Government

Special Report: El Paso Children’s Hospital Argues It Is Not Accountable to El Paso

The El Paso Children’s Hospital is arguing that it is not subject to the Texas Public Information Act. El Paso Children’s Hospital is a 501(c)(3) nonprofit. As a nonprofit, it argues that it is not a “governmental body” subject to the Texas Public Information Act. However, we disagree. Here is why.

The Attorney General Opinion

The Texas Attorney General has determined that the Texas Public Information Act, § 552.003(1)(A)(xv) defines a “governmental body” as “the part, section, or portion of an organization, corporation, commission, committee, institution, or agency that spends or that is supported in whole or in part by public funds”.

Under the current version of the state statue, the only exceptions to § 552.003(1)(A)(xv) are the “the judiciary” (B) and an “economic development entity” (B)(ii).

As the children’s hospital is not part of the “judiciary” nor is it an “economic development entity,” the question then becomes is the children’s hospital “supported in whole or in part by public funds”?

The 2007 Bond Election

The building used by the El Paso Children’s Hospital was funded by a 2007 bond election approved by the El Paso taxpayers. Although the building built by the 2007 bond election is part of UMC, it was funded by bonds specifically designated for the children’s hospital.

The language of the bond stated that “proceeds from the sale of the Bonds will be for the following purposes, to wit: (i) to acquire, construct and/or equip a children’s hospital as part of said District’s hospital system, and acquire and necessary sites therefor (the ‘Project’), (ii) to pay capitalized interest on the Bonds, and (iii) to pay costs of issuance associated with the sale of the Bonds.”

The El Paso Children’s Hospital occupies and provides services from a taxpayer-funded building. However, is that enough to make it subject to open records?

Medicaid Funding

On December 15, 2018, the CEO Stout, CEO of El Paso Children’s Hospital explained the structure of the children’s hospital to radio listeners. Stout told the listeners that the “structure” of El Paso Children’s Hospital “is part of the County Hospital District.” [1]

The County Hospital District is the public entity that is the University Medical Center of El Paso (UMC). UMC is subject to the open records law.

Although Stout argued on the radio program that the children’s hospital does not receive “taxpayer” monies, she, nonetheless goes on to explain that “we have a large percent of the population here, within the region that receives Medicaid funding.” [1]

Managed Medicaid is funded by both federal and state taxes, i.e., the El Paso taxpayer.

We already know that the open records statue defines “public funds” as “funds of the state or of a governmental subdivision of the states.”

Medicaid funds are federal and state monies. The reader also knows that in El Paso “a large percent of the population here, within the region that receives Medicaid funding.”

However, Stout went on to state that without UMC’s money, the children’s hospital would be unable to pay its bills on a “timely” manner.

The UMC Line of Credit

Cindy Stout told radio listeners that in 2018, El Paso Children’s Hospital secured a line of credit from UMC.

“The line of credit that we have established with University Medical Center affords us the opportunity to ensure that we are paying everything on a timely manner.” [1]

This is important to note.

One of the two requirements that subjects a private entity to the Texas Public Information Act is whether they are dependent on government funds for their operations.

Stout told the radio listeners that the UMC line of credit allows the children’s hospital to pay its bills “on a timely basis.” UMC is funded by the El Paso taxpayers and is subject to open records requests.

From Stout’s public statements and from the children’s hospital tax returns we know that the children’s hospital relies on taxpayer funds in the form of UMC’s line of credit and from the payments it receives from Medicaid.

But is that enough to make the children’s hospital subject to open records requests? After all, if children’s is subject to the open records laws by virtue of receiving Medicaid funding wouldn’t that make any doctor that is paid with Medicaid monies subject to the Texas Public Information Act?

In some ways they already are in that part of the requirement to receive Medicaid funding is to file annual reports detailing what their expenses are to the federal government. However, the reports do not provide government transparency envisioned under the open records laws. The question then, is there more? Yes.

The governing body of the El Paso Children’s Hospital is subservient to UMC’s governing board.

The UMC Board Has Final Authority

After the children’s hospital emerged from bankruptcy, El Paso’s public hospital “UMC became the sole member of the Children’s Hospital as of January 2016” [2] That is the official position of UMC, that it is the sole owner of the El Paso Children’s Hospital.

However, the children’s hospital’s own Bylaws are even clearer.

Not only do the Bylaws clarify that UMC is the “sole owner” they also go on to state that the UMC Board has the authority to approve the children’s “annual operating and capital budgets,” but more importantly the final authority in the “selection and removal of the Hospital CEO.” [3]

This, among other powers exclusively reserved by UMC over the operations of the children’s hospital – a taxpayer funded entity.

Not only is the children’s hospital housed in a building paid for by the taxpayers of the community, receives taxpayer funds in the form of a UMC credit line and Medicaid payments, but the owner and final authority over the children’s hospital is UMC.

That brings us the question of whether a nonprofit can be subject to the Texas Public Information Act.

Are Nonprofits Subject to Open Records?

The El Paso Housing Finance Corporation “was created under the authority of Local Government Code chapter. 394, which authorizes local governments ‘to create and use public nonprofit corporations.’”

The Texas Attorney General concluded that the El Paso Housing Finance Corporation is subject to the TPIA because “all property owned by it, the income from the property, all bonds issued by it, the income from the bonds, and the transfer of the bonds” are exempt from taxes as “public property used for public purposes”. [4]

This is in line with the El Paso Children’s Hospital.

The Texas Attorney General also stated that, “private entities fall within the definition of ‘governmental body’ if two requirements are met.”

“The first requirement is whether the funds at issue are public.”

We believe that we have established that the children’s hospital was funded and is funded by public funds.

The other requirement is “if the funds at issue are public, the second requirement is whether the private entity is ‘supported’ by or spends those public funds.”

We know that Cindy Stout told radio listeners in 2018 that UMC has provided children’s a line of credit and that Medicaid payments are used by a “large percent” of the population.

The Texas Attorney General issued opinion GA-0280 on December 4, 2004. In that opinion, the Texas Attorney General concluded that the Border Health Institute (BHI) is a governmental body under the terms of the Texas Public Information Act. The Attorney General cited the reason for the determination because the BHI is “an organization… that spends or that is supported by public funds.” [5]

The BHI is not only a nonprofit, but it also provides “health care” and its board members are comprised of public institutions.

Because of the makeup of the governing board and because the BHI “may receive appropriated as well as federal funds,” the Attorney General concluded that the BHI “appears to be a governmental body for all purposes.” [6] Thus federal funds are considered public monies.

Other Texas Attorney General Opinions subject nonprofits to the Texas Public Information Act based on the use of public monies and public governing boards.

The Texas Guaranteed Student Loan Corporation argued that it was not subject to the Texas Public Information Act “because the source of the corporation’s initial appropriation was a federal grant to the Coordinating Board, Texas College and University System, these funds were not “public funds” as the term is defined in section 2(l)(F) of the Open Records Act.” [7]

The Attorney General concluded that the student loan nonprofit was subject to the open records laws even though its funding was from federal monies. The AG wrote, “the corporation was initially funded by an appropriation by the legislature from funds deposited in the state treasury. That the source of these funds was a federal grant is not determinative of whether the funds are within the definition of “public funds ” found in section 2(l)(F) of the Open Records Act. Federal funds deposited in the state treasury become state funds. Attorney General Opinions JM-118 (1983); C-530 (1965).”

Federal funds, according to the Texas Attorney General are public funds for the purposes of the Texas Public Information Act.

However, are Texas Attorney General opinions supported by the law?

The Texas Supreme Court

The Texas Supreme Court weighed in on the issue of a nonprofit being subject to the Texas Public Information Act in Greater Houston Partnership v. Ken Paxton and Jim Jenkins, No. 13-0745, argued on March 25, 2015.

In a divided decision, the Texas Supreme Court ruled that Greater Houston Partnership is not a governmental body because it “does not rely on its government contracts to sustain itself as a going concern.” The justices found that the chamber of commerce’ government funds “constitute a relatively miniscule portion” of its annual budget. Thus, according to the justices, the only way a private entity “can qualify as a ‘governmental body,’ then, is if it can be said to be ‘supported in whole or in part by public funds.’”

However, that is not the case with EPCH. It relies on public funds to operate, unlike the Greater Houston Partnership.

Therefore, in light of the Texas Supreme Court ruling and what we have outlined, we contend that the El Paso Children’s Hospital meets the threshold outlined by the Texas Supreme Court ruling by virtue of the revenues it generates from federal funds. This is in addition to the fact that El Paso Children’s Hospital is owned by a public entity, UMC, and operates out of a building funded by the 2007 Bond.

However, the El Paso Children’s Hospital continues to argue that it is not subject to the Texas Public Information Act.

Children’s Tells Us It Does Not Need To Comply With Our Open Records Requests

On April 19, 2021, we submitted a request to the El Paso Children’s Hospital requesting “any correspondence between Estela Casas, Executive Director of El Paso Children’s Hospital Foundation and Cindy Stout, CEO of El Paso Children’s Hospital between March 28, 2021 and April 1, 2021.” We submitted our request under the Texas Public Information Act via electronic mail.

On April 22, 2021, we received a response from El Paso Children’s Hospital via electronic mail advising us that the “El Paso Children’s Hospital is not a governmental body.” The EPCH response added, “as such, the Act does not apply to El Paso Children’s Hospital.”

We disagree but we are at an impasse. We do not have the authority to request an opinion from the Texas Attorney General to determine whether the El Paso Children’s Hospital must comply with our request. Only public officials have that authority.

However, it seems that in responding to our request, the El Paso Children’s Hospital missed a crucial step under the Texas Public Information Act.

El Paso Needs The Texas Attorney General To Make The Determination

The Texas Attorney General states that the extent to which “an entity is ‘supported’ by public funds…requires an analysis of the facts surrounding each entity,” adding that the “Attorney General’s opinion process is not conducive to the determination of questions of fact.”

To decide whether a nonprofit is subject to the open records law, the Texas Attorney General states that “such questions are properly addressed by the Attorney General under the PIA. When an entity that believes it is not a governmental body under the terms of the PIA receives a request for information, the entity should seek a ruling from the Attorney General’s Open Records Division as to whether and to what extent, if any, the entity is actually a ‘governmental body.’ An entity that requests such a ruling does not thereby admit that it is in fact a governmental body.” [emphasis ours] [8]

The children’s hospital is required under a Texas Attorney opinion to seek a determination of whether they must comply with an open records request. To our knowledge, it has not.

What We Did

We disagree with the El Paso Children’s Hospital’s stance that it is not subject to the Texas Public Information Act. We are unable to ask the Texas Attorney General for an opinion and therefore we sent a letter on Friday, April 26, 2021 asking the County Attorney’s office to request the opinion on behalf of the taxpayers of El Paso.

We also copied the County Judge and County Commissioners our letter. They also have the authority to request an opinion from the Texas Attorney General. And, we also filed a complaint with the Texas Attorney General’s office.

The elected officials publicly advocate transparency in government, we hope that they remain true to their word by asking for an opinion as well. Readers can help by asking their elected officials to seek an opinion as well.

Readers can use the following link to download a copy of our packet outlining our reasons for requiring the El Paso Children’s Hospital to release government records. The packet also includes our letter to the County Attorney.

El Paso Politics will continue to report on this issue as more information becomes available.

Footnotes:

  1. “El Paso Primetime” Radio Program, Richard Dayoub interview of Cindy Stout, CEO of El Paso Children’s Hospital, KTEP 88.5 FM, Broadcast on December 15, 2018. [transcript by author]
  2. El Paso County Hospital District d/b/a University Medical Center of El Paso, A Component Unit of El Paso County, Texas, Independent Auditor’s Report and Financial Statements, September 30, 2018 and 2017, page 50.
  3. Amended Bylaws of El Paso Children’s Hospital Corporation, Effective January 8, 2016.
  4. Texas Attorney General Opinion, ORD-601.
  5. Texas Attorney General Opinion, GA-0280, page 9.
  6. Texas Attorney General Opinion, GA-0280, page 4.
  7. Texas Attorney General Opinion, ORD-563.
  8. Texas Attorney General Opinion, GA-0666.
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We are on a mission to deliver the news and information important to you. Information that no one else is covering. We believe that public policy is grounded on an informed citizenry. We provide information based on analytical analysis that is well-sourced to allow readers to understand the policy decisions that affects their lives. We keep our reporting open to give everyone access to our reports. We are self-funded. This allows us to be independent and we are not influenced by stakeholders on how and what we report.

Help us to keep this resource available to everyone. Your support allows us to fund the site and pay for the research we use to bring important topics to your attention. Support our project by making a small donation today.

Help Us To Bring You News No One Else Reports

We are on a mission to deliver the news and information important to you. Information that no one else is covering. We believe that public policy is grounded on an informed citizenry. We provide information based on analytical analysis that is well-sourced to allow readers to understand the policy decisions that affects their lives. We keep our reporting open to give everyone access to our reports. We are self-funded. This allows us to be independent and we are not influenced by stakeholders on how and what we report.

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2 replies »

  1. Unfortunately El Paso Children’s Hospital doesn’t think it is accountable to anybody. Just look at the allegations in the Canales lawsuit to understand the type of of thinking that appears to go on there. If that is not convincing enough, then just speak to former employees and physicians to learn about the culture of favoritism and retaliation that exists there. I bet the same thing could be said of current personnel. Good luck with your quest although I don’t hold out much hope that you will get the outcome you desire.

    Liked by 1 person

  2. I agree with Loco Motive. Kids were harmed and died as a result of the poor care Canales and his group with the CEO standing by and doing nothing about the negligent acts. Who will be held responsible for kids unnecessarily dying?!?!

    Like

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