Court of Appeals rules that Valley Medical Center, UW Alliance is legal

The Valley Medical Center Alliance with UW Medicine was affirmed as legal this week in a ruling from the Court of Appeals of Washington State.

In the ruling, the Court of Appeals found that the hospital district does have a right under state law to enter into a joint operating agreement. The decision marks another victory for the hospital and UW, following a decision last July by the Supreme Court not to review a King County Superior Court decision from 2012 that dismissed the challenge to the validity of the district.

"This is a significant win and it validates the strategy of expanding the opportunities for good health care to a wider community," said Lou Peterson of Hillis Clark Martin & Peterson, the law firm representing the hospital and university. The Supreme Court's decision not to grant direct review of case put it back into the Court of Appeals level.

"Both King County Superior Court and the Court of Appeals have agreed with UW Medicine," said Peterson. The case was brought forth by the elected commissioners of Public Hospital District No. 1 after the election of a new majority of commissioners who disagreed with the May 2011 decision to form the alliance with UW, designed to expand the reach of the publicly owned hospital.

But Phil Talmadge of Talmadge Fitpatrick, the firm representing the commissioners, called the decision "fundamentally flawed" and said he believes the courts did not fully understand the scope of agreement and its effect on the ability of the elected commissioners to run the district in a way that represents the will of the voters.

"The court simply didn't understand," Talmadge said. "They didn't understand how the  Alliance agreement tied the hands of the commissioners."

According to Talmadge, because the agreement gives the right set the budget to UW Medicine's Board of Trustees, a 13-person board made up of the five elected hospital commissioners and eight non-elected members, the Board has the ability to set tax rates that the commissioners must then agree to pass on. Talmadge called that "fundamentally undemocractic."

"When folks go to the ballot box to vote for district commissioners they think they're electing the people who will run the hospital district," he said.

But according to the ruling, RCW 70.44.060 allows a public district, such as the hospital, to "enter into any contract with the UNited States government, or any state municipality, or other hospital district, or any of those governing bodies, for carrying out any of the powers authorized by this chapter."

An additional provision authorizes public hospital districts to contract with other entities to provide healthcare services.The commissioners had argued that because the agreement delegates the commissioners' "core legislative powers," such as the power to establish a budget, levy taxes or issue public debt, the agreement should be invalidated.

The court disagreed.

"We conclude that this statutorily authorized agreement is not an unlawful delegation of the district's powers," the decision reads.Talmadge called that reading of the law a "very superficial analysis."

The commissioners have 30 days to appeal the decision to the Supreme Court, which will then decide if it wants to hear the case.Talmadge said no decision on appeal has been made by the commissioners, though he said he personally would like the Supreme Court to hear and rule on the matter.


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