Advisory Opinion 2003-18A

Dear Mr. Spalding:

This responds to your request on behalf of the Glynn-Brunswick Memorial Hospital Authority (Hospital Authority) for an advisory opinion from the Department of Labor (Department) concerning the applicability of Title I of the Employee Retirement Income Security Act of 1974 (ERISA) to the Glynn-Brunswick Memorial Hospital Retirement Plan (Retirement Plan). The Retirement Plan covers the employees of the Brunswick Campus of the Southeast Georgia Health System (Brunswick Campus). You represent that the Hospital Authority formerly operated the Brunswick Campus under the name "Glynn-Brunswick Memorial Hospital," and that name remains on the Retirement Plan. You ask whether the Retirement Plan is a "governmental plan" within the meaning of ERISA section 3(32) that is excepted from coverage under Title I by section 4(b)(1) of ERISA.

The Hospital Authority was established in 1961 by a joint resolution of the Board of Commissioners of Roads and Revenue of Glynn County and the Commission of the City of Brunswick. The Hospital Authority was created and operates pursuant to the Georgia Hospital Authorities Act as "a public body corporate and politic" under Georgia Law. See Ga. Code Ann. § 31-7-72. The Hospital Authority's stated purpose is to meet regional health care needs for all persons on a nondiscriminatory basis and regardless of ability to pay. The powers and functions of hospital authorities are set forth in Ga. Code Ann. § 31-7-75 as "public and essential governmental functions," and include the right to exercise the power of eminent domain. The Hospital Authority leases certain hospital facilities from the County and City and directly owns other properties. It provides an annual financial report to the County, and periodically meets with City and County Commissioners. The Hospital Authority is exempt from federal tax under section 501(c)(3) of the Internal Revenue Code. Under Georgia state law, hospital authorities are subject to state open meetings and records laws, and are exempt from state income and sales taxes. Ga. Code Ann. § 31-7-72(e) and 48-8-3. The Supreme Court of Georgia has held that hospital authorities established under the Georgia Hospital Authorities Act are governmental entities and instrumentalities of political subdivisions of the State of Georgia. Cox Enterprises Inc. v. Carroll City-County Hospital Authority, 273 S.E.2d 841, 845 (Ga. 1981).

You represent that the Hospital Authority operates all of its facilities, including the Brunswick Campus, under the trade name "Southeast Georgia Health System." The Hospital Authority operates a Brantley Campus, a Darien Campus, and a St. Simons Island Campus as departments of the Brunswick Campus even though they are not located within the County of Glynn or the City of Brunswick. You indicate that the Georgia Hospital Authorities Act permits this practice if the Hospital Authority operates these facilities pursuant to the request or with the approval of the city or county in which the facilities are located. See Ga. Code Ann. § 31-7-71.

The Board of Trustees ("Board of Trustees" or 'Board') is the governing body of the Hospital Authority. Pursuant to Ga. Code Ann. § 31-7-72(d), the Board may consist of not less than five nor more than fifteen members to be appointed by the governing body or bodies of the area of operation. The appointment of Board members is provided for by resolutions adopted by the governing bodies of the sponsoring governmental entities and by the Hospital Authority's constitution and by-laws. The Board members serve a staggered term of four years. The County and City each are responsible for filling four vacancies in accordance with the following procedure. In the event of a vacancy, the County or City, as appropriate, submits a list of three eligible persons, and the Board selects the new member from the list. If the Board declines to name a person from the list, the County of City, as appropriate, submits a second list of three names. The Board appoints a ninth Board member from nominees submitted jointly by the City and County.

The Board of Trustees annually elects officers (chair, vice-chair, secretary, treasurer, and such other officers as the Board may authorize) from among its members. The chairperson presides at meetings of the Board of Trustees and has signature authority for contracts and similar documents. The treasurer has custody of funds and serves as chair of the Board of Trustees finance committee. The Board of Trustees meets monthly in regular meetings, and may also hold special meetings. At the monthly meetings, the Board of Trustees exercises control over all aspects of the operation of the Brunswick Campus. For example, the Board approves changes in major capital expenditures, reviews the activities of its committees, develops policies affecting hospital procedures, reviews the administration of the hospital facility, approves contracts, and approves recommendations by the medical staff for appointments, staffing, and credentialing. Between meetings of the Board of Trustees, the Boards executive committee (the chair, vice-chair, secretary, and treasurer) has the power to transact all regular business of the Brunswick Campus.

Over ninety-five percent of the Brunswick Campus's revenue is derived from patient services. To date, those revenues have exceeded the Campus's expenses so that the Hospital Authority has not needed to invoke contractual provisions by which the County would be obligated to provide funds to the Hospital Authority through levy of a property tax or out of general funds. The Hospital Authority has financed improvements by borrowing from banks or issuing revenue certificates to repay such loans secured by the pledge of revenues from County taxes. Upon dissolution of the Brunswick Campus, its assets and liabilities will be disbursed according to the Georgia Hospital Authorities Act, which provides that the Hospital Authorities governing board and sponsoring governmental entities jointly determine the proper disposition of property upon dissolution, except that no conveyance may be made to a private person, corporation, or association except as authorized by law. Ga. Code Ann. § 31-7-89.

The Retirement Plan is a defined benefit plan, established by the Hospital Authority effective July 1, 1968, that covers substantially all the employees of the Brunswick Campus and its departments, and is funded by the Brunswick Campus through a group annuity contract. The IRS issued a private letter ruling on April 4, 1991, concluding that the Retirement Plan was a governmental plan within the meaning of section 414(d) of the Internal Revenue Code.

ERISA section 4(b)(l) excludes from Title I coverage any "governmental plan" as defined in ERISA section 3(32). Section 3(32), in pertinent part, defines the term "governmental plan" to include "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing." Based on the facts and representations above regarding the Hospital Authority and its relationship with the County and City, we conclude that the Hospital Authority is a governmental agency or instrumentality within the meaning of ERISA section 3(32). Accordingly, it appears that the Retirement Plan, which was established and is maintained by the Hospital Authority, doing business as the Brunswick Campus, for employees of the Brunswick Campus and its departments, is a "governmental plan" within the meaning of ERISA section 3(32) and is excluded by ERISA section 4(b)(1) from coverage under Title I.

This letter constitutes an advisory opinion under ERISA Procedure 76-1 and, accordingly, it is issued subject to the provisions of that procedure, including section 10 thereof relating to the effect of advisory opinions. The opinion expressed in this letter applies only to the governmental plan status of the Retirement Plan under Title I of ERISA, and does not extend to any other benefit arrangement of the Brunswick Campus, the Hospital Authority, or other entities owned or operated by the Hospital Authority. Further, this letter expresses no opinion as to any particular tax treatment of the Plan under the Internal Revenue Code, as administered by the Internal Revenue Service, or any particular treatment under Title IV of ERISA, as administered by the Pension Benefit Guaranty Corporation.