Politics & Government

UNC board sues Vidant Health over who can appoint trustees for Greenville hospital

The UNC Board of Governors went to court on Monday to try to stop Vidant Health from kicking the university system out of the process of choosing members of the Greenville hospital’s governing board.

UNC was responding to a move last month by Vidant Health, quietly approved by the Pitt County Board of Commissioners, to change the makeup of Vidant Medical Center’s board of trustees. UNC has been involved in the hospital since 1975 and remained involved when Pitt County later turned over the facility’s operation to a private, not-for-profit company.

Under that agreement, the facility became the teaching hospital for East Carolina University’s Brody School of Medicine, and the university system agreed not to build a separate teaching hospital that would have competed with it.

The agreement has been tweaked over the decades as it was renewed. The most recent agreement, approved in 2013, specifies that the Board of Trustees will have 20 members, 11 of them appointed by the Pitt County Board of Commissioners, and the remaining nine named by the UNC Board of Governors.

According to a report by the Greenville Daily Reflector, Mike Waldrum, Vidant Health’s chief executive, asked Beth Ward, chairman of the Pitt County Board of Commissioners, to place an item on the commissioners’ April 22 consent agenda asking for approval to change the hospital’s articles of incorporation. Under the change, the county still would appoint 11 members to the hospital’s Board of Trustees. The remaining the nine members would be chosen by Vidant Health.

Pitt County commissioners were to meet Monday night. Ward could not immediately be reached for comment.

County officials approved the change without discussion, the Daily Reflector reported. Two days later, the UNC system says in its complaint, Vidant filed the paperwork with the N.C. Secretary of State.

In its complaint, UNC says Vidant did not have the authority to make the change, because UNC’s right to make appointments to the board was spelled out by the N.C. General Assembly when it approved the designation of the medical center as ECU’s teaching hospital. The complaint says the state has pumped $60 million to $65 million a year over the past five years into the Brody School of Medicine, directly benefiting the hospital.

UNC asks the court to find that in changing the board’s appointment process, Vidant has breached the 2013 contract. It asks for an injunction barring the change.

Jason Lowry, associate director of communications for Vidant Health, responded to questions about the situation with an email saying, “We are aware of a lawsuit filed today against Vidant Medical Center and Pitt County in the Orange County Superior Court by the UNC Board of Governors and East Carolina University. There is nothing about the governance changes that materially or fundamentally changes the academic affiliation or the more than forty-year relationship between the Brody School of Medicine and Vidant Medical Center. We look forward to a positive resolution.”

If the university system loses its ability to appoint members to the Board of Trustees, UNC’s complaint says, the only remedy is for the system to build a separate teaching hospital for the medical school. The cost would be more than $500 million, according to the complaint.

According to its 2017 annual report, Vidant Health and the Brody School of Medicine together employ more than 14,000 team members and have an economic impact of more than $3 billion a year through the hospital and a network of hospitals, home health agencies, doctors’ offices and other partners across Eastern North Carolina.

In a press release about the complaint, the UNC system said it had tried to work with Vidant on the changes to the hospital’s governance, but the two sides had been unable to reach an understanding.

UNC took legal action, it said, because, “ECU, with strong support from the University System, takes the stewardship responsibility regarding the Brody School of Medicine and its historic public mission with the utmost seriousness. Vidant’s unexpected elimination of the appointment powers vested in the UNC Board of Governors, accomplished without consultation, creates serious concerns about a relationship that has served eastern North Carolina well since its inception in 1975.”

Recently, the UNC Board of Governors has been pressing its schools, including the Brody School of Medicine, to find ways to cut costs, in part to help keep student tuition from rising.

The Brody School and Vidant Medical Center are a major source of healthcare in Eastern North Carolina, serving patients who tend to be poorer and sicker than the general population. Many of those who get their degrees from the school stay in the region and provide care in rural communities that otherwise would be medical deserts.

Vidant was involved in a protracted dispute over the tiny hospital in Belhaven, which served residents from several rural counties. The company took over the struggling facility from the town in 2011 pledging to upgrade it.

But it abruptly closed Vidant Pungo Hospital two years later, forcing some residents to travel long distances to reach an emergency room. When the town’s former mayor said he was getting close to reopening part of the hospital with federal aid, Vidant had the building demolished.

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Martha Quillin is a general assignment reporter at The News & Observer who writes about North Carolina culture, religion and social issues. She has held jobs throughout the newsroom since 1987.