In a recent posting, Director Hickey claimed that Sequoia Healthcare District (the "District") changed its name and its status from a hospital district in order to acquire new powers exercisable only by a healthcare district. He claims that this change was not authorized by voters and that, as a result, the exercise of new powers (including making grants to community organizations) is illegal. He even posits that such grants may be felonious conduct by the other Board members.

These are very serious charges and the Board members are entitled to assurances that their actions in making community grants are legal. Based on the amendments to the Local Hospital District law over time, it is my opinion that the District is properly organized as a healthcare district and is acting within its powers when it makes grants for the provision of health care within the communities served by the District.

The statutes authorizing the creation of hospital districts were enacted by the Legislature in 1945. This body of law, Health & Safety Code §32000 et seq., was known at the time as the Local Hospital District Law. There was no reference to "healthcare district" in the law at that time.

The District was organized under the Local Hospital District Law in the 1940’s and was originally named "Sequoia Hospital District."

The general powers to be exercised by a hospital district were set forth in H&S §32121. These powers have been amended and expanded by the legislature from time to time. In 1972, the Legislature enacted §32121(m), which authorized hospital districts to "establish, maintain, and operate, or provide assistance in the operation of, free clinics, diagnostic and testing centers, health education programs, and other health care provider groups and organizations as are necessary for the maintenance of good physical and mental health in the communities served by the district."

Also in 1972, the Legislature enacted H&S §32126.5. Subsection (b) allows a district to "provide assistance or make grants to nonprofit provider groups and clinics already functioning in the community."

These two enactments recognized that, in some instances, outside groups may be more efficient providers of a particular services than the district itself.

In the early 1990’s, and in the midst of major changes in the health care marketplace, the Legislature recognized that hospital districts needed additional powers and flexibility. Accordingly, the Legislature amended H&S §32000 to provide "This division shall be known and may be cited as ‘The Local Health Care District Law.’ Any references in any statute to the Local Hospital District Law shall be deemed a reference to the Local Health Care District Law, and any references to a hospital district shall be deemed to be a reference to a health care district."

The Legislature also added H&S §32000.1, which provides, in relevant part: "Any reference to ‘hospital district’ of ‘district’ shall mean ‘health care district’…."

By virtue of these changes, there was no need for the District to take action to change its name or status. That decision was made by the Legislature, for all former hospital districts, and became effective automatically when these amendments were enacted in 1994. There was no option to remain as a hospital district. After 1994, the District would be a health care district, regardless of whether it formally changed its name or not. And, as a health care district, it could exercise all of the powers assigned by the Legislature in the Health and Safety Code, including the power to make community grants, without the need for further authorization by the voters.

One final point should be noted. Local voters make the decision to authorize the formation of a health care district and can make a decision to dissolve the district. Once created by the voters, however, the district is a creature of state law, subject to the expansion and contraction of its powers by the Legislature. Health care districts are not static; they are not limited to the powers that were in the enabling statutes at the time each district was created. Otherwise, every district would have a different set of powers, depending on when it was created.

As this statutory history makes clear, the District is acting within the scope of existing law when it is making community grants. The Board members should be assured that, in making these grants, they are not violating any laws and do not need any further authorization from the voters to exercise the powers in H&S §§32121(m) and 32126(b).