WILMINGTON, Del. – ChristianaCare has filed a lawsuit challenging Delaware House Bill 350, claiming the new law infringes on its constitutional rights and threatens its mission to serve the community.
The lawsuit argues that HB 350, signed into law on June 13, 2024, violates Delaware’s general corporation law and state constitution. The law establishes the Diamond State Hospital Cost Review Board, a politically appointed body with the authority to override strategic and budgetary decisions made by the hospitals’ elected directors. ChristianaCare contends this board is unelected and unaccountable, thus overstepping legal boundaries.
“House Bill 350 raises important questions about the integrity of the corporate franchise in Delaware,” said Nicholas Marsini, chair of ChristianaCare’s Health System Board. “We hope the Court of Chancery will provide clear guidance on these legal questions impacting not only ChristianaCare but any corporation in Delaware.”
Hospitals have opposed the bill since its inception, though some in the healthcare industry softened their position after modifications were made to the legislation.
ChristianaCare’s complaint also claims that HB 350 violates federal constitutional rights by forcing private hospitals to disclose confidential information about their strategies and priorities and by unfairly targeting a select few private hospitals.
House Speaker Valerie Longhurst and Senate Majority Leader Bryan Townsend issued a joint statement expressing confidence that the Diamond State Review Board will withstand judicial scrutiny.
“We are disappointed that the state’s largest hospital system has chosen to continue in an oppositional posture rather than working with the General Assembly and other stakeholders,” they said.
Governor John Carney and House and Senate Democrats argue the law is necessary to control rising healthcare costs.
However, Republicans claim the bill rushed through the legislative process, undermined hospital governance and could negatively impact Delaware’s business climate.
"This poorly conceived law is symptomatic of the bad policymaking that occurs when a single party controls the lawmaking apparatus. A state government with one-party rule does not engage in consensus building nor reflect any perspective that is not in keeping with its monoculture of political thought," a statement from the Delaware House of Representatives Republican Caucus reads. "The result is a growing list of plaintiffs like ChristianaCare who are forced to head to court to secure the fair consideration they should have received in the legislature and by the governor."
A statement from the Delaware Senate Republicans adds “From the time HB 350 was introduced, our caucus argued the legislation and the Diamond State Hospital Cost Review Board it establishes would place undue burdens on Delaware’s private hospital systems. Our members raised constitutional concerns, particularly regarding the unelected board that will allow the state government to oversee the budget and financial processes of Delaware’s non-profit hospitals. As seen in other states, such as in Vermont with its Green Mountain Care Board (GMCB), healthcare costs have continued to rise while qualified healthcare professionals have opted to leave. Recently, a consultant issued a report to the GMCB stating that if significant changes were not made in the near future, Vermont’s healthcare systems would become ‘financially unsustainable by 2030’."
