
    Incorporation of Certain Charitable Institutions
    
      November 16, 1956.
   Stephen B. Narin, Deputy Attorney General,

You have requested this department to advise you as to when the special procedure for incorporation of certain charitable and eleemosynary institutions, set forth in section 212 of the Nonprofit Corporation Law of May 5, 1933, P. L. 289, 15 PS §2851-212, must be followed.

Section 212 provides:

“Section 212. Special Procedure for Incorporation of Certain Charitable and Eleemosynary Institutions. —Whenever articles of incorporation for the incorporation of a nonsectarian hospital or other nonsectarian charitable or eleemosynary institution or society, in which indigent persons are treated or are to be treated or maintained, are filed with the prothonotary, he shall forthwith transmit the articles to the Department of Welfare of the Commonwealth. Thereupon, the department shall make a thorough investigation as to the need for such a corporation in the community wherein the work of the corporation is to be carried on, and, within sixty days, shall certify upon the articles whether or not the needs of the community wherein the work of the corporation is to be carried on require the incorporation of such hospital, institution or society, and the reasons for its conclusion. The court shall not approve such application unless and until the articles are returned by the department, and unless the department shall certify that the incorporation of such hospital, charitable or eleemosynary institution or society is required by the needs of the community in which its work is to be carried on. The certification of the department as to such necessity shall be conclusive upon the court.”

Clearly, the special procedure set forth in section 212 is to be followed only when the proposed articles of incorporation are for the incorporation of a nonsectarian hospital or other nonsectarian charitable or eleemosynary institution or society in which indigent persons are treated or are to be treated or maintained.

Two questions of interpretation are inherent in this section. First, what is “a nonsectarian hospital or other nonsectarian charitable or eleemosynary institution or society in which indigent persons are to be treated or maintained” (hereinafter referred to as a “section 212 corporation”) ? Second, when do articles of incorporation indicate that the proposed corporation will be a section 212 corporation?

Whether a proposed corporation is sectarian or nonsectarian is a matter to be determined from all the facts of the particular situation. In general “sectarian” means denominational; devoted to, peculiar to, pertaining to or promotive of the interest of a sect or sects; especially marked by attachment to a sect or denomination; and the term, in a broader sense, is used to describe the activities of the followers of one faith as related to the activities of adherents of another. The term is most comprehensive in scope. See Formal Opinion No. 455, dated May 12, 1943, to the Honorable S. M. R. O’Hara, Secretary of Welfare, and cases cited therein for an extensive discussion of the question.

Once it has been decided that the proposed corporation is nonsectarian, whether it is a hospital or other charitable or eleemosynary institution or society must then be determined, as the special procedure must be followed only in the case of proposed corporations which intend to operate such a hospital or institution and not to those which intend merely to contribute funds toward the support of such hospitals or institutions. This question was discussed in Informal Opinion No. 1105, dated May 23, 1940, and addressed to the Honorable E. Arthur Sweeny, Secretary of Welfare, in which it was stated:

“Your second question is whether or not this section of the act governs organizations which do not conduct, hospitals or institutions, but contribute toward the support of hospitals or institutions where indigent persons are treated or maintained.
“Since this section of the act specifically refers to institutions in which indigent persons are treated or maintained, the answer to your second inquiry seems equally free from doubt.
“We are of the opinion, therefore, and you are accordingly advised that . . .
“(2) Neither does Section 212 of the act apply to organizations which do not conduct hospitals or institutions, but merely contribute toward the support of hospitals or institutions where indigent persons are treated or maintained.”

Finally, when is such a hospital or institution one in which indigent persons- are to be treated or maintained? Every hospital will treat an emergency case even though the patient may be indigent and the hospital may be a high-cost private institution. However, as used in this section, the phrase refers only to those hospitals or institutions in which indigent persons are to be treated or maintained in the regular course of operations. For exampié,'the incorporation of a private hospital in which each patient would ordinarily pay in full for the services received by him would not be subject to the special procedure set forth in section 212.

The purpose of section 212 is to prevent the incorporation of section 212 corporations not required by the needs of the community in which the proposed corporation’s work is to be carried on. For this reason we must conclude that whenever proposed articles of incorporation either specifically provide for the incorporation of a section 212 corporation or are so broad as to permit the proposed corporation to operate as a section 212 corporation the special procedure set forth in section 212 must be followed.

Whenever proposed articles of incorporation are submitted to the Department of Welfare pursuant to section 212 solely because they are so broad as to permit the proposed corporation to operate as a section 212 corporation and the incorporators indicate to the department that they have no intention of so operating, the proposed articles should not be approved unless they are amended so as to eliminate such possibility. The insertion into the purpose clause of the following:

“The corporation will not maintain a nonsectarian hospital or other nonsectarian charitable or eleemosynary institution or society, in which indigent persons are to be treated or are to be treated or maintained,” or a similar sentence or phrase will remove the proposed corporation from the scope of section 212. However, if the proposed articles are not so amended, the special procedure set forth in section 212 must be followed as indicated above.

If there is any doubt in a particular case as to whether or not, under the facts, a proposed corporation is a section 212 corporation, the facts should be submitted to this department for a legal determination.  