EXHIBIT 8.1
December 4, 1997
To the Board of Directors of River Oaks Hospital, Inc.
Re: MERGER WITH HEALTH MANAGEMENT ASSOCIATES, INC. - FEDERAL INCOME TAX
CONSEQUENCES
Ladies and Gentlemen:
We have acted as counsel for River Oaks Hospital, Inc. d/b/a River Oaks
Health System ("River Oaks") in connection with the Agreement of Merger and Plan
of Reorganization dated as of ______________, 1997 (the "Agreement"), by and
between River Oaks, HMA-RO Acquisition Corp. ("Sub") and Health Management
Associates, Inc. ("HMA"). Capitalized terms not defined herein shall have the
meaning ascribed to them in the Agreement.
The Agreement provides that Sub, a wholly-owned subsidiary of HMA organized
under the laws of the State of Mississippi, will be merged with and into River
Oaks (the "Merger") under the applicable provisions of the Mississippi Business
Corporation Act. The corporate existence of Sub will cease, and River Oaks will
become the surviving corporation. Pursuant to the Agreement, each share of
River Oaks Common Stock issued and outstanding as of the Effective Time (except
for Qualifying Shares and shares held by shareholders who validly perfect their
dissenters' rights under Mississippi law) will be converted into shares of HMA
Common Stock in amounts determined under Section 3.2(d) of the Agreement. No
fractional shares of HMA Common Stock will be issued in connection with the
Merger. In lieu of fractional shares, HMA will make a cash payment equal to the
amount determined pursuant to Section 3.3(c) of the Agreement. No River Oaks
shareholder will receive cash for a fractional share in an amount in excess of
the value of one (1) share of HMA Common Stock.
We have been provided with an Officer's Certificate, in which officers of
River Oaks make certain representations on behalf of River Oaks regarding the
Merger, and we have been provided with Certificates, in which officers of HMA
make certain representations with respect to HMA regarding the Merger (the
"Certificates"). We assume those representations to be not only statements in
the signers' best information but also currently true statements, and we rely
thereon in rendering this opinion.
Board of Directors of River Oaks Hospital, Inc.
December 4, 1997
Page 2
In rendering the following opinion, we have considered the Agreement, the
Certificates, applicable case law and applicable provisions of the Internal
Revenue Code of 1986, as amended and as presently in effect (the "Code"), and
regulations adopted thereunder, and Revenue Rulings and Revenue Procedures
published thereunder.
Based on the foregoing, and assuming that the representations made in the
Certificates also will be true as of the Effective Time of the Merger as defined
in the Agreement, we are of the opinion that, upon consummation of the Merger in
accordance with the terms and conditions of the Agreement, for federal income
tax purposes:
(a) Provided that the Merger qualifies as a statutory merger under the
Mississippi Business Corporation Act, the Merger will be a
reorganization within the meaning of Section 368(a) of the Code, and
HMA and River Oaks will each be a party to the reorganization within
the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by either HMA or River Oaks as a
result of the Merger.
(c) No gain or loss will be recognized by the shareholders of River Oaks
upon receipt of HMA Common Stock in exchange for their River Oaks
Common Stock, except as described below with respect to cash received
in lieu of a fractional share interest in the HMA Common Stock.
(d) The basis of the HMA Common Stock received by each River Oaks
shareholder will be the same as the basis of the shares of River Oaks
Common Stock owned by such shareholder surrendered in exchange
therefor, decreased by any amount allocable to a fractional share
interest for which cash was received.
(e) The holding period of the HMA Common Stock received by a River Oaks
stockholder will include the period during which the River Oaks Common
Stock surrendered in exchange therefor was held, provided that such
River Oaks Common Stock was held by such River Oaks stockholder as a
capital asset as of the Effective Time.
(f) A stockholder of River Oaks Common Stock who receives cash in the
Merger in lieu of a fractional share interest in HMA Common Stock will
be treated as having received cash in redemption of such fractional
share interest. Provided that such River Oaks Common Stock was held by
such River Oaks stockholder as a capital asset as of the Effective
Time, the
Board of Directors of River Oaks Hospital, Inc.
December 4, 1997
Page 3
receipt of such cash should generally result in capital gain or loss
equal to the difference between the amount of cash received and the
portion of such River Oaks stockholder's adjusted basis in the shares
of River Oaks Common Stock allocable to the fractional share interest.
Such capital gain or loss will be long-term capital gain or loss if the
holding period for the shares of HMA Common Stock for which cash is
received is more than one (1) year.
(g) A River Oaks shareholder who elects to retain Qualifying Shares of
River Oaks will not be deemed to have made any sale or other
disposition of such Qualifying Shares which would require realization
of gain under Section 1001 of the Code. The tax basis and holding
period of the Qualifying Shares will continue to be the same after the
Merger as they were before the Merger.
No opinion is expressed herein with respect to any subsequent disposition
of either Qualifying Shares or HMA Common Stock received in exchange for shares
of River Oaks Common Stock.
The shares of River Oaks Common Stock referred to herein do not include any
stock rights, rights or options to acquire River Oaks Common Stock.
This opinion is limited to the effect of the income tax laws of the United
States of America, and we have expressed no opinion as to the laws of any
jurisdiction other than the United States of America. We have not considered the
effects of the transaction on the stockholders of River Oaks under the income
tax laws of the states in which they reside, and we have not considered the
effects on the transaction, if any, of any other state and local taxes. We
express no opinion as to the federal income tax consequences of the exchange of
River Oaks shares by any individual who receives such shares as compensation and
holds them at the Effective Time subject to any restriction related to
employment.
Changes to the Code, regulations, rulings thereunder, and changes by the
courts and the interpretation of the authorities relied upon, may be applied
retroactively and may affect the opinion expressed herein.
The foregoing opinion is furnished to you solely in connection with the
above-described transaction and may not be relied upon by any other person or
entity, or used for any other purpose.
Board of Directors of River Oaks Hospital, Inc.
December 4, 1997
Page 4
Unless a prior written consent of our firm is obtained, this opinion is not
to be quoted or otherwise referred to in any report, proxy statement, or
registration statement, and is not to be filed with or furnished to any
governmental agency or other entity or person, except as otherwise required by
law.
We hereby consent to the filing of a copy of this opinion as an exhibit to
the Registration Statement on Form S-4, relating to the issuance of shares of
HMA Common Stock in the Merger, to be filed by HMA with the Securities and
Exchange Commission, and to all references to this firm in the Prospectus that
is part of the Registration Statement.
Very truly yours,
BAKER, DONELSON, BEARMAN,
& CALDWELL, P.C.
By: __________________________
A Member Thereof