UPDATED: ChristianaCare Files Lawsuit over Constitutional & Corporate Franchise Issues in DE House Bill 350
UPDATED 07/29/24 5pm: House Speaker Valerie Longhurst and Senate Majority Leader Bryan Townsend issued the following joint statement in response to the lawsuit ChristianaCare filed regarding HB 350:
“We are confident that the new Diamond State Review Board will withstand judicial and constitutional scrutiny.
“The delivery of high-quality and economically sustainable health care is of paramount concern to the state government and to our constituents, and House Bill 350 went through many iterations as we tried to craft a solution that would deliver for Delaware’s hard-working taxpayers, while accommodating practical and policy concerns raised by the hospital industry – including Christiana Care.
“We are disappointed that the state’s largest hospital system has chosen to continue in an oppositional posture, rather than working with the General Assembly and other stakeholders to fine tune the structure and operation of the Board – which they have not even allowed to get off the ground before working to undermine it.”
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Legislation signed by Governor John Carney on June 13th is now in dispute by ChristianaCare, which has filed a lawsuit which claims that House Bill 350 is unlawful and infringes on ChristianaCare’s fundamental state and federal constitutional rights. Their complaint says that the measure violates Delaware’s general corporation law and state constitution by authorizing state control over the strategic and business decision-making authority from the boards of certain private hospitals – including ChristianaCare, which did raise concerns during the legislative process that were not addressed. This lawsuit is their next step.
Additional information from ChristianaCare release:
The complaint asserts that HB 350, signed into law on June 13, 2024, violates Delaware’s general corporation law and state constitution by authorizing state control over the strategic and business decision-making authority from the boards of certain private hospitals, including ChristianaCare. The law created a politically appointed, unelected and unaccountable “super-board”— the Diamond State Hospital Cost Review Board — administered by the Delaware Healthcare Commission with authority to override the strategic and budgetary decisions made by the hospitals’ duly-elected directors.
The complaint also argues that HB 350 violates federal constitutional rights through the take-over of private hospital governance and budgets, by forcing private hospitals to disclose confidential information about its future priorities and strategy, and by unfairly targeting only a few private hospitals.
“House Bill 350 raises important questions about the integrity of the corporate franchise in Delaware, and whether it is legal for the government to usurp authority over core business decisions such as setting the budget from a corporation’s duly elected board,” said Nicholas Marsini, chair of ChristianaCare’s Health System Board. “We are hopeful that the Court of Chancery will provide clear guidance on these important legal questions that impact not only ChristianaCare, but potentially any corporation that does business in Delaware.”
ChristianaCare raised constitutional concerns during the legislative process that were not addressed and has filed this lawsuit as a necessary next step in protecting the community’s continued access to excellent hospital care, close to home.
“This lawsuit is necessary to preserve and ensure independence in clinical decision-making and patient care, critically necessary hospital services and resources, non-profit board autonomy, and a strong health care delivery system in this community for generations to come,” said Lolita Lopez, chair of ChristianaCare’s Health Services Board.
ChristianaCare has served this non-profit mission over 136 years, providing acute hospital care and medical services to patients throughout the community and region, making high-quality care more accessible, equitable, and affordable, with a commitment to improving the health of the population and the health outcomes for every person it serves.
ChristianaCare shares the legislature’s concerns about the cost of health care and recognizes the complexity of this national issue. We look forward to collaborating with various stakeholders in our health eco-system in order to improve health outcomes for Delawareans, and make high-quality care more accessible, equitable and affordable for all in our community.
House Republicans Support Challenge of Hospital Oversight Bill
The Delaware House of Representatives Republican Caucus fully supports ChristianaCare’s lawsuit challenging a new state law that usurps financial control of Delaware’s non-profit hospitals.
Sponsored by Speaker of the House Valerie Longhurst (D-Bear), House Substitute 2 for House Bill 350 was enacted about six weeks ago, giving a politically appointed board full authority over critical hospital spending decisions.
Governor John Carney and House and Senate Democrats maintained that the authoritarian overreach was needed to control rising healthcare costs, ignoring the many other factors driving the escalation of healthcare and their lack of action to curtail the state’s own healthcare expenses.
Under the law, hospitals with budgets exceeding growth benchmarks set by the state are coerced to comply, possibly facing fines of up to $500,000 if they fail.
House Republicans have consistently opposed this legislation.
Given its momentous reach and scope, the measure was rushed. It was first introduced on March 12 and was passed by the legislature in its final form—its third incarnation—on May 21st. The House Health Committee was never allowed to scrutinize the bill, with Speaker Longhurst gaming the system by assigning it instead to the House Administration Committee, which is exclusively controlled by herself and the two other leaders of the House Democratic Caucus.
HS 2 for HB 350 is an exercise in conceit. Its supporters believe that government appointees are more capable of making hospitals’ spending decisions than the men and women who have spent their careers working in the healthcare sector.
This poorly conceived law is symptomatic of the bad policymaking that occurs when a single party controls the lawmaking apparatus. A state government with one-party rule does not engage in consensus building nor reflect any perspective that is not in keeping with its monoculture of political thought. The result is a growing list of plaintiffs like ChristianaCare who are forced to head to court to secure the fair consideration they should have received in the legislature and by the governor.
