Bar Journal - March 1, 2003
By: Attorney Michael S. DeLucia
This issue of Bar Journal is devoted entirely to developments in the healthcare sector. In the four years since the last "Bar Journal" publication on healthcare, there have been many important legal and public policy developments in this sector. It remains among the most complex of topics, especially given the interplay of institutions and developments on the federal, state and local levels.
Federal Developments. The Journal begins with the article by Byrne Decker, who examines Rush Prudential HMO, Inc. v. Moran, the most recent United States Supreme Court case on health care preemption and ERISA.1 This opinion was crafted by Justice David Souter and was a 5-4 opinion of the Court. Byrne’s article raises interesting questions about the impact of the Rush opinion on certain New Hampshire statutes in the healthcare arena. It is certain to provoke discussion on the issue. The second article by Paul Remus and Renelle L’Huillier addresses the new Federal HIPAA regulations2 and the impact that the privacy requirements will have on attorneys in this state.
Elizabeth L. Hodges and Peter J. Gardner have cooperated to produce two articles on the Human Genome Project, examining both the legal and ethical implications of this major development in human understanding. This development in scientific knowledge is raising legal and public policy issues that have rarely been confronted.
New Hampshire Developments. The next two articles address two mergers or terminations of healthcare entities that were completed in 2002 under New Hampshire RSA 7:19-b. This statute was a major piece of legislation, giving a role in healthcare mergers to the communities impacted by the merger or termination. The statute also codified the Attorney General’s authority to protect healthcare charitable assets, setting forth clear fiduciary standards to be met and a clear road-map or process to be followed.
The article by Ovide Lamontagne and Walter Maroney involves the merger of two nonprofit hospitals: the Franklin Regional Hospital and Lakes Region General Hospital. Attorneys Lamontagne and Maroney represented the two entities, guiding the respective governing boards through the statutory process. The transaction centered upon the desire of the governing board of Franklin Regional Hospital and the Franklin community to preserve its uniqueness while, at the same time, becoming part of a larger affiliation for compelling economic reasons.
The article by Attorney Todd Fahey involves the termination of The Gale Home, a charitable, nonprofit nursing home established in Manchester in the 1890’s and devoted to "aged and destitute females" in Manchester. The termination of this nursing home involved a cy pres petition to the Probate Court in Hillsborough County; the establishment of a new foundation devoted to elderly and destitute women; the sale of the property and the conveyance of the nursing home beds. Attorney Fahey, who handled this unique transaction from the boardroom to the courtroom, describes the process.
The New Health Foundations. The next two articles examine the two major New Hampshire foundations to come out of the mergers of the 1990’s. In 1997, Healthy New Hampshire Foundation was created with the termination of the Matthew Thornton HMO, a charitable entity. It was funded with $12,000,000 in proceeds; and those funds helped enable the CHIPS program (children’s insurance) to establish itself in this state. Sandi Van Scoyoc, the executive director, has provided the analysis in her article. In 1999, the second foundation, the Endowment for Health, was created from the sale of Blue Cross Blue Shield to Anthem Blue Cross with $87,000,000 in proceeds. The income from this foundation is being used to fund very targeted health initiatives throughout the state. Dr. James W. Squires, a former State Senator, physician, and creator of the original Mathew Thornton Health Plan in the 1970’s, has provided leadership to the Endowment – and authored the article on its development. The Endowment, through the leadership provided by Dr. Squires, Mary Kaplan and the Endowment’s governing board, has become the gold-standard in terms of good governance, ethical decision-making, and grant-making – and a model for other foundations.
Judge Raymond Cloutier, who handled the Optima transaction, the conversion of Blue Cross Blue Shield, and the termination of The Gale Home, has developed exceptional expertise in this area of the law. He balances an understanding of the business forces driving the transactions with the intricacies of trust law, tax law and the process of creating new foundations. The Blue Cross transaction supervised by Judge Cloutier involved the sale of the state’s major nonprofit HMO, the holding of nine separate public forums around the state, and the creation of this state’s most innovative healthcare foundation. As a result of Judge Cloutier’s approval, the Endowment for Health was created and was funded with the $87,000,000 in proceeds from that sale.
Community Initiatives. Finally, three articles involve developments in health issues on a community level. The first deals with child obesity in Manchester and a city-wide initiative to wrestle with the problem. The second deals with healthcare initiatives in the North Country (Berlin/Gorham) after the closing of the paper mills. The third involves the New Hampshire Hospital Association and its work on the healthcare safety net in this state.
Taken as a whole, these ten articles demonstrate how quickly the health care landscape in New Hampshire is changing. In time, it may be that the developments on the local, community level are as significant as the changes in Washington, D.C.
536 U.S. 355 (2002).
The Health Insurance Portability and Accountability Act of 1996 ("HIPAA").
Michael S. DeLucia is the Director of Charitable Trusts and Senior Attorney General at the New Hampshire Attorney General's Office, Concord, New Hampshire.