Saturday, May 3, 2008

Judge to decide soon on county hospital contract

Julia M. Dendinger News-Bulletin Staff Writer; jdendinger@news-bulletin.com

A lawsuit filed by nine county residents nearly a year ago took another step towards possible resolution Tuesday morning. District Judge Camille Martinez-Olguin heard arguments from attorneys on whether or not a proposed contract between the county and Valencia Health Commons (VHC) for the transference of mill levy funds for a proposed hospital was proper.

The judge listened to nearly an hour of arguments, and after a few questions, said she would issue a written ruling on the matter. As of News-Bulletin press time, Judge Martinez-Olguin had not issued her ruling.

At its April 16 meeting, the county commission voted 3-2 to approve the content of the contract and put it before Judge Martinez-Olguin. The commission did not sign the agreement due a temporary restraining order.

The hearing on Tuesday began with James Lawrence Sanchez, the attorney for the plaintiffs, asking that the court enjoin the county from entering into the contract with VHC and to permanently enjoin the county from entering into any contract with an entity that did not have existing facilities.

"This contract is not with an existing hospital," Sanchez said. "This is an attempt to escrow the mill levy funds. This is for a hospital that may be built in the future; we can't predict the future."

Sanchez went on to refer to the contract as a "sham contract," saying it was akin to him putting out a sign saying he was running a hospital. "I don't have a hospital and neither does the entity the proposed contract is with," he said.

He argued that the hospital funding act stipulated that a county can only enter into a contract with an entity that has physical facilities, equipment and personnel required by the New Mexico Environment Department.

"The $22 million from the mill levy is not to be dealt with lightly," Sanchez said. "There is no facility, no equipment, no personnel. They are hoping to have it in three years."

The proposed contract says that VHC will receive a certificate of substantial completion of the hospital project within 36 months of the effective date of the contract and will begin providing services to patients within six months of receipt of that certificate.

Sanchez also argued that the contract would bind the use of the mill levy for its entire eight-year term, thus binding the use of the money for future commissions. "You cannot bind future commissions under New Mexico law," he said.

He also pointed to the letter from Stern Brothers promising up to $50 million in funding for the project. "Before they will loan the money (to VHC), the county must enter into agreement to tie up the mill levy," Sanchez said. "This is a clever and elaborate disguise to use the mill levy funds to build a hospital. They need all eight years of the mill levy.

"If they don't sign the contract, there is no funding from Stern Brothers. And as it has already been determined, the mill levy funds can't be used for construction."

Sanchez said under the hospital funding act, the county could send the mill levy money to Presbyterian Hospital in Albuquerque. "It would not be wise, but the act does not limit it to a facility in the county," he said. "The county could legally give that money to a facility that provides services to the residents of the county, not some phantom hospital."

Sanchez closed by again asking the court to enjoin the county from entering into the proposed contract or any other contract with a facility that does not exist.

Representing the county commission in the matter was Art Melendres of Modrell Sperling, an Albuquerque law firm.

He began his arguments with a brief recap of what the county commission had already done in the hospital matter. "The need for additional healthcare facilities was clear," Melendres said. "They held an election, and the citizens voted almost three to one that they were willing to tax themselves to operate, maintain and provide a hospital."

Melendres went on to explain that it was the county's hope to use the show of local support to leverage substantial legislative appropriations for the construction of the hospital.

"That didn't happen," he said. "The commission took reasonable steps to demonstrate its support. Now they are in a conundrum. The mill levy has been imposed and is being collected. They began with a thorough study of what was needed, the feasibility of the project, and when that was accomplished, they did a detailed study on the site."

The attorney suggested that the motivation behind the lawsuit filed last June was because some people did not like the site selected for the hospital.

Melendres pointed out that the county hired a bond expert, Dwayne Brown, also of Modrell Sperling, to determine a funding mechanism for the project. "He (Brown) suggested seeking outside help for the funding," he said. "These are not general obligation bonds or county money for the construction. This is money from the private sector."

He called the use of a private, non-profit corporation, such as VHC "a very common mechanism" for funding projects such as the proposed hospital. "They are prepared to move ahead with the funding, operating and constructing of a hospital," Melendres said. "They want to make sure the mill levy is still available; that there is still support from the citizens.

"And if you will recall, it has been said many times the mill levy money is not going to be used for construction; only the operation and maintenance of the hospital. And to that end, the majority of the commission have asked the judge to review the proposed contract."

Melendres then turned to the words defined in the hospital funding act. "The word hospital and existing hospital are not defined," he said. "What is defined is a county hospital." He went on to say that the act allows for the payment of the mill levy funds by the county to a hospital and "to make available" those funds.

"That is what the county commission has done — make available the funding to such an entity, and then they will enter into an agreement to use the mill levy for operation and maintenance," he said.

Melendres said that the county has protected the use of the money and limited it to operation and maintenance by first collecting the funds and placing them into a separate account.

"They have said, 'you, VCH must fund and construct, at your own expense, a hospital which we will give you three years to build, and once that hospital is operational we will begin transferring funds'," he said.

Sanchez countered that the language in the hospital funding act was in the present. "It doesn't say future," he said. "The language is all active and present tense. If a hospital exists in three years, that commission can sign the contract."

Melendres said that the act specifically says that the purpose of the act is to provide flexibility in the creation of and operation and maintenance of hospital facilities. "The county has set up a flexible mechanism," he said. "If at the end of three years the hospital is not built, the county commission can say it's not going to happen, cancel the levy and try again another day.

"It would be a shame that all that has been done in good faith was thrown away. The purpose of the act is to be flexible. Whether the act was written all active language, not in the past, not in the future, that is how it ends up in your lap."

E-mail this story Printer-friendly version