Suit: Open Rex, WakeMed pact

Louisburg's suit is the latest skirmish over Rex's proposal to move Franklin County's only hospital to Youngsville

Reacting to continued efforts to move Franklin County's only hospital out of Louisburg, town officials filed a lawsuit Wednesday against one of the partners in the project, Rex Healthcare. The suit asks for copies of a confidential agreement those officials say the hospital struck with WakeMed not to oppose each other's expansion plans.

Filed in Franklin County, the lawsuit names Rex and its nonprofit parent, UNC Healthcare, and asks a judge to declare a public record any confidential agreement Rex entered into with WakeMed or any other hospital to remain silent during the state's review process for new hospital projects.

The town's lawsuit heightens tension between local officials and the corporate owners of the hospital. Owners want to move Franklin Regional Medical Center out of Louisburg and closer to the border of Wake County and its more affluent suburban residents.

In November, hospital owners Health Management Associates of Naples, Fla., and Rex teamed up to ask the state to allow them to relocate the Louisburg facility to a proposed new $103 million, 70-bed hospital in Youngsville -- 16 miles from the center of Franklin County. WakeMed, after initially opposing a 2007 bid for state approval of the project, did not oppose the latest bid, which was rejected by state regulators in April.

"We believe there may be documents that would shed light on the planned relocation from Louisburg to Youngsville," said Noah H. Huffstetler III, an attorney for Louisburg.

At issue is a confidential agreement WakeMed and Rex entered into last year in which the two hospitals agreed not to fight each other over building satellite medical centers during the state's vetting process for a certificate of need. A CON, as the certificate is called, is a requirement for new hospital projects, relocations and expansion of existing facilities.

Rex officials declined to discuss details of the agreement but did not dispute its existence.

"As far as any sort of agreement, we resolved several CON cases with WakeMed in 2007," said Lisa Schiller, a Rex spokeswoman.

The partners appealed the state's latest rejection of the project in mid-May.

As part of UNC Healthcare, Rex is wholly owned by the state's hospital system. The lawsuit could affect how Rex operates and what kinds of documents it must disclose to the public, said Hugh Stevens, a first amendment lawyer who was consulted on the suit filed by Louisburg officials. Stevens also represents The News & Observer.

"I would think there was a high likelihood that Rex is a public agency," Stevens said.

Rex asserts that it is a private, nonprofit corporation and is not subject to public records law.

"We are absolutely a hundred percent not a public entity," Rex's Schiller said.

To support her point, Schiller pointed to a North Carolina attorney general's opinion that said employees of Rex were not state employees and not eligible for state benefits or pensions.

But Stevens and Huffstetler cited a 1981 court ruling that determined the Wake County Hospital System, now WakeMed, was a public body subject to the state's public record law. Although the hospital was run by an independent board, the court determined that Wake County's stake in the hospital required that under public records law, the hospital make its records available.

In letters from lawyers for Rex and UNC included in the lawsuit, the hospitals also contend that the documents Louisburg is asking for are covered by an exemption to the state's public records law for confidential, competitive health-care information.

Schiller dismissed the suit as a roadblock to bringing better health care to Franklin County.

"This suit is basically allowing small town politics to slow down the process," she said.