ChristianaCare files lawsuit against law allowing state takeover of hospital budgets

A legal challenge has been filed against recent state law that authorizes state control of hospital budgets.

ChristianaCare has filed a lawsuit in Chancery Court seeking declaratory and injunctive relief related to Delaware House Bill 350, a bill passed last legislative session and signed into law by Gov. John Carney June 13. Christiana, Bayhealth, Beebe, Nanticoke and other hospitals and healthcare systems opposed the bill that creates the Diamond State Hospital Cost Review Board, a group given authority to override budget decisions by a private company.

The complaint argues that HB 350 violates federal constitutional rights through the takeover of private hospital governance and budgets, by forcing private hospitals to disclose confidential information about their future priorities and strategy, and by unfairly targeting only a few private hospitals, ChristianaCare wrote in a press release.

The law violates Delaware’s general corporation law and state constitution by authorizing state control over the strategic and business decision-making authority from the boards of certain private hospitals, ChristianaCare said. The Diamond State board is an unelected and unaccountable “super-board” administered by the Delaware Healthcare Commission with authority to override the strategic and budgetary decisions made by the hospitals’ duly elected directors, ChristianaCare said.

“HB 350 raises important questions about the integrity of the corporate franchise in Delaware, and whether it is legal for the government to usurp authority over core business decisions such as setting the budget from a corporation’s duly elected board,” said Nicholas Marsini, chair of ChristianaCare’s Health System Board. “We are hopeful that the Court of Chancery will provide clear guidance on these important legal questions that impact not only ChristianaCare, but potentially any corporation that does business in Delaware.”

ChristianaCare said it raised constitutional concerns during the legislative process that were not addressed and has filed this lawsuit as a necessary next step in protecting the community’s continued access to excellent hospital care, close to home.

“This lawsuit is necessary to preserve and ensure independence in clinical decision-making and patient care, critically necessary hospital services and resources, non-profit board autonomy, and a strong health care delivery system in this community for generations to come,” said Lolita Lopez, chair of ChristianaCare’s Health Services Board.

ChristianaCare said it shares the Legislature's concerns about the cost of health care and recognizes the complexity of this national issue, and looks forward to collaborating with various stakeholders in its health ecosystem in order to improve health outcomes for Delawareans, and make high-quality care more accessible, equitable and affordable for all in its community.