MERGER OF CATHOLIC HEALTHCARE WITH SECULAR INSTITUTION

[Vance R. Koven]

At 5:31 PM -0500 1/3/02, Kim Daniels wrote:
>Even assuming an Establishment Clause problem, I'm not convinced it comes
>into play.  Two private, albeit highly-regulated, health care providers
>attempt a merger; both entities privately determine and agree to the terms
>of the merger, some of which continue certain religiously-based policies of
>one of the entities. At that point the attorney general signs off.  Does
>that sign-off really amount to state action?  I stand ready to be corrected,
>but I understood Jackson v. Metropolitan Edison Co. to hold that regulatory
>oversight of a licensee is not sufficient to support such a finding.
>
>As far as I recall, current state action doctrine also doesn't support
>applying the Establishment Clause to a hospital based on its receipt of
>state funds or its regulation and licensing by the state -- isn't that the
>holding of Blum v. Yaretsky?  I realize there are lower court cases to the
>contrary -- I believe the Alaska hospital merger case is one -- and so would
>appreciate the comments of someone more knowledgeable about this issue.

Unlike David Guinn, I wasn't arguing my point based on general
health-based regulation of hospitals, I was looking at the more
general standards for approving mergers of non-profit organizations,
which in most places requires more than just a rubber-stamp from the
state AG. The parties have to make some affirmative showing that the
merger would be in the public interest in light of the charitable
objectives of each of the merging entities. This is enough, it would
seem to me, to create a significant degree of state action so that
the EC should be a guiding factor in the AG's determination.

I also am not a specialist in health care regulation, but have had to
navigate the shoals of non-profit merger regulation (mercifully not
in light of constitutional objections).

--
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*Vance R. Koven  Counselor at Law    20 Park Plaza Ste. 633   Boston MA 02116*
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