Cardinals claim rights in hospital dispute: university president contends it's his to sell - sale of St. Louis Univ's St. Louis Hospital to Tenet Healthcare Corp pits three cardinals against the school and its president, Lawrence Biondi

National Catholic Reporter, Oct 24, 1997 by Pamela Schaeffer

ST. LOUIS -- In a rare public clash between members of the U.S. hierarchy and a university president, three of the nation's most powerful cardinals have charged into a dispute in St. Louis over the proposed sale of a Catholic hospital to a publicly traded for-profit company.

The outcome has potentially broad implications for U.S. institutions with Catholic roots.

Cardinals James Hickey of Washington, Bernard Law of Boston and John O'Connor of New York have joined St. Louis Archbishop Justin F. Rigali in condemning St. Louis University's board of trustees and its president, Jesuit Fr. Lawrence Biondi, for a decision to sell St. Louis University Hospital to Tenet Healthcare Corp.

Tenet, based in Santa Barbara, Calif., is the nation's second-largest for-profit health care system, after Columbia\HCA Healthcare Corp.

Among questions the St. Louis issue has pushed to the surface is what power a bishop has over an independent, largely lay board of a Catholic institution that refuses his directives. Another question is who controls the designation "Catholic."

St. Louis University is one of hundreds of U.S. Catholic institutions where ownership has been transferred from a religious order to an independent board without going through a formal process of "alienation" -- that is, permission from the Vatican to sell or transfer church property. Is such an institution now subject to church law, as Rigali has argued, or is it exempt, as Biondi contends?

In statements issued in recent days, prelates have leaned hard on Biondi, warning of canonical improprieties and hinting strongly at possible Vatican intervention in the dispute.

Hickey, Law, O'Connor and Rigali all have close ties to Vatican officials. Rigali worked in Rome for 25 years before being assigned to the archdiocese of St. Louis in 1994.

Rigali, in a public statement on Oct. 17, said the 303-bed St. Louis University Hospital will "cease to be a Catholic hospital" if the proposed sale to Tenet goes through.

Hickey's statement reiterated an earlier warning from Rigali that Vatican approval was required for such a major transfer of church property. O'Connor supported Rigali's argument that the hospital is church property, regardless of its present legal status as a civil corporation or its ownership by an independent board

Hickey wrote, "It is my hope that this gravely flawed decision will be overturned by the joint action of the Holy See and the superior general of the Jesuits."

Law issued a similar statement a week earlier, citing a "fundamental difference" between Catholic and for-profit health care institutions. Law said the dispute raises the question of whether the board of trustees has canonical authority for its decision. "Perhaps the intervention of the father general of the Society of Jesus and the Holy See can reverse this lamentable action," he said.

Sources around the country say the situation in St. Louis is a flash point for unresolved issues of Catholic identity and control that date to the late 1960s and 1970s, when many religious orders transferred institutions to independent boards.

Under civil law, Biondi is within legal rights to sell the hospital, but members of the hierarchy are challenging his actions under canon law. O'Connor said the U.S. Supreme Court has ruled in support of the church's right to insist that canon law be followed in such matters.

Rigali warned in his statement that the goal of preserving Catholic identity of institutions "cannot be realized if we continually yield institutions that are historically Catholic and have been perceived as such by the community, to for-profit corporations." Others argue, however, that members of the hierarchy cannot alone determine whether independently owned institutions like St. Louis University and its hospital are entitled to call themselves Catholic.

Despite the strong pressure, Biondi remained firm in his intention to proceed with the sale, according to John Kerr, associate vice president for university public relations. "We're moving ahead in our letter of commitment with Tenet Healthcare as we announced on Oct. 4," he said. "I'm sure Fr. Biondi and Archbishop Rigali will continue to discuss intricacies of the proposal so that the archbishop is fully advised of all the issues he's concerned about."

Final terms of the sale are to be worked out over the next 60 days. Missouri Attorney Jay Nixon will review the proposed sale, as required in transfers of not-for-profit institutions to for-profit.

The dispute came to a head on Oct. 4, when St. Louis University's 52-member board of trustees voted to sell the hospital to Tenet for about $300 million, ignoring Rigali's strong objections. Biondi had assured the board and the public that terms of the agreement with Tenet would allow the hospital to continue to carry out its Jesuit and Catholic mission.

The board chose Tenet's bid over a competing joint offer of $200 million from two St. Louis-based Catholic health care systems.

In correspondence with Biondi, Rigali had expressed strong support for accepting the lower offer from the Catholic groups over the one from Tenet. The letters were given to university trustees on the day of the vote. Rigali was not invited to address the board.