County attorney memo

The memorandum written by Missoula County deputy county attorney Dori Brownlow outlining the county's interest, or lack thereof, in the proposed sale of Community Medical Center.

DAVID ERICKSON david.erickson@missoulian.com

An initial review by the Missoula County Attorney’s Office has concluded there is nothing that would limit or restrict the proposed sale of the nonprofit Community Medical Center to a for-profit partnership between Billings Clinic and RegionalCare Hospital Partners and that the county isn’t owed any money if the sale is approved.

Back in September, the CMC board of directors announced an agreement to sell the hospital for $67.4 million in cash. The Montana Attorney General’s Office has to approve the deal, a process that could take another two months.

However, the Missoula County Attorney’s Office has been fielding calls from concerned residents since the sale was announced. That’s because many people believe the county is entitled to the proceeds of the sale and CMC has stated otherwise.

In November 1965, Missoula County sold property near Fort Missoula to CMC for $145,188 at an auction as required by Montana law. The sale was by a Contract for Deed which was paid off in 1968, according to a memorandum written by Deputy County Attorney Dori Brownlow.

“There is nothing in the above transactions that would limit or restrict the sale of the property to a for-profit entity or that give Missoula County an interest in the property,” Brownlow wrote. “The only restrictions are in the Restrictive Covenants, to be used for schools, churches, hospitals and homes for the aged.”

In March, the hospital changed its articles of incorporation, which originally stated that funds resulting from a sale of the hospital would be given to the county. The new articles of incorporation state the funds will go to an unspecified charitable or educational entity. This was a point of contention for many Missoula residents, who accused the hospital of abruptly changing the articles to cut the county out of the deal.

However, the hospital contends the articles were being reviewed in anticipation of a sale and that’s when it discovered the county would receive the funds. The hospital made the decision that a nonprofit foundation of its choosing would get the funds, not the county.

Brownlow said it appears the articles probably should have been changed in the 1970s, and that it's perfectly legal for the hospital to make any changes to the articles.

“A lot of people are invested in the hospital,” she explained. “A lot of people think the county has a legal basis to be involved, but to date I haven’t found anything that the county itself could insert itself in the process. If anyone has new information, I would like to see it.”

CMC spokewoman Mary Windecker said that many people wrongly believed the county had originally donated the land to CMC.

“The biggest misperception was that the land was donated to Community Medical Center, and that was not the case,” Windecker said. “It was purchased at the auction at fair-market value. In the bylaws, years ago, nonprofits would go through a public entity to go through the bond market. The county held the bond for part of the hospital. CMC listed the county in the bylaws as a recipient if, for whatever reason, the hospital failed. But once the bond was paid off, they weren’t holding the bond any longer. So a lot of people were wondering, did we pay it off, do we owe the county any money? They county is saying no, that is not the case. No money is owed to the county and we did pay fair-market value.”

Windecker said the CMC board has not yet determined which nonprofit foundation will receive the $67 million. Because CMC is itself a nonprofit entity, the attorney general will also have to approve which foundation gets the money, but the foundation has to be located within CMC’s service area of western Montana.

“The money will go into a foundation that is nonprofit to be used for health and wellness,” Windecker explained.

The Montana Attorney General's Office will hold a public hearing on the proposed sale, but it hasn't set a date yet.

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