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2003-18A
ERISA Sec. 3(32)
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Charles G. Spalding, Esq.
Gilbert, Harrell, Gilbert, Sumerford & Martin
First Federal Plaza
777 Gloucester Street, Suite 200
P.O. Box 19
Brunswick, Georgia 31521-0190
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Dear Mr. Spalding:
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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.
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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).
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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.
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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.
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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 Board’s
executive committee (the chair, vice-chair, secretary, and treasurer) has
the power to transact all regular business of the Brunswick Campus.
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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.
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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.
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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.
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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.
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Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting & Disclosure
Office of Regulations and Interpretations
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