STATE SUPREME COURT RETURNS BANNER DECISION
(Pierre) – The South Dakota Supreme Court unanimously found today that the State of South Dakota can continue its cases challenging Banner’s sale of hospital and nursing home facilities in Spearfish, Sturgis, Belle Fourche, Eureka and Gregory. According to Attorney General Larry Long, the decision in Banner Health System v. Lawrence E. Long allows the state to proceed with ongoing state and federal lawsuits that were filed in May of 2002.
“This is a landmark win for the state and for the communities involved,” said Long. “It will allow small towns in South Dakota to provide affordable health care to their residents.”
Chief Deputy, Mark Barnett, who argued the case two months ago, said the sale proceeds should remain in the communities in which the facilities are located. The state asked the court to find that state law does provide for the imposition of charitable trusts.
Today the South Dakota Supreme Court agreed with the Attorney General’s Office that if a nonprofit corporation is unjustly enriched by the sale of assets and removal of the proceeds from local communities at their expense, courts have the power to impose a constructive trust on those proceeds. In addition, nonprofit corporations may be held accountable for breach of fiduciary duties to communities.