Glasgow Daily Times, Glasgow, KY

December 6, 2013

6:07 EVENING UPDATE: Judge rules in favor of T.J. Samson Hospital board

By LISA SIMPSON STRANGE
Glasgow Daily Times

GLASGOW — A judge has ruled in favor of the board of directors for T.J. Samson Community Hospital in a civil lawsuit brought by Wendell Honeycutt and other descendents of original “subscribers” who contributed money when the hospital was originally incorporated almost 90 years ago.

Ken M. Howard, special judge for Barren Circuit Court, ordered in court documents signed Tuesday that “The original subscribers, heirs or assignees lost any right to vote in elections for the Board of Directors of T.J. Samson Community Hospital pursuant to the 1968 Amended Articles.”

In the findings of fact in the court documents, it was recognized that the hospital was organized as a non-profit and that “no shares of capital stock were to be issued to anyone and no dividends declared in favor of anyone.”

"Since the Hospital was originally organized as a non-stock charitable institution, the claims of Honeycutt must fail,” Howard wrote in the decision. “The Hospital validly amended its charter in 1968 by a vote of two-thirds of the Directors. The subscribers lost any right to vote when the 1968 and 1974 Amended and Restated Articles were enacted. The subscribers' heirs lost any rights they may have [had] as well.”

Howard further noted “the original subscribers adopted the Hospital's Articles with the same knowledge, and they never had any vested rights. The subscribers' heirs cannot have vested rights where their ancestors had none.”

On March 11, 1968, the hospital board passed amended articles of incorporation that specified the board to be self-perpetuating “upon the death, resignation or removal from the community of any Trustee. The remaining Trustees had the power to fill any vacancies, and there was no mention of subscribers having the right to elect Trustees.”

In 2011, the board approved the formation of T.J. Health Partners LLC, “an integrated network of health providers offering an array of comprehensive services,” according to their website. The TJ Health Pavilion, which houses partner members, opened in May 2013.

"The Defendant Board of Directors of T.J. Samson Community Hospital is the valid Board provided that the electoral procedures required by in the 2011 Restated Articles and Hospital bylaws were followed,” Howard stated in his ruling. “The Court was not asked to decide that particular issue and has been provided no evidence about the recent election.”

Attorney Jeff Herbert, who represented the hospital board in the suit, said they were obviously very pleased by the outcome although he felt it was regrettable they had to go through it because of “a few misguided people.”

It's a shame the hospital has had to spend its time and money defending this claim, which diverted their goal of high-quality healthcare in the community, but now we can move on,” he said.

Herbert said the judge's opinion was “very well-written and thorough” and that he had no idea whether the plaintiffs planned to appeal the ruling.

This is a final and appealable judgment, according to the court records.

I'm very disappointed with the decision and we will be considering our options and whether or not we want to appeal,” said Alan Simpson, attorney for Honeycutt, who is a Glasgow city council member, and the other plaintiffs.

Simpson said he will need to meet with his clients before any further action is considered.

It's an issue of law that has really never been tested in Kentucky before, so we'll just have to wait and see what we decide to do, he said.

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