Is a North Dakota critical access hospital that gets some public funding (mill levy money, city sales tax) subject to the open records law?
Plain-English summary
Southwest Healthcare Services operates a clinic, hospital, ambulance service, and assisted/independent living facility serving Bowman and surrounding communities. It's privately governed (a board of trustees representing the served communities) and most revenue is patient billing (Medicare, Medicaid, and commercial insurance). But Southwest also received about $95,000 in mill levy money in 2021, applies for City of Bowman healthcare sales tax funds, and could receive rural ambulance service district funds.
Kevin Thompson, through his attorney, asked Southwest for "any and all records" about Bowman's healthcare sales tax proceedings. Southwest denied, saying it isn't a public entity. Thompson asked the AG.
The AG applied two tests from prior opinions:
Supported by Public Funds Test (N.D.C.C. § 44-04-17.1(13)(c)): A non-governmental organization is a public entity for open records purposes if it's supported "in whole or in part by public funds." Federal funds (including Medicare/Medicaid) don't count. State and local funds do. The $95,000 mill levy contribution was clearly more than minimal. Even though the City Health Board could deny each sales tax request and Southwest had no discretion over those funds, receipt of mill levy and applied-for sales tax funds was enough to make Southwest a public entity for records related to those funds.
Agency of Government Test: Southwest also could provide ambulance service for the Bowman County Rural Ambulance Service District (organized under N.D.C.C. ch. 11-28.3). To the extent Southwest performs functions the District itself could perform, Southwest is a public entity for those activities and their records. Same analysis applies to its assisted/independent living operations.
Records of "general-fund" operations not connected to public funds aren't subject to disclosure. But Southwest acknowledged that mill levy funds were not commingled with general funds, so the line is drawable. Even so, if public funds had been or were ever commingled, all financial records would be open.
Thompson's specific request was for healthcare sales tax expenditures (a public-fund activity), so denial was a clear open records violation. The AG ordered the records to be produced free of charge.
What this means for you
If you operate a critical access hospital or other quasi-public organization
Get clarity on whether you receive public funds (state, county, city, or special district). If you do, you're at minimum a public entity for those public-funded activities. Set up bookkeeping that keeps public funds separate from general funds; commingling sweeps everything into open-record territory.
If you're a citizen wanting records of a quasi-public hospital
Tailor your request to public-fund activities. Records about a hospital's general patient operations aren't open just because the hospital exists. Records about specific public funds (mill levies, sales tax distributions, rural ambulance district appropriations) are open.
Common questions
Q: What counts as "public funds" under § 44-04-17.1(14)?
A: "Cash and other assets with more than minimal value received from the state or any political subdivision of the state." Federal funds and Medicare/Medicaid reimbursements don't count. Mill levies, city sales tax distributions, and county appropriations do.
Q: How much is "more than minimal"?
A: Not de minimis. Past opinions have flagged occasional use of a public meeting room as the kind of minimal contribution that doesn't qualify. A $45,000 annual mill levy clearly does (per N.D.A.G. 2006-O-04). The $95,000 here easily clears the bar.
Q: What about Medicare and Medicaid funds?
A: Federal funds aren't "public funds" under the state statute. They came from the U.S. Treasury, not from the state or a political subdivision.
Q: Does the entity become fully open if it gets any public funds?
A: Not for the entity's general operations, only for records related to the public funds and any government-agency activities. But commingling can change that. If public funds get pooled with private funds and can't be tracked separately, all financial records of the entity become open.
Citations and references
Statutes:
- N.D.C.C. § 44-04-17.1 (definitions)
- N.D.C.C. § 44-04-18 (open records)
- N.D.C.C. § 11-28.3 (rural ambulance service districts)
Cases:
- Adams County Record v. Greater N.D. Association, 529 N.W.2d 830 (N.D. 1995) (public-funds test)
Source
- Landing page: https://attorneygeneral.nd.gov/southwest-healthcare-services-violated-open-records-law-when-it-refused-to-provide-records-regarding-healthcare-sales-tax-expenditures/
- Original PDF: https://attorneygeneral.nd.gov/wp-content/uploads/2024/09/2024-O-06.pdf
Original opinion text
STATE OF NORTH DAKOTA
OFFICE OF ATTORNEY GENERAL
www.attorneygeneral.nd.gov
(701) 328-2210
Drew H. Wrigley
ATTORNEY GENERAL
OPEN RECORDS AND MEETINGS OPINION
2024-O-06
DATE ISSUED: September 11, 2024
ISSUED TO: Southwest Healthcare Services
CITIZEN'S REQUEST FOR OPINION
The law firm of Ebeltoft Sickler Lawyers, PLLC, on behalf of its client, Kevin Thompson,
requested an opinion from this office under N.D.C.C. § 44-04-21.1 asking whether Southwest
Healthcare Services violated N.D.C.C. § 44-04-18 by improperly denying a request for records.
FACTS PRESENTED
On January 28, 2022, Mr. Thompson, by and through his attorney, Adam Bothun of Ebeltoft
Sickler, requested the following records from Southwest Healthcare Services (Southwest):
Any and all records from January 1, 2020, to the present regarding
the City of Bowman's ("Bowman") healthcare sales tax proceedings
including, but not limited to, receipts, expenditures, meeting
minutes, memos, reports, outlines, notes, employee salary, and all
recorded information regardless of the physical form (e.g. paper,
email, computer file, photograph, audiotape or recording, video, test
message, etc.).
Southwest denied Mr. Thompson's request on February 16, 2022. In response to later
communication with this office, Southwest stated the records were "denied because Southwest
Healthcare Services is not a public entity subject to the open records statutes."
Southwest further responded that it is a non-government entity. Its services include a clinic,
hospital, ambulance, and assisted and independent living. Southwest is licensed as a critical access
hospital and rural health clinic. Southwest is governed by a board of trustees that represent the
communities Southwest serves. Most of Southwest's revenue is "in the form of net patient
revenue," the majority from Medicare and Medicaid. Southwest also contracts with commercial
insurance companies for payment. Additionally, Southwest's revenue for 2021 included $95,000
(1%) from mill levy money.
Southwest may apply for city sales tax funds from the City Health Board, which the City Health
Board may either approve or deny. Bowman's healthcare sales tax funds are limited to the scope
of applied for funds and are only spent "towards the reason stated in the application for the
funds."
ISSUES
- Whether Southwest is a public entity subject to open records laws.
- Whether Southwest violated N.D.C.C. § 44-04-18 by denying a request for records.
ANALYSIS
Issue 1
Open records laws apply to all public entities. The definition of public entity includes
"[o]rganizations or agencies supported in whole or in part by public funds, or expending public
funds." An organization is a public entity if it "is supported in whole or in part by public funds;"
or "[t]he organization is an agent or agency of a public entity performing a governmental function
on behalf of a public entity or having possession or custody of records of a public entity."
However, if the public funds received are "in exchange for goods or services having a fair market
value equivalent to the amount of public funds received" the organization is not supported by
public funds for the purposes of open records laws. Previous opinions have applied two tests to
analyze if an entity is a public entity, the Supported by Public Funds Test and Agency of
Government Test.
Supported by Public Funds Test
A non-governmental organization is subject to North Dakota open records laws if it is supported
in whole or in part by public funds. "Public funds" are defined as, "cash and other assets with
more than minimal value received from the state or any political subdivision of the state." Federal
funds are not included in the definition of public funds. In a past opinion this office determined
that a mill levy contribution of $45,000 annually was more than "minimal" and met the definition
of public funds.
Here, Southwest argues that it is not a public entity as it does not have access to public funds, nor
the discretion to spend these funds, but rather Southwest "receives public funds under an
authorized economic development program or by making a request of the City Health Board,
which may be granted or denied at the City's discretion." Southwest has a process where they
petition the City Health Board for public funds to address certain financial needs. The City Health
Board then hears the request and determines whether to provide the funding; there is no agreement
in place guaranteeing the funds, nor does Southwest have discretion to use the funds as they wish.
Southwest could receive funds for its ambulances services from the rural ambulance service district
through a similar process. Additionally, Southwest received $95,000 from mill levy money in
2021.
The fact that Southwest relies on and has access to public funds via mill levies and through requests
for public funds from Bowman's healthcare sales tax and rural ambulance service district
demonstrates how, at least in respect to the use of these funds, Southwest is supported by and
expends public funds. Therefore, to the extent Southwest is supported by or expends public funds,
in excess of any fair market value exchange of services, it is a public entity subject to open records
laws.
Agency of Government Test
Southwest did not explain or dispute Mr. Thompson's position that the Bowman County Rural
Ambulance Service District (District) "delegates its public duty or business to Southwest and
Southwest performs such services on behalf of and in place of the District." Rural Ambulance
Service Districts are organized pursuant to N.D.C.C. chapter 11-28.3 and may pass mill levy
money on to a local ambulance service. According to Mr. Thompson, Southwest receives support
from the District in public funds. Southwest stated the mill levy funds it receives "are only used
for Ambulance Services and only the Ambulance Board can request funds and can be denied."
In addition to the records related to those mill levy funds being open, if Southwest is delegated
any authority to provide services or perform any functions the District could provide itself, it is
my opinion that Southwest is a public entity for those purposes, and the records related to those
funds or activities would also be subject to open records laws. This legal rationale likewise applies
to Southwest's operations of assisted and independent living facilities.
At times, Southwest receives or expends public funds, from sources such as mill levies, city
healthcare sales taxes, and rural ambulance districts and is therefore, a public entity subject to open
records law. In any instance when Southwest undertakes government agency activities, the records
of those activities are also subject to open records laws.
Issue 2
North Dakota Century Code specifically states, "[u]pon request for a copy of specific public
records any entity . . . shall furnish the requester one copy of the public records requested." As
analyzed above, Southwest is an organization that is, at times, supported by and expends public
funds through mill levy money, Bowman's healthcare sales tax, and potentially through rural
ambulance service district funds and, therefore, is a public entity for the purposes of open records
laws regarding related records. However, records of entities that are subject to the open records
law merely because they are in part supported by public funds are limited to the records pertaining
to the use of public funds. This office in a previous opinion stated, ". . . if the public funds were
commingled with the other entity funds and not used for any specific purpose, then all of the
entity's records must be open, unless a specific law provides otherwise." Southwest states the
"[m]ill [l]evy funds are not commingled."
Southwest is bound by the open records laws in respect
to how it manages its public funds; however, if those funds are at any time, past or present,
commingled with general funds, then all of the entity's applicable records must be open. Mr.
Thompson and his representatives requested records pertaining to the use of public funds,
specifically from Bowman's healthcare sales tax, which are open records. Therefore, Southwest's
denial of those requests violated North Dakota open records laws.
CONCLUSION
- Southwest is a public entity subject to open records law to the extent the records related to
the use of public funds received or expended and any government agency activities. - Southwest violated N.D.C.C. § 44-04-18 when it denied records regarding healthcare sales
tax expenditures.
STEPS NEEDED TO REMEDY VIOLATION
Southwest must provide the requested records to Mr. Thompson, and anyone else upon request, at
no charge.
While I have every reason to expect the Southwest Healthcare Services will remedy this situation,
in accordance with this opinion, failure to take the corrective measures described in this opinion
within seven days of the date this opinion is issued will result in mandatory costs, disbursements,
and reasonable attorney fees if the person requesting the opinion prevails in a civil action under
N.D.C.C. § 44-04-21.2. Failure to take these corrective measures may also result in personal
liability for the person or persons responsible for the noncompliance.
Drew H. Wrigley
Attorney General
cc: Adam Bothun