An investigation into the legality of taxpayer subsidies awarded to St. Luke’s McCall by the McCall Memorial Hospital District is underway, according to the Idaho Office of the Attorney General.
The investigation was announced in a July 7 letter from Deputy Attorney General Stephanie Guyon to Andy Laidlaw, who chairs the hospital district’s board of directors. The letter came in response to a complaint filed June 23 by a citizens’ group that includes McCall resident Faye Thompson, who represents District 8 in the Idaho House of Representatives.
“The Attorney General’s Office shares Rep. Thompson’s concerns and would appreciate receiving the hospital district’s written response to her complaint,” Guyon said in the letter.
Besides the hospital district’s formal response, Guyon also requested a litany of documents related to the relationship between the district and St. Luke’s McCall.
It is unclear when the investigation could be completed. The attorney general’s office did not respond to Valley Lookout’s request for comment on Tuesday.
Hospital district: subsidies are legal
The hospital district responded to the inquiry in an Aug. 1 letter that spans 252 pages, including copies of documents requested by the state. The letter is signed by McCall attorneys Steve Millemann, Amy Holm, and Hannah Drabinski.
The district maintains that the use of taxpayer funding for St. Luke’s McCall projects complies with laws and agreements governing the district, despite claims to the contrary by Give Us A Vote!, the citizen group that filed the complaint.
The district’s letter suggested “philosophical differences” in how the money should be spent led to GUV’s complaint.
“The fact that the June 23 submittal and the district disagree on that issue does not render anything the district is doing either statutorily or constitutionally suspect,” the letter said.
Citizens’ group: ‘clarity is all we ever sought’
Tomi Grote, a member of GUV’s steering committee, “commended” the state for following up on the group’s complaint in a statement provided to Valley Lookout on Tuesday.
“However this investigation comes out, it is a win for the district’s taxpayers,” Grote said on behalf of the group. “Clarity is all we have ever sought.”
GUV’s complaint is centered on what the group says is the improper use of millions in taxpayer funding, of which the district’s levy collects about $1.5 million each year from residents in the areas of McCall and Donnelly.
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The allocations have helped build an ambulance shelter at St. Luke’s McCall, purchase a new ambulance, and open an urgent care clinic on the hospital campus, among other things.
In recent years, most of the funding has gone to a hospital employee housing project, as Valley Lookout reported. That includes about $2.4 million already allocated, with the district expected to consider allocating another $1.4 million to the project this month.
GUV believes the allocations violate the Idaho Constitution as a public subsidy that primarily benefits St. Luke’s, a private healthcare conglomerate, at the expense of taxpayers.
Public purpose or private benefit?
Millemann rejected that claim in the district’s Aug. 1 response letter and said the allocations are primarily beneficial to the public despite also benefiting St. Luke’s.
“The Idaho Supreme Court has already held that enhancing the caliber of healthcare available to the public by improving either public or private non-profit hospital facilities satisfies the Public Purpose Doctrine,” the letter said.
GUV’s complaint also said the hospital district and St. Luke’s are operating as a “partnership,” which would be in conflict with the state’s 2016 ruling that the entities must remain independent for the relationship to be constitutional.
The hospital district’s funding allocations have all gone to projects related to St. Luke’s McCall since 2016, with no solicitations for competitive bids or alternate proposals. District bylaws require the taxpayer funds to be used “for the betterment of public health,” but do not preclude the district from awarding the funds to healthcare agencies other than St. Luke’s.
Millemann also rebutted that claim and said the district is operating within the parameters of the 2016 ruling by then-Attorney General Lawrence Wasden.
“All funding requests are considered and either approved or denied by the district,” he said. “All items and improvements funded by the district are currently owned by the district. And all services provided through district funding are provided to district taxpayers and patrons at district-owned facilities.”
Advisory vote request
GUV’s complaint was filed after the group unsuccessfully lobbied the hospital district board to hold an advisory vote to consider dissolving the taxing district, which predates St. Luke’s taking control of the hospital’s operations in 2010.
“GUV only resorted to an attorney general inquiry because a now year-long request to the board to give the patrons a vote on their appropriations continues to not receive serious consideration,” Grote said. “Given the latest draft of their ‘communication strategy,’ it appears to be dead altogether.”
The group’s complaint does not ask Attorney General Raúl Labrador to dissolve the district. It only asks Labrador to evaluate the legality of the district’s practices and relationship with St. Luke’s. A copy of the complaint can be downloaded from Grote’s blog, Letters to the Valley County Electorate.
McCall Memorial Hospital history
The McCall Memorial Hospital opened in 1956 as a city-owned hospital that later became a county-owned facility.
In 1984, the hospital district was created by voters in the McCall-Donnelly area to take control of the hospital from the county.
St. Alphonsus Health System managed the hospital on a contract with the district until 1999, when St. Luke’s signed a contract to manage the hospital.
The hospital became known as St. Luke’s McCall in 2010 following a merger agreement with St. Luke’s Health System. The merger was favored by 86% of voters in an advisory vote.
The initial merger agreement gave the district’s assets, including land, to St. Luke’s and re-routed the district’s annual tax levy to St. Luke’s.
In 2016, however, the state found that agreement unconstitutional and revised it so that the district retained control over how the tax funding is spent as well as ownership of its land and assets, which are now leased to St. Luke’s.
