Opinion Number

Dear Mr. Walker:

You have recently requested this office to render our opinion concerning the following issue:

Is commercially sensitive confidential information that forms a part of the Hospital Service District's ongoing marketing strategy and strategic plan exempt from disclosure under the Public Records Act?

The Hospital Service District Act, LSA-R.S. 46:1051, et seq., provides the law applicable to Hospital Service Districts. In 1984, the legislature amended the Hospital Service District Act to include a new Part II entitled "Enhanced Ability to Compete," pursuant to LSA-R.S. 46:1070-1077. Central to the legislature's 1984 mandate is an express authorization for Hospital Service Districts to "develop marketing strategies for. . .existing hospital health services" and to "develop strategic plans for the development of any future hospital health service or facility." LSA-R.S. 46:1073(A).

When enacting these strategic planning provisions, the legislature expressly recognized "that the market for hospital and health care services is becoming increasingly competitive." LSA-R.S. 46:1071. As a result of this increasing competitiveness, hospitals are being forced "to develop market strategies and strategic plans to effectively compete" in the market place. LSA-R.S. 46:1071. However, "hospital service districts are presently at a competitive disadvantage," according to the legislature's findings, because of their inability to develop such market strategies and strategic plans. LSA-R.S. 46:1071.

The legislature has declared that the purpose of the 1984 amendments to the Hospital Service District Act regarding strategic plans and marketing strategies is to "enhance the ability of a hospital service district to compete effectively and equally in the market for health care services."

LSA-R.S. 42:1071. Because of the importance of this goal, the legislature has further directed that the laws providing for enhanced ability to compete "shall be liberally construed." LSA-R.S. 42:1071.

As this office explained in Attorney General Opinion 95-193, the phrases "market strategies" and "strategic plans" are defined by the statute to include "any plan, strategy, or device developed or intended to promote, sell, or offer to sell any hospital health service, and "any plan, strategy, or device developed or intended to construct, operate, maintain a health facility or engage in providing, promoting, or selling a hospital health service." LSA-R.S. 46:1073(A).

When enacting these strategic planning provisions, the legislature expressly recognized "that the market for hospital and health care services is becoming increasingly competitive." LSA-R.S. 46:1071. Based on these definitions, this office's earlier opinion concluded "that the definition of `strategic plans' encompasses those plans concerning acquisition of property, medical practices, and ancillary medical service companies since those transactions advance the development of the health facility as contemplated by the statute." Opinion 95-193, page 2.

Additionally, this office's earlier opinion answered in the affirmative your question as to when the strategic plan "includes multiple, interdependent components," the district can legally "act in executive session in a final and binding manner until the strategic plan has been fully developed and brought to a logical conclusion." This office explained that the Hospital Service District Commission "may continue to act within the confines of an executive session until such time as the development of those proposed marketing strategies and strategic plan are brought to a final resolution" and observed that any other conclusion "would hinder the ability of the Hospital Service District Commission to compete, clearly in contradiction to the purpose of the statute." Opinion 95-193, page 2.

This opinion is consistent with the expressed purpose of the statute, to permit the hospital service district equal ability to compete, and with LSA-R.S. 46:1073(B) which states:

Notwithstanding the provisions of R.S. 42:4.1 et seq.
[the Open Meetings Law] or any other law to the contrary, a hospital service district commission may hold an executive session for the discussion and development of marketing strategies and plans.

Thus, this office recognized that acting publicly without the protection of an executive session "would hinder the ability of the Hospital Service District to compete." Our conclusion in Opinion 95-193, is supported by recent caselaw, in which the court stated:

The defendants have also raised the issue of whether the Hospital District violated the open meetings laws, LSA-R.S. 42:4.1-13 in making the decision to expropriate the Fontenot's property in a closed meeting. LSA-R.S. 46:1073(B) specifically authorizes a hospital service district commission to hold an executive, or closed, session for the discussion and development of strategic plans, which includes any plan, strategy or device developed or intended to construct, operate or maintain a health facility (LSA-R.S. 1072(4)). Therefore, this issue has no merit.

While the language quoted above was stated in the first footnote in the case of Calcasieu-Cameron Hospital Service District vs. Fontenot,628 So.2d 75 (La. App 3rd Cir. 1993); writ den., 634 So.2d 854 (La. 1994), it is the sole jurisprudential interpretation of LSA-R.S. 46:1073(B) which our research reflects. As stated therein, the court found no merit to the argument that the hospital service district had violated the Open Meetings Laws by making the decision to expropriate certain property in executive session. Further note that the opinion of the court inCalcasieu, supra, was rendered in November of 1993, subsequent to Opinion 93-62 issued by this office in September of 1993. In Opinion 93-62 we advised that "business during the executive session is limited to a discussion of those matters which are privileged. Any formal action by vote must be taken in open session." This conclusion is now overruled to the extent that it is in conflict with the language of Calcasieu, supra. Based upon this reasoning, we conclude Opinion 95-193 remains an accurate interpretation of existing law.

Similarly, disclosure of such ongoing plans, or the commercially sensitive information that forms a part of those plans, pursuant to the Public Records Act, would also hinder the Hospital Service District's competitive position "clearly in contradiction to the purpose of the statute."

The statute also grants the following exemption from the Public Records Act in, LSA-R.S. 46:1073(C), stating:

Notwithstanding the provisions of R.S. 44:1 et seq. or any other law to the contrary, any marketing strategy and strategic plan of a hospital service district commission and the facility owned or operated by the district shall not be public record and shall be confidential. . . . (Emphasis added).

Because of the statute's clear policy and provisions, the Public Records Act cannot be used to force disclosure of the multiple, interdependent components of an ongoing strategic plan until the strategic plan has been fully developed and brought to a logical conclusion. See Opinion No. 95-193.

In the present case, the District's strategic plan calls for such initiatives or objectives as the acquisition of properties and medical practices, the expansion of services, facility extension, human resources development and many other activities intended to position the District for continued viability in a crowded marketplace. If the District is required to publicly release documents and written records which evidence and chronicle the implementation of the Hospital District's strategic plan, the ability of the District to compete effectively and equally in the market for health care services would be hindered. To require Public Records Act disclosure under such circumstances is to render ineffectual the specific and unequivocally clear exemptions granted to hospital service districts in LSA-R.S. 46:1073.

In keeping with these express statutory exemptions, and the legislature's directive that the 1984 amendments are to be construed broadly to achieve the purposes of the statute, the answer to your question is affirmative. Within the context of the Hospital Service District's current competitive environment, commercially sensitive confidential information, which is part of the marketing strategy or strategic plan of the hospital service district, remains exempt from disclosure under the Public Records Act.

Very truly yours,

RICHARD P. IEYOUB ATTORNEY GENERAL

BY: __________________________________ KERRY L. KILPATRICK ASSISTANT ATTORNEY GENERAL

KLK:ams

Dear Ms. Briehn:

This office is in receipt of your opinion request directed to Attorney General Richard P. Ieyoub. We restate your questions as per your correspondence:

(1) Can the hospital governing board and the medical staff go into executive session to discuss sensitive issues and circumstances concerning the hospital?

(2) Under what conditions can the hospital governing board and medical staff go into executive session?

(3) Under what conditions can the hospital governing board go into executive session to discuss matters which are deemed confidential?

(4) Must anyone other than the hospital board members be present while in executive session?

(5) When may a hospital governing board amend the by-laws?

(6) What is the procedure for amending the by-laws?

Questions 1, 2, and 3

Because your first three questions are closely related, we will avoid repetition by not answering each separately. The provisions of the Open Meetings Law (LSA-R.S. 42:4.1 through 13) apply to all public bodies, including a hospital owned by a parish or other political subdivision of the state. These provisions must be complied with unless the specific statutory exceptions which allow that public body to have a discussion within a closed, executive session are deemed applicable. LSA-R.S. 42:5
provides:

Every meeting of any public body shall be open to the public unless closed pursuant to R.S. 42:6, R.S. 42:6.1, or R.S. 42:6.2.

LSA-R.S. 42:6.1 states a public body may hold an executive session for specific reasons, certain reasons which we selectively quote below:

(A)(1) Discussion of the character, professional competence, or physical or mental health of a person, provided that such person is notified in writing at least twenty-four hours before the meeting and that such person may require that such discussion be held at an open meeting, and provided that nothing in this Subsection shall permit an executive session for discussion of the appointment of a person to a public body. In cases of extraordinary emergecy, written notice to such person shall not be required; however, the public body shall give such notice as it deems appropriate and circumstances permit.

(2) Strategy sessions or negotiations with respect to collective bargaining, prospective litigation after formal written demand, or litigation when an open meeting would have a detrimental effect on the bargaining or litigating position of the public body.

(3) Discussion regarding the report, development, or course of action regarding security personnel, plans, or devices.

(4) Investigative proceedings regarding allegations of misconduct.

(5) Cases of extraordinary emergency, which shall be limited to natural disaster, threat of epidemic, civil disturbances, suppression of insurrection, the repelling of invasions, or other matters of similar magnitude.

* * *

(8). . . .any other matters now provided for or as may be provided for by the legislature.

If records which are privileged under the Public Records Act (LSA-R.S.44:1, et seq.) are to be discussed, then LSA-R.S 42:6.1(A)(8) is properly interpreted to authorize an executive session to confidentially discuss the contents of the privileged records. See Attorney General Opinions 89-550 and 92-698, and 92-378, copies of which are enclosed.

Further, note there are other exceptions to the Open Meetings Law which are specifically applicable to hospital service districts. LSA-R.S. 46:1073 provides, in pertinent part:

B. Nothwithstanding the provisions of R.S. 42:4.1 et seq. or any other law to the contrary, a hospital service district commission may hold an executive session for the discussion and development of marketing strategies and strategic plans.

As noted, there are several situations which could arise prompting the hospital board of directors to call an executive session. However, from the information provided in your letter, we are unable to determine which specific factual situations you might desire addressed. Should the hospital board elect to call an executive session, the board should be advised that business during the executive session is limited to a discussion of those matters which are privileged. Any formal action by vote must be taken in open session. LSA-R.S. 42:6.

Question 4

We find no statute which mandates the presence of individuals other than the hospital board members while conducting an executive session. In fact, in some instances the presence of other individuals circumvents the underlying purpose of calling an executive session — to avoid public disclosure of those matters deemed confidential or otherwise privileged or exempt which should properly be discussed outside public purview.

Questions 5 6

We have been provided a copy of your bylaws. You ask us to determine when and how such bylaws may be amended.

We refer you to the provisions of LSA-R.S. 46:1060. That statute states "any hospital service district. . . .created by a police jury. . . .shall constitute a body corporate in law with all the powers of a corporation. . .". The Louisiana law governing corporations is found within the provisions of LSA-R.S. 12:1, et seq.; specific reference is made to LSA-R.S. 12:28 concerning by-laws, which provides in part:

A. Unless the articles provide otherwise, the board of directors may make and alter by-laws, including by-laws fixing the directors' qualifications, classifications, number or term of office, or fixing their compensation, subject to the power of the shareholders to change or repeal any by-laws so made.

B. The by-laws may contain any provisions relating to the business of the corporation, the conduct of its affairs, its rights or powers, or the rights or powers of its shareholders, directors, or officers, not inconsistent with law or the articles.

There is no statutory restriction concerning the time when an amendment to the by-laws may be made. It appears the hospital board of directors may amend the by-laws at any given time, as long as it is in conformity with any provisions governing amendment provided in the original by-laws.

There is in fact a provision governing the amendment of the by-laws. Article VIII of the bylaws governing the Jackson Parish hospital service district provides:

Amendments

These bylaws may be amended by [the] affirmative vote of the two-thirds majority of the members present or represented by proxy at the annual or any special meeting of the service district provided a full statement of such proposed amendments shall have [been] published in the notice calling the meeting.

Your bylaws provide an answer concerning the appropriate vote necessary to amend the bylaws — a "two-thirds majority of the members present or represented by proxy at the annual or any special meeting of the service district. . . .". Your bylaws further require public notification of the proposed amendments to the bylaws. A copy of Roberts' Rules of Order
would answer any particular questions concerning the formalities which should be followed in the conduction of a meeting to amend the bylaws. It is suggested that you retain a copy of the latest edition of this book, as it would no doubt prove helpful.

Finally, we enclose copies of Attorney General Opinions 91-339 and 89-265, which will provide further insight regarding the appropriateness of executive sessions in specific factual situations. Should you have further inquiries in which we may be of assistance, please contact this office.

Very truly yours,

RICHARD P. IEYOUB Attorney General

BY: ______________________________ Kerry L. Kilpatrick Assistant Attorney General

RPI/KLK/0278E

Dear Mr. Labat:

You have requested this office to issue an advisory opinion regarding the nature of interaction between the Hospital Service District No. 1 Board and the Terrebonne Parish Council. More specifically you have asked whether the Hospital Service District should be required to disclose documents and statements that comprise marketing and commercially sensitive information. In addition you have asked whether Parish Council members must be allowed to attend the Hospital District's strategic planning sessions.

This office has consistently held that the Public Records Act protects the confidentiality of the aforementioned information. The Hospital District may choose to provide the parish council with this information, but is under no obligation to do so. This office has stated in opinion No. 95-346, "Notwithstanding the provisions of R.S. 44:1-13, or any other law to the contrary, any marketing strategy and strategic plan of a hospital service district commission and the facility owned or operated by the district shall not be public record." The opinion further states, "Because of the statute's clear policy and provisions, the Public Records Act cannot be used to force disclosure of the multiple, interdependent components of an ongoing strategic plan until the strategic plan has been fully developed and brought to a logical conclusion". A copy of Attorney General Opinion 95-346 is attached.

We trust the attached opinion will answer your questions. If you have any further questions, please do not hesitate to contact our office.

Yours very truly,

CHARLES C. FOTI, JR. ATTORNEY GENERAL

By: ______________________ CHARLES H. BRAUD, JR. Assistant Attorney General

CCF, Jr./CHB, Jr./gr