Court Opinion

ID: 9596073
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:45:52.748165+00
Date Added: 2024-06-11T18:01:32.083572
License: Public Domain

Chief Justice ROVIRA
dissenting:
In October 1989, the Board of Regents of the University of Colorado (“the Regents”) created a private nonprofit, nonstock corporation (“the Hospital Corporation”) to operate the University Hospital of the University of Colorado, pursuant to the Act to Reorganize University Hospital as a Private Nonprofit Corporation (“the Act”), 1989 Colo.Sess.Laws 995-1008, (codified at §§ 23-21-401 to -22-111, 9 C.R.S. (Supp. 1990)). Notwithstanding the legislative pronouncements declaring that any corporation created under the Act would be private and notwithstanding the statutory provisions limiting the state’s role in the operation of any corporation formed under the Act, the majority holds that the Hospital Corporation is a public corporation subject to article XII, section 13, the state-personnel system provision, of the Colorado Constitution. The majority then proceeds to find that the Act violates the Colorado Constitution. I do not agree that the Hospital Corporation is a public corporation, or that the Act violates the state constitution. Accordingly, I respectfully dissent.
“ ‘Public corporations are all those created specially for public purposes as instruments or agencies to increase the efficiency of government, supply public wants, and promote the public welfare. Public corporations are classified as municipal, quasi-municipal, and public-quasi corporations.’ ” People ex rel. Rogers v. Letford, 102 Colo. 284, 297, 79 P.2d 274, 281 (1938) (quoting 43 C.J. Municipal Corporations § 11, at 72-73 (1927)); accord Bailey v. People, 200 Colo. 549, 552-53, 617 P.2d 549, 551 (1980). The term “public corporation” has been used consistently in various contexts to refer to entities created as subdivisions of the state to carry out governmental functions. For example, in the context of foreign-trade zones, the legislature has defined "public corporation” as:
[T]he state of Colorado, any political subdivision, municipality, or city and county thereof, any public agency of the state of Colorado, any political subdivision, mu*150nicipality, or city and county thereof, or any corporate municipal instrumentality of the state of Colorado or of the state of Colorado and one or more other states.
§ 7-49.5-108(6), 3A C.R.S. (1986); see § 29-1-202(2), 12A C.R.S. (1986) (“political subdivision” includes “public corporation organized pursuant to law” in intergovernmental-relationships statute); see also Paulu v. Lower Arkansas Valley Council of Gov’ts, 655 P.2d 1391, 1392 (Colo.App.), cert. denied (1982) (equating “public corporation” with municipal or quasi-municipal corporation in context of wage statute).
As the legislature and this court have defined “public corporation,” 1 I do not believe that the Hospital Corporation, as created by the Regents pursuant to the Act, constitutes a public corporation. The Act narrows the role of the Hospital Corporation beyond what can be considered a municipal or quasi-municipal entity. Under the Act, the Hospital Corporation must “assume responsibility for and shall defend, indemnify, and hold harmless” the state and Regents with respect to:
(a) All liabilities and duties of the regents pursuant to contracts, agreements, and leases for commodities, services, and supplies utilized by the hospital, including real property leases;
(b) All claims related to the employment relationship after the transfer date between employees of the corporation and the corporation;
(c) All claims for breach of contract resulting from the corporation’s action or failure to act after the transfer date;
(d) All claims related to the corporation’s professional errors and omissions, including medical malpractice; directors and officers liability; workers’ compensation; automobile liability; premises, completed operations, and products liability; and any other liabilities of the corporation.
§ 23-21-403(2); cf § 24-10-103(5) and -106, 10A C.R.S. (1988) (“public entity,” which includes special improvement district “and every other kind of district, agency, instrumentality, or political subdivision of the state organized pursuant to law,” shall be immune from liability for injury). Moreover, under the Act the Regents may only create a “'private nonprofit-nonstock corporation” under the Colorado Nonprofit Corporation Act, and the Hospital Corporation “shall not be an agency of state government, nor a department or political subdivision thereofQ nor shall it] be subject to any provisions of law affecting only governmental or public entities.” § 23 — 21—403(l)(a); see § 23-21-401(l)(e) (legislative declaration that University Hospital will operate as “a private nonprofit corporation”); cf, e.g., Colo. Const, art. XIV, § 17(l)(a) and (4)(a) (“general assembly shall provide by statute for the organization, structure, functions, services, facilities, and powers of service authorities” and such service authorities “shall be a body corporate and a political subdivision of the state”).
Notwithstanding the foregoing statutory provisions, the majority reasons that the Hospital Corporation is a public entity because it was founded by the Regents, who are “state officials, not private individuals,” and because of the “Regents’ continuing role” in controlling the operation of the Hospital Corporation. Maj. op. at 143-144. I am not persuaded by this analysis. Under the majority’s reasoning, neither the legislature nor the Regents can create a private, nonprofit corporation if the corporation is established by state officials pursuant to legislative authority, and so long as they retain any control over the corporation. Yet, the law governing nonprofit corporations, §§ 7-20-101 to -29-107, 3A C.R.S. (1986 & Supp.1990), specifically contemplates that a nonprofit corporation may be created by the legislature, and the legislature in enacting the Act intended that the Hospital Corporation be created under the nonprofit-corporations statute. See § 23-21-403. Section 7-20-102(2)(a) of the nonprofit corporations statute provides that “articles of incorporation” include:
For a corporation created by special act of the general assembly or pursuant *151to general law, which corporation has elected to accept the provisions of said articles 20 to 29, the special charter and any amendments thereto made by special act of the general assembly or pursuant to general law prior to the corporation’s election to accept the provisions of said articles.
The Regents’ limited control over the Hospital Corporation, as permitted through the Act, is consistent with the nonprofit-corporations statute. Section 7-21-102 provides that the articles of incorporation shall include the purpose for which the corporation is organized and “[a]ny provisions, not inconsistent with law, which the incorporators elect to set forth in the articles of incorporation for the regulation of the internal affairs of the [nonprofit] corpo-ration_” Likewise, section 7-23-102 provides that the nonprofit corporation’s bylaws “may contain any provisions for the regulation or management of the affairs of a corporation not inconsistent with the law or the articles of incorporation.” Nothing in the nonprofit-corporation statute, or any other statute governing the formation and operation of corporations, prohibits the organizational structure of the Hospital Corporation. On the contrary, we have held that the legislature “is invested with plenary power for all the purposes of civil government,” with the state constitution providing certain limitations. Letford, 102 Colo. at 300, 79 P.2d at 282. In Letford, we considered a challenge to a statute creating a water conservancy district. Although we noted that the district was not a traditional “municipal corporation,” the creation of the district did not violate the Colorado Constitution because “ ‘the state legislature may create any kind of a corporation to aid in the administration of public affairs and endow such corporation and its officers with such powers and functions as it may deem necessary.’ ” Id. at 299, 79 P.2d at 282 (emphasis supplied).
In my view, the Regents successfully created a private, nonprofit corporation to carry on the functions of the University Hospital, and to assume the hospital’s liabilities. The legislature in this case chose to permit the Regents to create a private nonprofit corporation to carry out the University Hospital functions. The Regents’ incidental control over the Hospital Corporation, and the General Assembly’s even more attenuated control, is insufficient to transform the Hospital Corporation into a public corporation. Because the Hospital Corporation is not a public corporation, the petitioners’ objections under article XI, section 3, and article XII, section 13, of the Colorado Constitution to the corporation’s creation must fail.
Accordingly, I respectfully dissent.

. Because the statutes and this court have adequately defined "public corporation,” I find it unnecessary in answering the question of whether the Hospital Corporation is a public corporation to consider how other jurisdictions have defined “public corporation.”