|Kentucky Conference wins lawsuit with foundation|
The Kentucky Annual (regional) Conference has won
control of proceeds from the 1995 sale of Good Samaritan Hospital in
Lexington, Ky., following a legal battle with Good Samaritan Foundation.
A UMNS Web-only photo courtesy of Good Samaritan Hospital.
A UMNS Report
By Linda Green*
Oct. 17, 2007
A seven-year legal battle between the United Methodist Kentucky Annual
(regional) Conference and an affiliated foundation has ended in favor of
The outcome also upholds the United Methodist "trust clause" pertaining to local church property.
The conference and the board of trustees of the Good Samaritan
Foundation were battling for control of $20 million in assets resulting
from the 1995 sale of Good Samaritan Hospital in Lexington, Ky.
Good Samaritan was one of dozens of hospitals built by the Methodist
church in the late 19th and early 20th centuries to provide care for the
poor and indigent.
When the hospital sold to a for-profit company, the foundation ––
described as "a philanthropic organization dedicated to serving the
healthcare needs of Kentucky's poor and disadvantaged" –– placed those
assets in an endowment fund providing $1 million a year in
In 2000, the foundation's board of trustees stopped reporting to the
conference and said it was no longer affiliated with The United
Methodist Church. The conference countered with a $20 million lawsuit,
claiming ownership of the hospital at the time of its sale.
Last December, Fayette Circuit Judge Gary Payne ruled that the church
rightfully owned the hospital and the money from its sale and ordered
that the church appoint a new foundation board. The board appealed, and
the appeals court sent the case back to Payne, who reaffirmed his
Last spring, the conference entered into discussions with the
foundation board. Under a plan announced in June, the conference and the
former trustees of the foundation have named 15 members to a
transitional board with the conference naming all members to the board
by 2012. The foundation will continue its mission to provide healthcare,
health education and research ministries for the people of Kentucky.
"We look forward to working with the former board," said Michael
Watts, treasurer of the Kentucky conference. "We are looking forward to
being able to continue with the mission of working to improve the health
and healthcare situation of Kentuckians."
Sally Manning, vice chairperson of the Good Samaritan Foundation,
said the board is happy the disagreement is settled. "We are a unified
board, united in carrying out the mission of the Good Samaritan
Foundation and the work of the Lord," she said.
Watts said the legal battle involved control by the foundation's
board of trustees, which handled the former hospital's assets and
refused to give the conference an accounting of the proceeds.
"The trust clause still is a vital part of
our polity as United Methodists, and we certainly want to uphold the
polity of the church."
-Michael Watts, conference treasurer
"While conference did not object to the foundation's use of the money
from the sale of the hospital for healthcare needs," Watts said, "the
suit was filed because of the trust clause" that established the
foundation's relationship with the conference.
The United Methodist Church's trust clause, which dates back to the
days of Methodism founder John Wesley, declares that the local church
holds its property in trust for the denomination. The clause, which has
been upheld in U.S. courts throughout the 200-plus history of the
denomination in the United States, has faced challenges in recent years.
According to Watts, the foundation's position "was that the trust
clause was not in the documentation for the articles of incorporation,
so they said they were not Methodists and the hospital was not
In Kentucky, a trust clause does not have to be in writing, "so we
maintained that we had established that trust relationship in 1925,"
"We felt we were in the right all the time as far as maintaining the trust clause is concerned."
Watts said the legal wrangling over the foundation and its assets,
while difficult at times, has helped all entities understand that "the
trust clause still is a vital part of our polity as United Methodists,
and we certainly want to uphold the polity of the church."
The legal battle took some interesting twists and turns over the years.
The appeal of the Payne's ruling was led by James Holsinger,
president of the United Methodist Church's Judicial Council, the
denomination's highest court. Holsinger also served as chairman of the
Good Samaritan Foundation's board.
Holsinger, who was nominated by President George W. Bush last spring
as U.S. surgeon general, was quoted by Media Transparency as saying the
church is "only interested in the foundation's money, not its cause."
Holsinger, who awaits confirmation as the country's top doctor, has
declined interviews on all matters, including the legal battle with the
Kentucky conference. His confirmation has stalled because the Senate
Health, Education, Labor and Pensions Committee is awaiting answers to
follow up questions it posed to him. Last August, the committee
questioned him about his views on homosexuality, an issue that has drawn
opposition to his nomination from health groups and gay rights groups,
*Green is a United Methodist News Service news writer based in Nashville, Tenn.
News media contact: Linda Green, (615) 742-5470 or email@example.com.
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