Outside parties see high-stakes fight in Halifax Health case

Halifax Health’s appeal to the Florida Supreme Court over its battle to build a hospital in Deltona is gaining statewide attention because of the issues it raises about the use of interlocal agreements and a public hospital’s ability to function in a competitive health care environment.

The appeal focuses on the $115 million in bond financing the hospital was denied to finance the facility but would also clarify larger issues about how Halifax Health operates. These underlying issues have triggered concern from numerous local governments, lobbying groups and one South Florida hospital, prompting them to submit so-called “friend of the court” briefs in support of Halifax Health’s position.

An interlocal agreement was at least part of the legal basis for Halifax Health’s push to build a 96-bed hospital in Deltona, the heavily populated city in West Volusia. The move quickly became the target of a lawsuit two years ago that has grown into a web of legal questions that will come before the high court.

“You never know until the decision is made what direction it’s going to go,” said Fred Crawford, executive director of the Florida Association of Special Districts, which represents more than 90 special taxing districts in the state.

“Our concern is that we want to make sure that the justices take into account the interlocal agreement statute and make sure that is a part of their decision.”

In its attempt to sway the justices, the county’s only public hospital submitted fresh arguments this month asserting that the lower courts erred when they found the Deltona project to be illegal.

Halifax Health argued in writing that the Legislature removed geographic restrictions from the public hospital's operations in 1979 after the statute that created the Halifax Hospital District was revised. Hospital lawyers said if there is no legal limitation, the hospital is free to act as a special taxing district and any other Florida nonprofit corporation, which would include using interlocal agreements.

Two state court judges have already disagreed with previous arguments by Halifax Health. But Clifford Shepard, an attorney submitting briefs on behalf of seven different outside parties, said he believes the lower court judges misinterpreted certain parts of the state law that created the Halifax Hospital District.

Shepard, who is representing the Florida League of Cities, among other groups, said Florida has hundreds of special taxing districts and many already provide services beyond their district boundaries using interlocal agreements. The concern for some municipalities and organizations, he said, is that the court will place restrictions on how these agreements can be used.

“The boundary sets up who gets taxed but they don’t necessarily limit where you can provide services to,” Shepard said. “That’s a critical fact that we want to make sure the court is aware of.”

The brief also identifies a section of the enabling act that instructs judges to interpret the law broadly, if they must. Such a move would allow the hospital more leeway to function beyond the boundaries of its district. Shepard said that argument seemed to be missing from the previous case.

“When courts are called on in these situations to interpret the law that’s provided, the parameters that they are typically asked to follow are don’t second guess the legislators that drafted it,” Shepard said. “Assume that the legislators who drafted it knew what they meant and meant what they said.”

Memorial Healthcare System, a similarly situated organization based in Broward County, plans to put forth its own arguments in favor of Halifax Health. The public hospital system run by the South Broward Hospital District is worried a decision against Halifax Health could imperil a project of theirs to offer specialized pediatric services in Palm Beach County.

Kerting Baldwin, a hospital spokesperson, said the lower court’s decision “threatens the economic viability of public healthcare systems” by restricting their ability to compete in a changing health care system.

“The ramifications of the trial court’s ruling, if upheld, detrimentally impacts the ability of public healthcare systems to provide critical medical services to district residents and neighboring communities,” Baldwin said.

“The effect of the ruling is to prevent public healthcare systems from expanding beyond their geographic footprint to deliver much needed primary and specialized medical care to underserved communities, and especially the most vulnerable citizens of those communities: children.”

The appeal is Halifax Health’s closing shot in a legal fight that has already proven to be a costly one as the hospital faces legal battles from multiple angles.

Halifax Health has spent more than $770,000 to pay three law firms for its project in Deltona, a review of legal invoices shows. The hospital also added a fourth last month — the high-powered law firm of Greenberg Traurig — to its bench.

The courtroom clashes started in June 2016 when former Ponce Inlet Mayor Nancy Epps filed a lawsuit challenging the legitimacy of the Deltona project. Before a judge could come to a decision in that case, Halifax Health asked for — and was later denied — permission to use bonds to help pay for the venture.

Opening a large-scale health care facility in West Volusia had been a goal for the hospital since at least 2013. After buying 30 acres along Interstate 4, Halifax Health opened a freestanding emergency room and planned for a hospital, which is now under construction.

The interlocal agreement with Deltona, which was desperate to attract more services for its 90,000 residents, was the backbone of the decision. But what power, if any, does an interlocal agreement grant a hospital?

“That’s what the court will ultimately have to sort its way through,” Shepard, the attorney, said.