In Re: Grover C. Shoemaker, TST Appeal of: GB Hosp , 115 A.3d 347 ( 2015 )

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2015 PA Super 111IN RE: GROVER C. SHOEMAKER, TST,: IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
APPEAL OF: GEISINGER-BLOOMSBURG :
HOSPITAL, : No. 828 MDA 2014
Appeal from the Decree Entered March 25, 2014,
In the Court of Common Pleas of Columbia County,
Orphans Court, at No. 2012 OC 231.
BEFORE: FORD ELLIOTT, P.J.E., SHOGAN, J., and STABILE, J.
OPINION BY SHOGAN, J.: FILED MAY 07, 2015
Appellant, Geisinger-Bloomsburg Hospital (“GBH”), appeals from a
decree entered on March 25, 2014, in the Orphans’ Court division of the
Columbia County Court of Common Pleas. On appeal, GBH challenges, inter
alia, the Orphans’ Court’s creation of a Pour Over Endowment Trust and the
requirement that charitable trust funds be spent only in years in which GBH
has an operating surplus. For the reasons that follow, we affirm in part, and
reverse in part, the decree entered on March 25, 2014.1
1
On September 30, 2014, GBH filed two separate motions with this Court:
1) a motion to dismiss First Columbia Bank & Trust Company (“First
Columbia”) for lack of standing, or in the alternative, to consider First
Columbia an amicus curiae and strike references in its brief to settlement;
and 2) a motion to dismiss the Bloomsburg Library for lack of standing. We
GRANT GBH’s motion to consider First Columbia, as an administrator of
trusts involved in this appeal, as an amicus curiae and strike references in
First Columbia’s brief to settlement. See In re Pearson’s Estate, 275 A.2d
336, 338 n.3 (Pa. 1971) (treating an administrator/stakeholder’s brief as an
amicus curiae brief only where the administrator/stakeholder was not an
aggrieved party and the issue of standing was raised). However, our
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This case concerns the allocation and distribution of funds from several
charitable trusts to the hospital following its affiliation with Geisinger Health
System Foundation (“GHSF”). On November 15, 2012, First Columbia filed a
petition pursuant to 20 Pa.C.S. § 7711 concerning the administration of
eight trusts. First Columbia sought judicial interpretation of the effect that
multiple corporate mergers and the changing corporate identity of the
original intended trust recipient, The Bloomsburg Hospital, had on these
eight trusts.2 On January 18, 2013, GBH filed its response.
On March 15, 2013, the Attorney General of Pennsylvania, in its
capacity as parens patriae, filed its statement of position in this matter.3
The Attorney General concluded that despite the changes in corporate
identity, the trusts at issue may still “be administered in exact conformity
with the Settlors’ intended schemes of distribution because [GBH] continues
decision on this issue is limited to the facts of this case and in accordance
with our Supreme Court’s statement that such determination is “made
without establishing precedent.” Id. Additionally, we GRANT GBH’s motion
to dismiss the Bloomsburg Library for lack of standing. Because the
Bloomsburg Library has filed no brief, there is nothing that we may consider
as an amicus brief.
2
Additional charitable trusts were subsequently put at issue.
3
We note that the Attorney General, on behalf of the Commonwealth as
parens patriae for charities, has not filed a brief in this matter. Charitable
trusts are continuously subject to the parens patriae power of the
Commonwealth through its Attorney General and the supervisory jurisdiction
of the courts. In re Estate of Coleman, 317 A.2d 631, 634 (Pa. 1974); In
re Estate of Voegtly, 151 A.2d 593, 594 (Pa. 1959).
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to operate as a non-profit hospital in Bloomsburg, Pennsylvania.” Attorney
General’s Statement of Position, 3/15/13, at ¶9. The Attorney General was
satisfied that no funds from the trusts had been, or would be, unlawfully
diverted from GBH. Id. at ¶11. However, the Attorney General made the
following recommendation:
The Commonwealth respectfully recommends language which
affirms GHSF’s commitment to honor the settlors[’] intentions as
follows, “[A]ny and all funds received from the charitable trusts
created by John Paul Barger[,] Reuben H. Learn, Mary Elizabeth
McNinch, Hazel W. Shoemaker, Grover C. Shoemaker, Mary F.
Sneidman, H.W. Titman, Mary W. Wolfe, and any other present
or future trust which references “Bloomsburg Hospital” shall be
restricted exclusively to the Geisinger-Bloomsburg Hospital
facility in Bloomsburg, Pennsylvania to be utilized in conformity
with the terms of each granting instrument and shall not be
diverted to any other use or facility without further Order of
Court.”
Id. at ¶12. Following hearings on December 27, 2013, and February 10,
2014, the Orphans’ Court issued its findings of fact and conclusions of law.
Due to the extensive nature of the court’s findings, we shall not restate them
here. However, a brief summary is in order.
On February 11, 1905, an entity known as “The Bloomsburg Hospital”
was incorporated. The Orphans’ Court took judicial notice of the fact that
the hospital’s stated purpose was caring for “the sick ... in the county of
Columbia, especially in and about the Town of Bloomsburg.” Findings of
Fact, 3/25/14, at ¶ 7. The Bloomsburg Hospital later became known as
Bloomsburg Hospital. Through a series of complicated transactions,
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Bloomsburg Hospital and related and ancillary corporate entities have been
joined under the larger corporate umbrella of GHSF. GHSF is the controlling
corporation of an integrated health care system with GBH, formerly known
as Bloomsburg Hospital, operating as a hospital in Bloomsburg,
Pennsylvania. Id. at ¶¶ 7-21; Conclusions of Law, 3/25/14, at 11. The
trusts at issue all directed that certain funds from the individual trusts were
for the benefit of Bloomsburg Hospital.
As stated by First Columbia, the question before the Orphans’ Court
was “the propriety of continued income distributions to GBH and the
appropriateness of any conditions or restrictions applicable to future
distributions should the court conclude that GBH continues to be qualified as
a beneficiary of each Trust.” First Columbia’s Amicus Curiae Brief at 6-7.
According to First Columbia, its concern was “whether the amended Articles
[of Incorporation of GBH] permitted Trust funds to be diverted to other
charitable entities under the control of GHSF that did not benefit the
Bloomsburg Hospital and Bloomsburg area.” Id.
The Orphans’ Court found that “[t]he hospital in Bloomsburg remains
in existence, both as a hospital located in Bloomsburg and as a separate
legal entity, whether known as BH [Bloomsburg Hospital] or GBH.” Findings
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of Fact, 3/25/14, at 20. However, the court then concluded, in relevant
part,4 as follows:
15. The charitable purpose of the settlors, specifically, to benefit
the intended locale and population of the charity which is
specified to be Columbia County, especially in and about
Bloomsburg, will become unable to be assured under GBH’s
interpretation, and accounting restrictions are necessary to avoid
an unlawful, impracticable and wasteful result.
16. The intent of all of the settlors of the Trusts at issue was to
benefit BH [Bloomsburg Hospital], consistent with the object
expressed in the original Charter to TBH [The Bloomsburg
Hospital], being the population of Columbia County, especially in
and about the Town of Bloomsburg. A further intent was to
facilitate the availability of an acute care hospital, serving said
population, providing all of the BH Services.
17. Achievement of the settlors’ intents cannot be assured
without accounting restrictions, given GBH’s stated intent of
distributing Trust income throughout the Geisinger system in the
event of consolidated surpluses at GBH. Money is fungible. A
dollar into a bank account is always a dollar in a bank account.
GBH and GHSF cannot be permitted to regard the first $100,000
of operational expenses to be paid for by a hypothetical
$100,000 of Trust income, and then pay the dollars which come
from patient revenues to affiliate hospitals 100 miles away from
Bloomsburg when there is an operational net profit, at least
limited to the Trust income. Simply put: That is too easy.
18. Orphans’ Courts are permitted to prescribe a tailored
accounting to ensure compliance with a settlor’s intent. []
4
The Orphans’ Court also detailed the irregularities and errors that occurred
in the transaction that placed GBH under the corporate umbrella of GHSF.
Conclusions of Law, 3/25/14, at ¶¶ 1-10. However, the Orphans’ Court
noted that the parties retroactively “re-closed the Transaction with proper
authorizing documents” and that “equity deems that which ought to be done
as having been done.” Id. at ¶ 11 (citation omitted). Accordingly, any issue
concerning the transaction has not been challenged and is not before us.
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19. Pursuant to 20 Pa.C.S. §7711(c), a judicial proceeding
involving a trust may relate to any matter involving the trust’s
administration, including a request for declaratory judgment.
This particular section further provides this court with the
authority to clarify and define the terms and conditions of
administration of the Trusts through the Order and Decree which
follows, for the same reasons articulated above.
Conclusions of Law, 3/25/14, at ¶¶ 15-19.
The Orphans’ Court then applied the doctrine of cy pres5 and issued
the following order:
ORDER AND DECREE
AND NOW, to-wit, on this 25th day of March, 2014, after
hearing held on the Petitions (as defined at paragraph 4. of the
Findings of Fact and Discussion), on the basis of the foregoing
Finding[s] of Fact, Conclusions of Law and Discussion, it is
hereby ORDERED and DECREED as follows:
1. The income from the Trusts, excepting the
Bittenbender, Kisner and Stewart estates and/or trusts, shall be
distributed to Geisinger Bloomsburg Hospital (“GBH”), subject to
the terms and conditions set forth herein.
2. For all Trusts except the Bittenbender, Kisner and
Stewart Trusts and/or Estates: An accounting system shall be
set up using a Pour Over Endowment Trust, to be administered
according to the following terms and conditions:
a. Operating surpluses and losses of GBH shall be
determined for the fiscal year at issue. Operating
5
As will be discussed in greater detail below, the cy pres doctrine requires
that “if the charitable purpose for which an interest is conveyed shall be or
become indefinite or impossible or impractical of fulfillment, ... the court
shall order an administration or distribution of the estate for a charitable
purpose in a manner as nearly as possible to fulfill the intention of the
conveyor ....” In re Farrow, 602 A.2d 1346, 1347 (Pa. Super. 1992).
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surpluses or losses are to be measured before
application of Trust income.
b. lf operating surpluses exist for a given fiscal year
at issue, all Trust income shall be paid into the Pour
Over Endowment Trust. First Columbia Bank & Trust
Co. shall serve as the Trustee of the Pour Over
Endowment Trust.
c. If there is an operating loss in a given fiscal year,
and the absolute value of the operating loss is less
than the Trust income, then the Trust income for
that fiscal year, limited to the absolute value of the
operating loss, shall be paid to GBH to fund that
extent of the operating loss. The Trust income for
that fiscal year, in excess of the absolute value of
the operating loss, shall be paid to the Pour Over
Endowment Trust.
d. If there is an operating loss, and the absolute
value of the operating loss is more than the Trust
income, then all of the Trust income for that fiscal
year shall be paid to GBH to fund the operating loss
for that fiscal year to the extent of Trust income for
that fiscal year. Further, GBH shall be paid monies
from the accumulated Pour Over Endowment Trust to
fund operating losses of GBH for that fiscal year in
excess of the Trust income earned during that fiscal
year. In such cases, the payment of accumulated
Pour Over Endowment Trust monies shall be limited
to that which is necessary to fund operating losses
not funded by Trust income for that fiscal year.
e. Notwithstanding anything to the contrary, in
addition to the payments permitted above, the
Trustees shall pay further Trust income from the
applicable fiscal year to the extent necessary to
avoid a penalty or forfeiture of said Trust income
under applicable law, whether to the Internal
Revenue Service or otherwise.
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3. As to the Bittenbender, Kisner and Stewart Trusts
and/or Estates: The Petitions are dismissed as moot in that there
are no assets held in trust or in estates for distribution or
management.
4. Payments of Trust Income for all trusts excepting the
Bittenbender, Kisner and Stewart Trusts and/or Estates shall be
conditioned upon GBH amending their Articles of Incorporation
to provide additional language as follows as a restriction upon
permissible donations and other transfers to GHSF:
“...except for funds restricted for use at or by
Geisinger-Bloomsburg Hospital, which shall be
expended solely in connection with the operation of
the Geisinger-Bloomsburg Hospital in a manner
consistent with the intent of the Donors and in
accordance with any explicit instructions governing
the application thereof, and in further accordance
with applicable orders of court; ...”
5. Within ninety (90) days after the end of a fiscal year,
GBH shall provide annual reports to the Attorney General and to
the Court Administrator of the 26th Judicial District, specifying:
a. The annual net income from the Trusts (excepting
the Bittenbender, Kisner and Stewart Trusts and/or
Estates), itemized per trust and setting forth the
caption and docket number of this action;
b. The net operating income or loss of GBH;
c. Deposits to, and withdrawals from, the Trusts
(excluding the Bittenbender, Kisner and Stewart
trusts and/or estates) over the reporting period,
specifying the date, amount, payee (for
withdrawals), purpose (for withdrawals) and source
of funds (for deposits). Further, the balance of each
Trust (excluding the Bittenbender, Kisner and
Stewart trusts and/or estates) at the beginning and
end of the reporting period shall be specified;
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d. Deposits to, and withdrawals from, the Pour Over
Endowment Trust over the reporting period,
specifying date, amount, payee (for withdrawals),
purpose (for withdrawals) and source of funds (for
deposits). Further, the balance of the Pour Over
Endowment Trust at the beginning and end of the
reporting period shall be specified;
e. An affidavit from the chief operating or executive
officer of GBH (and, if there is no one with either of
such titles, the person in the position of chief
executive officer of GHSF) affirming that, as of the
end of the reporting period and the one (1) year
prior, GBH has, or has not, provided all of the
following services on a generally available basis:
Psychiatry, Obstetrics, General Surgery, General
Medical Surgical beds, Emergency Department and
Intensive Care Unit (the “BH Services”).
6. If any of the BH Services are not generally available at
GBH, the Trustees shall make no further disbursements to GBH,
and GBH shall return to the Trustee any disbursements made to
GBH since the cessation of any such services, until further order
of court. The Trustees may rely on information received from the
Attorney General, the Court or any other reliable source.
Further, GBH shall immediately notify the Attorney General, the
Trustees and the Court Administrator of the 26th Judicial District
(with the above caption) if GBH, or any successor, ceases to
make the BH Services generally available.
7. The Court shall retain jurisdiction.
Findings of Fact and Conclusions of Law, Order and Decree, 3/25/14, at 22-
24.
On April 11, 2014, GBH filed timely exceptions to the March 25, 2014
decree pursuant to Pa.O.C.R. 7.1. In an order filed on April 24, 2014, the
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Orphans’ Court denied those exceptions, and on May 23, 2014, GBH filed its
timely notice of appeal.6
On appeal, GBH raises four issues for this Court’s consideration, which we
have reordered for purposes of our disposition:
1. Where a Trial Court has determined that income from certain
charitable trusts bequeathed to a non-profit corporation
operating a community hospital shall continue to be distributed
to that same corporation/hospital after it has become part of a
larger non-profit health care system and has committed to honor
all restrictions of all gifts, is it an abuse of discretion or error of
law for that Court to impose a Pour Over Endowment Trust and
other limiting conditions that were not part of the initial
bequests, including allowing payment only in the event of an
operating loss?
2. Where Settlors of certain charitable trusts bequeathed trust
income to a non-profit corporation operating a community
hospital and that corporation still exists and continues to operate
the same hospital, lawfully maintaining and carrying out the
same purpose and mission, is it an abuse of discretion or error of
law for a Court to apply the cy pres doctrine and use its
application to impose conditions on the availability of the gifts
that were not initially part of the gifts?
3. Where a Trial Court has determined that income from certain
charitable trusts bequeathed to a non-profit corporation
operating a community hospital shall continue to be distributed
to that same corporation/hospital after it has become part of a
larger non-profit health care system, is it an abuse of discretion
and error of law for the Court to consider the operating revenue,
expenses and income of the system as a whole and the breadth,
scope and geographic reach of the health care system as a whole
to impose conditions on the availability of the gifts that were not
initially part of the gifts[?]
6
“The 30 day appeal period pursuant to Pa.R.A.P. 903 from such final
orders begins to run from the date of entry of an order disposing of
exceptions ….” Pa.O.C.R. 7.1 (explanatory note).
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4. Where the Attorney General had no objection to the
underlying transaction and a non-profit corporation has
expressly committed to the Attorney General and to the Court to
honor the terms and conditions of all endowments and/or
restricted funds, is it an abuse of discretion for the Court to
additionally mandate that the corporation amend its articles and
bylaws to reflect its commitment to use the restricted funds
locally, and to submit to additional review by the Attorney
General beyond the Attorney General’s normal monitoring of
charitable trusts in the ordinary course, as parens patriae?
GBH’s Brief at 6-7.7
“When reviewing a decree entered by the Orphans’ Court, this Court
must determine whether the record is free from legal error and the court’s
factual findings are supported by the evidence.” In re Estate of Whitley,
50 A.3d 203, 206 (Pa. Super. 2012) (citation omitted). Because the
Orphans’ Court sits as the fact-finder, it determines the credibility of the
witnesses and, on review, we will not reverse the Orphans’ Court’s credibility
determinations absent an abuse of discretion. Id. “However, we are not
constrained to give the same deference to any resulting legal conclusions.”
Id. at 207 (citations omitted). “The Orphans’ Court decision will not be
reversed unless there has been an abuse of discretion or a fundamental
error in applying the correct principles of law.” Id. (citation omitted).
Moreover, when interpreting a trust agreement, the intent of the
settlor is paramount, and if that intent is not contrary to law, it must prevail.
7
For purposes of our discussion, we have reordered Appellant’s issues on
appeal.
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Estate of Nesbitt, 652 A.2d 855, 857 (Pa. Super. 1995). In order to
ascertain the intent of the settlor, the court must examine the language of
the document, the scheme of distribution, and the facts and circumstances
existing at the creation of the trust. Id. “Furthermore, charitable trusts are
favorites of the law because they are in relief of the public burden, and a
gift, even for a specific charitable purpose, should be liberally construed
whenever reasonably possible.” Id. (internal citation omitted).
GBH first claims that the Orphans’ Court abused its discretion in
creating the Pour Over Endowment Trust and limiting conditions that were
not part of the bequests where the intent of the settlors has not been
compromised. We are constrained to agree.
The Restatement (Second) of Trusts § 399 has been adopted as the
expression of the doctrine of cy pres in this Commonwealth, and it provides
as follows:
If property is given in trust to be applied to a particular
charitable purpose, and it is or becomes impossible or
impracticable or illegal to carry out the particular purpose, and if
the settlor manifested a more general intention to devote the
property to charitable purposes, the trust will not fail but the
court will direct the application of the property to some
charitable purpose which falls within the general charitable
intention of the settlor.
Restatement (Second) of Trusts at Section 399. This language has been
codified as follows:
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(a) General rule.--Except as otherwise provided in subsection
(b), if a particular charitable purpose becomes unlawful,
impracticable or wasteful:
(1) the trust does not fail, in whole or in part;
(2) the trust property does not revert to the settlor
or the settlor’s successors in interest; and
(3) the court shall apply cy pres to fulfill as nearly as
possible the settlor’s charitable intention, whether it
be general or specific.
20 Pa.C.S. § 7740.3.
“In practice, application of the doctrine of cy pres is imprecise but the
endeavor is to find the institution that ‘will most nearly approximate the
intention of the donor.’” In re Estate of Elkins, 32 A.3d 768, 778 (Pa.
Super. 2011) (quoting In re Women’s Homeopathic Hospital of
Philadelphia, 142 A.2d 292, 294 (Pa. 1958)). “The key is approximating
the express direction of the testator as nearly as possible by transferring the
funds to an institution that the decedent would have wished to receive the
funds had the decedent been aware of the situation that occurred following
his demise.” Id. “The only stricture is that the charity must be within the
general donative scheme outlined by the testator.” Id. (citation omitted).
In Estate of Nesbitt, a case with similar facts to the case at bar,
Abram G. Nesbitt bequeathed $400,000.00 to the Second National Bank of
Wilkes-Barre, as Trustee, to invest in and to pay the annual income from the
corpus of the trust to the Nesbitt West Side Hospital. Estate of Nesbitt,
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652 A.2d at 856. These payments were to continue “so long as [the
hospital] exists as a separate institution caring for the sick and injured.” Id.The terms of the trust did not provide for any alternate gift or reversion. Id.In 1992, the hospital became an affiliate of the Wyoming Valley Health Care
System, Inc. Id. In 1993, residual beneficiaries sought to cease the
payments to the hospital from the trust and argued that the trust was no
longer obligated to pay because of the hospital’s change in identity. Id.However, the Orphans’ Court found that the hospital continued in the same
location it occupied prior to the merger, and that the hospital continued to
exist as a separate facility, with its own name, management structure, and
identity. Id. The merger agreement specified that trust payments in place
for the benefit of the hospital would be used only for the hospital after the
merger. Id.This Court agreed with the Orphans’ Court’s conclusion that the
hospital continued to exist as a “separate institution caring for the sick and
injured.” Nesbitt, at 858. “Furthermore, as the Orphans’ Court pointed
out, if at any time the trust fund income is not applied to Nesbitt Hospital,
Appellants can seek relief on the basis that the trust provision has failed.”
Id. Nevertheless, we determined that: “At present, however, there is no
evidence that the trust provision has failed; on the contrary, the purpose of
the trust has been perpetuated by the merger of the hospitals.” Id.-14-
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In the present appeal, we are faced with a similar scenario. The
stated intent of the settlors of the trusts instructed that the trust funds were
to go to the hospital, a fact noted by the Orphans’ Court.8 Nothing in the
aforementioned trusts necessitates the utilization of the Orphans’ Court’s cy
pres authority to create the pour over trust. Indeed, the funds are currently
going to GBH, and there is no evidence that money is being diverted or that
the intent of the trusts is being thwarted. This was precisely the position
taken by the Attorney General in her capacity as parens patriae.
We, thus, conclude that the creation of the pour over trust is an abuse
of discretion and unnecessary. Moreover, we discern no basis upon which to
find that the Attorney General’s position was in error. Because GBH is
utilizing the trust funds in accordance with the settlors’ intent, the doctrine
of cy pres does not apply. In re Elkins Estate, 32 A.3d at 778. There is no
need for judicial intervention as none of the trusts has failed and none of the
settlors’ intentions has become impracticable or impossible, which would
trigger the application of the doctrine of cy pres. 20 Pa.C.S. § 7740.3.
Therefore, we conclude the Orphans’ Court abused its discretion and erred in
applying the doctrine of cy pres and creating the pour over trust.
8
See Findings of Fact, 3/25/14, at ¶¶ 33, 35, 39, 42, 45, 48, 51, 54, 58,
61, 64, 67, 70, and 73 (wherein the Orphans’ Court describes the gifts and
quotes from the Titman Trust, McNinch Trust, Learn Trust, Sneidman Trust,
Barger Trust, Hazel W. Shoemaker Trust, Grover C. Shoemaker Trust, Wolfe
Trust, Mensinger Trust, J. Low Trust, A. Low Trust, Brown Trust, E. Elwell
Trust, and S. Elwell Trust).
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GBH’s second issue is inextricably related to the first issue. In the
second issue on appeal, GBH claims that the Orphans’ Court abused its
discretion in applying the doctrine of cy pres to place conditions on the
availability of the trust funds. Here, GBH is specifically challenging the
Orphans’ Court adding the requirement that use of the trust monies was
conditioned on the hospital operating at a loss. GBH’s Brief at 23. In its
order, the Orphans’ Court required the creation of an accounting system
using a pour over trust. Order, 4/24/14, at ¶ 2.
As we discussed above, nothing in the record supports the application
of cy pres or necessitated the Orphans’ Court’s intervention and the creation
of a pour over trust. Moreover, there is nothing in the trust documents that
restricted the gifts to the hospital on the condition that it operated at a loss
or conditioned the gifts on the hospital’s fiscal position or solvency. As such,
we agree with GBH that the Orphans’ Court erred and abused its discretion
in utilizing the doctrine of cy pres to create a pour over trust and in adding
conditions on GBH’s use of the trust funds.
In its third issue GBH claims the Orphans’ Court abused its discretion
or committed an error of law when the court ordered that the operating
revenue, operating expenses and income of the system as a whole, and the
breadth, scope and geographic reach of the health care system as a whole,
were to be considered when it imposed conditions on the availability of the
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funds. GBH’s Brief at 7, 38-40. Because we have concluded that the
Orphans’ Court erred in applying the doctrine of cy pres and intervening in
the distribution of the trust funds to GBH by requiring GBH to operate at a
loss in order to receive funding from the trusts, we agree with GBH that the
size, scope, and operating expenditures of GHSF are not relevant, nor is
there a need for GHSF to make such disclosures in this matter. Thus, it was
error for the Orphans’ Court to mandate this requirement relating to GHSF. 9
While we have found that the Orphans’ Court erred with respect to
GBH’s first three issues, we discern no error or abuse of discretion in that
part of the order that directed GBH to amend its articles of incorporation to
include the following language:
“[E]xcept for funds restricted for use at or by Geisinger-
Bloomsburg Hospital, which shall be expended solely in
connection with the operation of the Geisinger-Bloomsburg
Hospital in a manner consistent with the intent of the Donors
and in accordance with any explicit instructions governing the
application thereof, and in further accordance with applicable
orders of court; ...”
9
The Orphans’ Court’s overarching concern and the scenario it sought to
forestall is a situation where: 1) if GBH has operational surplus revenue; 2)
GBH would not “need” monies from the trust; and 3) GBH could then expend
trust funds on other facilities within the GHSF corporate entity. Findings of
Fact, 3/25/14, at ¶¶ 95-102; Conclusions of Law, 3/25/14, at ¶¶ 15-17;
Orphans’ Court Opinion, 6/2/14, at 2-7. While such a scenario is possible, at
this point, it remains purely speculative because there is no indication that
trust funds have been expended beyond GBH. Moreover, in our discussion
of GBH’s final issue, we recognize the effort of the Orphans’ Court to assure
that such “funneling” of monies away from GBH and the Bloomsburg
community does not occur in the future.
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Order and Decree, 3/25/14, at ¶4.
GBH argues “[t]hat the Trust funds are being used locally can indeed
be adequately assured through the Attorney General’s usual monitoring of
GBH’s use of restricted funds consistent with its normal parens patriae
functions, and there is no need for GBH to amend its articles and bylaws or
submit to review beyond the normal course.” GBH’s Brief at 38. Despite
GBH’s protest, we point out that the language at issue tracks the
recommendation made by the Attorney General. Attorney General’s
Statement of Position, 3/15/13, at ¶12. Thus, this is the “normal course” of
oversight that the Attorney General exercises in its monitoring of charitable
trusts.
After review, we discern no error in the inclusion of said language as it
follows the recommendation made by the Attorney General in her capacity
as parens patriae over charitable trusts. The language is narrowly tailored
to assure that trust funds are utilized for the benefit of GBH consistent with
the intent of the trusts’ settlors.
For the reasons set forth above, we reverse the March 25, 2014
decree, with the exception of paragraph four. Paragraph four of the March
25, 2014 decree, which directed GBH to amend its articles of incorporation,
is hereby affirmed.
-18-
J-A34016-14
March 25, 2014 decree affirmed in part and reversed in part in
accordance with this Opinion. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/7/2015
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