Court Opinion

ID: 4129461
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:52:19.151146+00
Date Added: 2024-06-11T14:37:36.373049
License: Public Domain

OPFKE   OF THE ATTORNEY   GENERAL.   ST*TE OF TEXAS

    JOHN     CORNYN

                                                    May IO,2000

The Honorable David Counts                                Opinion No. JC-0220
Chair, Committee on Natural Resources
Texas House of Representatives                            Re: Whether a hospital district may continue to
P.O. Box 2910                                             levy a tax after closing its hospital and related
Austin, Texas 78768-2910                                  questions (RQ-0149-JC)

Dear Representative      Counts:

         You request an opinion regarding the powers and duties of the Garza Hospital District (the
“District”), a county-wide hospital district, that no longer operates a hospital, but continues to levy
and collect hospital district taxes. Specifically, we understand you to ask’ the following questions:
first, whether the District was authorized to close its hospital; second, whether the District was
authorized to lease its hospital facilities to a private hospital system for operation of a clinic to
provide medical care to county residents; third, whether the District may continue to levy a tax after
closing the hospital; fourth, if it may continue to tax, whether the tax proceeds may be used to make
payments under a contract with a private hospital system to provide medical care for county
residents; and fifth, whether the District may be dissolved at an election called and held for that
purpose.

         We conclude that the District was authorized to close its hospital if the District’s Board of
Directors determined that cjosing the hospital was in the best interest of the District’s residents and
the Board otherwise complied with the statutory procedures. Similarly, we conclude that the District
was authorized to lease its hospital facilities to a private hospital system for the operation of a clinic
to provide hospital and medical care to the District’s needy inhabitants if the District Board of
Directors determined that the lease was in the best interest of the District residents. In answer to
your third and fourth questions, we conclude that because closure ofthe hospital does not relieve the
District of its responsibility to provide and pay for hospital and medical care to its needy residents,

         ‘You do not ask specific questions in your request, but rather refer us to unanswered questions asked of the
Disbict by a Garza County newspaper regarding the District’s closure of its hospital and contract with Methodist
Hospital for the operation of the clinic located in the District’s facilities. See Letter from Honorable David Counts,
Chaii, Committee on Natural Resources, Texas House of Representatives, to Honorable John Comyn, Texas Attorney
General (Jan. 3.2000) (on file with Opinion Committee) [hereinafter “Request Letter”]; Letter from Wesley W. Burnett,
Publisher, The Post Dispatch, to Jack Alexander, President, Garza Hospital District Board of Directors and Board
Members (June 5, 1998) (asking questions raised by District’s Enabling Act); Letter from W. Galloway Huff&x, Esq.,
to Ma&a Reed, Garza Hospital District Board (June 16,1998) (addressing questions asked by The Post Dispatch).
The Honorable David Counts      - Page 2          (JC-0220)

the District may continue to levy a tax and use the proceeds to make payments under a contract to
provide that care. With respect to your second and fourth questions, we also conclude that the
District may through this contract offer medical care to nonindigent Garza County residents,
provided the District charges those persons the actual cost of the services. Finally, we conclude that
the District may not be dissolved pursuant to an election because there is no statutory authority to
call and hold a dissolution election with respect to the District.

          A hospital district’s powers and duties are determined by looking at the authorizing
 constitutional provision, its enabling act, and provisions of the Health and Safety Code applicable
 to hospital districts generally. Tex. Att’y Gen. Op. No. DM-37 (1991) at l-2. As a special district,
 the District may exercise only those powers that are expressly delegated to it by the legislature, or
 which exist by clear and unquestioned implication.        Tri-City Fresh Water Supply Dist. No. 2 v.
Mann, 142 S.W.2d 945,946 (Tex. 1940); Jackron County Hosp. Dist. v. Jackson County Citizens
for Continued Hosp. Care, 669 S.W.2d 147, 154 (Tex. App.-Corpus Christi 1984, no writ ).

         The Garza Hospital District was created and established pursuant to article IX, section 9 of
the Texas Constitution and special enabling legislation. See Act of May 17, 1967,6Oth Leg., R.S.,
ch. 502, 5 1, 1967 Tex. Gen. Laws 1132. Article IX, section 9 of the Texas Constitution provides
in part:

                         The Legislature may by general or special law provide for the
                creation, establishment,     maintenance and operation of hospital
                districts composed of one or more counties or all or any part of one
                or more counties with power to issue bonds for the purchase,
                construction,   acquisition, repair or renovation of buildings and
                improvements and equipping same&r hospitalpurposes; providing
                for the transfer to the hospital district of the title to any land,
                buildings, improvements and equipment located wholly within the
                district which may be jointly or separately owned by any city, town
                or county, providing that any district so created shall assume full
                responsibility for providing medical and hospital care for its needy
                inhabitants and assume the outstanding indebtedness incurred by
                cities, towns and counties for hospital purposes prior to the creation
                of the district, . . providing that after its creation no other
                municipality or political subdivision shall have the power to levy
                 taxes or issue bonds or other obligationsfor hospitalpurposes orfor
                providing medical care within the boundaries of the district;
                 providing for the levy of annual taxes at a rate not to exceed seventy-
                 five cents (75e) on the One Hundred Dollar valuation of all taxable
                 property within such district for the purpose of meeting the
                 requirements of the district’s bonds, the indebtedness assumed by it
                 and its maintenance and operating expenses
The Honorable David Counts        - Page 3          (JC-0220)

TEX. CONST. art. IX, 5 9 (emphasis     added).

          Pursuant to article IX, section 9, the legislature enacted House Bill 1325, Act of
May 17, 1967, 60th Leg., R.S., ch. 502, 1967 Tex. Gen. Laws 1132 (the “Enabling Act”),
authorizing the creation and establishment of the District with boundaries coextensive with Garza
County, subject to voter approval. See id. Under the Enabling Act, the District has the “powers and
responsibilities provided by” article IX, section 9. Id. 5 1. The District is directed to assume “full
responsibility for providing medical and hospital care for the needy persons residing within the
district[.]” Id. 5 2. Garza County and any city in the county are prohibited Tom levying a tax for
hospital purposes after the District’s organization, because the District “shall be deemed to have
assumed full responsibility for the furnishing ofmedical and hospital care for the needy and indigent
persons residing in said hospital district from the date that taxes are collected for the hospital
district.” Id. 5 12.

         Garza Hospital District apparently owned and operated a hospital and levied a tax on all
taxable property in the District pursuant to article IX, section 9 and the Enabling Act. The District
also apparently continues to levy the tax. You explain, however, that the District Board ofDirectors
closed the District hospital and contracted with Methodist Hospital, presumably a private hospital
or health system, for the operation of a clinic located in the District’s facilities. See Request Letter.
District residents, you tell us, now question the need for the District given that it no longer provides
“hospital care.” Id. In particular, residents question the District’s authority to levy a tax when it no
longer provides hospital services. Id.

         We begin our analysis with your fifth question: whether the District may order an election
to dissolve the District upon receipt of a petition by the District residents. Neither the Enabling Act
nor any other provision applicable to the District that we have found authorizes an election to
dissolve the District. We conclude that in the absence of statutory authorization, the District has no
authority to call and hold a dissolution election.

         While article IX, section 9 authorizes the legislature to provide for the dissolution of a
hospital district, the legislature has not done so with respect to the District. Article IX, section 9
provides that the “Legislature may also provide for the dissolution ofhospital districtsprovided          that
aprocess is afforded by statute for: (1) determining the desire of a majority of the qualified voters
within the district to dissolve it; (2) disposing of or transferring the assets, if any, of the district; and
(3) satisfying the debts and bond obligations, if any, of the district . . .” TEX. CONST. art. IX, $9
(emphasis added). By its terms, this provision is not self-executing; it authorizes the legislature to
provide for dissolution of a hospital district subject to voter approval. Cf: Tex. Att’y Gen. Op. No.
JM-859 (1988) at 3 (“Article IX, section 9, ofthe Texas Constitution.            confers authority, not on
the governing bodies of hospital districts, but rather on the legislature.“). The District’s Enabling
Act does not authorize a dissolution election.

         Nor does a provision of the Health and Safety Code applicable to the District authorize a
dissolution election. Section 286.102 of the Health and Safety Code authorizing a hospital district
The Honorable David Counts       - Page 4           (JC-0220)

board of directors to order a dissolution election on receipt of a petition by the district residents, see
TEX. HEALTH & SAFETY CODE ANN. 5 286.102 (Vernon 1992), applies only to a hospital district
created under that chapter. See id. $5 286.001(2) (“‘District’ means a hospital district created under
this chapter.“), 286.002 (authorizing creation ofgeneral law hospital district underchapter286).       The
District, of course, is created under the Enabling Act, not under chapter 286 ofthe Health and Safety
Code. See Act of May 17, 1967,6Oth Leg., R.S., ch. 502, 5 1, 1967 Tex. Gen. Laws 1132.

         The authority to hold an election is dependent on authority conferred by law. Tex. Att’y Gen.
Op. No. DM-172 (1992) at 2 (and cases cited therein). As Attorney General Opinion C-380 states,
“It is basic to our chosen form of government that the people of this State have no right to vote or
hold an election in the absence of some statutory or constitutional provision which provides
therefor.” Tex. Att’y Gen. Op. No. C-380 (1965) at 2 (citing Smith Y. Morton Indep. Sch. Dist., 85
S.W.2d 853 (Tex. Civ. App.-1935, writ dism’d) and Trustees of Indep. Sch. Dist. v. Elbon, 223
S.W.10 (Tex. Civ. App. 1920)). Accordingly, Attorney General Opinion C-380 concluded that a
county commissioners court did not have authority to call an election to abolish a special law
hospital district nor did precincts comprising the hospital district in the absence of statutory or
constitutional provision authorizing such an election. Id.

         We next address your first question: whether the District was authorized to close its hospital.
Again, neither article IX, section 9 nor the District’s Enabling Act address closure of the District’s
hospital. But section 285.05 l(a) ofthe Health and Safety Code specifically authorizes the governing
body of a hospital district to order by resolution “the sale, lease, or closing of all or part of a hospital
owned and operated by the hospital district, including real property” upon a finding that it is in the
best interest of the residents of the hospital district.        TEX. HEALTH & SAFETY CODE ANN.
5 285.051(a) (Vernon 1992). Section 285.051(b) and section 285.052 provide that the governing
body must conduct an election on the sale or closing of a hospital if petitioned to do so by ten
percent of the qualified voters of the hospital district before the 3 1st day after the date the governing
body orders the sale or closing. Id. $5 285.051(b), ,052. These provisions clearly authorize a
hospital district’s governing body to order the closing of its hospital if it finds that the closing is in
the best interest of the district’s residents. Tex. Att’y Gen. Op. Nos. DM-37 (1991) at 1; JM-864
(1988) at 5. Because sections 285.05 1 and 285.052 are not limited in their application to a particular
type of hospital district, they apply to the District, See TEX. HEALTH & SAFETY CODE ANN.
$5 285.051, ,052 (Vernon 1992). Accordingly, assuming the District’s governing body made the
requisite finding and otherwise complied with section 285.051, it had the authority to close the
District’s hospital.

         Similarly, assuming the District’s Board ofDirectors made the requisite finding under section
 285.05 1, the District was authorized to lease its hospital facilities to a private hospital system for the
 operation of a clinic to provide hospital and medical care to the District’s needy inhabitants. TEX.
 CONST. art. IX, 5 9; TEX. HEALTH&SAFETY CODE ANN. 5 285.051(a) (Vernon 1992); Tex. Att’y
 Gen. Op. Nos. DM-131 (1992), DM-66 (1991). Again, section 285.051(a) ofthe Health and Safety
 Code specifically authorizes the governing body of a hospital district to order by resolution “the sale,
 lease, or closing of all or part of a hospital owned and operated by the hospital district, including real
The Honorable   David Counts     - Page 5          (JC-0220)

property” upon a finding that it is in the best interest of the residents of the hospital district. TEX.
HEALTH&SAFETY CODE ANN. § 285.051(a) (Vernon 1992) (emphasis added). To be permissible,
however, a hospital district facilities lease must also serve a hospital district purpose consistent with
article IX, section 9, requiring a hospital district to provide medical care, particularly hospital and
medical care to needy hospital district residents. See Tex. Att’y Gen. Op. No. DM-66 (199 1) at 3
(stating that statutory authority to lease hospital building does not end analysis, must also consider
whether hospital district’s lease plan would serve hospital purpose consistent with article IX, 5 9);
see also Tex. Att’y Gen. Op. No. DM-131 (1992) at 1; Tex. Att’y Gen. LO-97-068, at 2-3.

         In our opinion, lease of hospital district facilities for the operation of a clinic to provide
medical care to county residents, including the needy, is entirely consistent with the requirements
of article IX, section 9 of the Texas Constitution. See TEX. CONST.art. IX, 5 9; Tex. Att’y Gen. Op.
No. DM-131 (1992) at l-2 (hospital district authorized to lease part of its facility for private
operation of adolescent drug treatment facility, provided facility treats needy as well as other
adolescents); Tex. Att’y Gen. Op. No. DM-66 (1991) at 3-4 (hospital district lease for operation of
private dialysis clinic permissible because clinic would provide cost-effective renal services,
primarily serve Medicare and Medicaid patients, and would be conveniently located adjacent to
hospital). Cf: Tex. Att’y Gen. Op. No. JM-258 (1984) at 3 (hospital district not permitted to lease
office space to private physicians because “offices for the private practice of medicine are not
‘hospital purposes’ or the provision of ‘medical or hospital care for the needy”‘).

         Because the authority to continue to levy a tax depends on the purposes for which that tax
is authorized, we address your third and fourth questions together: whether the District may continue
to levy a tax after closing its hospital and, if it may do so, whether the tax proceeds may be used to
pay for a contract with a private health care system to provide medical care to county residents. We
first determine that the District’s maintenance and operating expense tax proceeds may be used for
providing indigent medical and hospital care. We then conclude that because closure of the hospital
does not relieve the District of its responsibility to provide and pay for indigent hospital and medical
care, the District may continue to levy the tax and use the proceeds to make payments under a
contract with a private hospital to provide that care. We also conclude that the District may through
this contract offer medical care to nonindigent Garza county residents.

         Hospital district taxes may be levied and used only for the purposes authorized in article IX,
section 9 of the constitution and a hospital district’s enabling legislation. See Bexur County Hosp.
Dist. v. Crosby, 327 S.W.2d 445 (Tex. 1959) (article IX, section 9 tax levied for bond debt service
may only be used for that purpose); Tri-City Fresh Water Supply Dist. No. 2 v. Mann, 142 S.W.2d
945, 948 (Tex. 1940) (taxing power may be exercised only for purposes distinctly included in
constitutional or legislative provision); Tex. Att’y Gen. LO-97-004, at 1 (use of hospital district
taxes limited to purposes set out in constitution); LO-95-088, at 1 (same).

         Article M, section 9 authorizes a hospital district tax to be levied to meet the requirements
 of (1) debt service on district bonds issued for construction and improvement of hospital facilities
 and on obligations assumed by the hospital district that were incurred by cities, towns, or a county
The Honorable David Counts       - Page 6          (JC-0220)

within the hospital district before its creation for hospital purposes; and (2) the district’s maintenance
and operating expenses. See TEX. CONST.art. IX, 5 9. The article IX, section 9 hospital district tax
is expressly authorized to pay debt service on bonds issued by a hospital district for hospital facilities
or on hospital purpose obligations assumed by the district. The debt service tax may be levied to
make those payments until the bonds and assumed obligations secured by the tax are retired. Thus,
the tax may be levied for such purpose as long as the bonds and obligations are outstanding.
Accordingly, if bonds and obligations secured by hospital district taxes are outstanding after the
closing of a hospital, a hospital district may continue to levy the tax to make the required debt
service payments. The contract payments for medical care at issue, however, are not debt service
payments on outstanding District bonds or assumed obligations, and we do not understand you to
ask about the District’s authority to continue levying taxes for debt service.

          Besides debt service payments, the hospital district tax is only expressly authorized to pay
a district k maintenance and operating expenses. See El Paso County Hosp. Dist. v. Gilbert, 4
S.W.2d 66, 72 (Tex. App.-El Paso 1999, pet. tiled) (hospital district ad valorem tax revenues
generated for two enumerated purposes-payment         of debt service and payment of maintenance and
operation expenses). Consequently, the District may continue to levy the tax and use the proceeds
to make the contract payments for medical care only if such purpose is encompassed within
“maintenance and operating expenses.” Article IX, section 9 does not define these expenses. Nor
have we found any Texas cases that do so for the purposes of article IX section 9. Based on the
language and purpose of article IX, section 9, however, we conclude that “maintenance and
operation expenses” necessarily encompass expenses related to providing medical care to a hospital
district’s needy residents.    See Republican Party Y. Dietz, 940 S.W.2d 86, 89 (Tex. 1997) (in
construing state constitution, effect will be given to its plain language, considering purpose of
provision, its historical context, and the collective intent ofthe framers and people who adopted it).

         The tax is authorized for the district’s maintenance and operating expenses, not those of a
hospital. Thus it is not limited to maintenance and operation expense of a physical hospital, but
instead relates more broadly to the lawful expenses of the hospital district. CJ TEX.TAX CODEANN.
5 26.012(16) (Vernon 1992) (“‘Maintenance and operation’ means any lawful purpose other than
debt service for which a taxing unit may spend property tax revenues.“‘); Gilbert, 4 S.W.2d at 72
(indiscussinghospitaldistrict’s   adopted taxrate, referring to Tax Code section26.012(16) definition
of“maintenance and operation”); id. (referring to hospital district “main-tenance and operation fund”
as its “general fund”).

           The most significant lawful hospital district expense is that for indigent medical care. (In
this regard we note, that “needy inhabitants” is equivalent to “indigent residents,” and we use those
terms interchangeably for the purposes of this opinion. See Tex. Att’y Gen. Op. No. H-703 (1975)
(equating “needy inhabitant” as used in article IX, section 9 to “indigent resident” in article IX,
section 4).) Article IX, section 9 was adopted to maintain or improve public health care and
facilities, especially for indigent persons and shift the financial burden of providing the care and
 facilities from cities and counties to hospital districts. TEX.CONST.art.IX, 5 9; GEORGED. BRADEN,
THE CONSTITUTIONOF THESTATEOFTEXAS: AN ANNOTATEDAND COMPARATIVEANALYSIS, Art.
The Honorable David Counts         - Page 7             (X-0220)

IX, 5 9 (History and Explanation); see also Tex. Att’y Gen. Op. No. C-382 (1965) at 2 (primary
function of hospital district is furnishing of medical and hospital care for indigent and needy of
county and such function takes precedence over all others). Thus under this constitutional provision,
a hospital district is directed to assume responsibility for providing hospital and medical care to its
needy inhabitants; and, moreover, other political subdivisions within the district are prohibited from
providing or raising revenues for hospital or medical care once a district is created. See TEX.CONST.
art. IX, 5 9. Because of its absolute duty to provide medical and hospital care for its needy
inhabitants, a hospital district is responsible for those medical expenses.* See, e.g., Tex. Att’y Gen.
Op. Nos. JM-864 (1988), JM-858 (1988), JM-540 (1986), JM-257 (1984), H-703 (1975), M-171
(1967).

         The only constitutionally      authorized stream of hospital district revenues available to
discharge a hospital district’s responsibility is the ad valorem property tax levied for maintenance
and operating expenses. It must necessarily be available to discharge that responsibility. Ifit is not,
a district cannot carry out its constitutional duty to provide hospital and medical care to its needy
inhabitants. And, moreover, no other political entity within the district can provide that care. See
TEX. CONST. art. IX, 5 9. The result would be that no medical care would be or could be provided
to the needy residents of all or part of a county. This result, in our opinion, is contrary to the
manifest purpose of article IX, section 9 to provide for indigent medical care. See Die&, 940 S.W.2d
at 89 (in construing state constitution, effect will be given to its plain language, considering purpose
of provision, its historical context, and the collective intent of the framers and people who adopted
it). Accordingly, we construe the article IX, section 9 “maintenance and operating expenses” to
encompass a hospital district’s expenses for providing indigent hospital and medical care. See id.
This does not, however, end our enquiry. Because the District’s powers and duties are also derived
from its Enabling Act, we must also examine that act’s provision,

        The Enabling Act authorizes the District’s Board ofDirectors to levy a tax for the following
purposes: (1) paying debt service on “warrants, which may be issued by the hospital district for
hospital purposes as herein provided”; (2) providing for operation and maintenance of the hospital
or hospital system; and (3) for making finther improvements and additions to the hospital system
and acquiring sites. See Act ofMay 17,1967,6Oth Leg., R.S., ch. 502,s 5(a), 1967 Tex. Gen. Laws
1132,1134. First, unlike article IX, section 9, the Enabling Act authorizes taxes for debt service on
District “warrants” rather than on “bonds”; second, the Enabling Act does not expressly authorize
the tax to pay debt service on any obligations issued by the county or city within the district for
hospital purposes and assumed by the District; and third, and most important, the Enabling Act
authorizes the tax for operation and maintenance expenses of the hospital or hospital system rather
than of the District. Nonetheless, we construe these provisions consistently with article IX, section
9 and with reference to other provisions in the Enabling Act to authorize a tax for the same purposes
as the constitutional provision, for the following reasons.

        ‘We do not address in this opinion any rights or obligationsof nonprofit hospitals in providing indigent health
care.
The Honorable David Counts       - Page 8          (JC-0220)

         The legislature cannot enact an enabling statute inconsistent with article IX, section 9’s
provisions regarding the powers and duties ofa hospital district. By its own terms, the constitutional
provision limits the legislature’s authority to do so by providing the purposes for which the
legislature may authorize the creation of a hospital district and the purposes for which the legislature
may authorize a hospital district tax. See TEX. CONST. art. IX, 5 9; see also City of Fort Worth v.
Howerton, 236 S.W.2d 615, 618 (Tex. 1951) (legislature cannot enact any law contrary to
constitutional provision).

         Additionally, we do not believe the legislature intended to provide powers and duties in the
Enabling Act inconsistent with article IX, section 9. Legislative intent is to be determined from the
entire act and not simply from isolated portions of the act. Jones Y. Fowler, 969 S.W.2d 429,432
(Tex. 1998); accord Sayre v. Mullins, 681 S.W.2d 25,27 (Tex. 1984) (in determining meaning of
statutory language, statute to be read as whole giving consideration to entire act, its nature and
object, and consequences that would follow from particular construction). Accordingly, we look at
other provisions of the Enabling Act keeping in mind the taxing provisions. First, notwithstanding
the authority to levy a tax to pay debt service on “warrants which may be issued by the hospital
district for hospital purposes as herein provided,” the Enabling Act authorizes the District only to
issue “bonds” for hospital purposes. See Act ofMay 17,1967,6Oth Leg., R.S., ch. 502,s 6(a), 1967
Tex. Gen. Laws 1132, 1135. Thus, authority to levy a tax for debt service may be exercised only
with respect to District bonds. It would be absurd to read the tax authority to be limited to
“warrants,” when no warrants can be authorized or issued by the District. Second, notwithstanding
the absence of authority to tax for assumed indebtedness, the Enabling Act specifically provides for
the District to assume “all outstanding bonds and indebtedness heretofore issued by Garza County
and by any city or town within said county for hospital purposes.” Id. 9 2. In fact, the Enabling Act
specifically requires the assumption language to be printed on the ballot presented to the District
voters for approving the creation of the District. Id. If the District is to assume all such obligations,
 it must pay them; it can do that only if the tax is available for that purpose. Third, while the taxes
 are authorized for paying maintenance and operation expenses of the hospital or hospitalsystem, the
 Enabling Act expressly provides that the District “shall assume full responsibility for providing
 medical and hospital care for the needy persons residing within the district[.]” Id. 5 2. Furthermore,
 the Enabling Act states that:

                          After the hospital district has been organized pursuant to this
                Act, neither Garza County nor any city therein shall levy any tax for
                hospital purposes; and such hospital district shall be deemed to have
                assumed full responsibility for the furnishing ofmedical and hospital
                care for the needy and indigent persons residing in said hospital
                districtfrom the date that taxes are collectedfor the hospital district.

Id. 5 11 (emphasis added). Again, if the District has the responsibility for indigent medical care, it
must pay for it; it can only reasonably do that if the tax is available for that purpose. And, the latter-
quoted provision by tying the prohibition against county or city levying a tax to the date the District
collects the tax clearly contemplates that the tax will be used to pay for the medical services.
The Honorable   David Counts     - Page 9          (JC-0220)

Finally, the Enabling Act provides that the District “shall have the powers and responsibilities
provided” by article IX, section 9. Id. 5 1. By its own terms, provisions ofthe Enabling Act dealing
with the powers and obligations of the District must comport with those in article IX, section 9.

         Based on the foregoing construction of article IX, section 9 and the Enabling Act taxing
provisions, we conclude that the District’s maintenance and operating expense taxes may be levied
and used to provide and pay for the District’s needy residents’ hospital and medical care.

         Authority to levy and use the proceeds for the District’s needy residents’ hospital and
medical care is neither limited to nor contingent on ownership or operation of a physical hospital.
Clearly, a hospital district may provide hospital and medical care to its indigent residents through
its own hospital facility. But it must provide that care even if it does not own or operate a hospital
facility. Tex. Att’y Gen. Op. Nos. JM-858 (1988) at 2, JM-864 (1988) at 5-6; see also Tex. Att’y
Gen. Op. No. DM-37 (1991) at 1. Specifically, a hospital district’s closure of its hospital does
not relieve the district of its responsibility for providing and paying for the district’s indigent
residents’ medical care. Tex. Att’y Gen. Op. No. JM-864 (1988) at S-6; see also Tex. Att’y Gen.
Op. No. DM-37 (1991) at 1. In Attorney General Opinion JM-864, this office advised that:

                  Regardless of the method chosen by the hospital district to provide
                services to its eligible recipients, the district is liable for the health
                care services as provided by the constitution and its statute.      Thus,
                the sale, closure, or lease of the Northwest Texas Hospital will have
                no effect on the legal responsibility that the [City of Amarillo
                Hospital District] has towards the persons it serves.

Tex. Att’y Gen. Op. No. JM-864 (1988) at 5-6; see also Tex. Att’y Gen. Op. No. DM-37 (1991) at
1 (closure ofhospital under section 285.05 1 ofthe Health and Safety Code does not relieve hospital
district of liability for paying for indigents residents’ health care services). Thus, a hospital district
must arrange and pay for medical care even when it does not own or operate a hospital.

          As Attorney General Opinion JM-864 indicates, a hospital district may fulfill its obligation
to provide medical care by various methods. Tex. Att’y Gen. Op. No. JM-864 (1988) at 5. While
the District’s Enabling Act does not contain any provision expressly authorizing the District to
contract for medical care, the Indigent Health Care and Treatment Act, TEX. HEALTH & SAFETY
CODE ANN. ch. 61 (Vernon 1992 & Supp. 2000), applicable to the District, does contain such a
provision. Under that act, a hospital district may arrange to provide health care services through
other public health facilities, through a contract with a private provider, or through the purchase of
insurance for eligible residents. Id. 5 61.056(a) (Vernon 1992); Tex. Att’y Gen. Op. No. JM-864
(1988) (hospital district may use these various methods to provide indigent medical care). The
district may also affiliate with other public hospitals, other hospital districts, or a governmental
 entity to provide regional administration and delivery of health care services. TEX. HEALTH &
 SAFETY CODE ANN. @ 61.056(b) (Vernon 1992); Tex. Att’y Gen. Op. No. JM-858 (1988) at 2
 (hospital district may affiliate with another hospital district to provide medical care to needy district
The Honorable David Counts      - Page 10         (JC-0220)

inhabitants).  Thus, the District is authorized to provide hospital and medical care to its needy
inhabitants through a contract with a private hospital system.

        In sum, the District’s maintenance and operating expense taxes may be levied and used to
pay for needy inhabitants’ hospital and medical care expenses after closure ofthe District’s hospital.
Because that care may be provided through a contract with a private hospital system, proceeds of the
maintenance and operating tax may be used to make payments under that contract.

         Finally, we address an issue implicit in your second and fourth questions, namely, whether
the District may through its contract with the private hospital system provide medical care to county
residents who are not indigent. In other words, may nonindigent Garza County residents be treated
in the clinic operated by the private hospital system? Based on the constitutional and statutory
scheme for providing hospital and medical care, we conclude that the District may offer medical care
to nonindigent Garza County residents provided it collects from these persons the cost ofthe medical
services.

          Neither article IX, section 9 nor the Enabling Act specifically authorizes the District to
provide medical care to District residents generally or prohibits the district from doing so. Both,
however, contain provisions that implicitly contemplate that the District will furnish hospital and
medical care to nonindigent District residents. See DAVIDB. BROOKS,~~TEXASPRACTICE: COUNTY
ANDSPECIALDISTRICTLAW 5 26.28 (1989) (Article IX, section 9 hospital district is authorized, but
not required, to provide medical services to nonindigent patients.). Article IX, section 9 requires a
hospital district to take over existing hospital facilities owned by a city or county within the hospital
district. See TEX. CONST. art. IX, $9. A county hospital established under chapter 263 ofthe Health
and Safety Code (formerly article 4478 ofthe Texas Revised Civil Statutes), for instance, is “for the
care and treatment ofpersons who are sick or injured,” see TEX. HEALTH & SAFETY CODE ANN.
5 263.021(a) (Vernon 1992) (emphasis added), not just indigent county residents. Thus, article IX,
section 9 contemplates that a hospital district may continue to provide the services rendered by those
facilities. See TEX. CONST. art. IX, 5 9; Tex. Att’y Gen. Op. No. C-382 (1965) (hospital district
taking over county hospital established under article 4478, TEX. REV. CIV. STAT. ANN., takes over
all duties and obligations county previously had for care of persons). Additionally, article IX,
section 9 prohibits any city or political subdivision in the district from providing any medical care,
not just indigent medical care. TEX. CONST. art. IX, 5 9; see also Tex. Att’y Gen. Op. No. JM-1052
(1989) at 6 n.1 (obligation placed on hospital district to assume responsibility for needy resident’s
medical care is narrower than prohibition on other political subdivision against spending money on
medical care generally, not just for indigents). This prohibition in the context of article IX, section
9 can only reasonably be construed as contemplating that the hospital district may offer the requisite
medical care because no other political entity may do so. Otherwise, the result of this prohibition
would have absurd results. For instance, nonindigent county residents in a rural county-wide
hospital district with no private medical care facility might have to travel to another county for
hospital care simply because they could pay for the care.
The Honorable   David Counts     - Page 11         (JC-0220)

        Consistent with the article IX, section 9 provision, the Enabling Act also prohibits Garza
County or any city therein from levying taxes for hospitalpurposes.  See Act of May 17, 1967,6&h
Leg., R.S., ch. 502, 5 12, 1967 Tex. Gen. Laws 1132, 1137. Moreover, section 13 ofthe Enabling
Act further provides that:

                          Whenever a patient claiming indigence has been admitted to
                thefacilities ofthe hospital district, the directors shall cause inquiry
                to be made as to his circumstances, and of the relatives of such
                patients legally liable for his support. Ifit is found that such patient
                or said relatives are liable topayfor his care and treatment in whole
                or in part, an order shall be made directing such patient, or said
                relatives, to pay      for the support of such patient a specified sum
                per week, in proportion to their financial ability, but such sum shall
                not exceed the actual per capita cost of maintenance.        If the agent
                designated by thedistict to handle such affairsfinds thatsuchpatient
                or said relatives are not able to pay, either in whole or inpart,for his
                care and treatment in such hospital, the same shall become a charge
                upon the hospital district.

Id. $ 13, 1967 Tex. Gen. Laws at 1137 (emphasis added). This provision clearly contemplates that
persons who are able to pay for their medical care may be admitted to the District’s hospital and
furnished medical care. See Tex. Att’y Gen. Op. No. C-382 (1965) at 2.

         Looking at provisions similar to the Enabling Act’s section 13 and a statutory requirement
virtually identical to the article IX, section 9 requirement that a hospital district take over existing
county hospital system, Attorney General Opinion C-382 determined that these provisions clearly
contemplated that paying patients could be admitted to hospital district facilities. Tex. Att’y Gen.
Op. No. C-382 (1965) at 2. Attorney General Opinion C-382 then concluded that a hospital district
may admit patients to its facility that are neither needy nor indigents: “[A] patient should not be
refused admittance to the hospital facilities simply because he may be able to pay for his care, either
in whole or in part.” Id. The opinion emphasized that “when a patient has been admitted who is
fully able to pay, the Administrator may not permit him to pay less than the full and actual cost of
his care and maintenance.” Id.

         We believe care provided through the clinic operated by the private hospital system pursuant
to a contract with the District here is analogous to the care provided through a hospital district
facility. Both the constitutional provision and the Enabling Act contemplate that the District’s
hospital facilities may serve nonindigents. The clinic serves the same function as did the District’s
hospital, which presumably admitted nonindigent patients. Accordingly, we conclude that the
District may offer medical care to nonindigent county residents through the clinic, provided the
District charges those persons the actual cost of the services.
The Honorable David Counts    - Page 12         (JC-0220)

                                      SUMMARY

                       Garza Hospital District was authorized to close its hospital if
              the District’s Board of Directors determined that closing the hospital
              was in the best interest of the District’s residents and the Board
              otherwise complied with the statutory procedures.       Similarly, the
              District was authorized to lease its hospital facilities to a private
              hospital system for the operation of a clinic to provide hospital and
              medical care to the District’s needy inhabitants if the District Board
              of Directors determined that the lease was in the best interest of the
              District’s residents. Because closure of the hospital does not relieve
              the District of its responsibility to provide and pay for needy
              residents’ hospital andmedical care, the District may continue to levy
              a tax and use the proceeds to make payments under a contract to
              provide that care. The District may through this contract offer
              medical care to nonindigent Garza County residents, provided the
               District charges those persons the actual cost of the services. The
               District may not be dissolved pursuant to an election because there is
               no statutory authority to call and hold a dissolution election with
               respect to the District.

                                              Attorney General of Texas

ANDY TAYLOR
First Assistant Attorney General

CLARK RENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

Sheela Rai
Assistant Attorney General - Opinion Committee