Vidant Health can’t take away UNC’s right to name hospital board members, judge rules

ECU’s Brody School of Medicine produces mostly primary care doctors, which are in high demand.
ECU’s Brody School of Medicine produces mostly primary care doctors, which are in high demand. Christobal Perez

Vidant Health cannot — for now — rewrite its rules of corporate governance to strip the UNC Board of Governors’ right to appoint members to the company’s flagship hospital, Vidant Medical Center of Greenville, a judge ruled on Friday.

Orange County Superior Court Judge Allen Baddour issued a temporary restraining order Friday afternoon against Vidant Health, stopping it from making appointments to fill any vacant seats on the hospital’s governing board. The order is in effect through the end of the day June 3. UNC and Vidant are to be back in court May 29 for further arguments if necessary.

The UNC system sued Vidant on Monday to defend its right to appoint nine members to the hospital’s 20-member governing board.

“We appreciate that the court determined that the UNC System and East Carolina University have shown a likelihood of success on the merits of our claims and that the Brody School of Medicine is likely to sustain irreparable harm unless a temporary restraining order is in place,” UNC system spokesman Josh Ellis said in a statement after the judge’s ruling. “This order will allow the parties to pause and evaluate what steps will be needed to preserve the long-standing partnership between ECU and Vidant, so that all parties may better serve the people of North Carolina.”

Vidant, through spokesman Jason Lowry, indicated the company will continue to pursue changes to the board’s appointment process.

“A judge has granted a temporary restraining order that prohibits Vidant from filling two seats for 10 days,” Lowry said in an email. “The judge did not act on the change of venue request. Importantly, we have not made any recent appointments or changes to the board. The [Vidant Medical Center] board is not scheduled to meet until late July. There are two seats open that would have been filled by the UNC Board of Governors under the previous structure. There is also a third seat that would have been eligible for reappointment by the UNC Board of Governors. With the new structure, we would be able to appoint two ECU leaders to the VMC board. This would further strengthen our great relationship with ECU and ensure they are always at the table as we work together to care for the people of eastern North Carolina.”

UNC has been involved in the hospital in Greenville since 1975, when the Pitt County facility became the teaching hospital for East Carolina University’s Brody School of Medicine and the colleges of nursing and allied health sciences. The agreement prevented the state from having to build a separate teaching hospital to serve medical students.

Through the partnership between the school and the 909-bed hospital, students are offered residency and fellowship programs in 32 specialties, ECU says.

The county turned over the hospital’s operation to Vidant Health, a private, not-for-profit company, in 2011. It’s now the flagship hospital for Vidant Health, which also has clinics and other medical facilities serving a 29-county area of Eastern North Carolina.

The UNC Board of Governors said in its complaint that the state has put $60 million to $65 million per year into the Brody School of Medicine for the past five years, directly benefiting the hospital.

Under the most recent agreement, signed in 2013, describing the legal partnership between the hospital, Pitt County, ECU and the UNC System, the county’s Board of Commissioners appoints 11 members to the hospital’s board of trustees. The UNC Board of Governors appoints the other nine, with input from Vidant Health and ECU.

In April, Vidant asked the Pitt County Board of Commissioners to approve a change in the hospital’s governance that would eliminate the UNC Board of Governors’ right to name trustees. Members of the county board approved the change without discussion, according to news reports. Two days later, Vidant filed paperwork with the N.C. Secretary of State’s office amending its corporate structure to reflect the change.

According to UNC’s complaint,Vidant never talked to the university system about its plans to make the change. When UNC learned of the move, it said, it approached Vidant to say the change was unacceptable. When Vidant would not relent, UNC said, it went to court.

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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.