You Can’t Take The Money And Run: Court Prohibits Nonprofit Hospital Chain from Removing Community Assets

On May 21, 2003, the South Dakota Supreme Court issued a very important decision in the case of Banner Health System v. Lawrence E. Long, 663 N.W.2d 242 (2003). This case sets several precedents in the application of charitable trust law to nonprofit healthcare corporations. The court explicitly held that the assets of a nonprofit healthcare corporation, as well as the proceeds from the sale of those assets, are subject to the law of charitable trust. It also held that an out-of-state corporation must leave charitable assets with the local community upon divestiture. Consumers Union submitted an amicus brief to the court in this case.

Issues