Rep. Jason Spencer Comments to Opinion from the Attorney General Dated April 22, 2013

ATLANTA— State Representative Jason Spencer (R-Woodbine) today released the following statement regarding a letter he recently received from the Georgia Department of Law that addresses the validity of expenses made by the City of St. Marys Hospital Authority (SMHA):

“After an extensive review of all of the information presented to my office regarding concerns about the proper use of the proceeds from the sale of the St. Marys convalescent center, I presented information to the Attorney General’s office for legal clarification regarding this matter. All information that was presented to the Attorney General can be obtained by any citizen who is interested in the matter through an open records request through the City Clerk’s office. This information on file with the City Clerk was presented to the Georgia Department of Law and the opinion was written based on that information. Upon review of the opinion, I have determined the following regarding expenditures of the City of St. Marys Hospital Authority:

1) Multi-year noncompliance with audits: By all indications from the Attorney General’s office, the Hospital Authority of the City of St. Marys, Georgia (the “Authority”) is subject to the audit provisions of the “Hospital Authorities Law” (O.C.G.A § 31-7-91, 31-7-92 and 31-7-93). The Authority does not have any required annual audits on file with the City Clerk and concerns about proper expenditures cannot be properly validated. The Authority is in multi-year noncompliance with the audits provision and could be mandated by the courts if a city taxpayer or the St. Marys City Council filed a petition in superior court to require them to become compliant. Also, the Authority’s multi-year noncompliance will put the City of St. Marys at risk for being ineligible to receive any future state grants under O.C.G.A § 36-81-7 (d) (5).

2) No prior legal opinions approved Senior Center transaction: Communications between the Authority’s attorney and the Attorney General’s office in 2008 “do not set forth any legal analysis [or opinion] about the proceeds from the sale of the convalescent center” (page 3, footnote 1). In a separate communication from my office to the Department of Law, dated March 28, 2013, I asked if there were any opinions issued or other communication from the Attorney General that approved or reviewed any legal opinion from the Authority’s attorney that would give the Authority permission to spend the proceeds on the Senior Center outside of the scope of the law. According to a letter dated April 5, 2013 from the Department of Law, no such document(s) were available. The Authority’s attorney has stated that he received an opinion from the Department of Law to approve the transaction, but no opinion is on file. I suspect that the Authority’s attorney erroneously believed that a correspondence dated November 25, 2008 from the Department of Law was a legal opinion. As such, the Authority may have been misinformed; therefore, subsequent and questionable spending decisions have resulted. It is possible that the Authority’s attorney did not completely maximize due diligence regarding a review of legal advice concerning the transaction of the Senior Center.

3) The Authority may not use funds for the Senior Center: The part of the law concerning the sale of a hospital does apply to the sale of a nursing home and the money in the trust shall be used exclusively for funding hospital care for poor residents (indigent patients). The court order dated March 20, 2007 directs the Authority’s spending to follow O.C.G.A § 31-7-75.1(a). The Attorney General states that this court order is essentially a binding contract between the City of St. Marys and the Authority. The limitation of O.C.G.A §31-7-75.1(a) and the court order controls the use of the proceeds from the sale of the nursing home. The Authority appears to be in violation of the court order and could possibly be held in contempt by not adhering to the agreement.

“This situation surrounding the Authority’s decision to spend money on behalf of the needs of the senior citizens in St. Marys is complicated. Many in the community support the Senior Center and I believe it has been a worthy program. However, the law regarding the governance, structure and mission of hospital authorities in the state of Georgia was intended to provide and maintain health care related facilities. Unfortunately, the Senior Center does not appear to be classified as a health care related project or facility under the law.

“Furthermore, a thorough review of this situation has resulted in a complete and thorough study of the hospital authorities law. This study has exposed some flaws in the law that may have contributed to inaccurate legal advice, thus leading to other unintended consequences related to spending. Also, the audits provision of the law only calls for annual audits to be placed on file with the city clerk. However, questions regarding proper oversight have now been raised and legislation will be required to address this issue to ensure proper oversight.

“It is my intention to introduce legislation next legislative session to amend the hospital authorities law to clear up some of these flaws and look to dissolve any hospital authority in the state that no longer oversees a hospital or a health care related project. How many authorities do we have in this state that are considered “unattached” but have assets that are not properly audited? When government creates organizations with vast authority without external checks and balances, these organizations experience mission-creep which ultimately leads to serious unintended consequences.”

Please click on the following link for a copy of the letter from the Georgia Department of Law: Deputy AG Wright Banks Opinion April 22 2013 SMHA.

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