The Virginia Charitable Immunity Decision

Yesterday, the Supreme Court of Virginia unanimously ruled that foundations set up to administer the clinical practices of faculty at public medical schools are not eligible for charitable immunity. 

To be eligible for charitable immunity in Virginia, an entity must prove:  1. that it was organized for a recognized charitable purpose; 2. that it operates in fact in accord with that purpose; and 3. the tort claimant was a beneficiary of the charitable entity at the time of the alleged injury.  The court found the foundation was entitled to a presumption that it was a charitable entity based on its Articles of Incorporation.  However, the court held the foundation does not operate as a charity:

In this case, we find the following four factors determinative of the conclusion that HSF [the foundation] does not operate in fact with a charitable purpose: (a) HSF was created to correct billing and collection problems; (b) the ratio of HSF’s revenue compared to the cost of its charitable work is substantially disproportionate [charitable work is .66% of total revenue]; (c) HSF’s incentive payment structure is functionally a profit-based bonus system, much like a for-profit enterprise, and (d) HSF does not accept charitable gifts.

As a result of the decision, patients in Virginia’s three public medical hospitals will continue to be able to recover for a health care provider’s negligence.  The full opinion [pdf] is here.

–CJR