Opinion #6670

The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)

STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6670

December 19, 1990

HOSPITAL FINANCE AUTHORITY:

Eligibility of a nursing home facility for financing

The Hospital Finance Authority Act does authorize the Michigan State Hospital Finance Authority to make a loan to FFE/Michigan Properties, Inc., to finance the acquisition of nursing homes in Michigan.

Thomas Letavis

Deputy Executive Director

Michigan State Hospital Finance Authority

2nd Flr.

Plaza One

P.O. Box 15128

Lansing, MI 48901

You have requested my opinion on the question whether, under the provisions of the Hospital Finance Authority Act, 1969 PA 38, as amended, MCL 331.31 et seq; MSA 14.1220(1) et seq, the Michigan State Hospital Finance Authority is authorized to make a loan to FFE/Michigan Properties, Inc., to finance the acquisition of nursing homes in Michigan.

According to the materials submitted with your request, FFE/Michigan Properties, Inc., is an affiliate of Foundation for the Elderly, Inc., a nonprofit Texas corporation with section 501(c)(3) status under the Internal Revenue Code. Foundation for the Elderly, Inc., has a "group exemption" from federal income taxation under the Internal Revenue Code which includes FFE/Michigan Properties, Inc. I am further advised that the nursing homes to be acquired are licensed by the Michigan Department of Public Health and, further, that FFE/Michigan Properties, Inc., has been granted certificates of need to operate these facilities by the same department.

The legislative purpose in enacting the Hospital Finance Authority Act is set forth in section 2 of the Act, MCL 331.32; MSA 14.1220(2), which states:

"It is declared that, for the benefit of the people of the state and the improvement of their health, welfare, and living conditions, it is essential that hospitals within the state be provided with appropriate means at reasonable cost to maintain, expand, enlarge, and establish health care, hospitals, and other related facilities; that hospitals be provided with the ability to refinance indebtedness; and that authorities created or incorporated under this act be provided with the ability to refund or to refund in advance obligations of 1 or more of those authorities. This act shall provide a method to enable hospitals in the state to provide or maintain at reasonable cost pursuant to reasonable terms the facilities, structures and services needed to accomplish the purposes of this act, all to the public benefit and good, to the extent and manner provided in this act."

A statute is construed by a court to achieve the legislative purpose underlying its enactment. Wyandotte Savings Bank v State Banking Comm'r, 347 Mich 33, 40; 78 NW2d 612 (1956).

Section 13 of the Hospital Finance Authority Act, MCL 331.43; MSA 14.1220(13), states, in pertinent part:

"The state authority may lend money to hospitals for the acquisition, construction, improvement, or alteration of hospital facilities. ..." (Emphasis added.)

In section 3 of the Act, MCL 331.33; MSA 14.1220(3), the Legislature has defined the terms "hospital" and "hospital facilities" as these terms are used in that Act:

"(e) 'Hospital' means a nonpublic corporation, association, institution, or establishment located within the state for the care of the sick or wounded or of those who require medical treatment, operated without profit to an individual corporation or association. It includes nonprofit corporations or other organizations engaged solely in some phase of hospital activity or in providing a supporting service to hospitals or public corporations which operate or own hospital facilities. [Emphasis added.]

"(f) 'Hospital facilities' means a building or structure suitable and intended for, or incidental or ancillary to, use by a hospital and includes outpatient clinics, laboratories, laundries, nurses', doctors', or interns' residences, administration buildings, facilities for research directly involved with hospital care, maintenance, storage or utility facilities, parking lots, and garages and all necessary, useful, or related equipment, furnishings, and appurtenances and all lands necessary or convenient as a site for the foregoing. ..."

Section 47 of the Hospital Finance Authority Act, MCL 331.77; MSA 14.1220(47), requires that, with certain exceptions, a certificate of need must be issued, or a determination made that a certificate of need is not necessary, before the Authority may issue the bonds or notes. The provisions governing the issuance of certificates of need, formerly set forth in 1972 PA 256, are now found in Part 222 of the Public Health Code, MCL 333.22201 et seq; MSA 14.15(22201) et seq. Section 22209(1) of the Public Health Code, MCL 333.22209(1); MSA 14.15(22209)(1), provides, in pertinent part:

"(1) Except as otherwise provided under this part, a person shall not do any of the following without first obtaining a certificate of need:

(a) Acquire or begin operation of a new health facility.

..." (Emphasis added.)

The term "health facility" as used in this part of the Public Health Code, is defined in section 22205(1) of the Code, MCL 333.22205(1); MSA 14.15(22205)(1), which provides, in pertinent part, that:

"(1) 'Health facility', except as otherwise provided in subsection (2), means:

(a) A hospital licensed under part 215.

(b) A mental hospital, psychiatric hospital, or psychiatric unit licensed under the mental health code, Act No. 258 of the Public Acts of 1974, being sections 330.1001 to 330.2106 of the Michigan Compiled Laws.

..." (Emphasis added.)

The term "nursing home," in turn, is defined in section 20109(1) of the Public Health Code, MCL 333.20109(1); MSA 14.15(20109)(1):

" 'Nursing home' means a nursing care facility, including a county medical care facility, but excluding a hospital or a facility created by Act No 152 of the Public Acts of 1885, as amended, being sections 36.1 to 36.12 of the Michigan Compiled Laws, which provides organized nursing care and medical treatment to 7 or more unrelated individuals suffering or recovering from illness, injury or infirmity." (Emphasis added.)

In addition, section 21715 of the Code, MCL 333.21715; MSA 14.15(21715), provides:

"(1) A nursing home shall provide:

(a) [Expired.]

(b) A program of planned and continuing medical care under the charge of physicians.

"(2) Nursing care and medical care shall consist of services given to individuals who are subject to prolonged suffering from illness or injury or who are recovering from illness or injury. The services shall be within the ability of the home to provide and shall include the functions of medical care such as diagnosis and treatment of an illness; nursing care via assessment, planning, and implementation; evaluation of a patient's health care needs; and the carrying out of required treatment prescribed by a physician." (Emphasis added.)

Under the foregoing provisions of the Public Health Code, a nursing home facility is treated, for purposes of that Code, as an entity that is separate and distinct from a "hospital." However, the Hospital Finance Authority Act defines the term "hospital" much more broadly than does the Public Health Code. A nursing home clearly does exist to provide "for the care of the sick or wounded or of those who require medical treatment ...." Hospital Finance Authority Act, Sec. 3(e); MCL 331.33(e); MSA 14.1220(3)(e). It follows that a nursing home facility does fall within the definition of a "hospital" or "hospital facility" as those terms are defined by the Hospital Finance Authority Act.

It is my opinion, therefore, that the Hospital Finance Authority Act does authorize the Michigan State Hospital Finance Authority to make a loan to the Foundation for the Elderly/Michigan Properties, Inc., to finance the acquisition of nursing homes in Michigan.

Frank J. Kelley

Attorney General