The lawyer who pursued Texas' high-profile case against the state's largest not-for-profit hospital has lost her job in an apparent shake-up in the Texas attorney general's office.
The lawsuit, charging Methodist Hospital of Houston with shirking its charity-care duties, was settled after the Texas Legislature passed a law requiring tax-exempt hospitals to provide a specific amount of charity care (May 31, 1993, p. 4). Hospitals now must file reports with the state detailing how much charity care they provide.
Last month, Ann Kitchen, an assistant attorney general who pursued the state's case against Methodist, was laid off. Rose Ann Reeser, who headed the charitable trust division, has resigned.
Ms. Kitchen said she was one of a half-dozen lawyers laid off in the office. The only explanation she said she received was that Attorney General Dan Morales was "changing the focus of the agency." Ms. Kitchen will begin a new job this month as a policy analyst and attorney for the state's Medicaid director.
Although the charitable trust division is now down to just one attorney, Ms. Kitchen and Ms. Reeser will be replaced, said Patricia Guillermo, a spokeswoman in the attorney general's office. She declined to comment further on the resignations and layoffs, saying they were personnel matters.
In a related development, the attorney general's office released two analyses of Texas hospitals' charity-care expenditures in 1990 and 1991. Figures for 1992 aren't yet available.
Last year, Texas became the first state to require that tax-exempt hospitals provide a specific level of charity care. Under Texas law, hospitals must provide charity care or Medicaid shortfalls equal to 4% of their net revenues or 100% of the value of certain tax benefits. Hospitals also can qualify by providing community benefits that are equal to 5% of net patient revenues; however, 3% must be in charity care or Medicaid shortfalls.
Under the state analysis, 52 of Texas' 132 hospitals wouldn't have met the 4% standard. They would have had to provide $33.4 million more in 1991 if the law had been in effect at that time, according to the attorney general's report.
Houston's Methodist Hospital topped a list in the report that ranked the hospitals that provided the least proportionate amount of charity care. The state reported that Methodist provided $9.2 million in charity care in 1991, or 2% of its net revenues.
Methodist spokeswoman Blythe Schaffer said the hospital will meet the 4% standard in 1994 when the hospital estimates it will provide $19 million in free care. In addition to spending $6 million on indigent care, Methodist will give $1 million to Harris County Hospital District, Houston's tax-supported hospital system, for surgery services. Other funding is expected to go to other services and clinics operated by the district.