With a $3.4 million annual tax subsidy for Arkansas Children's Hospital under scrutiny by Pulaski County Circuit Judge Tim Fox, the hospital is arguing that the judge has been misinformed about how the funds are used.
The question of whether the county has appropriately managed the money, derived from a 36-year-old, voter-approved property tax, was the subject of a trial earlier this month.
An adverse ruling could force the county to return five years' worth of tax proceeds to taxpayers, more than $17.4 million.
Since 2008, the amount raised by the tax has increased from $2.4 million to $3.4 million and is projected to rise to $3.8 million this year.
The aid to Children's costs county taxpayers about 60 cents per year for every $1,000 of taxable property value. The money is used to bolster the hospital's Medicaid funding.
County officials argue that by following the direction of the hospital and combining the annual tax collection with federal Medicaid funds, Pulaski County has satisfied its management obligations to taxpayers. With no evidence that any money is being misspent, the county wants the judge to dismiss the suit.
Hospital officials said Medicaid money goes toward healing sick children regardless of residence or expense at a facility that costs $1.3 million a day to run.
The trial was to answer accusations in a 2015 lawsuit by community activist Dee Blakley that Pulaski County has not provided sufficient oversight of the tax money. She maintains that the tax proceeds, as approved in 1980 by Pulaski County voters, can be spent only on behalf of county residents.
The tax vote was part of a process that established Children's as the county hospital and included Pulaski County taking an ownership stake in the hospital property.
Blakley's lawsuit maintains that by depositing the money into the Medicaid fund used by all eligible hospitals, the county has given up control of the money, so cannot determine whether the tax money is being spent the way voters approved.
Children's had been a defendant but persuaded the judge to dismiss it from the lawsuit almost a year ago, leaving Pulaski County as the only defendant.
But in a Wednesday court filing, Children's attorney Jane Duke asks the judge to allow the hospital to challenge the testimony of Christine Coutu, the state official who explained at trial how Children's receives its share of the Medicaid pool. Coutu did not really know what she was talking about, Duke states in her pleading.
"Ms. Coutu's testimony was at times very confusing and difficult to follow," Duke wrote in the four-page pleading. "During her testimony, Ms. Coutu expressed certain limitations to her knowledge, yet despite such limitations, proceeded to testify as to factual matters that were outside her area of operations."
Coutu, a manager for the state Department of Human Services' Medical Services Division, had been called by plaintiff's attorney Luther Sutter to tell the judge how Children's gets its Medicaid allotment from the agency.
In a court filing submitted after the trial, Sutter cites Coutu's testimony as proof that hospital officials, Duke included, have deliberately misled the judge about whether they directly receive any of the tax money.
Sutter has asserted that the hospital's representatives, by denying to the judge that Children's receives any of the tax money, have "perpetuated a fraud on the court that has only been uncovered after tens of thousands of dollars have been expended."
He's asking the judge to deem the tax collection an illegal exaction that must be refunded to taxpayers.
Sutter also wants Fox to reconsider his earlier decision that released Children's as a defendant and rule that the hospital has been accepting sufficient public funding to bring it under the jurisdiction of the Arkansas Freedom of Information Act.
In the hospital's Wednesday pleading, Duke acknowledges that Coutu's testimony contradicted what the judge has been told by Children's. But hospital officials were not wrong; rather, it was Coutu, the filing states.
"It is the position of [Arkansas Children's Hospital] and Duke that Ms. Coutu's testimony was incorrect or confused," the filing states.
The filing asks the judge not to take any action on Sutter's accusations and to give Children's sufficient time to prepare a response, at least a week.
Metro on 04/13/2017