April 15, 1983
A judge may serve as a director of a hospital if it is charitable and it is not likely that the hospital will be regularly engaged in adversary proceedings in any court.
Should a hospital of which the judge is a director become engaged in litigation, malpractice or otherwise, regardless of whether or not the hospital is charitable or profit making, the judge should resign as director.
A judge can only serve as a director of a profit-making hospital if the judge's activity were passive or of a personal character.
Should a judge be involved in financial or business dealings, including director of a hospital, and litigation involving that entity comes before the judge's court, the judge should withdraw from hearing the controversy.
References: MCJC 5B, 5C; CI-502.
A judge asks whether it is proper for appellate and trial judges to serve as hospital directors and/or trustees of hospitals while continuing to hear malpractice cases assigned to them that involve the same hospitals, and whether a judge must resign as hospital director and/or trustee of the hospital if the hospital is regularly engaged in adversary proceedings.
The inquirer does not specify whether or not the judge is serving purely in an honorary capacity or is receiving financial renumeration. Nor does the inquirer indicate whether or not the judge's capacity of director purely involve "improvement of the law, the legal system . . . administration of justice." MCJC 5(G). It is therefore assumed, in broad response to the question and in qualification thereof that such does not apply. Thus, this analysis shall only consider the situation where the judge actively, as a hospital director, gets involved with hospital policy and/or management decisions.
MCJC 5(B) states:
"B. Civic and Charitable Activities: A judge may participate in civic and charitable activities that do not reflect adversely upon the judge's impartiality or interfere with the performance of judicial duties. A judge may serve as an officer, director, trustee, or nonlegal advisor of a bona fide educational, religious, charitable, fraternal, or civic organization, subject to the following limitations:
"(1) A judge should not serve if it is likely that the organization will be engaged in proceedings that would ordinarily come before the judge or will be regularly engaged in adversary proceedings in any court.
". . . ."
MRPC 5(C)(1) and (2) state:
"(1) A judge should refrain from financial and business dealings that tend to reflect adversely on the judge's impartiality or judicial office, interfere with the proper performance of judicial duties, exploit the judicial position, or involve the judge in frequent transactions with lawyers or persons likely to come before the court on which the judge serves.
"(2) Subject to the requirements of C(1), a judge may hold and manage investments, including real estate, and engage in other remunerative activity, but should not serve as director, officer, manager, advisor, or employee of any business. Provided, however, with respect to a judge holding office and serving as an officer, director, manager, advisor, or employee of any business not prohibited heretofore by law or judicial canon, the effective date of the prohibition contained herein shall be the date of expiration of the judge's current judicial term of office." Emphasis added.
Thus, the judge may serve as a hospital director if it is charitable, and it is not likely that the hospital will be regularly engaged in adversary proceedings in any court, not merely the court of the judge-director.
Interpreting former Canons, ABA Op C-706 admonished that a judge could serve on the board of a charitable or not-for-profit hospital but if a conflict (e.g., litigation) existed, the judge should "remain inactive as a board member until the conflict ceases." MCJC 5(B)(1) appears more broadly to forbid such a directorship/trusteeship where adversary proceedings are likely in any court, as previously mentioned.
This Committee opined in CI-502 that under MCJC 5C(2), a judge could only act as director if the judge's activity were passive or of a personal character.
Responding to the second query, should a charitable hospital of which a director is a judge be involved in any litigation, not merely with the judge's own court, what should the judge do? MCJC 5(B)(1) forbids the judge to serve as a director in those circumstances. Should the judge be a director of a profit making private hospital? MCJC 5(C)(2) mandates that the judge immediately resign as director.