St. Luke's acquiring of community hospitals eyed as illegal

BOISE (AP) - The Idaho Attorney General's Office and St. Luke's Health System are working to settle a dispute involving the health provider acquiring community hospitals formed with special taxing districts.

The Idaho Statesman reports in a story on Tuesday that state attorneys say the agreements are illegal because they violate state laws having to do with rules involving the use of taxpayer money.

St. Luke's has already acquired community hospitals in McCall and Mountain Home, and is in the process of acquiring one in Weiser.

Consumer Protection Division Chief Brett DeLange, in a Jan. 9 email to lawyers for St. Luke's and the Weiser taxing district, said the deals violate Idaho law "in at least four different ways."

A draft lawsuit prepared by state attorneys said tax revenues can't directly benefit corporations. It also said that the hospital districts didn't get a two-thirds majority in a referendum to approve incurring debt for longer than a year, a violation of the state constitution.

Also, state attorneys said, the state constitution prohibits "governmental entities from lending or pledging the credit or faith thereof in aid of corporations for any amount and for any purpose." Finally, the deals failed to make sure hospital districts would retain for taxpayers a "just proportion" of the investment in the hospital assets.

The hospitals say the deal will offer better health care for patients by allowing the hospitals to keep up with changing technology and health-insurance payments.

"This agreement is, from a consumer standpoint, a win-win for the people in this community," McCall District Chairman Derek Williamson said. If St. Luke's were to stop owning the hospital, "the economic impact and the health care impact would be negative on Valley County. It doesn't take a rocket scientist to figure out it would have some effect."

Patrick Miller, a Givens Pursley attorney representing the Weiser district, said the agreement doesn't break the law. St. Luke's said its analysis also found the agreements legal.

"We definitely looked at those issues beforehand and felt comfortable that the tax districts had the authority to enter into the agreements," said Christine Neuhoff, chief counsel for St. Luke's. "It turns out the Attorney General's Office has a slightly different interpretation of the law."