January 26, 1987
Honorable Neal E. Birmingham Opinion No. JM-626
District Attorney
P. 0. Box 940 He: Interpretation and constitu-
Linden, Texas 75563 tionality of Indigent Health Care
and Treatment Act. article 4438f,
V.T.C.S.
Dear Mr. Birmingham:
You inquire whether certain hospitals are public hospitals within
the meaning of the Indigent Realth Care and Treatment Act [hereinafter
the act], article 4438f, V.T.C.S., and whether certain cities are
responsible for indigent health care provided by those hospitals. You
also ask questions concerning the constitutionality of the act. It is
our opinion that the hospitals in question are "public hospitals" and
that each of the cities must provide sufficient funding to its public
hospital or hospital authority to provide the health care assistance
required by the act. We further conclude that the constitutional
issues that you raise do not render the act unconstitutional.
In the cities about which you inquire, the governing body of each
city passed an ordinance creating a city hospital authority as
authorized by the Hospital Authority Act, codified as article 4437e,
V.T.C.S. Such a hospital authority has no taming power and is
governed by a board of directors. which may issue revenue bonds to
provide funds for its purpose, may purchase, construct, and equip
hospitals, may enter into a management contract with any person, and
may sell, lease, or close a hospital. V.T.C.S. art. 4437e, 994. 5;
art. 4437e-1. Unless the hospital is being leased, it shall be
operated by the hospital authority for the use and benefit of the
public. Art. 4437e. 514.
Under the facts presented to us, it appears that the hospitals
were acquired by and are governed and operated by the hospital
authorities' boards of directors. Section l.OZ(lO) of the Indigent
Health Care Act expressly defines a public hospital as "a hospital
owned, operated, or leased by a governmental entity." According to
section 1.02(6), a governmental entity "includes a county, city, town,
hospital authority, or other political subdivision of the state, but
does not include a hospital district." The dominant consideration in
construing a statute is its legislative intent. Minton v. Frank, 545
S.W.Zd 442, 445 (Tex. 1976). The words of the statute are the best
evidence of legislative intent, and, when a statute is plain and
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Eonorable Neal E. Birmingham - Paga 2 UM-626)
unambiguous, it will be enforced according to its words. Anderson v.
Penix, 161 S.W.Zd 455, 459 (Tex. 1942); Sabine Pilots Assn. v. Lykes
Brothers Steamship, Inc., 346 S.W.Zd 166. 169 (Tex. Civ. App. - Austin
1961. no writ). In our opinion, the language in section 1.02(6) and
section 1.02(10) is clear and unambiguous.
Since the hospitals in question appear to be owned and operated
by a hospital authority, we conclude that they are public hospitals
within the meaning of the Indigent Health Care Act. Each hospital
owned and operated by a city hospital authority is to be operated for
the use and benefit of the public and shall serve the area of the
city. As a public hospital, it shall provide health care assistance
to eligible residents of the city. Since the city created the
hospital authority, the city shall provide sufficient funding to the
public hospital or to the hospital authority to provide the health
care assistance required by the Indigent Health Care Act. -See
V.T.C.S. art. 4438f. 1§10.02, 12.03.
You ask whether the provisions of section 12.03 of the Indigent
Health Care Act are unconstitutional under article VIII, section 1. of
the Texas Constitution. You suggest that section 12.03 provides for
double taxation of some county taxpayers and an unequal tax that will
be imposed on county taxpayers, soms of which will be taxed by only
the county and some of which.will be taxed by both the county and the
city. depending on the location of their residences. We conclude-that
section 12.03 does not result in double taxation.
Article VIII, section 1. of the Texas Constitution, which states
that "[tlaxation shall be equal and uniform," calls for equal and
uniform taxes within taxing jurisdictions. Ia City of Pelly v. Harris
County Water Control and Improvement District, 198 S.W.Zd 450. 454
(Tex. 1946). the Texas Supreme Court poiated out that a city and a
special district are separate entities created under separate
provisions of the constitution, each of which has been delegated the
power to assess and collect taxes for the purpose of accomplishing the
functions for which each is orgaaixed. The court held that the fact
that part of the property in the territorial limits of oae entity is
also included in the other entity does not subject the property to
double taxation nor contravene the constitutional rule that taxes must
be equal and uniform. See also Moore v. Edna Hospital District, 449
S.W.Zd 508 (Tex. Civ. App. - Corpus Christ1 1969, writ ref'd n.r.e.)
(in county with hospitaldistrict~eacompassing part of the county, the
countv can tax on a couatv-wide basis to suouort its countv hosnital.
which- does not constitute double taxatiohj; Kuhlmann vt Drainage
District No. 12 of Harris County, 51 S.W.Zd 784 (Tex. Civ. App. -
Galveston 1932, writ ref'd) (taxes by city for city purposes,
including drainage, and taxes by drainage-district on same-property is
not double taxation nor violation of provision that taxation be equal
and uniform).
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Eonorable Neal E. Birmingham - Page 3 (J'M-626)
You also express concern that sections 4.03, 5.02, and 12.03 of
article '443Sf may be discriminatory and invalid because certain
provisions apply only to counties and not to cities. Your concern
appears to be that the Indigent Eealth Care and Treatment Act is a
denial of equal protection to the residents and taxpayers of a city
under either article I, section 3, of the Texas Constitution or the
Fourteenth Amendment to the United States Constitution. Equal
protection is a right extended to persons rather than to governmental
entities.
Section 4.03 provides that:
(a) County liability for health care services
urovided by all providers of assistance, including
hospitals -aad skilled nursing facilities, to an
eligible resident of that county who does not
reside within the area that a public hospital or
hospital district has a legal obligation to serve
is limited to a maximum total payment of $30,000
for all services provided to that resident during
the county's fiscal year.
(b) If a county provides hospital or skilled
nursing facility services to an eligible resident
of that county who does not reside within the area
that a public hospital or hospital district has a
legal obligation to serve, the county's liability
is limited to payment for a total of 30 days of
hospitalizatioa, or treatment in a skilled nursing
facility, or both, during the county's fiscal year
or a maximum total payment of $30,000 for all
services provided to that eligible resident during
that fiscal year, whichever occurs first.
(Emphasis added).
Section 5.02 provides, in part, that:
(a) The department may distribute funds as
provided by this subtitle to eligible counties to
assist the counties in providing mandatory health
care services to eligible residents of that county
who do not reside within the area that a public
hospital or hospital district has a legal obliga-
tion to serve.
(b) Except as provided by Subsection (c) of
this section, to be eligible for state assistance,
a county must:
(1) expend in a fiscal year at least 10 per-
cent of the countv general revenue levy for that
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Honorable Neal E. Birmingham - Page 4 (m-626)
vear to provide mandatory health care services to
eligible residents of that county who do not
reside within the area that a public hospital or
hospital district has a legal obligation to serve
and who qualify for assistance under Section 5.01
of this Act. . . .
. . . .
(g) State funds shall be equal to 80 percent
of the actual payment for health care services for
eligible residents of that county who do not
reside within the area that a public hospital or
hospital district has a legal obligation to serve
during the remainder of the year after the 10
percent expenditure level has been reached.
(h) If the department fails to provide assis-
tance to an eligible county as prescribed by
Subsections (f) and (g) of this section, the
county is not liable for payments for health care
services provided to eligible residents after the
county reaches the 10 percent expenditure level.
(Emphasis added).
Section 12.03 provides that:
Each governmental entity that owns. operates,
or leases a public hospital shall provide suf-
ficient funding to the hospital to provide the
health care assistance required by this Act. If a
public hospital is owned; operated, or leased by
a hospital authority, the governmental entity
that created or authorized the creation of the
authority shall provide sufficient funding to the
public hospital or hospital authority to provide
the health care assistance required by this Act.
(Emphasis added).
The right to equal protection prohibits a legislature only from
See Yick
treating differently persons who are "similarly situated." --
Wo v. Hopkins, 118 U.S. 356, 374 (1886). There are many differences
in the powers and duties of a county and a city. For instance, they
have different tax and revenue raising powers. See V.T.C.S. art.
1066~ (authorizing only a city to adopt by electionalocal sales and
use tax for the benefit of the city). It is our opinion that
residents and taxpayers of a county and a city are not "similarly
situated."
Also, the provisions of sections 4.03 and 5.02 of article 4438f
limiting the liability of a county and authorizing state assistance to
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Eonorable Neal E. Binaingham - Page 5 (JM-626)
a county under certain circumstances are part of Title 2 of the act,
which establishes the responsibility of counties for persons who
do not reside in an area served by a public hospital or hospital
district. Each county must provide health care assistance as provided
by that title to each eligible resident of that county who does not
reside in an area served by a public hospital or hospital district.
V.T.C.S. art. 4438f. 02.02. A city has no obligation under Title 2.
It may have an obligation only under Title 3. Section 12.03 of Title
3 applies to each governmental entity that owus, operates, or leases a
public hospital and applies equally to counties and cities. The
circumstances under which a county has limited liability and receives
state assistance under Title 2 differ from the circumstances under
which both cities and counties may be required to provide funding to a
hospital to provide health care assistance under Title 3.
We pointed out in Attorney General Opinion m-552 (1986) that
the Indigent Health Care Act is the legislature's implementation of
recommendations made by the Task Force on Indigent Health Care
appointed in 1983. The Task Force Final Report anticipated that, in
some instances, counties would provide services under Title 2 through
contracts with public or private providers or other counties or
through the purchase of insurance for county residents. The Task
Force noted potential difficulties facing a county in providing care
for its indigent, including, among other things, the potential
liability of a county for catastrophic illness and health care costs
that may exceed the 'counties' ability to pay because of widespread
poverty and a limited property tax base that will not raise sufficient
ad valorem taxes. See Task Force on Indigent Health Care, Final
Report, December 1984,t 13, 22.
Moreover, a state may apply different laws, or its law dif-
ferently, to reasonable classes of persons without violating the equal
protection clause of the Fourteenth Amendment. See Railroad
Commission of Texas v. Miller, 434 S.W.Zd 670, 673 (Tex.1968).
The courts have applied the federal standard in considering both
the state and federal constitutional provisions. Spring Branch
Independent School District v. Stams, 695 S.W.Zd 556, 560 (Tex.
1985); Detar Hospital, Inc. v. Estrada, 694 S.W.Zd 359, 365 (Tex. App.
- Corpus Christi 1985. no writ). Basically, the courts have adhered
to a two tier analysis. See Clement6 v. Fashing, 457 U.S. 957, 963
(1982). See also Detar Hospital, Inc. v. Estrada. 694 S.W.Zd at 365.
If a statute infringes ou a fundamental right or creates a suspect
classification, the statute is subject to strict judicial scrutiny
which requires the state to establish a compelling interest in its
enactment. See In re Griffiths, 413 U.S. 717 (1973). If a statute
does not interfere with the exercise of fundamental rights protected
by the constitution or operate to the disadvantage of suspect classes,
the statute is accorded a presumption of constitutionality that is not
disturbed unless the person challenging a classification establishes
that the classification does not rationally further a legitimate state
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Eonorable Neal E. Birmingham - Page 6 (JM-626)
purpose or interest. See San Antonio Independent School District v.
Rodriguez, 411 U.S. 171973); McGowan v. Maryland. 366 U.S. 420
(1961); University Interscholastic League v. North Dallas Chamber of
Commerce Soccer Association, 693 S.W.Zd 513, 517 (Tex. App. - Dallas
1985, *o wit). In addition to the two tiers, the court in certain
instances has inquired whether legislation furthers the "substantial
laterest" of the state. See Plyler v. Doe, 457 U.S. 202 (1982).
We are of the opinion that the provisions in question do not
involve a fundamental right guaranteed by the constitution or a
suspect class aad would be judged by a court under the rational basis
test. The United States Supreme Court used the rational basis test
to uphold differences in levels of expenditures la Texas school
districts. In doing so, the court restated its reluctance to
interfere with the states' fiscal policies under the equal protection
clause as follows:
The broad discretion as to classification
possessed by a legislature in the field of
taxation has long been recognized. . . . It has
. . . been pointed out that in taxation, even more
than in other fields, legislatures possess the
greatest freedom in classification. Since the
members of a legislature necessarily enjoy a
familiarity with local conditions which this Court
c'anno
t have, the presumption of constitutionality
can be overcome only by the most explicit demon-
stration that a classification is a hostile and
oppressive discrimination against particular
persons and classes. . . . (Citation omitted).
San Antonio Independent School District v. Rodriguez, 411 U.S. at 40.
We cannot presume that the legislature acted unreasonably or
arbitrarily (1) in limiting the'liability of the counties who bear the
sole responsibility for providing health care assistance to their
eligible residents who do not reside in an area served by a public
hospital or hospital district or (2) in providing state assistance to
counties that must expend at least 10 percent of the county's general
revenue levy for the year to provide the mandatory health care
service.
It has been suggested that the legislature canaot constitu-
tionally empower a private, for-profit corporation which operates a
hospital as lessee to make quasi-judicial and legislative decisions
that a "public hospital" is empowered to make under Title 3 of the
act. It also has been suggested that the legislature nay not
constitutionally require a county or city to provide "funding" for a
private or for-profit corporation. For instance, sections 10.02(a)
and 12.03 of article 4438f require a governmental entity that owns a
hospital which is operated by a private, for-profit corporation to
p. 2828
Honorable Neal E. Birmingham - Page 7 (~~-626)
provide sufficient funding to allow the hospital to provide the
required health care assistance. The questions require a statutory
interpretation of the act.
The dominant consideration in construing a statute is its legis-
lative latent. Minton v. Frank, 545 S.W.Zd 442, 445 (Tex. 1976).
Section 2.02 provides that, for residents of areas not served by a
public hospital or hospital district, the county as payor of last
resort shall provide the health care assistance prescribed by Title 2.
On the other hand, section 10.02(a) provides that each public hospital
shall provide the health care assistance prescribed by Title 3 and
further requires each governmental entity that owns a hospital which
may be operated by another entity to provide sufficient funding to
allow the hospital to provide the required health care assistance. We
conclude that the language of the statute states the intention of the
legislature that a county or a city that owns a public hospital must
provide sufficient financial support to permit a hospital operated by
a corporation or other entity to meet the hospital's obligation for
indigent care.
It is our opinion that the term "public hospital" as used in
section 10.02(s) includes both the owner and operator of such a
hospital and does not maan only the operator of the hospital or only
the owner of the hospital. The Task Force on Indigent Health Care
recommended to the legislature that implementation of the act be a
matter for local determination in order to meet the different needs of
various areas of the state. See Task Force on Indigent Health Care,
Final Report, December 1984.x 21. Decisions necessary to comply
with the act are an internal matter to be resolved by the entities
that constitute the public hospital. If the legislature intended the
governmental entity that owns a hospital to merely pay the operator
for services rendered to indigents, the legislature easily could have
so stated as it did in section 2.02 when it stated that "each county
shall provide health care assistance as prescribed." Art. 4438f.
52.02. Instead. the legislature directed a governmental entity that
owns a public hospital to "provide sufficient funding to allow the
hospital to provide the required health care assistance." We conclude
that, where a hospital is owned by one entity and operated by another,
the legislature intends "sufficient funding" to be a matter to be
negotiated between the entities and to be the decision of both, with
the operator of the hospital presenting information necessary for the
decision. It is our opinion that the act does not strip the govern-
mental entity of control and does not constitute an unconstitutional
delegation of power.
Section 10.02(f) of article 4438f authorizes a public hospital to
adopt an income and resources standard for the purpose of eligibility
that is less restrictive than the basic standard mandated by that
section. It has been suggested that such authority may be unconstitu-
tional if exercised by a private corporation operating a hospital that
is owned by a governmental entity. We believe that section 10.02(f)
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Eonorable Neal E. Birmingham - Page 8 (JM-626)
is intended to clarify the fact that a hospital is not bound by the
basic standard specified by the act. However. the adoption of a less
restrictive standard by a corporation operating a hospital does not
change the respoasibility of a governmental entity. A governmental
entity that owns a public hospital shall provide sufficient funding to
allow the hospital to provide the required health care assistance. A
less restrictive standard is not required by the act.
Article III, section 51, of the Texas Constitution, provides that
"[t]he legislature shall have no parer to make any grant or authorize
the making of any grant of public moneys to any individual, associa-
tion of individuals, municipal or other corporations." Both the
courts and this office have approved statutes that authorize grants of
public funds to private entities so long as the expenditure is made
for the direct accomplishment of a legitimate public purpose. See
Barrington v. Cokinos, 338 S.W.Zd 133, 140 (Tex. 1960); see also State
v. City of Austin, 331 S.W.Zd 737 (Tex. 1960); Davis v. City of
Lubbock, 326 S.W.Zd 699 (Tex. 1959); Attorney General Opinions MW-89
(1979); H-1260 (1978). Also, the public entity must receive adequate
consideration to avoid making a gift or grant of public funds to a
private entity in violation of article III, section 51. See Attorney
General Opinions H-1309 (1978); H-403 (1974). when a governmental
entity accomplishes a public purpose by granting funds to a private
entity, it must maintain control over the use of the funds to see that
the public purpose is achieved. See Attorney General Opinions MW-423
(1982); m-373 (1981). It is our galon that a court would find that
health care assistance for the indigent serves a public purpose and a
governmental entity is not precluded from maintaining control over the
use of the funds to insure adequate consideration and the achievement
of the public purpose. Eence , we conclude that the act does not on
its face violate article III, section 51. of the Texas Constitution.
SUMMARY
Under the Indigent Health Care and Treatment
Act, article 4438f. V.T.C.S., a hospital owned or
operated by a hospital authority created by a city
is a public hospital, and the city shall provide
sufficient funding to the public hospital or to
the hospital authority to provide the health care
assistance required by the act.
The act does not provide double taxation of
county taxpayers or an unequal tax la violation of
article VIII, section 1. of the Texas Constitu-
tion. The provisions in Title 2 of the act
limiting liability of a county and authorizing
state assistance to a county under certain circum-
stances are not a denial of equal protection to
the residents and taxpayers of a city under
article I. section 3, of the Texas Constitution or
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Honorable Neal E. Birmingham - Page 9 (JM-626)
the Fourteenth Amendment to the United States
Constitution. The act does not unconstitutionally
delegate authority when a public hospital is owned
by one entity and operated by another entity. The
act is not unconstitutional as a grant of public
funds to a private entity in violation of article
III. section 51, of the Texas Constitution.
JIM MATTOX
Attorney General of Texas
JACK EIGETOWER
First Assistant Attorney General
MARYXELIER
Executive Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Nancy Sutton
Assistant Attorney General
P. 2831