BETHEL

DE House Republican Caucus Newsletter – 8/2/24

NEWS: Christiana Care Files Lawsuit Seeking to Overturn State Law Usurping Control of Hospital Budgets

A controversial new state law that gives a state board budgetary control of Delaware’s non-profit hospitals is being challenged.

Christiana Care filed a lawsuit Monday in Chancery Court against Gov. John Carney and other state officials seeking to overturn the law that targets the state’s non-profit hospitals. All of Delaware’s general acute care and pediatric hospitals are nonprofit organizations. Christiana Care operates three hospitals, including two in northern New Castle County.

House Substitute 2 for House Bill 350 (as amended) passed the General Assembly earlier this year in a contested vote that essentially broke along party lines. Gov. Carney and House and Senate Democrats leveraged their control of the lawmaking process to enact the legislation despite the concerns expressed by healthcare providers. The measure was signed into law in mid-June.

Under the new law, the governor appoints seven members to the Diamond State Hospital Cost Review Board. Hospitals must submit their operating budgets, capital budgets, recent expenditures, and workforce development efforts to the board for annual review. 

Hospitals with budgets exceeding a benchmark targeted growth rate set by the state or not meeting other performance parameters can be required to fashion an improvement plan. The law allows the board to coerce compliance by imposing fines of up to $500,000 on hospitals that fail to conform.

According to a statement released by Christiana Care, its complaint asserts that the law violates Delaware’s general corporation statutes and the state constitution by seizing the decision-making authority of private non-profit hospitals and giving it to the “unelected and unaccountable” Diamond State Hospital Cost Review Board.

The complaint also argues that the law contradicts the U.S. Constitution by taking over private hospital governance and budgets, forcing them to disclose confidential information, and unfairly targeting them.

The 15 members of the House Republican Caucus, all of which opposed the legislation, were quick to support Christiana Care. “This poorly conceived law is symptomatic of the bad policymaking that occurs when a single party controls the lawmaking apparatus,” read a statement issued by the organization. “A state government with one-party rule does not engage in consensus building nor reflect any perspective that is not in keeping with its monoculture of political thought. The result is a growing list of plaintiffs like Christiana Care who are forced to head to court to secure the fair consideration they should have received in the legislature and by the governor.”

State Rep. Valerie Jones Giltner (R-Georgetown), a retired critical care nurse and healthcare consultant, said she hoped Christiana Care’s challenge would be successful. She expressed concern about the legislation’s potential to severely disrupt the Delaware healthcare market, noting that for-profit corporations have a history of taking over failing non-profit hospitals. The new law does not impact for-profit hospitals. 

“I worked with hospital administrations over the past 23 years before I retired to help them improve performance and patient outcomes and reduce costs,” she said. “For-profit companies are very selective in choosing their patients, and if they displace our state’s non-profit hospitals, it will exacerbate existing challenges to provide adequate medical service access to disadvantaged groups.”

Supporters of the legislation maintained that the authoritarian approach was needed to control rising healthcare costs. State Rep. Bryan Shupe (R-Milford South) takes issue with that rationale.

“There are a multitude of factors driving the escalation of healthcare,” he said. “Collectively, Delaware’s non-profit hospitals actually posted a negative operating margin last year,” Rep. Shupe said. “If this misguided law is allowed to stand, it will prevent them from investing in new technology, curtail or eliminate facility expansions, and make it harder to recruit and retain medical professionals. We need a responsive, growing healthcare system, not one that is shackled by bureaucracy.” 

State Rep. Jeff Hilovsky (R-Long Neck, Oak Orchard) agrees with Christiana Care’s arguments. “This law is a clear case of the state seizing control of private companies. It is entirely at odds with our nation’s founding principles and the law expressed in our state and federal constitutions. I hope the Chancery Court overturns this overreach of governmental authority for the sake of the quality of our future hospital services and to discourage this type of legislative hubris in the future.”

OPINION

House Republicans React to Report on Division of Unemployment Insurance’s Financial Problems

NOTE: The Delaware Department of Labor and the Delaware Department of Finance released a report earlier this week regarding a large theft from the Unemployment Insurance Trust Fund and a separate issue concerning the inability to credibly audit the fund. The following is a statement from the House of Representatives Republican Caucus on the report.

State officials quietly issued a report this week regarding what was framed as “financial irregularities” at the Delaware Division of Unemployment Insurance, which included the embezzlement of more than $188,000 by a trusted staffer and an inability to audit the $390 million Delaware Unemployment Compensation Fund.

Those issues had earlier led the Delaware Coalition for Open Government to call on all state lawmakers to launch an investigation of the Delaware Department of Labor and the Unemployment Compensation Fund under its administration.

The House Republican Caucus proposed such an investigation in a resolution we sponsored in June. However, we quickly learned that the Democratic leadership of the House of Representatives would not support its passage.

Instead, the Delaware Department of Labor and Delaware Department of Finance conducted their own internal inquiry, producing the 20-page report that was released on Tuesday. It details numerous factors that led to the state’s profound failings, including antiquated systems, chronic understaffing, and the excessive burden the pandemic placed on the unemployment insurance program. It also discussed what steps are being taken to remedy the situation and restore public trust.

While we appreciate the thorough and thoughtful explanations, and have no reason to doubt their veracity, we believe a full investigation by a third-party entity should have been conducted. The credibility of state agencies being charged to review and report on their own flaws will always be viewed with suspicion—even when the work is performed well.

An independent probe would not only have brought different perspectives to the table and likely resulted in a more diverse analysis, but it would have also provided the public with a higher sense of fidelity regarding the outcome of that work.

Supreme Court Issues Ruling on Worship Restrictions Imposed During the Pandemic

In a ruling issued this week, the Delaware State Supreme Court affirmed that Gov. John Carney committed no wrongdoing in imposing restrictions on religious worship during the COVID-19 pandemic. However, the High Court indicated that future governors will likely have to be more deliberative.

The finding upheld an earlier Superior Court decision in a case involving a series of restrictions the governor imposed on churches and worshipers during the 16-month State of Emergency he declared starting in March 2020.

The plaintiffs—Rev. Alan Hines of Townsend Free Will Baptist Church and Rev. David Landow of Emmanuel Orthodox Presbyterian Church—sought to have the pandemic restrictions on worship declared unconstitutional and wanted a permanent injunction issued prohibiting similar limitations in the future.

The lawsuit noted that the governor’s emergency orders included limiting communal services to no more than ten people and specified how clergy members could deliver services and perform religious rituals. The plaintiffs also maintained that the governor singled out places of worship for special restrictive treatment. Even though the Carney administration identified churches as providers of essential services, more than two hundred categories of “essential” secular businesses and organizations were allowed to operate under looser rules.

State Rep. Tim Dukes (R-Laurel), who is also a member of the clergy, supported the lawsuit. “As cited in the complaint, our state and federal constitutions were written by leaders who were all too familiar with widespread outbreaks of dangerous pathogens and their consequences. Even so, our constitutional framers did not grant the chief executive the authority to unilaterally deny citizens their fundamental rights.”

In their ruling, the justices said the governor’s actions during the pandemic did not clearly violate the law because, at the time, there was no consensus among federal or state courts regarding their legality. However, they noted that court rulings since then have provided more guidance, explicitly citing the U.S. Supreme Court decision in Roman Catholic Diocese of Brooklyn v. Cuomo. In that case, the court blocked an executive order by New York Governor Andrew Cuomo that had limited attendance at worship services on the basis that it was a form of religious discrimination.

The Delaware Supreme Court, while turning away the appeal, indicated that the actions of future Delaware governors in similar situations would be constrained by the case law arising from pandemic-related actions.