A brief overview of how they differ from private providers
Guest article by David A. Greher, Esq., and Kathryn L. Garner, Esq., Collins Cockrel & Cole, PC
The Special District Act authorizes the creation of several types of districts which can provide health services to their residents and taxpayers, including health service districts (formerly called hospital districts). In our experience, health service districts are very attuned to the many health care statutes, rules and regulations with which they must comply, but are sometimes less familiar with the entirely separate laws and regulations that apply to them as local governments. The following is a brief discussion of some issues which our health service district clients have “discovered” apply to them.
Public Meetings
Under the “Sunshine Law” (Title 24, Article 6, part 4, C.R.S.) and the Special District Act, all meetings of a quorum or more of a health service district’s board of directors must be at a properly noticed meeting that is open to the public. At least 72 hours in advance of any board meeting, notice of the meeting must be posted in at least three public places within the district’s boundaries and in the office of the county clerk and recorder of each county in which the district is located, and the meeting agenda must be posted in at least one location in the district at least 24 hours in advance. Only in limited circumstances (as provided in the Sunshine Law) may the Board enter into an executive session. No board action may be taken in an executive session.
Management
When a health service district hires a new CEO, it must follow set procedures under the Sunshine Law, including establishing a committee to set search criteria and making public the names of all finalists.
If the district hires another entity to manage its facilities or services, the limitations and requirements placed on health service districts as governmental entities under Colorado law remain fully in place. Further, the board of directors must maintain a sufficient level of oversight to ensure that it has not impermissibly delegated its authority as a local government to a private entity. If the district has outstanding tax-exempt obligations (including bonds and lease-purchase financings), it must ensure that such agreements follow strict IRS guidelines so that the obligations do not become taxable.
Open Records
Whereas HIPAA and other rules and regulations require health care providers to maintain the privacy of certain records, health service districts are also subject to the Public (Open) Records Act (Title 24, Article 72, C.R.S.) to make other records publicly available. The Open Records Act requires districts to designate an employee to act as custodian of the district’s records and to generally make all “public records” available to any member of the public within three business days. The term “public records” includes all documents for use in functions “authorized or required by law” or involving “the receipt or expenditure of public funds.” Documents should be presumed to be “public records” unless they fit into one of the limited exceptions provided in the Open Records Act. Any person denied access to public records can bring suit in district court for the right to inspect documents and shall receive attorney fees and costs if successful in their claim.
Annual Statutory Compliance
Health service districts are sometimes unaware of certain annual statutory compliance requirements, including: filing a boundary map with the Division of Local Government (DLG), the county clerk and recorder, and the county assessor; providing key contact information to numerous county and municipal departments; providing an annual notice to electors containing certain required information about the district and its board members; and providing a list of all existing contracts with other governmental entities. Other requirements may be followed but perhaps not in compliance with Colorado local government standards. For example, auditors specializing in serving hospitals may be unfamiliar with the requirement to list a special district’s current authorized but unissued general obligation debt under the Colorado Local Government Audit Law (Title 29, Article 1, part 6, C.R.S.).
Service Plan Compliance
All health service districts are subject to the “approving authority” of either a municipality or one or more counties. The relationship between the district and the approving authority is set forth in the district’s service plan or (for districts formed before July 1, 1986) in a statement of purposes. However, whereas most special districts must request the approving authority to approve a service plan amendment before undertaking any “material modification” to the service plan (including an addition to the types of services provided or a decrease in the level of services provided), a health service district may effectively amend its service plan by submitting to the approving authority a license or certificate of compliance (or evidence of a pending application) issued by the Colorado Department of Public Health and Environment.
TABOR
TABOR (Article X, Section 20 of the Colorado Constitution) restricts financial operations of Colorado governmental entities. Many health service districts receive sufficient revenues from their health care operations to qualify as “enterprises” under TABOR, which relieves them of most (but not all) of TABOR’s restrictions. However, regardless of whether it operates an enterprise or has “de-Bruced,” a district cannot relieve itself of all TABOR restrictions, including, in particular, the need to obtain prior voter approval for an increase in its mill levy rate.
Sales Tax Option
In 2007, the Special District Act was amended to allow health service districts to impose and collect sales tax within the district, subject to prior voter approval. However, the definition of “eligible electors” for purposes of a sales tax vote would exclude non-resident property owners and their spouses (who are otherwise allowed to vote in special districts’ elections). A sales tax may be attractive in areas where a health service district’s services are used disproportionately by visitors to the area as opposed to residents.
The foregoing provides a brief overview of several examples of how health service districts differ from private health care providers. Health service district boards and staff must make sure that they are following all of the applicable requirements of Colorado local governments—and should strive to take advantage of all the related benefits.