In a case that church-sponsored hospitals are watching closely, the Methodist Church in Kansas has renewed its claim to $40 million in proceeds from a recent hospital conversion. Last week it argued its case before the Kansas Supreme Court.
The United Methodist Church Kansas East Conference asserts it should have received the $40 million that Columbia/HCA Healthcare Corp. spent a year ago to buy Bethany Medical Center in Kansas City, Kan. The money was paid to the hospital's not-for-profit community owner, Bethany Corp., which was renamed Wyandotte Health Foundation.
The church claims that because it founded the hospital in 1892, it should receive the proceeds (Oct. 6, 1997, p. 17).
The church, the hospital and the state attorney general hashed out their interests before a circuit court judge late last year. He ruled that the community foundation was entitled to the money.
The Methodist Church then appealed the case to the state Supreme Court, which heard arguments Oct. 27. The court is expected to rule on Dec. 11.
Stewart Entz, lawyer for the Methodist Church, said the sale proceeds should go to the church and the foundation should be dissolved. Those who donated to the hospital should control its funds, he said.
William Epperheimer, president and chief executive officer of Wyandotte Health Foundation, said that until its legal status is clarified, the foundation will not give away any money.
After all loose ends of the sale are tied up, the final valuation of the hospital's assets should be between $40 million and $45 million, Epperheimer said, allowing between $1.5 million and $2 million to be disbursed per year.
"All ties between the church and the hospital were severed in 1983," Epperheimer said. "In reality the hospital did not in any way benefit from its association with the church since 1983. It had been an independent 501(c)(3) since that time."
Epperheimer said the foundation is continuing the hospital's mission "to serve the underprivileged and medically indigent." Kansas Attorney General Carla Stovall supports the foundation's claim to the money.
If the foundation can keep the proceeds, it will focus first on extending primary care.
The foundation has a staff of three, including Epperheimer, and is housed in the hospital pending resolution of the dispute.
Ironically, the hospital is about to revert to not-for-profit status. Columbia is in due diligence to sell it to nearby Sisters of Charity of Leavenworth (Kan.) Health Services Corp. (Aug. 17, p. 18).