Canon Law Made Easy

Q: In [the city where I live], there’s a hospital … that was founded and run by Catholic religious sisters for over a century.  Now however it’s owned by a huge conglomerate, and there are no Catholic sisters on the board of directors at all.  The sisters sold the hospital about 40 years ago, and later the buyer sold it to someone else, who sold it to someone else, etc.  The Catholic hospital is now a non-Catholic hospital.  
Can you speak to the legality of selling a Catholic hospital to a buyer outside the Church? Also, how are the sisters permitted to use the money that they were paid?  I’m not suggesting they violated canon law, I’m just wondering how this works or is supposed to work. —Haley
 
A: Whether you’re Catholic or not, odds are high that you’re aware of the Catholic origins of the world’s oldest hospitals—and you’re probably equally aware that today, many/most of the hospitals founded by Catholic institutions are owned and operated either by the state, or by secular healthcare organizations like Haley describes.  Some of these transformations are many centuries old; others took place only in recent decades.  The history behind these changes can vary dramatically too: countless Catholic hospitals around the world (and all their assets) were seized at one time or another by political rulers hostile to the Church—while countless others were voluntarily handed over or sold to others by the Catholic entities which had maintained them for generations.  Bear in mind also that this has happened on every inhabited continent, in numerous countries with their own civil laws governing such buying/selling; and these civil laws must be observed in addition to any canon law pertaining to this issue. 
 
Consequently, it can be quite difficult (to put it mildly!) to make general statements about this topic which apply to all cases.  Nevertheless we can have a look first at some of the basic canonical concepts pertaining to selling church property; and then at how canon law applies—or doesn’t—to the various aspects of selling a Catholic hospital to non-Catholics. 
 
First of all, regular readers might recall that in this space we have looked at the canons relevant to the sale of church property before, in “Canon Law and Selling a Church,” and “Can the Pastor Buy and Sell Parish Property Without Our Consent?”  We saw that among other things, just as there are church laws regarding large purchases of property, there are also laws concerning the sale of church property to others.  In canon law the term used to refer to such sales is alienation.  And depending on the nature of the item to be alienated, and the amount of money involved, the approval of the diocesan bishop and the diocesan finance council may not be sufficient: if the sums are high enough, it will be necessary to obtain permission from Rome for the sale as well (c. 1292.2)—and rest assured that nowadays, the value of the average Catholic hospital in any country is so high that selling one will almost invariably require approval from the Vatican.   
 
But if you stop to consider the full implications of Haley’s question, you may realize that it’s different from the sales-scenarios we’ve previously discussed.  The questions we’ve dealt with before involved the sale of church property for a different use.  For example, if a diocesan bishop suppresses a parish and closes the parish church, it might conceivably be sold to some outside entity that will re-purpose the building, perhaps turning it into a school or an office building.  The bishop is therefore not selling a Catholic church to some buyer that plans to use it as a Catholic church!  A key issue in sales like these is the purpose for which the property will henceforth be used; and as was discussed in detail in the above-mentioned “Canon Law and Selling a Church,” canon 1222 states that a church building can be relegated to “profane but not sordid use.”  
 
When a Catholic hospital is sold to an entity outside the Church, however, the purchaser’s motives for buying the property are not really the issue.  If someone wants to buy a hospital, normally their intention is to continue operating it as a hospital—so the fundamental purpose to which the property will be put does not change.  What could definitely change, depending on the buyer, is the identity of the hospital as Catholic, and the potential implications for medical ethics in everyday practice.  This is ordinarily the key issue, when a hospital operated by a Catholic diocese or religious institute is sold to non-Catholics.   
 
Assuming there are no abuses involved, we Catholics can take it for granted that doctors at a Catholic hospital don’t perform abortions, or voluntary sterilizations, or sex-change operations; nor do they engage in euthanasia, or assist patients in voluntary suicide (see “Catholic Funerals and Physician-Assisted Suicide” for more on this sad issue).  A Catholic hospital may also have an explicit policy about providing truly necessary medical services to the poor at reduced prices, or even for free.  The guidelines for Catholic hospitals in the United States can be read here. Such policies are grounded in Catholic ethics and social teaching, and in a Catholic hospital those teachings should take precedence over any secular policies that are rooted first and foremost in economics and efficiency.  In short, the Church will argue that you can’t put a price-tag on a human person, made in the image and likeness of God; and the day-to-day workings of a Catholic hospital should reflect that. 
 
For this fundamental reason, if some non-Catholic business entity offered to buy a Catholic hospital for a fabulously high sum, it stands to reason that the Catholic owners shouldn’t automatically jump at the opportunity to make a lot of money.  There are serious questions involving moral theology that must be asked first!  At the same time, however, there’s no denying that particularly when hospitals are owned by institutes of women religious which have seen plummeting numbers of vocations, and are thus struggling to maintain control of the hospitals which their predecessors successfully ran only with far larger numbers of members working full-time … it might only be reasonable for the leadership to conclude that this can’t go on.  When a choice has to be made between “selling our hospital to non-Catholics” and “shutting our hospital down completely,” it makes total sense for Catholic institutions—like the institutes of women religious just described—to be willing to sell.  As sad as it may be for the local community as well as for the religious themselves, there is nothing necessarily wrong with this, from the standpoint of either moral theology or canon law. 
 
No matter where in the world it’s located, transferring ownership of anything so large as a hospital is going to involve a lot of discussions and legalities on many fronts—so there will be secular lawyers for both sides engaged in the negotiations for sure.  While canon law can’t be ignored by the negotiators, this is one of those topics where in many ways canon law will defer to secular law.  As was discussed in greater detail in “Canon Law and Contracts: Firing a Seminary Professor, Part I”  and “Part II,” canon 1290 declares that if a contract is made in accord with the civil laws of a given locality, the Church accepts and will abide by that contract—unless “the provisions are contrary to divine law or canon law provides otherwise.”  Canon law doesn’t provide exact specs for drawing up a contract for the sale of a Catholic hospital; but there are some requirements that must be observed in the drawing up of that contract.  The first one we’ve seen already: it has to be clear as possible to the seller that the hospital isn’t going to be engaging in activity which is morally objectionable.  How precisely this is made clear will depend largely on the way that civil contracts are worded in that part of the world—and this can of course vary widely.  If it’s possible (for example) somehow to include in the contract some kind of explicit caveat that the buyer can’t start performing abortions at the hospital, great!  But as per canon 1290, the exact way that these conditions are spelled out depends on secular law, which unsurprisingly doesn’t always jibe with canon law.  Here‘s an article about a state law in California which sadly ties the hands of church officials there, when it comes to selling a Catholic hospital.
 
There’s another condition that must be observed for the Church to recognize and accept the sale of any property as large as a hospital, and it’s mentioned in canon 1291.  Permission of the competent authority must be obtained in advance, for “the valid alienation of goods which constitute by legitimate designation the stable patrimony of a public juridic person.”  In “Who Controls Ecclesiastical Property?” we saw that the term public juridic person is legal jargon describing an entity—not a physical, human person—in the Church which has its own rights and obligations.  (See “When Can Parish Buildings be Rented Out for Secular Use?” for another scenario involving public juridic persons.)  Some entities automatically have this juridic personhood, because it’s given to them by the law itself: a diocese (c. 373), a parish (c. 515.3), a seminary (c. 238.1), a religious institute as a whole, and its individual convents/monasteries/houses (c. 634.1) … these all attain the status of juridic person when they are erected by competent authority.  As we’re about to see, this is directly relevant to our topic. 
 
If readers’ heads are spinning by this point, know that this isn’t as complicated as it may sound!  A concrete, fictitious example may help to clarify its meaning.   
 
Let’s pretend that Queen of Heaven Hospital was founded in 1885 by the Sisters of St. Matilda in Diocese X.  As an institute of women religious, the Sisters of St. Matilda constitute a public juridic person, as per canon 634.1, just mentioned above.  The bishop of the diocese where the sisters’ motherhouse was located gave his approval for this hospital work long ago, of course; back then, as now, religious could not engage in their various apostolates in a particular diocese without the bishop’s express approbation.  True, there was no canon 394 in 1885, but the fundamental concept existed all the same (and see “Canon Law and a Convent of Rebellious Sisters” for more on this issue).  
 
Let’s say that the Sisters of St. Matilda used to have medical apostolates in five different dioceses, in two countries; but in recent decades they, like almost every institute of women religious around the world, have seen their numbers shrink drastically.  The leadership of the Sisters of St. Matilda was obliged to pull sisters entirely out of four of the five dioceses where they used to operate; and today they have only one house, a convent in Diocese X that is right next to Queen of Heaven Hospital.  This hospital, still owned by the sisters, is the only place where they are now engaged in their medical work.   
 
Now imagine that the Mother Superior is heroically trying to balance the dwindling number of new vocations to the institute, the ever increasing number of elderly sisters who are no longer able to work (some of whom are now patients at the hospital themselves), the higher costs involved in running a hospital nowadays, the growing government regulation that sometimes interferes directly in the ability of the sisters to run an effective hospital … and she’s realizing that this is no longer sustainable.  She looks at future projections and sees clearly that by the year 2040, there’s no way that Queen of Heaven Hospital will be able to function as-is.  At the same time, the Sisters of St. Matilda are barely surviving themselves: they are currently deep in debt, and desperately need an influx of money to cover their expenses in maintaining their convent and supporting their large number of retired sisters.   
 
So let’s say that Mother Superior and her council conclude that the hospital will have to be sold off.  A secular healthcare conglomerate will gladly buy Queen of Heaven Hospital from them, for a generous price!  In this way, the sisters reason, the hospital work will continue, and the Sisters of St. Matilda can pay off their debts.  Sounds like a good plan, right? 
 
Wrong.  Here’s where canon 1291 comes into play, and saves the sisters from a disastrous financial decision.  Since Queen of Heaven Hospital is now the only source of regular income for the Sisters of St. Matilda, it constitutes the “stable patrimony of a public juridic person.”  Without it, the sisters have nothing!  When the diocesan bishop—and the Vatican, which must approve the sale of such a valuable property as per the abovementioned c. 1292.2—take a look at this proposed hospital sale, they will immediately object: “If you sisters sell off your only source of continued income, then what’s going to happen to all of you once you’ve spent all the money you received from the sale of the hospital?  It may sound like a large sum right now; but once you’ve paid off your debts as you intend, there won’t be much left!  What will you be living on, 15 or 20 years from now, when even more sisters will be elderly and in need of continued care?  On top of that, you haven’t even considered what kind of apostolate you sisters will engage in, once you lose your hospital.  Your proposed sale doesn’t make any provision for the continued employment of your sisters at the hospital after it’s sold, so what do you intend to do with yourselves when you no longer own Queen of Heaven?” 
 
In blocking the sale of the hospital in the way that the Sisters of St. Matilda had planned, these church authorities will undoubtedly cite canon 1294.2, which directly addresses what the money from such a sale can be used for: 

The money received from the alienation is either to be invested carefully for the advantage of the Church or to be expended prudently according to the purposes of the alienation.

Our fictitious sisters, overwhelmed by financial pressures, haven’t thought this sale through, and so the money they’d receive for the hospital would not, according to their plan, be “expended prudently.”  On the contrary, selling the hospital on these terms would be a sure-fire way ultimately to reduce the Sisters of St. Matilda to destitution, and leave the institute without a reason for its existence!  

If the sisters had violated canon law, and gone ahead with the sale under these conditions without first obtaining the permission of competent authorities required by canons 1291 and 1292, the Church wouldn’t recognize the sale as legitimate under canon law—thereby causing an enormous legal mess for everyone involved.  As canon 1296 tells us,  

Whenever ecclesiastical goods have been alienated without the required canonical formalities but the alienation is valid civilly, it is for the competent authority, after having considered everything thoroughly, to decide whether and what type of action, namely, personal or real, is to be instituted by whom and against whom in order to vindicate the rights of the Church.

(Incidentally, if you think this scenario is unrealistic, because “nobody with any sense would ever agree to a sale like this without thinking through the long-term financial implications more thoroughly” … well, think again.  When people trained in theology, and/or in medicine or education or suchlike, are confronted by enormous business  decisions like selling their hospital, you can’t automatically assume they’ll make complex financial choices that are sound.)  In our imaginary account, it’s important to understand that church authorities are not saying that the Sisters of St. Matilda can never sell the hospital to secular buyers; rather, they are insisting that if the hospital is to be sold, the conditions under which this is done must ensure that the sisters aren’t left without an apostolate, and without any patrimony and subsequent income which will save them from future destitution. 

The canonical requirement found in canons 1291-1292, that competent authorities must review any proposed alienation, thus serves as a “second opinion,” designed among other things to help avoid making a huge financial mistake that can’t be undone later.  That doesn’t mean, of course, that every sale of a Catholic hospital is seen in retrospect to have been a good move—because even the most knowledgeable, experienced church authorities don’t have a crystal ball to show them what the future holds.   
 
And unfortunately, there are far too many instances of sales of healthcare properties in the Church which raise questions about why they were ever approved by competent authorities in the first place.  To cite one example of a tragic decision, a number of Catholic hospitals in the Archdiocese of Boston were sold off all together, and 14 years later, under non-Catholic management, they are now financially insolvent. And if you enjoy being frustrated by accounts of bad choices and financial mismanagement from every conceivable direction within the Church, here‘s an article about a number of business decisions involving religious institutes and sales of Catholic hospitals in Italy which will serve that purpose. 
 
The “competent authorities” responsible for granting permission to alienate a Catholic hospital look carefully at the proposal, and can’t be relied upon to automatically approve it.  Here’s a planned hospital sale in the U.S. state of Arkansas that was vigorously opposed, first by the diocesan bishop (who voiced his concerns directly to the Vatican, which also needed to approve the sale), and later by the civil government for different reasons.  The sale was canceled and the hospital was subsequently sold to another Catholic entity, ensuring that the hospital remains Catholic.  Without being privy to all the details, this appears to be a good example of the Church’s legal system working as intended. 
 
Unfortunately, that’s not always the way these things play out.  In 1997, St. Louis University (a Jesuit school in the U.S. state of Missouri) decided to sell its hospital to a secular healthcare company.  A different, Catholic company had also bid on the hospital; but the secular company offered to pay a higher sum, so the university determined to sell it to the higher bidder. 
 
Although St. Louis University is Catholic, as was its hospital, the competent authorities in the Church were not notified of this planned sale, in direct violation of canon 1291.  The then-Archbishop of St. Louis, Justin Rigali—a canonist who also had experience working in the Vatican—objected vociferously when he learned of the project, and protested to Rome that canon law had not been followed in this case.  The university’s leadership defended the move, claiming that because the school/hospital was overseen by a mostly lay board of directors … it therefore wasn’t obliged to follow canon law.  (The argument occasioned much hilarity among canonists at the time.) 
 
But what was Rome to do?  The sale had already been finalized in accord with civil law, and the Vatican had no power to undo what had been done.  While there is no doubt that some extremely lively discussions on this subject took place in Rome behind closed doors, the Vatican accepted the sale after the fact.  The hospital of St. Louis University thus became a non-Catholic hospital. 
 
Interestingly, less than 20 years later, the secular healthcare conglomerate that had purchased the hospital sold it—to the Catholic entity which had originally wanted to purchase it in 1997.  Since discussions about hospital and university finances are (rightly) not open to the public, there’s no way to know if there’s more to the story here.  Suffice to say that St. Louis University Hospital is a Catholic hospital once again. 
 
What can we take away from all this?  First of all, in this day and age hospitals worldwide are big business; but those operating a Catholic hospital by definition must act in accord with Catholic ethics, which transcend finances.  Secondly, it’s understandable that Catholic entities that own and operate Catholic hospitals may genuinely need to sell, and while it’s naturally preferable to transfer ownership to another Catholic institution—thereby preserving the Catholic identity of the hospital—this isn’t always an option, so selling to a secular company might be unavoidable.  If a secular entity is going to take control, the Catholic seller should do whatever is possible to ensure that the ethical practices of the no-longer-Catholic hospital continue as before; unfortunately, the seller’s power to insist on this may be limited under civil law. 
 
Thirdly, negotiations pertaining to the sale of a Catholic hospital must take canonical considerations into account: the sale can’t jeopardize the patrimony of a religious institute or other Catholic entity that has been deriving income from operating the hospital.  Apart from that, given the value of a hospital nowadays, competent church authorities—including the Vatican—will have to approve the sale before it can lawfully take place.  To sum up, when it comes to selling a Catholic hospital, canon law does its best to juggle Catholic social teachings and fiscal realities.  In practice it may not always result in a perfect outcome; but that should generally be laid at the feet of the complex world we live in. 

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