All the State's a Stage: Vermont Summer Theater

City v s MCHV
Char ity on the Line
't.
"iF
.~
by Amy Schlegel
and Pete, F,..yne
B
lIrlington Mayor B ernie
Sanders said this week
that next week's court-
room showdown between the
City and the Medical Center
Hospital of Vermont (MCHV)
will be "a trial of national sig-
nificance."
Sanders said that if the city
wins its ar gument that the hos-
pital is not a "charitable" insti-
tution it wil l caus e a " national
ripple effect." Itwill say. said
Sanders. that many of the insti-
tutions that are posing as "non-
profit" and "charitable" real-
lyare nor, "and that will make
people think about what kind
of health-care system we
want."
At issue is MCHV's battle
to conv ince Chittenden Coun-
ty Superior Court J udge
Matthew Katz that the hospi-
tal is indeed a " char itabl e"
institution and therefore
exempt from paying property
taxes to the city. In June the
city delivered to MCHV a52.8
million property tax bill.
MCHV sought an immediate
inj unction to pr ev ent the city
f r om ev er coUecting the taxes ,
but received a promise of a
quick trial instead.
In arecent court hearing at
whicb he rnled against the
city's effort to postpone the
'r:ominued on page 6 ...
"continued from page J
case J udge Katz told the par-
ties, ',It's a very substantial.
case and inevirably ripples will
spread out all over the state:'
MCHV's Public Relations
Director Beverly Rutherford
said the legal dispute is "a
precedentMsetting case for
Vermont."
"There was 8time in our
country, perhaps 100 years
ego," said Sanders. "when hos-
pitals actually were for all
intensive purposes really
charitable institutions. For
example, right here at the
Mary Aetcher, which evolved
into the Medical Center, we
have statistics which show that
over two-thirds of the people
that went to that hospital were
treated absolutely free:'
However, noted Sanders,
"over the last 100years there's
been a radical change in the
whole functioning of medicine
and large hospitals, and I have
some really serious doubts as
to whether the MCHV of
today reaDy functions in any
real sense of the word as a
charitable institution ratber
than just asanother bigbusi-
ness in which a lot of people
are making a lot of money."
MCHV's Rutherford agreed
that the "burden of proof is
on the hospital simply because
of the way the statute is writ-
ten." Rutherford pointed to
the large gray area in federal
guidelines defining "nonprof-
it" status as"very broad and
loose and certainly the hospi-
tal fits into it," Indeed,
Rutherford said tbe terms
"charitable" and "nonprofit"
have been viewed bythe Med-
ical Center "interchangeably,"
although, she notes, "nonprof-
it" is used only for tax pur-
poses. Unlikeother non-profit
organizations in Burlington,
the Medical Center does not
have a sliding-fee schedule,
adefinition of itself as a
"charitable organization," or
amajority of itsoperating
costs derived from either fed-
eral or state grants or private
oontributioDs.Accorrungto
MCHV's annual report, about
5I.5 miUion of the Medical
Center'stotal revenuesisspent
on "free care....In fact, the
MCHV's 1986Annual Report
states that nearly 55.5million
wasnever collected "due to
our support of patients for
whom the hospital bill was in
all or in part beyond their
financial means:'
Thehospital's mission state-
ment bowever, states tbat
"MCHv will not restrict the
avaiIability or compromise the
quality of essential care on any
basis." Inaddition, there isan
annuaifumd~byMCHV
employees for the needs of
financially debilitated, indi-
gent and homeless people,
among others. This fund pays
for social services such as
transportation and meal
vouchers, lodging, supplemen-
tal medication, and patient or
patient-family needs not al-
ready covered. Last year
55,000 out of the fund's total
596,000 raised was devoted to
these social services. Moreo-
ver, the hospital spent 56,000
on taxi vouchers infiscal year
1986, said Rutherford.
But city officials charge
that MCHV does not make its
policy or standards by which it
provides so-called free care
available to the public. They
also say that MCHV is relent-
less initseffortstoextract pay-
ment for services rendered and
"hounds" low-income people
for money.
"I wasout at one of our
low-income housing projects
last week,'"saidSanders. "and
some guy says, 'You want me
to tell you about the Medical
Center Hospital of Vennont?
Today Ireceived three calls
from them asking me to pay
my debt to the hospital and I
donIthave the money and I
explained that to them. '"
Indeed, tbe city's case
against MCHV is likely to raise
issues and introduce testimo-
ny that hospital officials are
not pleased with providing.
Lawyers for the city, who have
been assistedbyseveral inves-
tigators, areexpected todelve
into MCHV's financial rela-
tionships with firms repre-
sented by members of the hos-
pital's board of trustees.
According to documents
obtained by the Vanguard,
MCHV's board of trustees bas,
on at least one occasion,
awarded amajor contract toa
finn operated byaformer trus-
teeeven though the ex-board
member had not submitted the
lowbidfor the contract.
According to the minutes
of aJ une 26,1979, meeting of
theProject Committee of the
Board of Trustees and a sub-
sequent J une 28meeting of
the full board of trustees sev-
eral trustees argued suc~ess-
f~lIy that the hospital expan-
sion contract be awarded to
PizzagalJ i Construction in-
stead of McBro, a St. Louis-
based firm, even though
McBro's bid for the project
was 5500,000 less than Piz-
zagalli's.
Pizzagalli Construction is
headed by Angelo PizzagaJ ti
a fonner member of MCHV'~
board of trustees.
According to the minutes
of~e ~~ttee meeting,one
objection raised to awarding
themajor expansion contract
to McBro was the fact that
the company was a u.nion
outfit.
"The hospital shouldn't get
involved in anything that mighl
involveworkingwith aunion .,
said Trustee Richard M. ChaP.
man, execuuve vice-president
for the Chittenden Trust.
The full board of truslees
subsequently voted to award
the contract to Pizzagalli.
In fact, much of the city's
interestin MCHV has focused
on the financial machinations
of hospital administrators and
trustees. In a J uly 14 filing of
"Defendant's Counterclaims,"
City Attorneys J oseph McNeil
and J ohn Franco noted that
"the administrators of the
Medical Center Hospital of
Vermont have taken no oath
of poverty nor have they ~ol-
untarily set any limit on their
compensation for services
rendered; rather, they are
compensated in amounts that
arecomparable toor inexcess
of compensation received by
Vennont business executives
and for-profit business."
The city was able, after an
initial refusal, to obtain the
salary figures for MCHV Pres-
ident J ames Taylor and other
top administrators. MCHV cit-
ed as their concern the fact
that the release of those fig-
ures could he used by the
organizersof thecurrent union
effort at the hospital as ammu-
nition. The salary figureswere
eventually provided to the city
under anagreement that man-
dates that they be kept con-
fidentiaL
MCHV's attorney, Spencer
Knapp, said he "couldn't
believe" the amount of docu-
ments the city asked for as
part of thediscovery process.
"We gave them what they
asked for," hesaid at a recent
hearing on the case.
What if the city wins its
case?
Sanders says that one thing
hewould liketoseehappen is
for the city to "take agood
chunk" of the 52.8 million
annual tax payment, "and use
it directly for health care to
establish a large health care
center whichwould be freeto
all the people."
But the money isn't in the
bank yet. And regardless of
theoutcome of next week's
court battle, whichever party
loses isalmost certain to
appeal to the Vermont Su-
premeCoun .