitled to immunity under § 14, Ala. Const.
1901.
Discussing Tallaseehatchie Creek, the Rodgers Court
stated:
"As a [watershed conservancy district ('WCD')],
[Tallaseehatchie] Creek was authorized to act as an
agent of the State.
It enjoyed the customary
governmental power of eminent domain; it was exempt
from State and local taxation; and it benefited from
legislative appropriations.
See §§ 9-8-61(1),
[substituted p. 41]
1090084
9-8-61(7), and 9-8-67.
Despite these decidedly
governmental
characteristics,
we
held
that
Tallaseehatchie Creek, as a WCD, was an independent
entity, and, thus, was not entitled to sovereign
immunity. Tallaseehatchie Creek, 620 So. 2d at 631.
"This Court based its holding in that case on
several key characteristics that distinguished WCDs
as entities separate from the State.
Those
characteristics included the ability to: (1) sue and
be sued; (2) enter into contracts; (3) sell and
dispose of property; and (4) issue bonds. Id. at
630 (citing [Ala. Code 1975,] §§ 9-8-25(a)(13),
9-8-61(6), and 9-8-61(4) and (5)).
Notably, the
Legislature also had expressly provided that debts
and obligations of a WCD were not the State's debts
and obligations.
Id. (citing [Ala. Code 1975,]
§ 9-8-61(3)). We found this final characteristic to
be dispositive, stating:
"'This last provision clearly contemplates
that WCD are entities separate and apart
from
the
State;
the
provision
also
introduces an element of ambiguity into the
crucial
question
of
the
financial
responsibility for any judgment adverse to
a WCD.'
"Tallaseehatchie Creek, 620 So. 2d at 630.
"In the present case, ACIFA has these same
qualities, qualities suggesting that it is an entity
independent of the State. These qualities include:
(1) the power to sue and be sued; (2) the power to
enter into contracts; (3) the power to sell and
dispose of property; (4) the power to issue bonds;
and (5) exclusive responsibility for its financial
obligations (the same quality that we found
dispositive in Tallaseehatchie Creek).
See [Ala.
Code 1975,] §§ 14-2-8(2), 14-2-8(5) through (7),
14-2-12, and 14-2-24.
"ACIFA argues that, notwithstanding that it has
those qualities, it is organizationally intertwined
[substituted p. 42]
1090084
with the State by virtue of the State's oversight
power regarding ACIFA's chief operating activity-prison construction. This oversight power, however,
is not different from the power to direct operations
that is commonly exercised by the owner of any
ordinary business. In this case, the State's power
to direct operations includes the power to approve
prison-construction plans and the use of prison
labor. ACIFA's relationship with the State does not
persuade us to accept its argument."
768 So. 2d at 967.
Consistent
with
the
approach
taken
by
the
Court
in
Rodgers and Tallaseehatchie Creek, we take stock of some of
the more noteworthy factors weighing for and against treatment
of the Authority as an arm of the State.
Those that support
that treatment include: (1) its purposes of promoting public
health and arranging for the provision of health-care services
to the indigent, (2) the ability to exercise the right of
eminent domain in furtherance of its corporate purposes,
(3) the articulation by the legislature of a policy choice
that the Authority be permitted to engage in anticompetitive
conduct, (4) the Authority's tax-exempt status, and (5) the
appointment of a majority of the directors of the Authority by
the Board.
Among the factors that support the treatment of a
health-care authority formed under the HCA Act as simply a
franchisee of the State are:
(1) the fact that operating a
hospital is not a uniquely governmental function, (2) the
[substituted p. 43]
1090084
power to sell and dispose of property, (3) the fact that the
State assumes no responsibility for any debt issued by a
health-care authority, (4) the fact that no tax dollars are
used in the operation of a health-care authority, (5) the
power of a health-care authority to make contracts and to do
so without being required to solicit bids or to participate in
the State contract-review process, (6) the fact that the
legislature specifically prescribed to health-care authorities
an amenability to suit, and, perhaps most significantly,
(7)
the
fact
obligations
that
money
incurred
by
judgments
a
and
health-care
other
losses
authority
are
or
not
payable from the State treasury and therefore do not "directly
affect the financial status of the State treasury."
After examining and weighing the significance of these
factors, we conclude that the factors that support treatment
of the Authority as a franchisee of the State rather than as
an "arm of the State" predominate.
The impact of many of the
factors supporting treatment as the State is diluted in some
manner as discussed in the analysis above.
Among other
things, the power to operate a public hospital, including
providing indigent health care, the power to exercise eminent
domain,
the
legislature's
expression
[substituted p. 44]
of
intent
that
the
1090084
Authority be permitted to engage in anticompetitive conduct,
and the Authority's tax-exempt
status are all powers or
privileges that may be held by entities such as cities,
counties, public corporations, and/or nonprofit corporations
that are not entitled to State immunity.
Furthermore, we
consider the import of these factors to be well outweighed by
the
same
five
factors
found
to
be
dispositive
Tallaseehatchie Creek and Rodgers, i.e., the
in
power to sell
and dispose of property, the legislature's prescription to the
Authority of amenability to suit, the power to make contracts
without being subject to the State's competitive-bid laws or
the contract-review process, the power to issue debt for which
the State assumes no responsibility, and, most significantly,
the fact that any judgments or other losses incurred by the
Authority
are
not
payable
from
the
State
treasury.
In
addition, a health-care authority has no power to levy any
taxes, and, except in certain limited circumstances, no taxes
are used to maintain or operate a health-care authority.
Finally, in the present case there is the additional fact that
Baptist Health has retained control of certain significant
operational decisions and has reserved an interest in the
assets of the Authority.
[substituted p. 45]
1090084
4.
Conclusion as to State Immunity
The function performed by the Authority is, in the main,
providing the same health services as were provided, prior to
the
formation
of
the
Authority,
by
a
private
entity.
Moreover, the intrinsic character of a health-care authority
formed under the HCA Act is distinguishable from that of the
health-care-service providers that have been held to possess
State immunity. Compare, e.g., Liberty Nat'l Life Ins. Co. v.
University of Alabama Health Servs. Found., P.C., 881 So. 2d
1013 (Ala. 2003); Sarradett, supra; and Hutchinson v. Board of
Trs. of Univ. of Alabama, 288 Ala. 20, 256 So. 2d 281 (1971).
See also White v. Alabama Insane Hosp., 138 Ala. 479, 35 So.
454 (1903) (involving a hospital for the "insane" and noting,
among other things, that the State supplied the means by which
the hospital was maintained and operated).
Based on our weighing of the Staudt factors, we must
conclude that a health-care authority organized and operating
under
the
HCA
governmental
Act
is
agenc[y]
not
an
"'immediate
of
the
State.'"
and
strictly
See,
e.g.
Tallaseehatchie Creek, 620 So. 2d at 631 (quoting Thomas, 432
So. 2d at 480).
the State."
The Authority does not serve as "an arm of
Instead, it is a "franchisee licensed for some
[substituted p. 46]
1090084
beneficial purpose," Staudt, 388 So. 2d at 993, namely to
participate with other health-care providers in this State,
both public and private, in rendering health-care services to
citizens of this State.
entitled
to
State
The Authority therefore is not
immunity
under
§
14
of
the
Alabama
Constitution.
B.
Damages Cap of § 11-93-2
We turn now to the applicability of the $100,000 damages
cap in § 11-93-2.
As already discussed, § 22-21-318(a)(2) of the HCA Act
provides that health-care authorities shall be amenable to
suit
in
both
tort
and
contract
actions.
It
continues,
however, by stating that this amenability to suit is "subject
... to the provisions of Chapter 93 of Title 11, which chapter
is hereby made applicable to the authority."
(Emphasis
added.)
The Authority argues that this latter language, or at
least the "hereby made applicable" language, evidences an
intent by the legislature to make the $100,000 damages cap
that is applicable to county and municipal agencies and
instrumentalities under Chapter 93 applicable to all health-
[substituted p. 47]
1090084
care authorities formed under the HCA Act, regardless of
whether the Authority constitutes an agency or instrumentality
of a county or municipality.
Consistent with the position taken by the trial court,
Davis responds by arguing that the above-emphasized portions
of § 22-21-318(a)(2) plainly provide for the application of
the "chapter" -- i.e., the entire "chapter" and all "the
provisions" found therein.
Davis points out that among "the
provisions" of Chapter 93 "hereby made applicable" are the
provisions in Ala. Code 1975, § 11-93-2 and § 11-93-1(1),
defining the partial immunity granted by Chapter 93 as a
partial immunity for counties and municipalities and their
agencies.17
17
Section 11-93-2 provides, in pertinent part, that "[t]he
recovery of damages under any judgment against a governmental
entity shall be limited to $100,000.00 for bodily injury or
death ...." Section 11-93-1(1) defines "governmental entity"
as follows:
"Governmental
entity.
Any
incorporated
municipality, any county, and any department,
agency, board, or commission of any municipality or
county, municipal or county public corporations, and
any such instrumentality or instrumentalities acting
jointly. 'Governmental entity' shall also include
county public school boards, municipal public school
boards and city-county school boards when such
boards do not operate as functions of the State of
Alabama.
'Governmental entity' shall also mean
[substituted p. 48]
1090084
Davis notes that in § 22-21-318(a)(2) the legislature did
not simply borrow by reference the monetary amount of the
damages
cap
prescribed
in
§
11-93-2
for
counties
and
municipalities and then create a damages cap for all healthcare authorities in this same amount.
Instead, Davis argues,
it reaffirmed the applicability of Chapter 93, such as it is,
to health-care authorities.
Davis reasons that the effect of
the above-quoted passage is simply to make clear that, despite
the fact that § 22-21-318(a)(2) was enacted after Chapter 93
of Title 11, the express grant in the first sentence therein
to health-care authorities of the power to "be sued" in the
later enacted § 22-21-318(a)(2) is not to be construed as
overriding the grant of partial immunity in § 11-93-2 to an
"authority" that would otherwise fall within "the provisions"
of Chapter 93.
Alternatively,
Davis
argues
that
the
particular
attributes of the Authority in this case, as embodied in its
certificate of incorporation and in the affiliation agreement,
prevent
the
Authority
from
qualifying
as
a
health-care
county or city hospital boards when such boards are
instrumentalities of the municipality or county or
organized pursuant to authority from a municipality
or county."
[substituted p. 49]
1090084
authority under the HCA Act, or at least would deprive it of
the partial immunity, if any, otherwise granted under § 22-21318(a)(2).
We pretermit discussion of the foregoing arguments in
light of our conclusion as to the merits of one additional
argument made by Davis, namely, that, to the extent the HCA
Act was intended to extend the $100,000 damages cap of § 1193-2 to all health-care authorities organized under the HCA
Act,
i.e.,
not
instrumentalities
just
of
those
a
that
county
constitute
or
agencies
municipality,
it
or
is
unconstitutional.
Under Alabama law, there are only two categories of
governmental immunity within which the Authority possibly
could fall, and the Authority falls within neither.
The first category of immunity extends to the State,
which enjoys sovereign immunity.
As discussed in Part II.A.,
the Authority is not an "arm of the State" and does not
qualify for State immunity.18
18
The immunity of certain State officials and of State
employees performing certain governmental functions also is a
function of the immunity afforded to the State. See Ex parte
Cranman, 792 So. 2d 392 (Ala. 2000) (plurality opinion);
Ex parte Butts, 775 So. 2d 173 (Ala. 2000).
[substituted p. 50]
1090084
The
second
category
applies
to
local
entities, i.e., counties and municipalities.
governmental
As discussed
below, unlike State immunity, this second category finds no
expression in the Alabama Constitution; it exists in some
measure today only because of the unique, historical treatment
afforded
counties
and
municipalities
under
Alabama
law:
common-law immunity predating and surviving the adoption of
the 1901 Constitution.
As reflected in our cases, the common-law immunity for
counties and municipalities, and presumably their agencies, is
indeed unique because (a) it was not created by the 1901
Constitution but (b) it did survive the adoption of the 1901
Constitution.
The fact that this immunity was a function of
common law and not the constitution means that it can and has
been restricted or modified by legislative enactments (see,
e.g., § 11-47-190, Ala. Code 1975, and Title 11, Chapter 93,
Ala. Code 1975, and their predecessors) without violating any
constitutional
provision
legislature (e.g.,
restricting
the
§ 14, Ala. Const. 1901).
power
of
the
Conversely, the
fact that this common-law immunity was not abrogated by the
1901 Constitution itself means that the continued existence of
[substituted p. 51]
1090084
this immunity in some measure today (i.e., to the extent the
legislature has chosen in provisions like § 11-47-190 and
§ 11-93-2, to allow it) does not offend the 1901 Constitution
and its assurances under §§ 11 and 13, Ala. Const. 1901, of
trial by jury and remedies for injuries. To the contrary, the
reach of these provisions has been assessed in the context of
the county and municipal immunity that was accepted at the
time of their adoption.
It is because of the unique source and nature of county
and municipal immunity, and the resulting ability of the
legislature thus to limit or modify it, that a statute such as
§ 11-93-2 can, on the one hand, acknowledge and reaffirm this
immunity in some measure and yet simultaneously impose a
restriction on that immunity, something the legislature has no
power to do with respect to State immunity.19
however,
is
not
a
county
or municipality,
19
The Authority,
or
an
agency
That the legislature contemplated that some health-care
authorities might qualify under Chapter 93 of Title 11 for a
type of immunity that the legislature could restrict or waive
is further corroboration of the conclusion reached in Part
II.A. that the legislature did not consider health-care
authorities to be part of the State for purposes of immunity.
Dunn Constr. Co. v. State Bd. of Adjustment, 234 Ala. 372,
376, 175 So. 383, 386 (1937) ("[Section 14] wholly withdraws
from the Legislature, or any other state authority, the power
to give consent to a suit against the state.").
[substituted p. 52]
1090084
thereof.
This, taken in combination with the fact that it is
not
State,
the
means
there
is
no
basis
upon
which
the
legislature could extend local governmental immunity to it.20
In Home Indemnity Co. v. Anders, 459 So. 2d 836 (Ala.
1984), this Court rejected a constitutional challenge to § 1193-2 based on § 13 of the 1901 Constitution (providing for a
remedy for every injury).
Importantly, in doing so, we
specifically acknowledged that counties and municipalities
enjoyed an "immunity recognized at common law," i.e., an
immunity
that
predated
Constitution of 1901.
the
adoption
459 So. 2d at 840.
of
the
Alabama
On the basis of
this "background" this Court upheld the partial immunity
afforded by § 11-93-2 as one subject to regulation by the
legislature.
459 So. 2d at 840-41.
Similarly, in Garner v. Covington County, 624 So. 2d 1346
(Ala. 1993), this Court rejected the argument that § 11-93-2
violates § 11 of the 1901 Constitution (providing for a right
to trial by jury).
We began by noting that, in Anders, the
20
Compare, e.g., Hutchinson, 288 Ala. at 24, 256 So. 2d at
283 (noting that the claim in that case was not against an
agency of a county and must be assessed as one against an
agency of the State for purposes of determining whether the
entity is entitled to immunity).
[substituted p. 53]
1090084
Court had rejected the argument "that § 11-93-2 'violates the
remedy provisions of Article I, § 13.'"
624 So. 2d at 1351.
Consistent with Anders, we explained that § 11-93-2 "must be
addressed in the context of the unique status of counties and
cities as governmental entities."
Id.
We explained that,
because of the unique role of counties and municipalities as
local governmental entities, actions against counties and
municipalities
"have
always
been
subject
to
reasonable
regulation by the legislature on a basis not applicable to
actions against individuals and other entities."
Id.
In
Garner, we specifically discussed the rejection at the 1901
Constitutional Convention of a provision that would have
provided for the right to sue a municipality and quoted
portions
of
the
Convention's
debate
indicating
that,
in
rejecting the provision, the members understood that, in its
absence, counties and municipalities would continue to enjoy
an immunity from suit, albeit one subject to "regulation" by
the legislature.
624 So. 2d at 1351-54.
We ended our
analysis as follows:
"Because
cities
and
counties
are
exercising
governmental
functions,
however,
and
because
judgments against them must be paid out of public
moneys derived from taxation, the reasonable
[substituted p. 54]
1090084
limitation of § 11-93-2 on awards against them must
be sustained. If the Constitutional Convention had
adopted the proposed limitation on the legislative
power to regulate actions against municipalities, we
would probably reach a different result. Given this
constitutional history, however, we cannot say that
§ 11-93-2 violates the constitution."
Id. at 1354-55.
In Smith v. Schulte, 671 So. 2d 1334 (Ala. 1995), this
Court specifically explained that § 11, Ala. Const. 1901, must
be read in the context of the causes of action available at
common
law
and
that
the
immunity
of
counties
and
municipalities under the common law was the reason limitations
on their liability, as reflected in statutes such as § 11-932, were constitutional:
"It is well settled in Alabama that § 11 governs
(1) those causes of action arising under the common
law, and (2) those causes of action afforded by
pre-1901 statutes.
This principle was never more
forcefully stated than in Gilbreath v. Wallace, 292
Ala. 267, 270, 292 So. 2d 651, 653 (1974), where the
Court declared: 'Alabama's Constitution effected a
"freezing" of the right to jury trial as of 1901.'
292 Ala. at 269, 292 So. 2d at 652. See also Alford
v. State ex rel. Attorney General, 170 Ala. 178,
188-89, 54 So. 213, 215-16 (1910) (Mayfield, J.,
dissenting); Tims v. State, 26 Ala. 165 (1855)."
671
So.
2d
at
1342
(emphasis
omitted).
explained:
[substituted p. 55]
As
we
further
1090084
"The distinction between the [county and
municipal] entities subject to § 11-93-2 and [the
medical providers] subject to § 6-5-547[, Ala. Code
1975,]
renders
these
respective
statutes
so
fundamentally distinguishable as to eliminate the
need for further elaboration. Suffice it to say, as
did the trial judge: 'The defendants in the case at
bar do not enjoy the unique status of counties or
cities; and, therefore, no such status, crucial to
the
rationale
of
Garner,
supports
the
constitutionality of the § 6-5-547 cap on any
wrongful death judgment against medical providers.'"
671 So. 2d at 1343-44 (emphasis added).
It is with equal certitude that we can and must conclude
in the present case that the Authority "do[es] not enjoy the
unique status of counties or cities; and, therefore, no such
status, crucial to the rationale of Garner [and Schulte and
the constitutionality of the application of § 11-93-2 in those
cases], supports the constitutionality of the [§ 11-93-2] cap
on any ... judgment against [the Authority]." That is, to the
extent § 22-21-318(a)(2) may be construed as an attempt to
extend the partial immunity for counties and municipalities
recognized in § 11-93-2 to an entity that is neither of those,
that attempt is unconstitutional.
III. Conclusion
For the foregoing reasons, we must reject the Authority's
argument that it is entitled to the protection afforded
[substituted p. 56]
1090084
counties and municipalities in § 11-93-2. The only other form
of governmental immunity that it can and does seek is the
sovereign immunity of the State.
only
if
the
Authority
were
State immunity would apply
an
governmental agency of the State."
"immediate
and
It is not.
strictly
It therefore
is not entitled to either form of governmental immunity it
requests, and the judgment of the trial court therefore is due
to be affirmed.
APPLICATION
GRANTED;
OPINION
OF
JANUARY
14,
2011,
WITHDRAWN; OPINION SUBSTITUTED; AFFIRMED.
Parker, Main, and Wise, JJ., concur.
Bryan, J., concurs in part and concurs in the result in
part.
Moore, C.J., concurs in the result.
Stuart, Bolin, and Shaw, JJ., dissent.
[substituted p. 57]
1090084
BRYAN, Justice (concurring in part and concurring in the
result in part).
I concur in Part II.A. of the main opinion.
However, I
do not believe this Court needs to address the argument by Kay
E. Davis, the plaintiff below, that interpreting the Health
Care Authorities Act, § 22-21-310 et seq., Ala. Code 1975
("the Act"), so as to apply the damages cap set forth in § 1193-2, Ala. Code 1975, to all health-care authorities formed
pursuant to the Act is unconstitutional.
Therefore, as to
Part II.B. of the main opinion, I concur only in the result.
See
Lowe
v.
Fulford,
442
So.
2d
29,
33
(Ala.
1983)
("'Generally courts are reluctant to reach constitutional
questions, and should not do so, if the merits of the case can
be settled on non-constitutional grounds.'" (quoting the trial
court's order)); see also Working v. Jefferson Cnty. Election
Comm'n, 2 So. 3d 827, 838 (Ala. 2008) ("We first turn our
attention to the latter issue because an affirmative response
to
it
will
make
it
unnecessary
for
us
to
address
the
constitutionality of a legislative enactment." (citing Lowe)).
The Act provides, in pertinent part:
"(a) In addition to all other powers granted
elsewhere in this article, and subject to the
58
1090084
express
provisions
of
its
certificate
of
incorporation, an authority shall have the following
powers ...:
"....
"(2) To sue or be sued in its own name
in civil suits and actions, and to defend
suits and actions against it ..., subject,
however, to the provisions of Chapter 93 of
Title 11, which chapter is hereby made
applicable to the authority."
§ 22-21-318(a)(2), Ala. Code 1975.
As noted in the main opinion, the Health Care Authority
for Baptist Health ("the Authority") argues that the language
of § 22-21-318(a)(2), Ala. Code 1975, making "Chapter 93 of
Title 11 ... applicable to the authority," indicates that the
legislature intended for the $100,000 damages cap set forth in
§ 11-93-2 for governmental entities, including county and
municipal agencies, to apply to all authorities formed under
the Act, regardless of the status of the creating entity.
"'The fundamental rule of statutory construction
is to ascertain and give effect to the intent of the
legislature in enacting the statute. Words used in
a statute must be given their natural, plain,
ordinary, and commonly understood meaning, and where
plain language is used a court is bound to interpret
that language to mean exactly what it says. If the
language of the statute is unambiguous, then there
is no room for judicial construction and the clearly
expressed intent of the legislature must be given
effect.'"
59
1090084
Bandy v. City of Birmingham, 73 So. 3d 1233, 1246 (Ala. 2011)
(quoting IMED Corp. v. Systems Eng'g Assocs. Corp., 602 So. 2d
344, 346 (Ala. 1992)).
Section 11-93-2 provides, in pertinent part, that "[t]he
recovery of damages under any judgment against a governmental
entity shall be limited to $100,000 for bodily injury or death
for one person in any single occurrence." Section 11-93-1(1),
Ala. Code 1975, defines a "governmental entity" as:
"Any incorporated municipality, any county, and any
department, agency, board, or commission of any
municipality or county, municipal or county public
corporations, and any such instrumentality or
instrumentalities acting jointly.
'Governmental
entity' shall also include county public school
boards, municipal public school boards and citycounty school boards when such boards do not operate
as functions of the State of Alabama. 'Governmental
entity' shall also mean county or city hospital
boards when such boards are instrumentalities of the
municipality or county or organized pursuant to
authority from a municipality or county."
As Davis points out, the legislature did not expressly
state that the damages cap in § 11-93-2 applies to all
authorities but, instead, that Chapter 93 in its entirety "is
made applicable" to health-care authorities under the Act.
Giving the terms their plain meaning and interpreting the
language of the Act to mean what it says, I do not read § 22-
60
1090084
21-318(a)(2) of the Act as subjecting all authorities to the
statutory damages cap in § 11-93-2, but, instead, as ensuring
that a health-care authority created under the Act that also
satisfies the definition of a "governmental entity" in § 1193-1(1) receives the protections afforded such entities by §
11-93-2.
The Authority concedes that it "is not a 'governmental
entity,' as defined in § 11-93-1[(1)]."
brief, at 52.
The Authority's
Therefore, the statutory damages cap set forth
in § 11-93-2 does not apply to the judgment entered against
the Authority in this case.
For this reason, I concur in the
result reached in Part II.B. of the main opinion.
61
1090084
MOORE, Chief Justice (concurring in the result).
I concur in the result reached by the main opinion. I
agree that the Health Care Authority for Baptist Health ("the
Authority")
is
not
entitled
to
sovereign
immunity
(now
referred to as "State immunity") under Article I, § 14, of the
Alabama Constitution of 1901 for reasons set out below. I
further agree that extending the $100,000 damages cap of § 1193-2, Ala. Code 1975, to health-care authorities organized
under the Health Care Authorities Act of 1982, § 22-21-310 et
seq.,
Ala.
Code
instrumentalities
1975,
of
a
that
county
are
or
not
a
agencies
or
municipality
is
unconstitutional.
I write to state that weighing various factors such as
tax-exempt status, anticompetitive conduct, eminent-domain
powers, ownership and disposal of property, makeup of the
board of directors will not necessarily lead to the proper
determination of a sovereign-immunity issue in every case.
Different courts and different judges will at different times
weigh
and
prioritize
such
factors
differently.
The
determination of whether sovereign immunity exists is not
arrived at by balancing various factors relating to powers
62
1090084
generally exercised by government but, rather, is dependent
upon whether the activity involved is a proper function of
government according to the Constitution ratified by the
people.
Whether the Authority enjoys sovereign immunity under
Article I, § 14, must be examined under the provisions of the
Constitution of Alabama. I would hold that sovereign immunity
from civil actions under Article I, § 14, can exist only when
that immunity does not violate the rights retained by the
people under the Constitution of Alabama unless that immunity
is specifically granted an entity by the people of Alabama in
an amendment to the 1901 Constitution.
A historical overview of the origins of state sovereignty
in
our
country
is
helpful to a proper
understanding
of
sovereign immunity in its most recent forms. One of the first
Associate Justices of the United States Supreme Court, Justice
James
Wilson,
who
not
only
signed
the
Declaration
of
Independence but who also helped draft the Constitution of the
United States, attributed "sovereignty" to the feudal system.
In Chisholm v. Georgia, 2 U.S. 419 (1793), Justice Wilson
wrote:
63
1090084
"[S]overeignty is derived from a feudal source; and
like many other parts of that system so degrading to
man, still retains its influence over our sentiments
and conduct, though the cause, by which that
influence was produced never extended to the
American States."
2 U.S. at 457. In the earliest stages of our Republic, the
term "sovereign" was not readily applied to our federal
government, as Justice Wilson explained:
"To the Constitution of the United States the
term SOVEREIGN, is totally unknown. There is but one
place where it could have been used with propriety.
But, even in that place it would not, perhaps, have
comported with the delicacy of those, who ordained
and established that Constitution. They might have
announced themselves 'SOVEREIGN' people of the
United States: But serenely conscious of the fact,
they avoided the ostentatious declaration."
Id. at 454 (capitalization in original). Nor did Alabama's
original Constitution of 1819 ascribe to State government the
term "sovereign," and it gave State government no immunity
under the law for wrongs it had committed. Article 6, § 9,
Ala. Const. 1819. Even after the War Between the States, the
Constitution of Alabama of 1865 continued to protect citizens
in their right to bring suits against the State. Article 1, §
15, Ala. Const. 1865.
Both
the
federal
government
as
well
as
our
State
government recognized, according to Justice Wilson, that the
64
1090084
State was an "inferior contrivance" to human authority. "When
I speak of a State as an inferior contrivance, I mean that it
is a contrivance inferior only to that, which is divine: Of
all human contrivances, it is certainly most transcendently
excellent." Chisholm, 2 U.S. at 455.
However, in 1875 a new Constitution was ratified. It
included the provision that the State of Alabama "shall never
be made to be a defendant in any court of law or equity."
Article 1, § 15, Ala. Const. 1875. (This bar to suit was
retained as Article 1, § 14, in the Alabama Constitution of
1901.) The same year the 1875 Constitution was ratified, the
Supreme Court of Alabama began to define the bounds of State
sovereignty:
"[I]t is not congruous with the ideas of order and
duty, that the State, the August sovereign body
whose servants they are, from which proceed all
civil laws, and to which we owe unstinted respect
and honor, should be held capable of doing wrongs,
for which she should be made answerable as for
tortious injuries, in her own courts to her own
children or subjects."
State v. Hill, 54 Ala. 67, 68 (1875) (emphasis added). Hill
starkly
described
perhaps
the
essence
of
Alabama
State
sovereignty: immunity from suit for "tortious injuries" in
"her own courts to her own children or subjects."
65
1090084
This Court later stated simply: "The state can do no
wrong. Neither can her servants do a wrong for it or in its
name, so as to make it a party to a suit against them." Elmore
v. Fields, 153 Ala. 345, 351, 45 So. 66, 67 (1907).21 "This
Court,
construing
Section
14,
has
held
almost
every
conceivable type of suit to be within the constitutional
prohibition." Hutchinson v. Board of Trs. of Univ. of Alabama,
288 Ala. 20, 23, 256 So. 2d 281, 283 (1971). With that,
Alabama "closed the door to litigants who had claims against
the State, and the door has remained closed continuously."
Id.22
21
The similar maxim "the king can do no wrong" rests on a
legal misconception. Joe McElwain, State Immunity from Tort
Liability, 8 Mont. L. Rev. 45, 45 (1947)(citing Bouchard,
Government Liability in Tort, 34 Yale L.J. 1 n.2 (1924)).
Originally, the maxim did not mean "that the king could not do
wrong in the sense that he was incapable of doing a wrong, but
that he was not privileged to do wrong. The king was obligated
to right any wrongs which he had done." Id. (footnote
omitted). Sir William Blackstone likewise limited the maxim
so: "[I]t means that the prerogative of the crown extends not
to do any injury." 1 William Blackstone, Commentaries *239
(emphasis added).
22
One exception is actions arising from the State's legal
contractual obligations. See, e.g., State of Alabama Highway
Dep't v. Milton Constr. Co., 586 So. 2d 872, 875 (Ala.
1991)("Once the Highway Department has legally contracted
under state law for goods or services and accepts such goods
or services, the Highway Department also becomes legally
obligated to pay for the goods or services accepted in
[substituted p. 66]
1090084
Nevertheless, other provisions of the Declaration of
Rights
in
the
1901
Constitution
present
a
seeming
inconsistency with the State's immunity from suit in § 14.
Specifically, Article I, § 11, guarantees the right of trial
by jury, and Article I, § 13, provides "[t]hat all courts
shall be open; and that every person, for any injury done him,
in his lands, goods, person, or reputation, shall have a
remedy by due process of law."
That inconsistency, however, must first be examined under
Article I, § 36, of the Declaration of Rights, which protects
"against any encroachments on the rights herein retained" by
declaring "that everything in this Declaration of Rights is
excepted out of the general powers of government, and shall
forever remain inviolate." Each of Alabama's Constitutions
from 1819 to 1901 "has excepted out of the general powers of
government, the power to violate the right of trial by jury."
Clark v. Container Corp. of America, Inc., 589 So. 2d 184, 196
(Ala.
1991).
In
fact,
Article
I,
§
36,
prohibits
"the
Legislature, the executive, or judicial branch, one or all,
accordance with the terms of the contract. It follows that
this obligation is not subject to the doctrine of sovereign
immunity and is enforceable in the courts.").
67
1090084
from destroying or impairing such reserved rights of the
people" and "from ever burdening, disturbing, qualifying, or
tampering with, these rights, to the prejudice of the people."
Alford v. State, 170 Ala. 178, 213, 54 So. 213, 223 (1910).
Because the entire Declaration of Rights is excepted out of
the general powers of government, neither the judiciary nor
the legislature may extend § 14 sovereign immunity so as to
destroy the inalienable rights of the people contained in §§
11 and 13.
Although the rights contained in the Declaration of
Rights are made secure, this Court has also held:
"The presence of these guarantees, we respectfully
submit, does not repudiate other provisions of our
state's organic law which the people themselves have
established, however inconsistent to some they may
appear to be. By adopting § 14, our people have
placed a limitation upon their own ability to make
their state a 'defendant in any court.' It would be
incongruous for this court to hold that this
particular
section
[Art.
1,
§
14]
of
the
Constitution of Alabama 1901 may not be enforced
because it might appear to be in conflict with
another. This follows from the requirement that
constitutional provisions should be construed as a
whole and in light of the entire instrument and to
harmonize with its other provisions."
Deal v. Tannehill Furnace & Foundry Comm'n, 443 So. 2d 1213,
1218-19 (Ala. 1983). As stated in Deal, there is an apparent
68
1090084
conflict between § 14 (sovereign immunity) and §§ 11 and 13
(trial by jury and open courts). The question then becomes –when does § 14 restrict the rights to trial by jury and access
to an open court system?
Whether the Authority is entitled to sovereign immunity
depends on whether they are "arm[s] of the state" and whether
they perform a function of State government. Armory Comm'n of
Alabama v. Staudt, 388 So. 2d 991, 993 (Ala. 1980). In Staudt,
three elements were discussed:
1. The character of power delegated to the entity;
2. The relation of the entity to the State; and
3. The nature of the function performed by the entity.
388 So. 2d at 993.
The main opinion sufficiently examines the first two
elements, i.e., the "character of power delegated" to
the
Authority and the Authority's "relation" to the State of
Alabama. I concentrate here on the third element -- the nature
of the "function performed by the entity." Article 1, § 35, of
the Alabama Constitution of 1901 declares that "the sole
object and only legitimate end of government is to protect the
citizen in the enjoyment of life, liberty, and property,"
69
1090084
because "when the government assumes other functions it is
usurpation and oppression." Therefore, sovereign immunity
under § 14 can never be said to exist for any entity that
violates
the
government"
"sole
and
object
"assumes
and
other
only
legitimate
functions."
end
Because
of
the
Declaration of Rights is excepted out of the general powers of
government,
only
the
people
of
Alabama
may
enlarge
the
"legitimate end of government" to encompass functions such as
health care. Thus sovereign immunity exists only when a
government
entity
functions
within
its
legitimate
constitutional sphere.
At common law, hospitals were not within the sphere of
civil
government,
but
were
eleemosynary23
corporations,
"constituted for the perpetual distribution of the free alms,
or bounty, of the founder of them to such persons as he has
directed. Of this kind are all hospitals for the maintenance
of the poor, sick, and impotent." 1 William Blackstone,
23
"Of, relating to, or assisted by charity; not-forprofit." Black's Law Dictionary 597 (9th ed. 2004). An
"eleemosynaria" was "[t]he place in a religious house or
church where the common alms were deposited, to be distributed
to the poor." Id.
[substituted p. 70]
1090084
Commentaries on the Laws of England *459.24 Our common law
inherited much from the canon law of the Christian church,
which allowed any group of persons with the proper structure
and purpose to form charitable corporations for the purpose of
operating hospitals.25 Harold Berman, Law and Revolution 219
(1983). In accord with English common law, "health care" is
not found in the enumerated powers given Congress in Article
I, § 8, of the United States Constitution. Nor is such a power
to be found under the General Welfare provision as it was
understood by our founding fathers. See The Federalist No. 41
at 258-259 (James Madison)(Clinton Rossiter ed., 1961). This
legal history demonstrates why hospitals and health care were
not
considered
proper
objects
and
functions
of
civil
24
Eleemosynary
corporations
were
lay
corporations,
composed of ecclesiastical persons that shared some "of the
nature, privileges, and restrictions of ecclesiastical
bodies." 1 William Blackstone, Commentaries *459.
25
Donors would make gifts to God to established
ecclesiastical corporations for specific charitable purposes,
such as the building and operating of hospitals. Harold
Berman, Law and Revolution 238 (1983). However, under Roman
law, Emperor Justinian had recognized hospitals as charitable
societies, under the supervision of diocesan bishops. Roman
law did not grant charitable societies the legal privileges of
incorporation, which were reserved for cities, public
treasuries, churches, and colleges. Id. at 216, 219. Thus,
canon law expanded the legal protections for
charitable
societies. Id.
[substituted p. 71]
1090084
government in the United States and in Alabama for many years.
Alabama's
early
hospitals
were
organized
primarily
by
churches, religious orders, private individuals, and private
organizations, and not by the State.26
However, in 1946 the people of Alabama ratified Amendment
No. 53 to the Alabama Constitution of 1901 to provide for
State hospitals and health facilities. Amendment No. 53 (now
Article IV, § 93.12, Ala. Const. 1901 (Off. Recomp.)) provides
as follows:
"The state, notwithstanding section 93 of the
Constitution as amended and section 94 of the
Constitution, may acquire, build, establish, own,
operate and maintain hospitals, health centers,
sanatoria
and
other
health
facilities.
The
legislature for such purposes may appropriate public
funds and may authorize counties, municipalities and
other political subdivisions to appropriate their
funds, and may designate or create an agency or
agencies to accept and administer funds appropriated
or donated for such purposes by the United States
government to the state upon such terms and
conditions as may be imposed by the United States
government."
26
See Howard Holley, M.D., The History of Medicine in
Alabama (1982). Dr. Holley chronicled the development of
hospitals in Alabama from colonial times to the 1970s.
Holley's survey covers the origins of 27 Alabama hospitals: 21
were organized by religious orders, private individuals, and
private corporations; 2 were organized by cities; 2 by federal
authority; 1 by a county; and only 1 by the State. Dr. Holley
acknowledges he omitted many "privately owned and operated
small hospitals." Id. at 45-74.
[substituted p. 72]
1090084
(Emphasis added.) Section 93.12 clearly defines the limited
conditions
under
which
the
State
of
Alabama
may
constitutionally assume the functions of maintaining hospitals
and providing health care to the people of this State. Only
under the limited constitutional exception of § 93.12 would a
State-run hospital be immune from civil action under the
concept of sovereign immunity in § 14.
The evidence in this case does not reflect that the State
of
Alabama
ever
acquired,
built,
established,
owned,
or
operated the Authority's medical facilities. Nor did the
Legislature of Alabama appropriate funds or authorize
a
county, a municipality, or other political subdivision to do
so.
Because
no
State
entity
has
availed
itself
of
the
provision of § 93.12 in this case, the Authority is not
exercising a government function so as to entitle it to
sovereign immunity.
The provisions of §§ 22-21-310 through 22-21-359, Ala.
Code 1975, the Health Care Authorities Act of 1982, do not, in
my opinion, meet the requirements for a State-run hospital
under § 93.12 and were never meant to provide for a Stateowned
and
operated
hospital.
73
Indeed
the
Health
Care
1090084
Authorities Act itself permits a health-care authority to be
sued in civil actions:
"(a) In addition to all other powers granted
elsewhere in this article, and subject to the
express
provisions
of
its
certificate
of
incorporation, an authority shall have the following
powers, together with all powers incidental thereto
or necessary to the discharge thereof in corporate
form:
"....
"(2) To sue and be sued in its own
name in civil suits and actions, and to
defend suits and actions against it,
including suits and actions ex delicto and
ex contractu, subject, however, to the
provisions of Chapter 93 of Title 11, which
chapter is hereby made applicable to the
authority ...."
§
22-21-318,
Ala.
Code
1975
(emphasis
added).
When
the
legislature expressly authorized a health-care authority "to
sue and be sued in its own name in civil suits and actions,"
it cannot be said that even the legislature, which could not
create sovereign immunity, ever contemplated such a result for
any health-care authority.
Therefore, I would hold that, absent a constitutional
amendment, sovereign immunity cannot be extended to shield a
public authority, agency, or franchisee that works to deprive
the people of their rights retained in §§ 11 and 13. The
74
1090084
effect of granting § 14 immunity to the Authority would be to
destroy the people's inalienable rights to a jury trial and to
take away a remedy in open court in cases involving such an
entity, in violation of Article I, §§ 35 and 36. Such an
application of sovereign immunity, absent the consent of the
people of Alabama by constitutional amendment, is void and
unconstitutional under §§ 35 and 36. I agree with the main
opinion that under the Alabama Constitution the Authority is
not entitled to sovereign immunity.
Furthermore, the $100,000 damages cap of § 11-93-2 is not
applicable here because such a cap was never intended under
the Health Care Authorities Act to extend to nongovernmental
entities.
Moreover, the Authority never claimed to be an
instrumentality of either a county or a municipal government
and is therefore not entitled to the damages limitations that
such government entities presently enjoy.
75
1090084
BOLIN, Justice (dissenting).
At the outset, I must express my extreme disappointment
in this Court's delay in ruling on this application for
rehearing. The original opinion, which I authored, was issued
on January 14, 2011, and the application for rehearing was
timely filed on January 27, 2011.
On July 7, 2011, the case
was transferred from my office.
Rule 40(a), Ala. R. App. P., provides that a party who
has not prevailed may apply for rehearing.
"This Court invites applications for rehearing
because we are the court of last resort in virtually
every case that comes before us. Rule 40(b), Ala.
R. App. P., therefore states in relevant part: 'The
application
for
rehearing
must
state
with
particularity the points of law or the facts the
applicant
believes
the
court
overlooked
or
misapprehended.'
The
operative
words
are
'overlooked' and 'misapprehended.'
We grant
application for a rehearing in a rather narrow range
of cases.
A rehearing is not an opportunity to
raise new issues not addressed on original
application.
See Town of Pike Road v. City of
Montgomery, 57 So. 3d 693, 694 (Ala. 2006)(opinion
on application for rehearing)('As a general rule,
the Court does not consider matters raised for the
first time in an application for rehearing.' (citing
Morgan Keegan & Co. v. Cunningham, 918 So. 2d 897,
908 (Ala. 2005))); Riscorp, Inc. v. Norman, 915 So.
2d 1142, 1155 (Ala. 2005)(opinion on application for
rehearing)('"The well-settled rule of this Court
precludes consideration of arguments made for the
first time on rehearing."'(quoting Water Works &
Sewer Bd. of Selma v. Randolph, 833 So. 2d 604, 608
76
1090084
(Ala. 2002))); and Kirkland v. Kirkland, 281 Ala.
42, 49, 198 So. 2d 771, 777 (1967) ('We cannot
sanction the practice of bringing up new questions
for the first time in application for rehearing.').
Nor is an application for rehearing an invitation to
reargue the issues already thoroughly considered on
original application. See Willis v. Atlanta Cas.
Co., 801 So. 2d 837, 838 (Ala. 2001) (overruling an
application for rehearing when it was 'simply an
earnest reiteration of the appellant's original
brief')(Johnstone,
J.,
concurring
specially).
Instead, this Court invites an application for a
rehearing so that we may be informed of a fact or a
point of law that we have 'overlooked' or one that
we have 'misapprehended.'"
Chism v. Jefferson Cnty., 954 So. 2d 1058, 1106-07 (Ala. 2006)
(See, J., concurring specially on application for rehearing).
With the relatively narrow grounds for granting an application
for rehearing, there is no justification for the inordinate
delay in ruling on this application for rehearing.
Not only
have the parties been in a state of uncertainty, undoubtedly
other patients have been treated at a Baptist Medical Center
facility without a final resolution of the issues involved.
Furthermore, in the time that has elapsed since our original
opinion was issued on January 14, 2011, there have been
numerous changes to the membership of this Court, and the
delay in ruling on the application could erroneously appear to
be outcome driven.
Although I am certain that the delay was
77
1090084
not a product of judicial machinations, I must note that such
a lengthy delay appears improper and that the mere appearance
of impropriety reflects poorly on past and current members of
this Court.
That being stated, I now turn to the issue of sovereign
immunity.
The Healthcare Authority for Baptist Health d/b/a
Baptist Medical Center East, also known as the Healthcare
Authority for Baptist Health, an affiliate of UAB Health
System d/b/a Baptist Medical Center East (hereinafter "the
Authority"), argues that State immunity under § 14, Ala.
Const. 1901, also known as sovereign immunity, acts as a
jurisdictional bar in this case.27
Section 14 provides that the State "shall never be made
a defendant in any court of law or equity."
27
Neither the
The Authority raises this argument for the first time on
appeal.
Generally, an appellate court cannot consider
arguments raised for the first time on appeal. CSX Transp.,
Inc. v. Day, 613 So. 2d 883, 884 (Ala. 1993). However, "[t]he
assertion of State immunity challenges the subject-matter
jurisdiction of the court; therefore, it may be raised at any
time by the parties or by a court ex mero motu." Atkinson v.
State, 986 So. 2d 408, 411 (Ala. 2007).
"'[A]n action
contrary to the State's immunity is an action over which the
courts of this State lack subject-matter jurisdiction.'" Ex
parte Alabama Dep't of Transp., 978 So. 2d 17, 21 (Ala.
2007)(quoting Larkins v. Department of Mental Health & Mental
Retardation, 806 So. 2d 358, 363 (Ala. 2001)).
[substituted p. 78]
1090084
legislature nor this Court has the power to waive the State's
immunity from suit. Sovereign immunity provides protection to
the State and State-related agencies.
The immunity from suit
provided by § 14 extends to State universities.
Rigby v.
Auburn Univ., 448 So. 2d 345, 347 (Ala. 1984)("[W]e conclude
that because of the character of the power delegated
to it by
the state, its relation to the state as an institution of
higher learning, and the nature of the function it performs as
an institution of higher learning, Auburn University is an
instrumentality of the state and therefore immune to suit by
the terms of Section 14 of our state constitution.");
Taylor
v. Troy State Univ., 437 So. 2d 472 (Ala. 1983)(holding that
State immunity extends to the State's institutions of higher
learning); Harman v. Alabama Coll., 235 Ala. 148, 177 So. 747
(1937)(holding that the legislature could create a college as
a public corporation with the right to sue and to contract, to
acquire and to hold real property, that the public corporation
so created could incur debt without violating § 213 of the
Alabama Constitution, and that the college was immune from
suit); Alabama Girls' Indus. Sch. v. Reynolds, 143 Ala. 579,
42 So. 114 (1905)(holding that school was entitled to immunity
79
1090084
from suit under the Alabama Constitution notwithstanding fact
that creating statute provided that the school could be sued).
The operation of a hospital by a State university falls
within the realm of sovereign immunity.
Liberty Nat'l Life
Ins. Co. v. University of Alabama Health Servs. Found., P.C.,
881 So. 2d 1013 (Ala. 2003)(holding that sovereign immunity
protected State-university hospital from insurer's suit to
stop practice of billing more that it would accept as full
satisfaction from Medicare or other insurers); Sarradett v.
University of South Alabama Med. Ctr., 484 So. 2d 426 (Ala.
1986)(holding that county hospital acquired by university was
entitled to sovereign immunity where agreement provided that
university desired to operate the hospital as part of its
college of medicine and fact that agreement provided that the
university would operate the hospital as a public hospital did
not deprive the entity of immunity as a subdivision of a State
university); and Hutchinson v. Board of Trs. of the Univ. of
Alabama, 288 Ala. 20, 256 So. 2d 281 (1971)(recognizing that
the operation of a university hospital is a governmental
function and that even if operating a university hospital was
a business function, the State could not be sued because the
80
1090084
result of allowing a suit would be to directly affect the
financial status of the State treasury).
In Armory Commission of Alabama v. Staudt, 388 So. 2d 991
(Ala. 1980), the Court set out the test to determine if an
entity
is
part
of
the
State
and
therefore
entitled
to
sovereign immunity:
"Whether a lawsuit against a body created by
legislative enactment is a suit against the state
depends on the character of power delegated to the
body, the relation of the body to the state, and the
nature of the function performed by the body. All
factors in the relationship must be examined to
determine whether the suit is against an arm of the
state or merely against a franchisee licensed for
some beneficial purpose."
388 So. 2d at 993.
In the present case, the issue is whether a health-care
authority
established
by
a
State
university
operating
a
medical school is entitled to sovereign immunity. A brief
history of the statutes allowing for the creation of healthcare authorities is necessary.
In 1945, the legislature
authorized the creation of public-hospital associations by
local governing bodies.
seq., Ala. Code 1975).
Title 22, Art. 3 (now § 22-21-50 et
In 1949, the legislature provided for
the creation of county hospital corporations.
81
Title 22, Art.
1090084
4 (now § 22-21-70 et seq., Ala. Code 1975).
In 1961, the
legislature enacted Title 22, Art. 5 (now § 22-21-130 et seq.,
Ala. Code 1975), to allow the creation of municipal hospitalbuilding authorities.
In 1975, the legislature enacted Title
22, Art. 6 (now § 22-21-170 et seq., Ala. Code 1975), to
authorize
the
creation
of
county
and
municipal
hospital
authorities.
In
1982,
the
legislature
enacted
the
Health
Care
Authorities Act of 1982, § 22-21-310 et seq., Ala. Code 1975
("the HCA Act").
for
the
creation
Section 22-21-312 of the HCA Act provides
of
health-care
authorities
as
public
corporations in order to effectuate the intent of the HCA Act:
"The Legislature hereby finds and declares:
"(1)
That
publicly-owned
(as
distinguished
from
investor-owned
and
community-nonprofit) hospitals and other
health
care
facilities
furnish
a
substantial part of the indigent and
reduced-rate care and other health care
services furnished to residents of the
state by hospitals and other health care
facilities generally;
"(2) That as a result of current
significant
fiscal
and
budgetary
limitations or restrictions, the state and
the various counties, municipalities, and
educational institutions therein are no
longer able to provide, from taxes and
82
1090084
other general fund moneys, all the revenues
and funds necessary to operate such
publicly-owned hospitals and other health
care facilities adequately and efficiently;
and
"(3) That to enable such publiclyowned hospitals and other health care
facilities
to
continue
to
operate
adequately and efficiently, it is necessary
that the entities and agencies operating
them have significantly greater powers with
respect to health care facilities than now
vested in various public hospital or
health-care authorities and corporations
and the ability to provide a corporate
structure somewhat more flexible than those
now provided for in existing laws relating
to the public hospital and health-care
authorities.
"It is therefore the intent of the Legislature
by the passage of this article to promote the public
health of the people of the state (1) by authorizing
the
several
counties,
municipalities,
and
educational institutions in the state effectively to
form public corporations whose corporate purpose
shall be to acquire, own and operate health care
facilities, and (2) by permitting, with the consent
of the counties or municipalities (or both)
authorizing
their
formation,
existing
public
hospital corporations to reincorporate hereunder. To
that end, this article invests each public
corporation so organized or reincorporated hereunder
with all powers that may be necessary to enable it
to accomplish its corporate purposes and shall be
liberally construed in conformity with said intent."
A 2003 amendment to the HCA Act added the language
"educational
institutions"
to
83
allow
a
public
college
or
1090084
university established under the Alabama Constitution that
operates a school of medicine to establish a health-care
authority.
It should be noted that until 1975 city and county
hospitals, as well as the city or county that established
them, enjoyed almost absolute governmental immunity from civil
liability.
See Thompson v. Druid City Hosp. Bd., 279 Ala.
314, 184 So. 2d 825 (1966)(holding that a hospital board,
created by local law as an agency of the county and city to
construct and operate a public hospital mainly for charity,
was a public agency immune from liability for the negligence
of its officers and employees and that the procurement of
liability-insurance coverage by the board did not affect that
immunity); Clark v. Mobile Cnty. Hosp. Bd., 275 Ala. 26, 151
So. 2d 750 (1963)(holding that the county hospital board was
a public agency performing a governmental function and was
immune from suit by paying patient for injuries allegedly
suffered by him as a result of the negligence of agents,
servants, or employees of the board); Laney v. Jefferson
Cnty., 249 Ala. 612, 32 So. 2d 542 (1947)(holding that the
general provision that a county is a corporate body with power
84
1090084
to sue and be sued does not deprive a county of the immunity
from suit based on negligence so long it is engaged in
governmental functions); and Moore v. Walker Cnty., 236 Ala.
688, 185 So. 175 (1938)(holding that the act authorizing and
empowering a county to equip, own, and operate a hospital
nowhere makes the county subject to suit for any injuries
patients suffer by reason of the negligence of the officers,
agents,
or
servants
entrusted
with
the
operation
and
management of the hospital).
In 1975, this Court issued two opinions that abolished
the doctrine of governmental immunity for municipalities and
counties, including immunity for the public hospitals they
operate:
Jackson v. City of Florence, 294 Ala. 592, 320 So.
2d 68 (1975), and Lorence v. Hospital Board of Morgan County,
294 Ala. 614, 320 So. 2d 631 (1975).
In Jackson, Jackson sued
the City of Florence and several of its police officers
seeking damages based on injuries he alleged the city's
officers had negligently inflicted on him during and after his
arrest.
Jackson asked this Court to review its previous
interpretation of the statute now codified at § 11-47-190,
Ala. Code 1975.
This Court acknowledged that, based on the
85
1090084
plain language of the statute, the legislature had abrogated
tort immunity for municipalities to the extent that the
alleged
wrongful
acts
occurred
"through
the
neglect,
carelessness, or unskillfulness of ... some agent, officer or
employee of the municipality engaged in work therefor and
while acting in the line of his or her duty ...."
190.
The Jackson Court
legislature
to
enter
§ 11-47-
"recognize[d] the authority of the
the
entire
field,
and
further
recognize[d] its superior position to provide with proper
legislation
any
limitations
or
protections
necessary."
it
deem[ed]
294 Ala. at 600, 320 So. 2d at 75.
In Lorence, the issue of governmental immunity in the
context
of
a
county
hospital
was
presented.
The
Court
discussed not only Title 22, § 204(24), Code of Ala. 1940
(Recomp. 1958)(now § 22-21-77, Ala. Code 1975), which allowed
a county hospital board "to sue and be sued and to defend
suits against it," but also Title 12, §§
7, §
3 and 115, and Title
96, Code of Ala. 1940 (Recomp. 1958)(now § 11-1-2, § 11-
12-5, and § 6-5-20, Ala. Code 1975, respectively), which
permitted the county "to sue or be sued" and provided for a
claim procedure before bringing suit.
86
The Court stated,
1090084
however, that the issue of a county's general liability was
not before the Court and that what was before it was the
immunity of a county hospital board, and it held that because
the statute authorizing the creation of such boards expressly
provided for suits against them, county hospital boards no
longer had immunity from tort liability. In Cook v. County of
St. Clair, 384 So. 2d 1 (Ala. 1980),
the Court clarified the
implication in its holding in Lorence, holding that counties
and county commissioners are subject to suit in tort under §
11-1-2.
It is clear that health-care authorities created by a
county or city no longer have State immunity and are
to the $100,000 statutory damages cap of § 11-93-2.
subject
However,
whether a health-care authority created by a State educational
institution is entitled to State immunity is a question of
first impression.
In
the
present
case,
the
Board
of
Trustees
of
the
University of Alabama ("the Board") created a health-care
authority -- the Authority. In accordance with the 2003
amendment to the HCA Act, the Board adopted a resolution
creating a health-care authority.
87
Section 22-21-312, Ala.
1090084
Code
1975,
setting
out
the
legislature's
intentions
in
creating the HCA Act, provides that the purpose of the HCA Act
is to "promote the public health of the people of the state
... by authorizing ... educational institutions in the state
effectively
to
form
public
corporations
whose
corporate
purpose shall be to acquire, own and operate health care
facilities."
The
HCA
Act
defines
an
"authority"
as
a
"public
corporation organized, and any public hospital corporation
reincorporated, pursuant to the provisions hereof."
311(a)(2), Ala. Code 1975.
§ 22-21-
The Board also entered into an
affiliation agreement with Baptist Health, pursuant to which
Baptist
Health's
assets
would
be
transferred
to
the
Authority. The certificate of incorporation for the Authority
was filed in the Tuscaloosa County Probate Court and provided,
among
other
things,
that,
subject
to
the
affiliation
agreement, the Authority shall have and may exercise all the
powers and authority set out in the HCA Act.
Kay
E. Davis,
the
plaintiff
below,
argues
that
the
Authority is not a validly created health-care authority
because, she argues, the HCA Act does not authorize the
88
1090084
Authority to acquire private hospitals, and, therefore, she
argues, the affiliation agreement between the Authority and
Baptist Health violates the HCA Act.
Section 22-21-312, Ala. Code 1975, authorizes certain
educational institutions "to form public corporations whose
corporate purpose shall be to acquire, own and operate health
care facilities."
Section 22-21-311(a)(14), Ala. Code 1975,
defines "health care facilities" as:
"Health care facilities. Generally, any one or more
buildings or facilities which serve to promote the
public health, either by providing places or
facilities for the diagnosis, treatment, care, cure
or convalescence of sick, injured, physically
disabled or handicapped, mentally ill, retarded or
disturbed persons, or for the prevention of sickness
and disease, or for the care, treatment and
rehabilitation of alcoholics, or for the care of
elderly persons, or for research with respect to any
of the foregoing, including, without limiting the
generality of the foregoing:
"a. Public hospitals of all types,
public clinics, sanitoria, public health
centers
and
related
public
health
facilities, such as medical or dental
facilities,
laboratories,
out-patient
departments,
educational
facilities,
nurses'
homes
and
nurses'
training
facilities, dormitories or residences for
hospital personnel or students, other
employee-related facilities, and central
service facilities operated in connection
with public hospitals and other facilities
(such as, for example, gift and flower
89
1090084
shops, cafe and cafeteria facilities and
the like) ancillary to public hospitals;
"b. Retirement homes, nursing homes,
convalescent homes, apartment buildings,
dormitory
or
domiciliary
facilities,
residences or special care facilities for
the housing and care of elderly persons or
other persons requiring special care;
"c. Appurtenant buildings and other
facilities:
"1. To provide offices for
persons engaged in the diagnosis,
treatment, care, or cure of
diseased,
sick,
or
injured
persons,
or
in
preventive
medicine, or in the practice of
dentistry; or
"2. To house or service
equipment used for the diagnosis,
treatment,
care
or
cure
of
diseased,
sick,
or
injured
persons,
or
in
preventive
medicine, or in the practice of
dentistry, or the records of such
diagnosis, treatment, care, cure
or practice or research with
respect to any of the foregoing;
"d. Parking areas, parking decks,
facilities,
buildings
and
structures
appurtenant to any of the foregoing;
"e. Ambulance, helicopter, and other
similar facilities and services for the
transportation of sick or injured persons;
and
90
1090084
"f. Machinery, equipment, furniture,
and fixtures useful or desirable in the
operation of any of the foregoing."
The definition of health-care facilities in the HCA Act
specifically includes public hospitals and then lists several
types of public hospitals "without limiting the generality" of
the preceding definition of health-care facilities.
The
omission of "private" hospital from the definition does not
mean
that
the
legislature
intended
that
health-care
authorities could purchase only public hospitals.
I agree
with the reasoning of the United States Court of Appeals for
the Eleventh Circuit in Askew v. DCH Regional Health Care
Authority, 995 F.2d 1033 (11th Cir. 1993), regarding the
health-care authority's purchase of a private hospital.
In
Askew, the plaintiffs brought an antitrust action against a
health-care
authority
to
prevent
the
authority
from
completing its acquisition of a private hospital in the same
region.
The
Eleventh
Circuit
held
that
the
health-care
authority qualified as a "political subdivision of the state"
for the purposes of antitrust immunity.
The court went on to
address the plaintiffs' argument that a health-care authority
could not acquire a private hospital because, they argued, a
91
1090084
health-care facility under the definition in § 22-21-311 of
the HCA Act means a "publicly owned" hospital as opposed to a
"privately owned" hospital:
"Plaintiffs' argument is inconsistent with a
common sense reading of the statute. The legislature
clearly stated that, in its view, publicly-owned
hospitals played a very significant role in
providing health care to the poor. By establishing
public health care authorities, it sought to enhance
the amount and quality of service for Alabama's
poor. If DCH could only purchase other publiclyowned hospitals, the overall number of publiclyowned facilities would not increase and service to
the disadvantaged would remain the same. To the
contrary,
by
purchasing
[a
privately
owned
hospital], DCH has increased the number of publiclyowned hospitals in the Tuscaloosa area, has expanded
its ability to serve indigent care needs in the
region, and has enhanced its ability to provide
indigent and reduced-rate care at its existing
facilities. This is entirely consistent with what
the Alabama legislature authorized DCH to do."
995 F.2d at 1040.
Davis asserts that the affiliation agreement between the
Board and Baptist Health provides that upon termination of the
agreement the assets of the Authority will be transferred to
Baptist Health or its designee.
Davis argues that this
provision of the affiliation agreement conflicts with § 22-21339, Ala. Code 1975, which provides that upon
dissolution of
a health-care authority formed pursuant to the HCA Act the
92
1090084
assets
revert
to
the
local
governmental
entity
or
educational institution that created the authority.
the
Davis
also contends that the specific provision in the Authority's
articles of incorporation that provides that the Authority is
obligated under the affiliation agreement to reconvey assets
to Baptist Health likewise violates § 22-21-339.
Section
22-21-339
prescribes
the
manner
in
which
a
health-care authority formed under the HCA Act is dissolved.
Section 22-21-339 provides:
"At any time when the authority does not have
any securities outstanding and when there shall be
no other obligations assumed by the authority that
are then outstanding, the board may adopt a
resolution ... declaring that the authority shall be
dissolved. ... [I]n the event that it owns any
assets or property at the time of the dissolution,
the title to its assets and property ... shall ...
vest in one or more counties, municipalities, or
educational
institutions
in
such
manner
and
interests as may be provided in the ... certificate
of incorporation."
The affiliation agreement between the Board and Baptist
Health accomplishes the purpose of the management agreement
between Baptist Health and University of Alabama at Birmingham
Health
System
("UABHS"),
with
the
stated
goal
of
"(i)
providing community-based health care in the Montgomery area;
(ii) promoting efficiency and quality in the delivery of
93
1090084
health care services to the people of the state of Alabama;
and (iii) supporting the academic and research mission of the
[Board and UABHS] with respect to health care services and
science of medicine."
In the affiliation agreement, the
parties expressly recognize that the Board has the power under
the HCA Act to organize a health-care authority and that the
authority so created would take possession of and operate
Baptist Health's assets during the term of the affiliation
agreement.
By the separate act of creating a health-care authority,
the Board formed a public corporation under the HCA Act,
providing financial benefits and other powers, such as eminent
domain and an exemption from certain taxation. Section 22-21318, Ala. Code 1975, provides, in pertinent part:
"(a) In addition to all other powers granted
elsewhere in this article, and subject to the
express
provisions
of
its
certificate
of
incorporation, an authority shall have the following
powers, together with all powers incidental thereto
or necessary to the discharge thereof in corporate
form:
"....
"(5)
To
acquire,
construct,
reconstruct, equip, enlarge, expand, alter,
repair, improve, maintain, equip, furnish
and operate health care facilities at such
94
1090084
place or places, within and without the
boundaries of its authorizing subdivisions
and within and without the state, as it
considers necessary or advisable;
"....
"(7) To receive, acquire, take and
hold (whether by purchase, gift, transfer,
foreclosure, lease, devise, option or
otherwise) real and personal property of
every description, or any interest therein,
and to manage, improve and dispose of the
same by any form of legal conveyance or
transfer; provided however, that the
authority shall not, without the prior
approval of the governing body of each
authorizing subdivision, have the power to
dispose of (i) substantially all its
assets, or (ii) any health care facilities
the disposition of which would materially
and significantly reduce or impair the
level of hospital or health care services
rendered by the authority; and provided
further, that the foregoing proviso shall
not be construed to require the prior
approval of any such governing body for the
mortgage or pledge of all or substantially
all its assets or of any of its health care
facilities, for the foreclosure of any such
mortgage or pledge or for any sale or other
disposition thereunder;
"....
"(18) To receive and accept from any
source aid or contributions in the form of
money, property, labor or other things of
value, to be held, used and applied to
carry out the purposes of this article,
subject to any lawful condition upon which
any such aid or contributions may be given
95
1090084
or made;
"....
"(23) To assume any obligations of any
entity that conveys and transfers to the
authority any health care facilities or
other property, or interest therein,
provided that such obligations appertain to
the health care facilities, property or
interest so conveyed and transferred to the
authority."
The terms of the affiliation agreement between Baptist
Health and the Board comply with the powers granted a healthcare authority to transfer property as contemplated by § 2221-318.
If the Authority has no outstanding securities or
obligations and the Authority's board elects to dissolve the
Authority, under § 22-21-339 the Authority's assets, if any,
will
be
transferred
to
the
Board.
In
contrast
to
a
dissolution, the affiliation agreement between Baptist Health
and the Board addresses the transfer of property in the event
of the termination of the affiliation agreement.
It does not
address the dissolution of the Authority; thus, nothing in the
affiliation agreement contradicts the provisions of § 22-21339.
Section 22-21-339 contemplates that the Authority might
not own assets at the time of dissolution, and nothing in the
HCA Act requires that the Authority own assets before it can
96
1090084
be dissolved. There is a distinction between the disposition
of assets upon a dissolution of the Authority under § 22-21339 and a termination of the affiliation agreement between
Baptist Health and the Board, where the affiliation agreement
states that the Board must return assets to Baptist Health
upon the termination of the agreement.
Davis also argues that the Authority does not meet this
Court's test for determining whether an entity is entitled to
sovereign immunity.
In Ex parte Greater Mobile-Washington
County Mental Health-Mental Retardation Board, 940 So. 2d 990
(Ala. 2006), a resident at a group home was killed in an
accident involving a van operated by the county mental-health
board.
The parents of the resident sued the board and the
manager of the group home. The defendants moved for a summary
judgment on the basis of various types of immunity, the board
principally relying on its claim that it was entitled to
sovereign immunity as an agency of the State.
This Court
reviewed caselaw relating to the criteria for determining
whether a particular entity qualifies as a State agency for
purposes of § 14, Ala. Const. 1901, and concluded that the
board had not shown that it was qualified as a State agency.
97
1090084
Specifically, this Court analyzed the three-factor test set
out in Staudt, supra: (1) the character of the power delegated
to the body; (2) the relation of the body to the State; and
(3) the nature of the body's function. Some attributes of the
board
and
some
aspects
of
its
relation
with
suggested that the board was a State agency.
caring
for
citizens
suffering
from
mental
the
State
For example,
illness
is
a
governmental function, citing White v. Alabama Insane Hosp.,
138
Ala.
479,
35
So.
454
(1903).
Further,
this
Court
recognized that the board had the power of eminent domain and
that its property, income, and activities were exempt from
taxation.
However, certain elements favored characterizing
the board as an entity separate from the State.
Although the
State exercised a certain amount of oversight over the board,
the oversight was minimal.
The board's regulations provided
that the "facilities and programs" of the board were not under
the
direction
or
control
of
any
person
other
than
its
directors so long as those facilities and programs complied
with the minimum standards adopted by the Board of Health and
the Department of Mental Health as set out in § 22-51-12, Ala.
Code 1975.
Also, the board was authorized to own all its
98
1090084
property in its own name and to sell or to otherwise dispose
of it.
Ownership of the property in the name of the entity
has been considered indicative of its independent status,
particularly when the entity was authorized to sell or dispose
of the property independent of the State. Also, the board was
authorized to borrow money by issuing bonds and notes and to
secure that indebtedness by a pledge of its revenues, so that
its
indebtedness
was
not
an
obligation
of
the
State.
Ultimately, this Court concluded that the board was not
entitled to sovereign immunity.
The present case is distinguishable from Greater MobileWashington County Mental Health Board because the HCA Act
specifically states that a health-care authority established
thereunder "acts as an agency or instrumentality of its
authorizing subdivisions and as a political subdivision of the
state." § 22-21-318(c)(2), Ala. Code 1975. In Greater MobileWashington
County
Mental
Health
Board,
the
enabling
legislation allowed for three or more persons to form a public
corporation to contract with the State Board of Mental Health
and
Mental
Retardation
in
constructing
and
operating
facilities and in carrying out programs in particular areas of
99
1090084
the state.
Nothing in that enabling legislation provided
that the public corporation would be an arm or instrumentality
of the Department of Mental Health.
It is the clear language
of the enabling provisions of the HCA Act that a health-care
authority created under the HCA Act acts as an agency or
instrumentality
of
its
authorizing
subdivision
and
as
a
political subdivision of the State.
Pursuant to § 22-21-318(c)(2), the Authority "acts as an
agency or instrumentality of its authorizing subdivisions and
as a political subdivision of the state." See Staudt, 388 So.
2d at 993 (addressing the factor "the relation of the body to
the state"); see also Tennessee Valley Printing Co. v. Health
Care
Auth.
of
2010)(holding
Lauderdale
that
a
Cnty.,
health-care
61
So.
3d
authority
1027
is
a
(Ala.
local
governmental entity for the purposes of the Open Records Act).
The incorporating entity for the Authority is the Board, which
has State immunity.
See Cox v. Board of Trs. of the Univ. of
Alabama, 161 Ala. 639, 49 So. 814 (1909)(holding that public
institutions created by the State purely for charitable or
educational purposes are a part of the State and are not
100
1090084
subject to be sued, because § 14 prohibits the State from
being a defendant in any court of law or equity).
The HCA Act "shall not be construed as a restriction or
limitation upon any power, right or remedy which any county,
municipality, educational institution, or public hospital
corporation now in existence or hereafter formed may have in
the absence of this article." § 22-21-343, Ala. Code 1975.
Article I, § 14, Ala. Const. 1901, provides "[t]hat the State
of Alabama shall never be made a defendant in any court of law
or equity." "The manifest purpose of section 14 ... was to
prohibit the Legislature from passing any act authorizing the
State to be sued in any court, and clearly any authorization
to
that
end
constitutional
would
be
void
provision."
because
Alabama
in
violation
Girls'
Reynolds, 143 Ala. at 585, 42 So. at 116.
Indus.
of
Sch.
the
v.
I recognize that §
22-21-318(a)(2), Ala. Code 1975, provides that an authority
may sue or be sued in its own name.
It does not matter that
§ 22-21-318 allows an authority created by an educational
institution to incorporate and to sue in its corporate name,
because the plenary authority of the legislature to enact laws
is limited by our Constitution. "The legislature may not deny
101
1090084
immunity from suit when that immunity is constitutionally
granted."
Staudt, 388 So. 2d at 992.
This Court has held
that the "constitutionally guaranteed principle of sovereign
immunity, acting as a jurisdictional bar, precludes a court
from
exercising
subject-matter
jurisdiction.
Without
jurisdiction, a court has no power to act and must dismiss the
action."
Alabama State Docks Terminal Ry. v. Lyles, 797 So.
2d 432, 435 (Ala. 2001).
I disagree with the majority's position that a healthcare
authority
is
"an
agency
or
instrumentality
of
its
authorizing subdivision[] and ... a political subdivision of
the State" only in the context of anticompetitive activity.
___ So. 3d at ___.
Section 22-21-318 sets out the powers of
a health-care authority.
The legislature clearly recognizes
that a health-care authority, in exercising the broad powers
granted it, may engage in anticompetitive activity.
However,
the legislature chose to allow State universities operating
medical schools to create health-care authorities.
The Board
is the authorizing subdivision of the Authority and, as such,
is an agent of the State.
The legislature, in allowing a
State agency to create a health-care authority cannot then
102
1090084
limit
the
State
agency's
immunity
to
anticompetitive
activity.
Accordingly, I believe the circuit court did not have
subject-matter
jurisdiction
over
this
action;
thus,
judgment is void, and the appeal should be dismissed.
the
See
Alabama Dep't of Corr. v. Montgomery County Comm'n, 11 So. 3d
189 (Ala. 2008)(holding that because of the State's immunity
from suit, a complaint filed solely against the State or one
of its agencies is a nullity and void ab initio, and any
action taken by a court without subject-matter jurisdiction –other than dismissing the action -- is void).
Therefore, I
must dissent.
I also write to address Davis's assertion on rehearing
that allowing the Authority immunity will automatically lead
to immunity for physicians and employees.
example,
I
note
that
UAB
Hospital
extensions of the State, are immune.
I disagree.
and
the
Board,
For
as
See Liberty National,
supra (noting the correct designation for the hospital and the
Board
and
University
recognizing
of
Alabama
their
at
immunity).
Birmingham
Foundation, P.C., is not immune.
103
However,
Health
the
Services
See Liberty National, supra
1090084
(describing
the
Foundation
as
a
nonprofit,
independent
professional corporation established by the faculty of the
medical school that in part attends to billing services for
those physicians and, as such, is not protected by immunity).
Physicians working for the Foundation are not immune from
suit.
Rivard v. University of Alabama Health Servs. Found.,
P.C., 835 So. 2d 987 (Ala. 2002)(reversing a summary judgment
for UAHSF and one of its physicians in a medical-malpractice
case in which the plaintiff was treated at UAB Hospital);
Waites v. University of Alabama Health Servs. Found., P.C.,
638
So.
2d
838
(Ala.
1994)(noting
the
dismissal
of
UAB
Hospital as a defendant on the basis of immunity but affirming
a summary judgment in favor of the UAHSF, physicians, and
residents
because
the
plaintiff
testimony of malpractice).
failed
to
rebut
expert
I recognize that a State official
or agent may be entitled to State-agent immunity as to actions
asserted against him or her in his or her individual capacity.
In Ex parte Cranman, 792 So. 2d 392 (Ala. 2000), a medicalmalpractice case against a resident physician employed by the
University of Alabama's health center, this Court traced the
evolution of State-agent immunity, restated the law of State-
104
1090084
agent immunity, and suggested the formulation of a new test
for determining when State employees sued in their individual
capacities would be entitled to the benefits of State-agent
immunity.
In Cranman, the resident physicians were not
entitled to State-agent immunity.
See also Hauseman v.
University of Alabama Health Servs. Found., P.C., 793 So. 2d
730 (Ala. 2000)(addressing State-agent immunity under Cranman
and holding that physician and resident physicians were not
entitled to State-agent immunity); Wimpee v. Stella, 791 So.
2d 915 (Ala. 2000)(holding that resident physicians employed
by the University of South Alabama Hospital were not entitled
to State-agent immunity).
In the present case, Davis also
sued two physicians and several fictitiously named parties.
Davis did not oppose the properly supported summary-judgment
motions filed by the physicians, and it does not appear that
any
parties
were
substituted
for
the
fictitiously
named
parties.
Last, I note that there is an obvious legislative remedy
to Davis's assertion that the Authority's immunity will lead
to private hospitals' placing their assets in a health-care
authority
established
by
a
State
105
university
operating
a
1090084
medical school to secure State immunity, which is to repeal
the 2003 amendment to the HCA Act.
I also note that this
Court in Hutchinson v. Board of Trustees of University of
Alabama,
288
Ala.
20,
256
So.
2d
281
(1971),
addressed
criticisms of sovereign immunity and the options advanced in
those
criticisms.
The
Court
acknowledged
that
some
jurisdictions have judicially abandoned sovereign immunity in
cases involving hospitals connected to a State university, but
recognized that in Alabama a constitutional amendment would be
required to permit legislative implementation of a tort-claims
system of compensation at the State level.
The Court also
recognized that, in the early years of our State,
"our rule of state governmental responsibility was
directly opposite from what it is today. Our first
Constitution provided:
"'The general assembly shall direct,
by law, in what manner, and in what courts,
suits may be brought against the State.'
Ala. Const. Art. 6 § 9 (1819)."
288 Ala. at 23, 256 So. 2d at 282-83.
Accordingly, I respectfully dissent.
Stuart, J., concurs.
106
1090084
SHAW, Justice (dissenting).
In enacting the Health Care Authorities Act of 1982,
§ 22-21-310 et seq., Ala. Code 1975 ("the HCA Act"), the
legislature recognized that publically owned hospitals, and
not investor-owned or community-nonprofit hospitals, furnish
a
substantial
Alabama.
certain
part
of
indigent
health-care
services
in
The HCA Act thus established a structure wherein
governmental
entities
in
the
State
could
create
organizations--health-care authorities--to operate health-care
facilities such as hospitals.
In this case, the Board of
Trustees of the University of Alabama ("the Board") organized
such an authority ("the Authority").
As noted in the main
opinion, the Authority is controlled by a board of directors,
a majority of which are appointed by the Board. The Authority
owns and operates several hospitals, provides community-based
health-care services in the Montgomery area, and supports the
academic and research mission of the Board.
The law is clear that the Board is an arm of the State;
under the Alabama Constitution, it cannot be sued.
Const. 1901, Art. I, § 14.
Ala.
The question that arises is
107
1090084
whether the Authority shares that protection from suit.
I
believe that it does.
In
Ex
parte
Greater
Mobile-Washington
County
Mental
Health-Mental Retardation Board, Inc., 940 So. 2d 990 (Ala.
2006), which is discussed extensively in the main opinion and
in Justice Bolin's dissent, this Court applied the three-part
test found in Armory Commission of Alabama v. Staudt, 388 So.
2d 991 (Ala. 1980), to determine whether a public corporation
qualified as the State of Alabama for purposes of § 14.
I see
no need to repeat the extensive discussions of Greater MobileWashington County Mental Health Board found in those writings;
instead,
I
will
distinguishable.
note
that
I
believe
that
the
case
is
The public corporation in that case acted
autonomously with minimal oversight and assisted State and
local agencies through contracts.
940 So. 2d at 1004.
Here,
the Authority is controlled by a board of directors dominated
by the Board's nominees, and it was created as a means through
which the Board's expertise and resources could be used to
rescue the hospitals the Authority now owns and operates from
the financial difficulties of their previous owner, Baptist
Health.
The Authority operates to serve a public purpose--to
108
1090084
provide health care--and to support the Board's academic and
research missions and the other entities the Board controls.
Unlike the isolated or autonomous entity in Greater MobileWashington County Mental Health Board, I cannot separate the
purpose, role, and existence of the Authority from that of its
creator, the Board.
Furthermore,
Ala.
Code
1975,
§
22-21-318(c)(2),
explicitly states that the Authority "acts as an agency or
instrumentality of its authorizing subdivision[] and as a
political subdivision of the state."
This means that the
Authority acts as "a political subdivision of the state" and
an "agency or instrumentality" of the Board, its "authorizing
subdivision," which, under the constitution, "shall never be
made a defendant in any court of law or equity."
Ala. Const.
1901, Art. I, § 14.
If this is true, as the legislature
states,
difficult
I
find
it
to
take
the
internally
inconsistent view that the Authority is to be considered "the
State" when competing in the health-care marketplace but not
considered
"the
State"
when
patients.
Stuart, J., concurs.
109
dispensing
health
care
to
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