Assembly OKs funds for outside counsel

The Kenai Peninsula Borough Assembly addressed Tuesday how to defend itself from a lawsuit that was part of the fallout from a local proposal to build a surgery center in Kenai, which the assembly opposed in January.

At its regular meeting, the assembly approved, 8-1, Ordinance 2011-19-71, which appropriates $35,000 to help pay for outside legal counsel to defend the borough against a lawsuit filed by Kahtnu Ventures LLC. Assembly member Ray Tauriainen voted against the measure.

Kahtnu is seeking an injunction against the Alaska Department of Health and Social Services, with Central Peninsula Hospital and now the borough listed as parties.

The group of eight surgeons who want to build an 8,365 square foot, $9 million ambulatory surgery center in Kenai is taking issue with the development and completion of CPH's fourth operating room, which has become a point of consideration surrounding whether or not their center is needed in the area.

The state is currently considering whether to issue Kahtnu a Certificate of Need after gathering what officials said is a record amount of public testimony on the issue.

Kahtnu is "asking that the court enjoin the hospital from proceeding with construction of the operating room in the hospital and that the operating room not be considered in determining whether the community needs the ambulatory surgery center proposed," according to the ordinance.

Tauriainen said he thought the borough would easily win the litigation without additional counsel and couldn't support the ordinance based on the amount of money it would allocate.

"I came into committee kind of against spending this money and just realizing that we were tacked on the end of this lawsuit I was thinking, 'Why should we be that concerned with it?'" he said. "But I do realize now ... that we are the one building the operating room so we do need to defend ourselves. But I do question the amount and the aggressive defense needed."

Assembly member Brent Johnson said he supported the ordinance because it would cost the borough more than $35,000 if it were to lose the lawsuit.

"I heard a fireman earlier talking about that you have to assume things are ugly early sometimes," he said.

Kasilof resident George Pierce testified against the appropriation. He said it was a problem the assembly created and therefore residents shouldn't have to foot the bill.

"You are helping out the hospital, you are not helping us out," he said. "The hospital is doing better, maybe they can give you the $35,000. But, I don't think you should take it out of the general fund."

However, Kenai Peninsula Borough Mayor Mike Navarre disagreed with that stance.

"We didn't create this problem, the borough was sued," he said. "We have to defend ourselves."

The borough assembly also discussed whether to take the funds out of the general fund or from the service area funds. Borough Finance Director Craig Chapman said either would be possible, but no motion was made to consider pulling funds from service area coffers.

Soldotna resident Fred Sturman also opposed the measure in public testimony. He said the money should come out of the borough attorney's existing budget.

That budget currently contains $32,500 for outside legal counsel, which is not enough to cover the additional suit, according to the ordinance.
Sturman said the borough needs to "slow up our expenditures."

"It seems like we are always coming up with a lot of extra money for the attorneys to defend themselves," he said. "Maybe we need some different kind of attorneys to defend the borough ... that has different expertise."

Assembly president Gary Knopp defended the legal department by explaining the office is mostly concerned with municipal law and not health care law.

"That's what they practice and that's their specialty," he said. "You can't be an expert in everything. They don't do civil, they don't do criminal. They do municipal law."

Knopp also rejected the idea that the assembly "brought this on ourselves by opposing the Kahtnu Ventures CON application."

"A year ago we sat through an entire year talking about governance of the hospital and we debated it on every issue you can imagine and the public came out in force and they overwhelmingly said 'Leave our hospital alone, leave it as is, don't change ownership, don't change the governance' and so that is what we did," he said. "We would have been really remiss in not opposing that because the impact to that hospital could be up to $20 million annually."

Assembly member Bill Smith echoed a similar sentiment.

"My personal belief is that they are looking to enhance their position in their certificate of need," he said. "So even if the assembly had supported the certificate of need they would still need to sue to stop this project."

Brian Smith can be reached at brian.smith@peninsulaclarion.com.

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