Judge's decision tells Thibodaux hospital to talk to legislature in order to change laws

A Terrebonne judge's written decision regarding a suit between hospital districts tells a Thibodaux hospital that they can't make an end run around the relevant laws and that if they don't like it to tell the legislature.

"This court recognizes the benefit of giving the local public more access to healthcare and recognizes the potential cost benefits to the public that could be gained from Hospital Service Districts operating and expanding outside their districts; but that is a policy decision to be decided by the legislative branch, not the judiciary," State District Court Judge Jason Dagate wrote.

Dagate ruled April 30 that Thibodaux Regional Health System violated hospital service district laws when it opened two clinics in Houma. Houma is part of Terrebonne General Health Systems service district, and service districts must get permission before entering one another's territories.

Hospital service districts are entities established by Louisiana state law that are given a defined area to operate within and collect taxes from. Their boards are appointed by the various parish governments or police juries. They are tasked with providing healthcare to the people of their districts. Hospital service districts cannot operate within each others' spaces without agreement from the service district assigned to the area.

The Lafourche Hospital Service District 3 created a nonprofit entity, Thibodaux Regional Health System, in July of 2019. It then transferred all control of the operations and facilities to the nonprofit Oct. 1, 2019. This included working capital, hospital buildings and equipment. It then fully funded its operations by transferring more than $130 million that year, and then an additional $10 million in 2021.

During a three-day trial, Thibodaux Regional's CEO Greg Stock testified before Dagate that the hospital created its nonprofit arm for the express purpose of no longer following the service district laws.

In his 12-page decision, Dagate asked whether the nonprofit was created "with the purpose of operating where it could not operate itself." He then answered his own question with a "yes."

The Lafourche service district then also paid for the completion of the cancer center, and avoided paying sales tax on the construction.

After laying this groundwork for its nonprofit, Thibodaux Regional Health System opened an urgent care clinic at 1411 St. Charles St. in Houma in September 2021. In February 2022, it opened a clinic at 1238 St. Charles St. in Houma without the permission of Terrebonne General.

Members of the Lafourche Hospital Service District 3 and Thibodaux Regional Health System testified that the service district was unaware of these moves, but Dagate didn't believe it.

"This court does not find that testimony credible because defendants also testified that one of the purposes of creating the non-profit… was to allow its hospital to operate and expand outside of the Lafourche Hospital Service District 3," Dagate wrote.

Members from both entities had testified that they had set all these moves into motion before the split. Stock, who was the CEO of the service district, became the CEO of the nonprofit. The service district then transferred its CFO, all employees, two board members who subsequently hand-picked three other board members, as well as all assets and working capital.

"Thus it's quite evident that they chose to try to have the law changed through the judiciary by arguing policy and market strategies rather than through the legislature," Dagate wrote in his decision.

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Stock was asked by attorneys why he didn't just ask legislators to change the law if it was such a hindrance to their competitiveness, and he said because he didn't think they could sway lawmakers.

"If we are to accept defendants' argument that a political subdivision can create its own nonprofit to begin to act outside its legislatively created authority, where does that logic lead?," Dagate asked. "Would it be acceptable under our current laws if a Parish Sheriff directed and funded the creation of a nonprofit, and under the title of the newly formed nonprofit, started carrying out law enforcement duties such as making arrests and collecting taxes outside its legislatively created jurisdiction without consent of the Sheriff in that other jurisdiction? Of course not."

This article originally appeared on The Courier: Judge's decision tells Thibodaux hospital they can't sidestep the law