Court Opinion

ID: 2799420
Source: CourtListenerOpinion
Date Created: 2015-05-07 21:36:23.494855+00
Date Added: 2024-06-11T11:30:53.820012
License: Public Domain

J-A34016-14

                            2015 PA Super 111

IN RE: GROVER C. SHOEMAKER, TST,:             IN THE SUPERIOR COURT OF
                                :                  PENNSYLVANIA
                                :
APPEAL OF: GEISINGER-BLOOMSBURG :
HOSPITAL,                       :             No. 828 MDA 2014

               Appeal from the Decree Entered March 25, 2014,
              In the Court of Common Pleas of Columbia County,
                     Orphans Court, at No. 2012 OC 231.

BEFORE: FORD ELLIOTT, P.J.E., SHOGAN, J., and STABILE, J.

OPINION BY SHOGAN, J.:                                FILED MAY 07, 2015

     Appellant, Geisinger-Bloomsburg Hospital (“GBH”), appeals from a

decree entered on March 25, 2014, in the Orphans’ Court division of the

Columbia County Court of Common Pleas. On appeal, GBH challenges, inter

alia, the Orphans’ Court’s creation of a Pour Over Endowment Trust and the

requirement that charitable trust funds be spent only in years in which GBH

has an operating surplus. For the reasons that follow, we affirm in part, and

reverse in part, the decree entered on March 25, 2014.1

1
   On September 30, 2014, GBH filed two separate motions with this Court:
1) a motion to dismiss First Columbia Bank & Trust Company (“First
Columbia”) for lack of standing, or in the alternative, to consider First
Columbia an amicus curiae and strike references in its brief to settlement;
and 2) a motion to dismiss the Bloomsburg Library for lack of standing. We
GRANT GBH’s motion to consider First Columbia, as an administrator of
trusts involved in this appeal, as an amicus curiae and strike references in
First Columbia’s brief to settlement. See In re Pearson’s Estate, 275 A.2d
336, 338 n.3 (Pa. 1971) (treating an administrator/stakeholder’s brief as an
amicus curiae brief only where the administrator/stakeholder was not an
aggrieved party and the issue of standing was raised). However, our
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       This case concerns the allocation and distribution of funds from several

charitable trusts to the hospital following its affiliation with Geisinger Health

System Foundation (“GHSF”). On November 15, 2012, First Columbia filed a

petition pursuant to 20 Pa.C.S. § 7711 concerning the administration of

eight trusts. First Columbia sought judicial interpretation of the effect that

multiple corporate mergers and the changing corporate identity of the

original intended trust recipient, The Bloomsburg Hospital, had on these

eight trusts.2 On January 18, 2013, GBH filed its response.

       On March 15, 2013, the Attorney General of Pennsylvania, in its

capacity as parens patriae, filed its statement of position in this matter.3

The Attorney General concluded that despite the changes in corporate

identity, the trusts at issue may still “be administered in exact conformity

with the Settlors’ intended schemes of distribution because [GBH] continues

decision on this issue is limited to the facts of this case and in accordance
with our Supreme Court’s statement that such determination is “made
without establishing precedent.” Id. Additionally, we GRANT GBH’s motion
to dismiss the Bloomsburg Library for lack of standing.          Because the
Bloomsburg Library has filed no brief, there is nothing that we may consider
as an amicus brief.
2
    Additional charitable trusts were subsequently put at issue.
3
   We note that the Attorney General, on behalf of the Commonwealth as
parens patriae for charities, has not filed a brief in this matter. Charitable
trusts are continuously subject to the parens patriae power of the
Commonwealth through its Attorney General and the supervisory jurisdiction
of the courts. In re Estate of Coleman, 317 A.2d 631, 634 (Pa. 1974); In
re Estate of Voegtly, 151 A.2d 593, 594 (Pa. 1959).

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to operate as a non-profit hospital in Bloomsburg, Pennsylvania.” Attorney

General’s Statement of Position, 3/15/13, at ¶9. The Attorney General was

satisfied that no funds from the trusts had been, or would be, unlawfully

diverted from GBH. Id. at ¶11. However, the Attorney General made the

following recommendation:

      The Commonwealth respectfully recommends language which
      affirms GHSF’s commitment to honor the settlors[’] intentions as
      follows, “[A]ny and all funds received from the charitable trusts
      created by John Paul Barger[,] Reuben H. Learn, Mary Elizabeth
      McNinch, Hazel W. Shoemaker, Grover C. Shoemaker, Mary F.
      Sneidman, H.W. Titman, Mary W. Wolfe, and any other present
      or future trust which references “Bloomsburg Hospital” shall be
      restricted exclusively to the Geisinger-Bloomsburg Hospital
      facility in Bloomsburg, Pennsylvania to be utilized in conformity
      with the terms of each granting instrument and shall not be
      diverted to any other use or facility without further Order of
      Court.”

Id. at ¶12.   Following hearings on December 27, 2013, and February 10,

2014, the Orphans’ Court issued its findings of fact and conclusions of law.

Due to the extensive nature of the court’s findings, we shall not restate them

here. However, a brief summary is in order.

      On February 11, 1905, an entity known as “The Bloomsburg Hospital”

was incorporated.   The Orphans’ Court took judicial notice of the fact that

the hospital’s stated purpose was caring for “the sick ... in the county of

Columbia, especially in and about the Town of Bloomsburg.”           Findings of

Fact, 3/25/14, at ¶ 7.    The Bloomsburg Hospital later became known as

Bloomsburg    Hospital.   Through   a   series   of   complicated   transactions,

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Bloomsburg Hospital and related and ancillary corporate entities have been

joined under the larger corporate umbrella of GHSF. GHSF is the controlling

corporation of an integrated health care system with GBH, formerly known

as   Bloomsburg    Hospital,    operating    as   a   hospital   in   Bloomsburg,

Pennsylvania.   Id. at ¶¶ 7-21; Conclusions of Law, 3/25/14, at 11.          The

trusts at issue all directed that certain funds from the individual trusts were

for the benefit of Bloomsburg Hospital.

      As stated by First Columbia, the question before the Orphans’ Court

was “the propriety of continued income distributions to GBH and the

appropriateness of any conditions or restrictions applicable to future

distributions should the court conclude that GBH continues to be qualified as

a beneficiary of each Trust.”    First Columbia’s Amicus Curiae Brief at 6-7.

According to First Columbia, its concern was “whether the amended Articles

[of Incorporation of GBH] permitted Trust funds to be diverted to other

charitable entities under the control of GHSF that did not benefit the

Bloomsburg Hospital and Bloomsburg area.” Id.

      The Orphans’ Court found that “[t]he hospital in Bloomsburg remains

in existence, both as a hospital located in Bloomsburg and as a separate

legal entity, whether known as BH [Bloomsburg Hospital] or GBH.” Findings

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of Fact, 3/25/14, at 20.    However, the court then concluded, in relevant

part,4 as follows:

      15. The charitable purpose of the settlors, specifically, to benefit
      the intended locale and population of the charity which is
      specified to be Columbia County, especially in and about
      Bloomsburg, will become unable to be assured under GBH’s
      interpretation, and accounting restrictions are necessary to avoid
      an unlawful, impracticable and wasteful result.

      16. The intent of all of the settlors of the Trusts at issue was to
      benefit BH [Bloomsburg Hospital], consistent with the object
      expressed in the original Charter to TBH [The Bloomsburg
      Hospital], being the population of Columbia County, especially in
      and about the Town of Bloomsburg. A further intent was to
      facilitate the availability of an acute care hospital, serving said
      population, providing all of the BH Services.

      17. Achievement of the settlors’ intents cannot be assured
      without accounting restrictions, given GBH’s stated intent of
      distributing Trust income throughout the Geisinger system in the
      event of consolidated surpluses at GBH. Money is fungible. A
      dollar into a bank account is always a dollar in a bank account.
      GBH and GHSF cannot be permitted to regard the first $100,000
      of operational expenses to be paid for by a hypothetical
      $100,000 of Trust income, and then pay the dollars which come
      from patient revenues to affiliate hospitals 100 miles away from
      Bloomsburg when there is an operational net profit, at least
      limited to the Trust income. Simply put: That is too easy.

      18. Orphans’ Courts are permitted to prescribe a tailored
      accounting to ensure compliance with a settlor’s intent. []

4
  The Orphans’ Court also detailed the irregularities and errors that occurred
in the transaction that placed GBH under the corporate umbrella of GHSF.
Conclusions of Law, 3/25/14, at ¶¶ 1-10. However, the Orphans’ Court
noted that the parties retroactively “re-closed the Transaction with proper
authorizing documents” and that “equity deems that which ought to be done
as having been done.” Id. at ¶ 11 (citation omitted). Accordingly, any issue
concerning the transaction has not been challenged and is not before us.

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      19. Pursuant to 20 Pa.C.S. §7711(c), a judicial proceeding
      involving a trust may relate to any matter involving the trust’s
      administration, including a request for declaratory judgment.
      This particular section further provides this court with the
      authority to clarify and define the terms and conditions of
      administration of the Trusts through the Order and Decree which
      follows, for the same reasons articulated above.

Conclusions of Law, 3/25/14, at ¶¶ 15-19.

      The Orphans’ Court then applied the doctrine of cy pres5 and issued

the following order:

                           ORDER AND DECREE

            AND NOW, to-wit, on this 25th day of March, 2014, after
      hearing held on the Petitions (as defined at paragraph 4. of the
      Findings of Fact and Discussion), on the basis of the foregoing
      Finding[s] of Fact, Conclusions of Law and Discussion, it is
      hereby ORDERED and DECREED as follows:

             1. The income from the Trusts, excepting the
      Bittenbender, Kisner and Stewart estates and/or trusts, shall be
      distributed to Geisinger Bloomsburg Hospital (“GBH”), subject to
      the terms and conditions set forth herein.

            2. For all Trusts except the Bittenbender, Kisner and
      Stewart Trusts and/or Estates: An accounting system shall be
      set up using a Pour Over Endowment Trust, to be administered
      according to the following terms and conditions:

            a. Operating surpluses and losses of GBH shall be
            determined for the fiscal year at issue. Operating

5
  As will be discussed in greater detail below, the cy pres doctrine requires
that “if the charitable purpose for which an interest is conveyed shall be or
become indefinite or impossible or impractical of fulfillment, ... the court
shall order an administration or distribution of the estate for a charitable
purpose in a manner as nearly as possible to fulfill the intention of the
conveyor ....” In re Farrow, 602 A.2d 1346, 1347 (Pa. Super. 1992).

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          surpluses or losses are to be measured before
          application of Trust income.

          b. lf operating surpluses exist for a given fiscal year
          at issue, all Trust income shall be paid into the Pour
          Over Endowment Trust. First Columbia Bank & Trust
          Co. shall serve as the Trustee of the Pour Over
          Endowment Trust.

          c. If there is an operating loss in a given fiscal year,
          and the absolute value of the operating loss is less
          than the Trust income, then the Trust income for
          that fiscal year, limited to the absolute value of the
          operating loss, shall be paid to GBH to fund that
          extent of the operating loss. The Trust income for
          that fiscal year, in excess of the absolute value of
          the operating loss, shall be paid to the Pour Over
          Endowment Trust.

          d. If there is an operating loss, and the absolute
          value of the operating loss is more than the Trust
          income, then all of the Trust income for that fiscal
          year shall be paid to GBH to fund the operating loss
          for that fiscal year to the extent of Trust income for
          that fiscal year. Further, GBH shall be paid monies
          from the accumulated Pour Over Endowment Trust to
          fund operating losses of GBH for that fiscal year in
          excess of the Trust income earned during that fiscal
          year. In such cases, the payment of accumulated
          Pour Over Endowment Trust monies shall be limited
          to that which is necessary to fund operating losses
          not funded by Trust income for that fiscal year.

          e. Notwithstanding anything to the contrary, in
          addition to the payments permitted above, the
          Trustees shall pay further Trust income from the
          applicable fiscal year to the extent necessary to
          avoid a penalty or forfeiture of said Trust income
          under applicable law, whether to the Internal
          Revenue Service or otherwise.

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          3. As to the Bittenbender, Kisner and Stewart Trusts
     and/or Estates: The Petitions are dismissed as moot in that there
     are no assets held in trust or in estates for distribution or
     management.

           4. Payments of Trust Income for all trusts excepting the
     Bittenbender, Kisner and Stewart Trusts and/or Estates shall be
     conditioned upon GBH amending their Articles of Incorporation
     to provide additional language as follows as a restriction upon
     permissible donations and other transfers to GHSF:

           “...except for funds restricted for use at or by
           Geisinger-Bloomsburg Hospital, which shall be
           expended solely in connection with the operation of
           the Geisinger-Bloomsburg Hospital in a manner
           consistent with the intent of the Donors and in
           accordance with any explicit instructions governing
           the application thereof, and in further accordance
           with applicable orders of court; ...”

           5. Within ninety (90) days after the end of a fiscal year,
     GBH shall provide annual reports to the Attorney General and to
     the Court Administrator of the 26th Judicial District, specifying:

           a. The annual net income from the Trusts (excepting
           the Bittenbender, Kisner and Stewart Trusts and/or
           Estates), itemized per trust and setting forth the
           caption and docket number of this action;

           b. The net operating income or loss of GBH;

           c. Deposits to, and withdrawals from, the Trusts
           (excluding the Bittenbender, Kisner and Stewart
           trusts and/or estates) over the reporting period,
           specifying    the   date,    amount,     payee    (for
           withdrawals), purpose (for withdrawals) and source
           of funds (for deposits). Further, the balance of each
           Trust (excluding the Bittenbender, Kisner and
           Stewart trusts and/or estates) at the beginning and
           end of the reporting period shall be specified;

                                     -8-
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           d. Deposits to, and withdrawals from, the Pour Over
           Endowment Trust over the reporting period,
           specifying date, amount, payee (for withdrawals),
           purpose (for withdrawals) and source of funds (for
           deposits). Further, the balance of the Pour Over
           Endowment Trust at the beginning and end of the
           reporting period shall be specified;

           e. An affidavit from the chief operating or executive
           officer of GBH (and, if there is no one with either of
           such titles, the person in the position of chief
           executive officer of GHSF) affirming that, as of the
           end of the reporting period and the one (1) year
           prior, GBH has, or has not, provided all of the
           following services on a generally available basis:
           Psychiatry, Obstetrics, General Surgery, General
           Medical Surgical beds, Emergency Department and
           Intensive Care Unit (the “BH Services”).

            6. If any of the BH Services are not generally available at
      GBH, the Trustees shall make no further disbursements to GBH,
      and GBH shall return to the Trustee any disbursements made to
      GBH since the cessation of any such services, until further order
      of court. The Trustees may rely on information received from the
      Attorney General, the Court or any other reliable source.
      Further, GBH shall immediately notify the Attorney General, the
      Trustees and the Court Administrator of the 26th Judicial District
      (with the above caption) if GBH, or any successor, ceases to
      make the BH Services generally available.

           7. The Court shall retain jurisdiction.

Findings of Fact and Conclusions of Law, Order and Decree, 3/25/14, at 22-

24.

      On April 11, 2014, GBH filed timely exceptions to the March 25, 2014

decree pursuant to Pa.O.C.R. 7.1. In an order filed on April 24, 2014, the

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Orphans’ Court denied those exceptions, and on May 23, 2014, GBH filed its

timely notice of appeal.6

    On appeal, GBH raises four issues for this Court’s consideration, which we

have reordered for purposes of our disposition:

    1. Where a Trial Court has determined that income from certain
       charitable trusts bequeathed to a non-profit corporation
       operating a community hospital shall continue to be distributed
       to that same corporation/hospital after it has become part of a
       larger non-profit health care system and has committed to honor
       all restrictions of all gifts, is it an abuse of discretion or error of
       law for that Court to impose a Pour Over Endowment Trust and
       other limiting conditions that were not part of the initial
       bequests, including allowing payment only in the event of an
       operating loss?

       2. Where Settlors of certain charitable trusts bequeathed trust
       income to a non-profit corporation operating a community
       hospital and that corporation still exists and continues to operate
       the same hospital, lawfully maintaining and carrying out the
       same purpose and mission, is it an abuse of discretion or error of
       law for a Court to apply the cy pres doctrine and use its
       application to impose conditions on the availability of the gifts
       that were not initially part of the gifts?

       3. Where a Trial Court has determined that income from certain
       charitable trusts bequeathed to a non-profit corporation
       operating a community hospital shall continue to be distributed
       to that same corporation/hospital after it has become part of a
       larger non-profit health care system, is it an abuse of discretion
       and error of law for the Court to consider the operating revenue,
       expenses and income of the system as a whole and the breadth,
       scope and geographic reach of the health care system as a whole
       to impose conditions on the availability of the gifts that were not
       initially part of the gifts[?]

6
   “The 30 day appeal period pursuant to Pa.R.A.P. 903 from such final
orders begins to run from the date of entry of an order disposing of
exceptions ….” Pa.O.C.R. 7.1 (explanatory note).

                                         -10-
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      4. Where the Attorney General had no objection to the
      underlying transaction and a non-profit corporation has
      expressly committed to the Attorney General and to the Court to
      honor the terms and conditions of all endowments and/or
      restricted funds, is it an abuse of discretion for the Court to
      additionally mandate that the corporation amend its articles and
      bylaws to reflect its commitment to use the restricted funds
      locally, and to submit to additional review by the Attorney
      General beyond the Attorney General’s normal monitoring of
      charitable trusts in the ordinary course, as parens patriae?

GBH’s Brief at 6-7.7

      “When reviewing a decree entered by the Orphans’ Court, this Court

must determine whether the record is free from legal error and the court’s

factual findings are supported by the evidence.” In re Estate of Whitley,

50 A.3d 203, 206 (Pa. Super. 2012) (citation omitted).             Because the

Orphans’ Court sits as the fact-finder, it determines the credibility of the

witnesses and, on review, we will not reverse the Orphans’ Court’s credibility

determinations absent an abuse of discretion.      Id.   “However, we are not

constrained to give the same deference to any resulting legal conclusions.”

Id. at 207 (citations omitted).     “The Orphans’ Court decision will not be

reversed unless there has been an abuse of discretion or a fundamental

error in applying the correct principles of law.” Id. (citation omitted).

      Moreover, when interpreting a trust agreement, the intent of the

settlor is paramount, and if that intent is not contrary to law, it must prevail.

7
 For purposes of our discussion, we have reordered Appellant’s issues on
appeal.

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Estate of Nesbitt, 652 A.2d 855, 857 (Pa. Super. 1995).            In order to

ascertain the intent of the settlor, the court must examine the language of

the document, the scheme of distribution, and the facts and circumstances

existing at the creation of the trust. Id. “Furthermore, charitable trusts are

favorites of the law because they are in relief of the public burden, and a

gift, even for a specific charitable purpose, should be liberally construed

whenever reasonably possible.” Id. (internal citation omitted).

      GBH first claims that the Orphans’ Court abused its discretion in

creating the Pour Over Endowment Trust and limiting conditions that were

not part of the bequests where the intent of the settlors has not been

compromised. We are constrained to agree.

      The Restatement (Second) of Trusts § 399 has been adopted as the

expression of the doctrine of cy pres in this Commonwealth, and it provides

as follows:

      If property is given in trust to be applied to a particular
      charitable purpose, and it is or becomes impossible or
      impracticable or illegal to carry out the particular purpose, and if
      the settlor manifested a more general intention to devote the
      property to charitable purposes, the trust will not fail but the
      court will direct the application of the property to some
      charitable purpose which falls within the general charitable
      intention of the settlor.

Restatement (Second) of Trusts at Section 399.        This language has been

codified as follows:

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      (a) General rule.--Except as otherwise provided in subsection
      (b), if a particular charitable purpose becomes unlawful,
      impracticable or wasteful:

            (1) the trust does not fail, in whole or in part;

            (2) the trust property does not revert to the settlor
            or the settlor’s successors in interest; and

            (3) the court shall apply cy pres to fulfill as nearly as
            possible the settlor’s charitable intention, whether it
            be general or specific.

20 Pa.C.S. § 7740.3.

      “In practice, application of the doctrine of cy pres is imprecise but the

endeavor is to find the institution that ‘will most nearly approximate the

intention of the donor.’”   In re Estate of Elkins, 32 A.3d 768, 778 (Pa.

Super. 2011) (quoting In re Women’s Homeopathic Hospital of

Philadelphia, 142 A.2d 292, 294 (Pa. 1958)). “The key is approximating

the express direction of the testator as nearly as possible by transferring the

funds to an institution that the decedent would have wished to receive the

funds had the decedent been aware of the situation that occurred following

his demise.” Id. “The only stricture is that the charity must be within the

general donative scheme outlined by the testator.” Id. (citation omitted).

      In Estate of Nesbitt, a case with similar facts to the case at bar,

Abram G. Nesbitt bequeathed $400,000.00 to the Second National Bank of

Wilkes-Barre, as Trustee, to invest in and to pay the annual income from the

corpus of the trust to the Nesbitt West Side Hospital.      Estate of Nesbitt,

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652 A.2d at 856.      These payments were to continue “so long as [the

hospital] exists as a separate institution caring for the sick and injured.” Id.

The terms of the trust did not provide for any alternate gift or reversion. Id.

In 1992, the hospital became an affiliate of the Wyoming Valley Health Care

System, Inc.    Id.   In 1993, residual beneficiaries sought to cease the

payments to the hospital from the trust and argued that the trust was no

longer obligated to pay because of the hospital’s change in identity.       Id.

However, the Orphans’ Court found that the hospital continued in the same

location it occupied prior to the merger, and that the hospital continued to

exist as a separate facility, with its own name, management structure, and

identity. Id. The merger agreement specified that trust payments in place

for the benefit of the hospital would be used only for the hospital after the

merger. Id.

      This Court agreed with the Orphans’ Court’s conclusion that the

hospital continued to exist as a “separate institution caring for the sick and

injured.”   Nesbitt, at 858.   “Furthermore, as the Orphans’ Court pointed

out, if at any time the trust fund income is not applied to Nesbitt Hospital,

Appellants can seek relief on the basis that the trust provision has failed.”

Id.   Nevertheless, we determined that: “At present, however, there is no

evidence that the trust provision has failed; on the contrary, the purpose of

the trust has been perpetuated by the merger of the hospitals.” Id.

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      In the present appeal, we are faced with a similar scenario.          The

stated intent of the settlors of the trusts instructed that the trust funds were

to go to the hospital, a fact noted by the Orphans’ Court.8 Nothing in the

aforementioned trusts necessitates the utilization of the Orphans’ Court’s cy

pres authority to create the pour over trust. Indeed, the funds are currently

going to GBH, and there is no evidence that money is being diverted or that

the intent of the trusts is being thwarted.    This was precisely the position

taken by the Attorney General in her capacity as parens patriae.

      We, thus, conclude that the creation of the pour over trust is an abuse

of discretion and unnecessary. Moreover, we discern no basis upon which to

find that the Attorney General’s position was in error.       Because GBH is

utilizing the trust funds in accordance with the settlors’ intent, the doctrine

of cy pres does not apply. In re Elkins Estate, 32 A.3d at 778. There is no

need for judicial intervention as none of the trusts has failed and none of the

settlors’ intentions has become impracticable or impossible, which would

trigger the application of the doctrine of cy pres. 20 Pa.C.S. § 7740.3.

Therefore, we conclude the Orphans’ Court abused its discretion and erred in

applying the doctrine of cy pres and creating the pour over trust.

8
  See Findings of Fact, 3/25/14, at ¶¶ 33, 35, 39, 42, 45, 48, 51, 54, 58,
61, 64, 67, 70, and 73 (wherein the Orphans’ Court describes the gifts and
quotes from the Titman Trust, McNinch Trust, Learn Trust, Sneidman Trust,
Barger Trust, Hazel W. Shoemaker Trust, Grover C. Shoemaker Trust, Wolfe
Trust, Mensinger Trust, J. Low Trust, A. Low Trust, Brown Trust, E. Elwell
Trust, and S. Elwell Trust).

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      GBH’s second issue is inextricably related to the first issue.     In the

second issue on appeal, GBH claims that the Orphans’ Court abused its

discretion in applying the doctrine of cy pres to place conditions on the

availability of the trust funds.   Here, GBH is specifically challenging the

Orphans’ Court adding the requirement that use of the trust monies was

conditioned on the hospital operating at a loss.    GBH’s Brief at 23. In its

order, the Orphans’ Court required the creation of an accounting system

using a pour over trust. Order, 4/24/14, at ¶ 2.

      As we discussed above, nothing in the record supports the application

of cy pres or necessitated the Orphans’ Court’s intervention and the creation

of a pour over trust. Moreover, there is nothing in the trust documents that

restricted the gifts to the hospital on the condition that it operated at a loss

or conditioned the gifts on the hospital’s fiscal position or solvency. As such,

we agree with GBH that the Orphans’ Court erred and abused its discretion

in utilizing the doctrine of cy pres to create a pour over trust and in adding

conditions on GBH’s use of the trust funds.

      In its third issue GBH claims the Orphans’ Court abused its discretion

or committed an error of law when the court ordered that the operating

revenue, operating expenses and income of the system as a whole, and the

breadth, scope and geographic reach of the health care system as a whole,

were to be considered when it imposed conditions on the availability of the

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funds.   GBH’s Brief at 7, 38-40.    Because we have concluded that the

Orphans’ Court erred in applying the doctrine of cy pres and intervening in

the distribution of the trust funds to GBH by requiring GBH to operate at a

loss in order to receive funding from the trusts, we agree with GBH that the

size, scope, and operating expenditures of GHSF are not relevant, nor is

there a need for GHSF to make such disclosures in this matter. Thus, it was

error for the Orphans’ Court to mandate this requirement relating to GHSF. 9

     While we have found that the Orphans’ Court erred with respect to

GBH’s first three issues, we discern no error or abuse of discretion in that

part of the order that directed GBH to amend its articles of incorporation to

include the following language:

     “[E]xcept for funds restricted for use at or by Geisinger-
     Bloomsburg Hospital, which shall be expended solely in
     connection with the operation of the Geisinger-Bloomsburg
     Hospital in a manner consistent with the intent of the Donors
     and in accordance with any explicit instructions governing the
     application thereof, and in further accordance with applicable
     orders of court; ...”

9
   The Orphans’ Court’s overarching concern and the scenario it sought to
forestall is a situation where: 1) if GBH has operational surplus revenue; 2)
GBH would not “need” monies from the trust; and 3) GBH could then expend
trust funds on other facilities within the GHSF corporate entity. Findings of
Fact, 3/25/14, at ¶¶ 95-102; Conclusions of Law, 3/25/14, at ¶¶ 15-17;
Orphans’ Court Opinion, 6/2/14, at 2-7. While such a scenario is possible, at
this point, it remains purely speculative because there is no indication that
trust funds have been expended beyond GBH. Moreover, in our discussion
of GBH’s final issue, we recognize the effort of the Orphans’ Court to assure
that such “funneling” of monies away from GBH and the Bloomsburg
community does not occur in the future.

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Order and Decree, 3/25/14, at ¶4.

      GBH argues “[t]hat the Trust funds are being used locally can indeed

be adequately assured through the Attorney General’s usual monitoring of

GBH’s use of restricted funds consistent with its normal parens patriae

functions, and there is no need for GBH to amend its articles and bylaws or

submit to review beyond the normal course.”       GBH’s Brief at 38.   Despite

GBH’s protest, we point out that the language at issue tracks the

recommendation made by the Attorney General.              Attorney General’s

Statement of Position, 3/15/13, at ¶12. Thus, this is the “normal course” of

oversight that the Attorney General exercises in its monitoring of charitable

trusts.

      After review, we discern no error in the inclusion of said language as it

follows the recommendation made by the Attorney General in her capacity

as parens patriae over charitable trusts. The language is narrowly tailored

to assure that trust funds are utilized for the benefit of GBH consistent with

the intent of the trusts’ settlors.

      For the reasons set forth above, we reverse the March 25, 2014

decree, with the exception of paragraph four. Paragraph four of the March

25, 2014 decree, which directed GBH to amend its articles of incorporation,

is hereby affirmed.

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J-A34016-14

      March 25, 2014 decree affirmed in part and reversed in part in

accordance with this Opinion. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 5/7/2015

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