Colorado Association of Public Employees v. Board of Regents of University of Colorado12/24/1990
This is an appeal from the Denver District Court's judgment upholding the constitutionality of House Bill No. 1143, Ch. 193, sec. 1 to 14, 1989 Colo. Sess. Laws 995-1006, which provided for the reorganization of the University of Colorado University Hospital as a private, nonprofit corporation. This act is mostly codified in sections 23-21-401 to -410, 9 C.R.S. (1990 Supp.). The plaintiffs challenged the constitutionality of the statute on two grounds: first, that it violates Article XII, Section 13, of the Colorado Constitution, the State Civil Service Amendment, and second, that it violates Article XI, Section 3, of the Colorado Constitution, the constitutional prohibition against public indebtedness. The trial court rejected both arguments. We reverse.
I.
The plaintiffs, the Colorado Association of Public Employees and employees of University Hospital, filed a complaint challenging the constitutionality of the statute under the Colorado Constitution on alternative grounds. They claimed that if the statute created a private corporation, then the statute violated Article V, Section 34, which prohibits public appropriations to private corporations, and Article XI, Section 2, which prohibits transfer of state assets to private corporations. In the alternative, they claimed that if the statute created a public corporation, then the statute violated Article XII, Section 13, the State Civil Service Amendment, and Article XI, Section 3, which prohibits state indebtedness. The plaintiffs requested injunctive and declaratory relief.
By stipulation, the parties submitted briefs solely on the facial constitutionality of the statute. The trial court ruled that the plaintiffs failed to prove that the statute was unconstitutional. Specifically, the trial court held: (1) that the reorganized hospital was a private, nonprofit corporation which did not violate Article XV, Section 2, prohibiting special legislation, (2) that the statute does not violate Article XII, Section 13, the Civil Service Amendment, because the employees of the reorganized hospital will not be employees of the state, (3) that, by similar reasoning, the statute does not violate Article XI, Section 3, because the debts of the reorganized hospital will not be debts of the state, (4) that the statute does not violate Article XI, Section 1, prohibiting extending debt to private corporations because the statute comes within the public purpose exception, and (5) that, by stipulating to resolve the facial constitutionality of the statute for an accelerated trial, the plaintiffs abandoned their claims under the Fourteenth Amendment to the United States Constitution and § 42 U.S.C. 1983, as well as under Article V, Section 34, and Article XI, Section 2, of the Colorado Constitution.
Prior to the enactment of section 23-21-401 to -410, the organization of the University Hospital was addressed in section 23-21-101 to -113, 9 C.R.S. (1988). The hospital was utilized for the health science education programs provided by the University of Colorado. § 23-21-104. Under section 23-21-102(1), control of the hospital was vested in the Board of Regents (the Regents) of the University of Colorado, members of which were elected to office pursuant to section 1-4-204, 1B C.R.S. (1980). The Regents were empowered "to manage, control, and govern such hospitals" under regulations it prescribed, § 23-21-102(1), and to provide for the operation of the hospitals "by any entity, public or private, profit or nonprofit" to administer the operation of the hospital adequately and efficiently, § 23-21-102(3)(a).
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