Marion County v. Oregon Health Authority

424 August 26, 2026 No. 797 IN THE COURT OF APPEALS OF THE STATE OF OREGON MARION COUNTY, a political subdivision of the State of Oregon, Plaintiff-Appellant, v. OREGON HEALTH AUTHORITY; Sejal Hathi, in her official capacity as Director of the Oregon Health Authority; and Sara Walker, in her official capacity as Interim Superintendent of the Oregon State Hospital, Defendants-Respondents. Marion County Circuit Court 23CV37155; A185645 Henry Kantor, Senior Judge. Argued and submitted March 18, 2026. Steve Elzinga argued the cause and filed the briefs for appellant. Patricia G. Rincon, Assistant Attorney General, filed the brief for respondent. Also on the brief were Dan Rayfield, Attorney General, and Benjamin Gutman, Deputy Attorney General. Before Tookey, Presiding Judge, Jacquot, Judge, and Kistler, Senior Judge. TOOKEY, P. J. Reversed and remanded. Cite as 352 Or App 424 (2026) 425 426 Marion County v. Oregon Health Authority TOOKEY, P. J. Plaintiff Marion County appeals a judgment dis- missing with prejudice its complaint seeking declaratory relief under ORS 28.020. In sum and substance, among other points, Marion County asserted that defendant Oregon Health Authority (OHA) has incorrectly interpreted the definition of “hospital level of care” as set forth in ORS 161.355(3) to allow it to prematurely cease providing medical care to certain individuals.1 And more specifically, Marion County asserted that, as a result of OHA’s misinterpretation of “hospital level of care,” Marion County has been burdened with the cost of providing medical care for those individuals whom OHA has inappropriately stopped treating. The trial court dismissed Marion County’s complaint, determining that Marion County lacked standing. For the reasons that follow, we reverse and remand. STANDARD OF REVIEW “Whether a plaintiff has standing to bring a declar- atory judgment action is a legal question, which we review for legal error.” Oregon Restaurant and Lodging Assn. v. City of Bend, 313 Or App 772, 777, 497 P3d 306 (2021). Where, as here, the trial court considered evidence outside the pleadings, we “assume the truth of the facts alleged in the complaint to the extent they are not contradicted by addi- tional facts in or outside of the record.” Nordbye v. BRCP/ GM Ellington, 271 Or App 168, 174, 349 P3d 639 (2015). We state the facts in accordance with that standard. BACKGROUND Marion County operates a Community Mental Health Program pursuant to ORS 430.620. One of the func- tions that Marion County performs in that capacity is the provision of “community restoration services” to certain individuals charged with crimes who are not fit to proceed.2 1 Marion County’s operative complaint names OHA, the director of OHA, and the superintendent of the Oregon State Hospital—which the complaint alleges is a part of OHA—as defendants. Because distinguishing between the defendants in this case is unnecessary to resolve the issue on appeal, we refer to them collectively and individually in this opinion as OHA. 2 An individual who lacks the fitness to proceed “may not be criminally pros- ecuted.” State v. Givens, 321 Or App 689, 695, 517 P3d 1021 (2022), rev den, 370 Cite as 352 Or App 424 (2026) 427 “Community restoration services” are defined by statute as “services and treatment necessary to safely allow a defen- dant to gain or regain fitness to proceed in the community.” ORS 161.355(2). Rules adopted by OHA set forth certain “responsibilities during community restoration” for commu- nity mental health programs, such as the program operated by Marion County. OAR 309-088-0146. Certain other individuals who are not fit to proceed are committed to the custody of OHA. See ORS 161.370 (governing criminal proceedings upon a determination of unfitness and providing for, among other things, community restoration services or commitment to a state hospital). A pre- requisite for such commitment is that the individual needs a “hospital level of care,” which is a phrase that is defined by statute to mean “the type of care provided by an inpatient hospital in order to gain or regain fitness to proceed.”3 ORS 161.370(3)(a)(A), (4)(a)(B); ORS 161.355(3). Rules adopted by OHA also set forth certain “responsibilities during commit- ment” for community mental health programs, such as the program operated by Marion County, in connection with individuals who are committed to OHA because they need a “hospital level of care.” OAR 309-088-0130. Once an individual is committed to OHA, if OHA “determines that a hospital level of care is no longer neces- sary,” the superintendent of OHA “may file notice of [that] determination with the court.” ORS 161.371(3)(a). After such a notice is filed with the court, the court must order that a community mental health program director (or the director’s designee) “[c]onsult with the defendant and with any local entity that would be responsible for providing community Or 694 (2022); see also ORS 161.360(2) (setting forth circumstances under which a court may determine a defendant to be unfit to proceed). 3 Whether a defendant meets the criteria for commitment to OHA to receive “hospital level of care” depends on whether the person is charged with a felony or a misdemeanor. When “the most serious offense in the charging instrument is a felony,” the determination that an individual needs a “hospital level of care” is based on either “[1] public safety concerns if the defendant is not hospitalized or in custody or [2] the acuity of symptoms of the defendant’s qualifying mental disorder.” ORS 161.370(3)(a)(A). In contrast, when “the most serious offense in the charging instrument is a misdemeanor,” the determination that an individual needs a “hospital level of care” must be based on “the acuity of symptoms of the defendant’s qualifying mental disorder.” ORS 161.370(4)(a)(B)(i). 428 Marion County v. Oregon Health Authority restoration services, if the defendant were to be released in the community, to determine whether community resto- ration services are present and available in the community” and provide the “court and the parties with a report with recommendations from the consultation.” ORS 161.371(3)(a) (A), (C). If a community placement is available and appro- priate, no party objects to the placement option, and the community health program director “secure[s] a placement for defendant and obtain[s] an anticipated availability date for the placement,” the court “hold[s] a hearing * * * to con- firm the placement and set any conditions of release.” ORS 161.371(5). This dispute arises out of, among other issues, OHA’s interpretation of the phrase “hospital level of care,” as defined by ORS 161.355(3). As we understand the parties’ positions, OHA believes that that phrase refers to “inpa- tient” care only and that when inpatient care is no longer necessary, a defendant may be discharged to receive commu- nity restoration services if further treatment is necessary. In that regard, we observe the statutory scheme concern- ing defendants who are not fit to proceed recognizes that defendants who are not fit to proceed “should be served in the least restrictive and most integrated environment that is clinically indicated.” See OAR 309-088-0105(1) (so noting regarding ORS 161.365 through ORS 161.370). Marion County has a different understanding of the phrase “hospital level of care” than OHA. In Marion County’s view, “hospital level of care” can include “outpa- tient” care. Marion County’s operative complaint alleged that, as a result of OHA’s misinterpretation of the phrase “hospital level of care”—along with OHA’s misinterpretation of other statutes—Marion County has been “bear[ing] signif- icant burdens of providing restorative services for individu- als requiring a hospital level of care.” That is, Marion County alleged in its operative complaint, in essence, that OHA has been failing to provide medical care to certain defendants as a result of its misinterpretation of the phrase “hospital level of care” and that the result has been Marion County provid- ing (and bearing the cost of) such care. Or put more bluntly, in Marion County’s view, once OHA stops providing care, Cite as 352 Or App 424 (2026) 429 “counties must start taking action and pick up the slack,” which has “obvious financial impacts” on counties. As noted, Marion County’s operative complaint sought declaratory relief under ORS 28.020. OHA moved to dismiss pursuant to ORCP 21, and the trial court granted that motion, concluding that Marion County lacked stand- ing under ORS 28.020 to bring its claim for declaratory relief. Marion County appealed and, in a single assignment of error, argues that the trial court erred in concluding that it lacks standing.4 ANALYSIS The term “standing,” as relevant here, “means the right to obtain an adjudication.” Eckles v. State of Oregon, 306 Or 380, 383, 760 P2d 846 (1988), appeal dismissed, 490 US 1032 (1989) (discussing ways the legal term “standing” is used). Whether a plaintiff has standing “largely depends on the statute under which the plaintiff seeks relief.” MT & M Gaming, Inc. v. City of Portland, 360 Or 544, 553, 383 P3d 800 (2016). Here, Marion County seeks relief under the Uniform Declaratory Judgments Act. The relevant statute, ORS 28.020, provides: “Any person interested under a deed, will, written con- tract or other writing constituting a contract, or whose rights, status or other legal relations are affected by a con- stitution, statute, municipal charter, ordinance, contract or franchise may have determined any question of con- struction or validity arising under any such instrument, 4 We note that Marion County’s claim for relief requested “[e]ntry of a judgment declaring that, under ORS 179.360, ORS 161.370, and ORS 161.371, and related statutes, defendants have a non-discretionary obli- gation to admit individuals committed to the custody of the superintendent to [Oregon State Hospital] on an inpatient basis (or, in the alternative, on an outpatient basis) and provide them restoration services until (1) the super- intendent of [Oregon State Hospital] certifies that a hospital level of care is no longer necessary and the committing court finds that they are fit to stand trial, or (2) those individuals reach the maximum period of restoration under ORS 161.371.” We also note that, in addition to allegations concerning OHA’s discharge deci- sions, Marion County’s complaint raised certain contentions concerning OHA’s admission of individuals. For our analysis in this opinion, however, it is sufficient to consider Marion County’s allegations concerning OHA’s discharge decisions. 430 Marion County v. Oregon Health Authority constitution, statute, municipal charter, ordinance, con- tract or franchise and obtain a declaration of rights, status or other legal relations thereunder.” To establish standing under that statute, there are “three showings that must be made by a plaintiff.” Foote v. State of Oregon, 364 Or 558, 562-63, 437 P3d 221 (2019). Specifically, “(1) there must be some injury or impact to a legally recognized interest beyond an abstract interest in the correct application or the validity of a law; (2) the injury or impact must be probable, not speculative; and (3) the court’s decision must have a practical effect on plaintiffs’ rights.” Albrecht v. Emmert, 327 Or App 465, 473, 535 P3d 785 (2023). In evaluating whether plaintiff has made those showings, “certainty” is not required. Jewell School Dist. v. KC, 349 Or App 657, 664, ___ P3d ___ (2026). Here, concerning the first requirement—injury or impact to a legally recognized interest—Marion County has a financial interest in the “correct application” of the phrase “hospital level of care” by OHA. That financial interest is “sufficient” to satisfy the first requirement for standing under ORS 28.020.5 See Eckles, 306 Or at 385 (“The inter- est perhaps most often recognized as sufficient for stand- ing under ORS 28.020 is a present or foreseeable financial interest[.]”); Thorin Properties v. City of Eugene, 334 Or App 570, 572-73, 557 P3d 531 (2024), rev den, 373 Or 282 (2025) (“financial impact” is a “legally recognized interest”). OHA contends otherwise. It acknowledges that Marion County has alleged financial harms, but it argues that those harms are insufficient because Marion County’s financial interest “is not legally recognized by the statutes at issue in the declaratory judgment action.” That is so, in OHA’s view, because “those statutes are directed at [OHA] and [its] obligation to provide restoration services to indi- viduals in need of those services” and under those statutes 5 Marion County’s legally recognized interest arising as a result of the alle- gations in this case is one reason why this case differs from our recent decision in Porter v. Lane County, 352 Or App 265, ___ P3d ___ (August 19, 2026), in which we concluded that a “controversy [was] merely hypothetical” where plaintiff’s “com- plaint alleged only that during discussions with the county about his building, he was ‘advised’ that the additional construction would not be allowed,” and he “never applied for a permit to allow for the additional construction.” Id. at 266, 268. Cite as 352 Or App 424 (2026) 431 “counties have no obligation to provide any services.” Thus, as OHA sees it, Marion County “has not shown that it has anything more than a general or abstract interest in the correct application of the statutes on which it sought a declaration.” We disagree that Marion County has only a “general or abstract interest” as OHA contends. As an initial matter, it may be the case, as we understand OHA to argue, that Marion County could refrain from operating a community mental health program and not suffer the particular finan- cial injury that it alleges. After all, under Oregon’s statu- tory scheme, operating community mental health programs appears to be a permissive activity for counties, not a man- datory one. See ORS 430.620(1) (“The county court or board of county commissioners * * * may * * * establish and oper- ate * * * a community mental health program.” (Emphasis added.)). But, as it stands, Marion County does run such a program, and Marion County has adequately alleged that its present financial interests are harmed by OHA’s interpreta- tion of the phrase “hospital level of care.” We are aware of no authority standing for the proposition that a party lacks standing to seek a declaratory judgment because they could cease running a program that they are legally authorized to run. And such a rule would be particularly inappropriate to apply in this context, because it is the express policy of the State of Oregon to “encourage, aid and financially assist” its “county governments in the establishment and development of community mental health programs.” ORS 430.610(4). Moreover, counties that operate community mental health programs such as Marion County—which, again, is a function the legislature has expressly encouraged counties to engage in—far from being strangers to Oregon’s scheme to assist criminal defendants in regaining fitness to pro- ceed, as OHA’s argument suggests, play an integral role in that process. See, e.g., ORS 161.370(6)(a) (“If the court does not order the commitment of the defendant * * *, if commit- ment is precluded * * * or if the court determines that care other than commitment would better serve the defendant and the community, the court shall release the defendant, 432 Marion County v. Oregon Health Authority pursuant to an order that the defendant engage in commu- nity restoration services, until the defendant has gained or regained fitness to proceed * * *.”); see also ORS 430.021(2) (a) (directing OHA to integrate community mental health programs with “the state mental health program”). Reflective of the integral nature of community men- tal health programs to Oregon’s scheme for assisting indi- viduals who are not fit to proceed, are OHA’s own rules, which exist, in part, to encourage “collaboration” between OHA and community mental health programs. See OAR 309-088-0105(2) (“These rules establish the standards for consultations and other required reports to occur and encourages collaboration between the Court, the Authority, State Hospital, [and] Community Mental Health Program * * * .”). And those rules specifically recognize the role such community mental health programs play. See OAR 309-088- 0146(2) (“When the Court has ordered that a defendant par- ticipate in Community Restoration, the [community mental health program] from the county responsible for attempting to restore a defendant’s Fitness to Proceed must individu- ally assess what services are necessary to allow the defen- dant to gain or regain Fitness to Proceed.”). In sum, given our standard of review and the cur- rent stage of the proceedings, Marion County has asserted an “injury or impact to a legally recognized interest beyond an abstract interest in the correct application or the validity of a law.” Albrecht, 327 Or App at 473. As for the second requirement for standing, we con- clude that the financial interest identified by Marion County is “real or probable, not hypothetical or speculative.” MT & M Gaming, Inc., 360 Or at 554. As described previously, Marion County contends that OHA does not provide care to certain individuals as a result of OHA’s misinterpretation of the phrase “hospital level of care” and that that has present downstream financial impacts on Marion County, because Marion County must then “pick up the slack” in provid- ing care to those individuals. That is sufficient to show the financial impact on Marion County is “real or probable.” See Oregon Restaurant and Lodging Assn., 313 Or App at 778-79 (allegation by businesses “that depend on patronage Cite as 352 Or App 424 (2026) 433 in Bend” that a “reduction in funds for tourism promotion [in Bend] would have concrete and plausible fiscal ramifica- tions” sufficiently alleged an “injury or impact [that] is real or probable, and not hypothetical or speculative”). OHA argues otherwise, contending, among other points, that “any dispute about what type of care defendants are required to provide is entirely hypothetical” because “defendants do not believe that ‘hospital level of care’ includes outpatient care.” To the extent we understand OHA’s argu- ment, we are not persuaded by the argument, because the meaning of “hospital level of care” in the Oregon Revised Statutes as a legal matter is precisely the issue that Marion County seeks to have determined in this declaratory judg- ment action. Finally, concerning the third requirement for stand- ing—i.e., that “the court’s decision must have a practical effect on plaintiffs’ rights,” Albrecht, 327 Or App at 473—we conclude that that requirement has also been met. As set forth above, when OHA determines that an individual com- mitted to its care no longer needs a “hospital level of care,” it can file a notice of that determination with the court and the entity responsible for restoring the individual’s fitness to proceed can be changed from OHA to a community mental health program, such as that operated by Marion County. ORS 161.371(3)(a) (if OHA determines “that a hospital level of care is no longer necessary,” OHA “may file notice of the determination with the court”). Consequently, if the term “hospital level of care” encompasses a broader swath of care than OHA currently understands it to—i.e., if “hospital level of care” encompasses outpatient care as well as inpatient care—the range of individuals OHA is required to provide services to before discharge is expanded and the number of individuals that community mental health programs (such as that operated by Marion County) need to provide services to is reduced. Or, at the very least, that is a “reasonable inference” that can be drawn, which is all that is necessary at this stage of the proceedings. Jewell School Dist., 349 Or App at 665 (noting “pleadings need only bear the reasonable inference that a decision by the court will in some sense rec- tify the injury” (internal quotation marks omitted)). 434 Marion County v. Oregon Health Authority OHA argues otherwise regarding the third require- ment for standing under ORS 28.020, contending “the dec- laration sought in this case would not have any practical effect as to Marion County” because of “undisputed capacity issues” to serve individuals at OHA and a particular fed- eral order, which OHA refers to as “the Mink order.”6 That order, according to OHA, “places strict limits on who may be admitted to [Oregon State Hospital] and how long they remain there,” with the “durational limits” for restorative services under the Mink order being shorter than those allowed by state law. See ORS 161.371(8)(a) (setting forth maximum periods of commitment to OHA for individuals committed under ORS 161.370). As a general matter, we see nothing in the Mink order that would prevent OHA from providing outpatient care, at least if such care is provided by OHA within the durational limits for OHA providing restorative care under the Mink order. And, indeed, at oral argument, OHA’s counsel was unable to identify where in the United States District Court’s orders OHA providing outpatient treatment is prohibited.7 Regarding OHA’s “capacity issues,” OHA has not explained, and we do not understand, how those issues 6 The order referred to by OHA as the Mink order is a July 3, 2023, order issued by the United States District Court for the District of Oregon in Disability Rights Oregon v. Allen, Case No. 3:02-cv-00339-MO. 7 To be sure, after entry of the Mink order, the United States District Court for the District of Oregon concluded that an order by the Marion County Circuit Court requiring OHA to provide outpatient treatment to a criminal defendant violated the Supremacy Clause of the United States Constitution, but that was because that particular order “require[d OHA] to provide the criminal defendant with restoration services that exceed the * * * maximum duration” that OHA could provide restoration services under the Mink order. Disability Rights Oregon v. Baden, 3:02-CV-00339-MO, 2024 WL 964243, at *1 (D Or Mar 6, 2024) (emphasis added). It does not follow from that order concerning the Supremacy Clause—and the trial court could not find on this record—that there never will be times that outpatient treatment would be clinically indicated for a criminal defendant who was within the “maximum duration” that OHA could provide “restoration ser- vices” under the Mink order. Further, we note that, during the pendency of this appeal—on June 1, 2026— the United States District Court for the District of Oregon entered an opinion and order in the Mink litigation providing for “additional remedial measures.” Disability Rights Oregon v. Hathi, 3:02-CV-00339-AN, 2026 WL 1536809, at *3 (D Or June 1, 2026). OHA has not argued that that opinion and order has any bearing on our analysis of the issue on appeal. Cite as 352 Or App 424 (2026) 435 would prevent OHA from providing outpatient treatment to an individual who was previously treated on an inpatient basis at OHA but for whom outpatient services are clinically indicated. At least at this stage of the proceeding and on this record, those “capacity issues” at OHA do not persuade us that Marion County lacks standing. CONCLUSION For the reasons above, we conclude that the trial court erred when it determined that Marion County lacked standing to pursue its declaratory judgment claim. We reverse and remand for further proceedings. Reversed and remanded.