L-R Peter Canfield and Randy Evans. (John Disney/ALM)
A public records fight between one of Atlanta’s largest hospitals and a Jones Day partner spilled into the Supreme Court of Georgia Monday as Jones Day battled to reverse lower court rulings that have, so far, shielded hospital business transaction records from public scrutiny.
The case has pitted Jones Day partner E. Kendrick Smith—the sole named plaintiff in the ongoing litigation—against Atlanta’s Northside Hospital over records associated with the hospital’s acquisitions of four large physician practice groups between 2011 and 2013—estimated to have cost $100 million in total.
Smith—represented by Jones Day partner Peter Canfield, a former longtime lawyer for The Atlanta Journal-Constitution—contends that Northside Hospital and its parent corporation are subject to Georgia’s open records law because the now-private, nonprofit hospital was first established by the Hospital Authority of Fulton County 50 years ago.
The Jones Day lawyers contend that Northside’s records—specifically those associated with its decision to affiliate with the four private medical practices—are subject to public disclosure because they were prepared, maintained or received by a private entity (in this case Northside’s parent company) that is performing duties entrusted to it by a public agency to operate and expand a health care system for the public’s benefit. That agency, they contend, is the county hospital authority.
Hospital lawyers have countered that Smith’s public records quest rests tenuously on Northside’s lease of its flagship hospital “from a government authority that got out of the healthcare business more than 25 years ago” when it decided to privatize Northside.
Northside’s attorneys also contend that Smith is attempting to misuse the state’s open records law to obtain “highly confidential and commercially sensitive” business records exempt from the law on behalf of “an undisclosed competitor” that intends to use them to secure a competitive advantage in the health care marketplace.
Northside has recruited Dentons political powerhouse Randy Evans and former Georgia Attorney General Thurbert Baker, also of Dentons, to defend it alongside Northside’s longtime outside counsel James Rawls of Atlanta’s Baker Hostetler and partner Derek Bauer, both of whom have extensive First Amendment experience.
One of the three private medical practices that has intervened in the case—Atlanta Gastroenterology Associates—has suggested in an appellate brief that Smith’s undisclosed client is Emory Healthcare, a major competitor affiliated with Atlanta’s Emory University. Jones Day’s website also lists Tenet Healthcare, which competes in Georgia, as one of Smith’s clients.
On Monday, Smith referred questions about whether he is standing in as a plaintiff on behalf of a client to Canfield. Canfield said that earlier in the litigation, the trial court entered a protective order “making it clear that any such inquiry was improper” and that “the only thing that’s important in an Open Records Act case is whether the records are ‘public records,’ not who requested them.”
Suing to make records subject to public scrutiny is a change of pace for Smith, who spent years battling successfully to seal thousands of pages of court records and corporate documents while defending online travel companies in extended litigation in multiple states, including Georgia, over whether or not the companies were collecting or adequately reimbursing local governments for hotel occupancy excise taxes.
The current appeal is rooted in an expansive 2013 public records request Smith sent to Northside’s parent company and the hospital authority requesting documents associated with Northside’s acquisitions of the physician practice groups, including financial statements, contracts, indemnification agreements, compensation and strategic plans and business forecasts.
When Northside refused, Smith sued. Fulton County Superior Court Judge Gail Tusan subsequently dismissed Smith’s case following a three-day bench trial, finding that Smith had not made his case that the records he sought were public. The state appeals court affirmed her ruling last year.
During oral arguments before the high court on Monday, Canfield said it is a long-established principle that, when local hospital authorities transfer their mission to a private company, the “records of these private entities are subject to the Open Records Act.”
Northside, he contended, “does nothing but perform a function for a public entity” after he claimed the hospital authority “lent” its assets to Northside’s parent firm but can legally reclaim them.
“If all the assets, operations, employees were given to you by the authority to operate that system, your records are subject to the [Open Records] Act, he said.
But Evans, in defending Northside Monday, noted that the state Legislature had been given several opportunities to make private companies that operate hospitals for local authorities specifically subject to the state open records law but had rebuffed those efforts. He was equally emphatic that “there is no long-standing rule” that business records of private, nonprofit firms that operate hospitals for local authorities are uniformly public.
Justices Michael Boggs, Nels Peterson and David Nahmias homed in on the nexus of a governmental entity, such as a hospital authority, and a private firm to which it hands over public assets in order to fulfill a public mission, such as the provision of health care.
Boggs asked whether there was any scenario in which a hospital authority could contract with a private firm and segregate its business transactions so they could be shielded from public review. Peterson asked what sway the Fulton County authority would have, if any, over out-of-county hospitals, clinics and staff that Northside’s parent company also operates. Nahmias suggested that at what point, in arguing that Northside was operating largely as a private company, did the transfer of valuable public assets for what could be construed as insufficient remuneration become a legal problem.
The Jones Day lawyer’s challenge has claimed the attention not only Northside but the physician’s practices that Northside acquired as well as the Fulton and DeKalb County hospital authorities, which, before Monday’s oral arguments, had also weighed in on Northside’s behalf.
Attorneys representing the private phsycians’ groups contend the authority played no role in their negotiations, and that the open records law does not extend to private, commercially sensitive documents exchanged between two private entities.
The intervenors also contend that they shared confidential business information with Northside only after executing detailed confidentiality agreements.
Hospital authorities for Fulton and DeKalb counties have expressed similar alarm and have retained, respectively, former DeKalb County Superior Court Judge Jonathan Peters of Peters & Monyak and former Georgia Supreme Court Chief Justice Norman Fletcher to file briefs backing Northside. Peters attested in an amicus brief on behalf of the Fulton County authority that more than 20 years ago the authority had transferred both ownership and control over hospital operations to the private, non-profit company that operates Northside.
Smith’s position, Peters said, “threatens our ability to choose how best to ensure that the public health needs of Fulton County are met.” if Smith succeeds, he said, Northside’s ability to operate the hospital and effectively compete in the healthcare marketplace “will be substantially diminished.”