Hospital disqualified from charitable immunity

On the last day of February, the highest court in the Commonwealth delivered this message to aggrieved UVA hospital patients: Litigate away!

The Virginia State Supreme Court rejected a plea by UVA’s Health Services Foundation of charitable immunity, ruling that UVA hospital doctors can be sued for malpractice. With its ruling, the court sent three malpractice suits back to lower courts to be decided on their merits and stripped UVA hospital doctors of a charitable immunity defense in future lawsuits.

Lawyers for the Health Services Foundation argued that because doctors are employed by the Foundation, which describes itself in a vaguely run-on fashion as a “non-profit group practice health care provider organization,” they should be provided immunity from malpractice lawsuits in all but the most egregious cases. In looking at the Foundation’s charitable bona fides, though, the Supreme Court found them lacking.

The Virginia Supreme Court held that the Health System Foundation’s ratio of revenue to the cost of its charitable work to be too small to label it a “charitable organization.”

Justices, considering 10 factors that determine if an organization is charitable, wrote, “It is clear that that the manner in which [the Health Services Foundation] actually conducts its affairs is not in accord with the charitable purposes stated in its Articles of Incorporation.”

Don Morin, one of the lawyers representing the Foundation, declined to comment on the specifics of the court’s decision because the cases are still being litigated but offered this statement: “The University of Virginia Health Services Foundation respects the decision of the Virginia Supreme Court in these cases, and now that the cases have been returned to the trial courts, we are going to work toward their final resolution. The Health Services Foundation will continue in its mission to provide high-quality health care, medical training and medical research through its physicians.”

The court cited four factors that it said made it clear that the Foundation “operates like a profitable commercial business with extensive revenues and assets,” and thus didn’t qualify for charitable immunity. The court found that the Foundation’s ratio of revenue to the cost of its charitable work to be too small to label it a “charitable organization.”

The Foundation’s actual shortfall in 2005 for treating indigent patients was about $1.5 million, thanks in part to state reimbursement. That same year, the Foundation’s total revenue and other income totaled $225 million.

According to its articles of incorporation, written in 1979 when the foundation was created, its purpose was to improve the billing and collection process. From 2001 to 2005, the Foundation filed 16,158 warrants in debt, collecting roughly $7 million of the $124 it sought.

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