Could Mason County fund the general operations of a privately owned nonprofit hospital or pay it for indigent care and ambulance-related services?

Texas AG Opinion JM-65: County Contracts with a Private Hospital

Plain-English summary

JM-65 concluded that Mason County could not donate county money toward the general operating expenses of a privately owned nonprofit hospital. Texas constitutional restrictions barred a contribution of public funds to a facility owned and controlled by a private corporation.

"We believe that the county may not make a donation or gift of its funds to a privately owned hospital's general operating expenses, but the county may contract with a hospital to perform services or functions that the county is authorized to provide."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

"It is well established that a county may not make a contribution of public funds to a facility owned and operated or controlled by a private, non-profit corporation."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

The county could contract with the hospital for services the county was legally authorized to provide, including necessary medical care for indigent residents and public-health ambulance services.

"However, it also is well established that a county may contract with private corporations and others to carry out its statutory duties to provide for public or governmental purposes."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

"It is well established that the county must provide necessary medical care for its indigents."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

The commissioners court had discretion to set contract terms, but the agreement could not amount to a disguised donation. The county had to receive adequate consideration, such as a public benefit or a service it had a duty to provide, and the contract should clearly state the public purpose.

"The commissioners court may not expend county funds in a manner that amounts to a virtual donation."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

"In return for its expenditure, the county must receive an adequate consideration, such as a public benefit or a service the county has a duty to provide."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Currency note

This opinion was issued in 1983. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could the county simply subsidize the hospital's operating budget?

No. An unrestricted contribution to the privately owned hospital's general operating expenses would be an unconstitutional donation.

"A county may not donate county funds for the operating expense of a privately owned and operated hospital."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Could the county pay the hospital for indigent medical care?

Yes, through a contract for services the county had authority and a duty to provide.

"Since a county may contract with a private corporation to perform services that the county is authorized to perform itself, a primary issue is whether the county has authority to perform the specific service."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

"It is well established that the county must provide necessary medical care for its indigents."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Could the county contract for ambulance services?

Yes. JM-65 treated ambulance service as within the county's public-health authority.

"We believe that it also is well established that a county may provide ambulance service pursuant to its power regarding public health."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

How much discretion did the commissioners court have?

It could decide, based on known facts, whether the contract paid a specified amount or reimbursed documented expenses. Its discretion was broad but bounded by the constitutional ban on donations.

"The terms and conditions of a contract, such as whether a contract should provide for payment of a specified amount or reimbursement of documented expenses, can be determined by the commissioners court in light of the facts known to it."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

"However, it is not our opinion that the authority of a county is unbridled with respect to the terms of a contract to provide for indigents or public health."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

What consideration did the county have to receive?

The return could be a public benefit or performance of a service the county was legally responsible to provide.

"In return for its expenditure, the county must receive an adequate consideration, such as a public benefit or a service the county has a duty to provide."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Who decided whether local conditions presented a public-health threat?

The commissioners court made that factual determination.

"The factual determination of specific conditions that create a threat to public health and sanitation within the meaning of article 4418f should be made by the commissioners court."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Background and statutory framework

Mason County had no county hospital, hospital authority, or hospital district. Its county attorney asked about general operating support, indigent care, and services associated with a volunteer county ambulance program.

"Mason County does not have a county hospital, a hospital authority, or a hospital district."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

"You have also inquired about the extent and manner in which the county may compensate a privately owned hospital for the care of indigents and for services associated with the operation of a volunteer county ambulance program."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

A commissioners court possessed only constitutional and statutory powers, including authority arising by reasonable implication.

"A county commissioners court has only the powers that the constitution and statutes have conferred on it."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Former article 4418f broadly authorized county general-revenue spending for public health and sanitation.

"[T]he authority to appropriate and expend money from the general revenues of its County for and in behalf of public health and sanitation within its County."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Holding

"A county may not donate county funds for the operating expense of a privately owned and operated hospital but may contract with the hospital to perform services that the county is authorized to provide. The commissioners court has discretionary authority to determine the terms and conditions for such a contract that provide for adequate consideration to the county and do not contravene the limitations of article III, section 52 of the Texas Constitution."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Citations and references

Constitutional and statutory provisions discussed by JM-65:

• "article III, section 52 of the Texas Constitution" Official PDF
• "article XI, section 3 of the Texas Constitution" Official PDF
• "article 2351, section 11, V.T.C.S." Official PDF
• "article 4438, V.T.C.S." Official PDF
• "article 4418f, V.T.C.S." Official PDF
• "article 2372t, V.T.C.S." Official PDF

Cases cited by JM-65:

• "Canales v. Laughlin, 214 S.W.2d 451, 453 (Tex. 1948)" Official PDF
• "Anderson v. Wood, 152 S.W.2d 1084, 1085 (Tex. 1941)" Official PDF
• "Madison County v. Wallace, 15 S.W.2d 535, 537 (Tex. 1929)" Official PDF
• "Sullivan v. Andrews County, 517 S.W.2d 410, 413 (Tex. Civ. App. - El Paso 1974, writ ref'd n.r.e.)" Official PDF
• "Llano County v. Knowles, 29 S.W. 549, 553 (Tex. Civ. App. 1895, no writ)" Official PDF

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0065
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0065.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain. The linked PDF is authoritative.

The Attorney General of Texas

JIM MATTOX
Attorney General

August 17, 1983

Honorable Harold R. Schmidt
Mason County Attorney
Courthouse
Mason, Texas 76856

Opinion No. JM-65

Re: Whether a county may contribute funds to a privately owned hospital

Dear Mr. Schmidt:

You have asked if Mason County may provide funds for the general operating expenses of a hospital that is owned and operated by a private, non-profit corporation. You have also inquired about the extent and manner in which the county may compensate a privately owned hospital for the care of indigents and for services associated with the operation of a volunteer county ambulance program. Mason County does not have a county hospital, a hospital authority, or a hospital district. We believe that the county may not make a donation or gift of its funds to a privately owned hospital's general operating expenses, but the county may contract with a hospital to perform services or functions that the county is authorized to provide.

It is well established that a county may not make a contribution of public funds to a facility owned and operated or controlled by a private, non-profit corporation. Tex. Const. art. III, §52; art. XI, §3. See Attorney General Opinions MW-329 (1981); MW-36 (1979); H-1189, H-1123 (1978); H-520 (1975); H-397 (1974); M-661 (1970); WW-630 (1959). However, it also is well established that a county may contract with private corporations and others to carry out its statutory duties to provide for public or governmental purposes. See Attorney General Opinions H-1123 (1978); H-912 (1976); H-675 (1975); H-127 (1973); M-843 (1971); M-605 (1970); C-334, C-246 (1964).

A county commissioners court has only the powers that the constitution and statutes have conferred on it. Therefore, the authority of the commissioners court to make a contract on the county's behalf is strictly limited to the power conferred either expressly or by reasonable implication by the constitution and statutes. See Tex. Const. art. V, §18; Canales v. Laughlin, 214 S.W.2d 451, 453 (Tex. 1948); Anderson v. Wood, 152 S.W.2d 1084, 1085 (Tex. 1941); Attorney General Opinions MW-329 (1981); H-1280 (1978); H-912 (1976); H-367 (1974); C-772 (1966); WW-630 (1959); V-173 (1947).

Since a county may contract with a private corporation to perform services that the county is authorized to perform itself, a primary issue is whether the county has authority to perform the specific service. Without that authority, an expenditure by the county constitutes a donation of the county's funds in violation of the constitution. See Attorney General Opinions MW-329 (1981); H-1123 (1978); H-127 (1973). You mention the responsibility of the county to provide for the care of indigents and services associated with an ambulance program. It is well established that the county must provide necessary medical care for its indigents. V.T.C.S. art. 2351, §11; V.T.C.S. art. 4438; Attorney General Opinion MW-33 (1979). We believe that it also is well established that a county may provide ambulance service pursuant to its power regarding public health. See V.T.C.S. art. 4418f; Attorney General Opinions H-976 (1977); M-845 (1971); M-806 (1971); M-385 (1969). See also V.T.C.S. art. 2372t.

Article 4418f, V.T.C.S., grants to the commissioners court of any county "the authority to appropriate and expend money from the general revenues of its County for and in behalf of public health and sanitation within its County." The authority conferred by that statute on the commissioners court to expend the county's general revenues for public health and sanitation is general in its scope. Since article 4418f provides no detailed direction to guide the commissioners court in the exercise of this power, it must be guided largely by its sound discretion. Prior opinions of this office interpreting article 4418f have approved funding by the county of numerous services that the commissioners courts have determined would aid the sick or deal with public health or sanitation problems, including ambulance services, county health units, public health clinics, outpatient medical treatment, preventive units, garbage disposal, storm sewer connection to a county hospital, and control of noxious aquatic weed. Attorney General Opinions H-1280 (1978); H-912 (1976); M-806 (1971); M-385 (1969); C-772 (1966); O-5670 (1944); O-2580-A (1940). The factual determination of specific conditions that create a threat to public health and sanitation within the meaning of article 4418f should be made by the commissioners court.

When the commissioners court is granted a power or charged with a duty, it has implied authority to exercise broad discretion to accomplish the intended purpose. Anderson v. Wood, supra; Madison County v. Wallace, 15 S.W.2d 535, 537 (Tex. 1929). The terms and conditions of a contract, such as whether a contract should provide for payment of a specified amount or reimbursement of documented expenses, can be determined by the commissioners court in light of the facts known to it.

However, it is not our opinion that the authority of a county is unbridled with respect to the terms of a contract to provide for indigents or public health. The extent of the county's expenditure under such an agreement cannot contravene the limitations of article III, section 52 of the Texas Constitution. The commissioners court may not expend county funds in a manner that amounts to a virtual donation. In return for its expenditure, the county must receive an adequate consideration, such as a public benefit or a service the county has a duty to provide. See Sullivan v. Andrews County, 517 S.W.2d 410, 413 (Tex. Civ. App. - El Paso 1974, writ ref'd n.r.e.); Llano County v. Knowles, 29 S.W. 549, 553 (Tex. Civ. App. 1895, no writ). We believe that such a contract should indicate clearly that a public purpose is being served.

SUMMARY

A county may not donate county funds for the operating expense of a privately owned and operated hospital but may contract with the hospital to perform services that the county is authorized to provide. The commissioners court has discretionary authority to determine the terms and conditions for such a contract that provide for adequate consideration to the county and do not contravene the limitations of article III, section 52 of the Texas Constitution.

Very truly yours,

JIM MATTOX
Attorney General of Texas

TOM GREEN
First Assistant Attorney General

DAVID R. RICHARDS
Executive Assistant Attorney General

Prepared by Nancy Sutton
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Acting Chairman
Jon Bible
David Brooks
Colin Carl
Jim Moellinger
Nancy Sutton