Durham County

Did Duke and UNC have an ‘understanding’ about swiping med professors? Lawsuit seeks answers.

Bill Roper, CEO of the UNC Health System, told lawyers he once tried to formalize a deal with Duke University about the poaching of medical-school faculty.
Bill Roper, CEO of the UNC Health System, told lawyers he once tried to formalize a deal with Duke University about the poaching of medical-school faculty. The News & Observer

UNC Health Care System CEO Bill Roper once asked his counterpart at Duke University to consider formalizing “some kind of understanding between us about the movement of faculty” between the universities’ medical schools, he told lawyers in a former Duke radiologist’s anti-trust lawsuit.

The exchange with Duke’s then-chancellor for health affairs, Victor Dzau, happened “in one of our early meetings” in the mid-2000s after the two men took over their respective schools’ medical operations, Roper said in a deposition that recently surfaced in a federal court file.

Dzau later told Roper that after checking with Duke’s lawyers, “we just don’t think that’s something we ought to enter into,” Roper said in answer to a question from one of the lawyers representing radiologist Danielle Seaman.

On its face, that testimony would appear to favor Duke in an anti-trust case that alleges officials at the two schools conspired to limit the “lateral movement” of professors trading a job at one for a similar post at the other.

But Seaman’s legal team sees the lack of a formal arrangement as smokescreen for an informal understanding between the schools that reduced the competition between them for labor.

Via another deposition, former Duke University President Nan Keohane supplied them ammunition to argue that by saying “the central administration at Duke University” while she was there “believed it was important not to recruit aggressively at UNC or N.C. State [University] or N.C. Central [University], for that matter.”

“We had a policy of avoiding active recruitment,” said Keohane, president from 1993 to 2004. “If a person from UNC came to us and said, ‘I’m really interested in his job and this department,’ that seemed, I suppose, in some ways a different phenomenon. The person was reaching out. We weren’t going and soliciting or recruiting.”

One of Keohane’s former lieutenants, John Burness, added in yet another deposition that Duke’s leaders “did not try” to recruit from UNC-CH “as a consequence of wanting them to remain as strong as they possibly could be, because that was also in Duke’s interest.”

We had a policy of avoiding active recruitment.

Nan Keohane, Duke University’s president from 1993 to 2004

Anti-trust lawyers

Seaman, then an assistant professor at Duke, filed her lawsuit in 2015 after missing out on a radiology-faculty opening at UNC-CH. She contends officials at UNC-CH told her there was an an agreement between the school’s medical deans – Roper and, at Duke at the time, Nancy Andrews – to avoid lateral hiring.

She turned for help to a team of anti-trust lawyers who had successfully sued a bevy of Silicon Valley tech giants, Apple and Google among them, over alleged hiring collusion. Her lawsuit has been pending since, surviving both a federal trial judge’s preliminary review and an attempt by Duke and Roper to get the 4th U.S. Circuit Court of Appeals to intervene.

Now, the lawyers say they’ve struck a deal with UNC-CH to secure its cooperation in the lawsuit against Duke. Their filing said the Chapel Hill institution is willing to make witnesses and documents available and swear off any future attempt to restrict labor-market competition.

The promised cooperation on the evidence front includes searches of the email of, among other officials, Chancellor Carol Folt and her two immediate predecessors, Provost Jim Dean and his three immediate predecessors, Roper and former UNC Health CEO Jeff Houpt.

UNC-CH spokeswoman Joanne Peters Denny confirmed that a settlement is in the works, but otherwise declined to comment.

Burness’ successor at Duke, Vice President for Public Affairs and Government Relations Michael Schoenfeld, said the Durham school doesn’t comment on pending litigation.

‘Something we had discussed’

In his deposition, Roper said that when he took over from Houpt in 2004, the departing CEO told him the lateral-hiring issue “was something that he had discussed with his counterpart at Duke,” former health affairs Chancellor Ralph Snyderman.

Radiologist Danielle Seaman’s expert witnesses agreed even an informal understanding that limits competition for professors would act to hold down wages among the two universities’ medical personnel.

Roper said he’d counseled his department chiefs in the UNC-CH med school over the years that “we need to be thoughtful and smart about how we manage our relationship with our colleagues at Duke,” and that hiring was one aspect of that. But he denied there was anything like a formal policy or agreement on the matter at UNC.

“Why was it never put in writing?” asked Dean Harvey, one of Seaman’s lawyers.

“There’s no need to,” Roper answered, agreeing that oral directives to, as Harvey put, “the people who needed to hear it” should suffice.

He added beyond a single conversation with Dzau, he has “no idea what Duke’s point of view on this matter is.”

Whatever it might have been, it didn’t stop the Durham school from trying to recruit from UNC-CH a three-professor bone-marrow transplant team headed by Dr. Jonathan Serody early this decade. Roper and other UNC officials made counteroffers that kept Serody and another professor in the fold. The “retention package” cost the university $4.4 million, Harvey said.

Roper conceded that he’d likely responded, in-house, by reminding the med school’s department chairs of his views about relations with Duke.

“I probably said something like, ‘This is not the way we want to do things, and you need to be thoughtful, responsible about the way we do things,’” Roper told the lawyer. “I wanted to discourage our team from engaging in what I would view as a hostile, unneighborly behavior.”

He added that in his view, that meant “informing the appropriate supervisors at Duke if we were attempting to hire” one of their professors away. Such “courtesy calls” are commonplace when recruiting from other schools, and valuable in gauging how hard the target’s current employer might fight to retain them, he said.

It’s also telling if a school isn’t willing to fight to keep a professor, Roper said. “We don’t want to hire people that home institutions don’t want to retain,” he said.

Expert witnesses

Seaman’s legal team has retained two expert witnesses, UCLA economics professor Edward Leamer and University of Pennsylvania management professor Peter Cappelli, to weigh in on the economic impact. They agreed even an informal understanding between the Triangle universities that limits competition for professors would act to hold down wages among all their medical personnel.

Cappelli – faculty at the school current Duke President Vince Price worked for until this summer – added that the market for medical specialties like bone marrow transplants is small enough that a personnel swap between the schools could effectively put the losing side out of that particular business.

Leamer’s report, heavily redacted as he got into the math of it, sought to gauge the economic impact of the alleged collusion. He pegged the “under-compensation” at both Duke and UNC as being worth about a combined $447 million over five years.

The lawsuit currently targets Duke and Roper. For reasons of governmental immunity, UNC-CH isn’t currently a named defendant. The proposed settlement would make it one, technically, if U.S. District Court Judge Catherine Eagles goes along. Harvey and the lawyers also want Eagles to give the lawsuit class-action status for all medical staff who worked at Duke and UNC from the summer of 2012 to now.

Roper sat for his deposition on June 29, about two months after lawyers for Seaman and UNC-CH agreed to “a term sheet” laying down the framework of a deal.

Roper’s deposition was partially redacted, with 107 of its 148 pages remaining public. Testimony from current or former Duke officials like Keohane, Burness and Andrews was more heavily redacted, and a deposition from Duke Vice President of Administration Kyle Cavanaugh was sealed entirely.

Ray Gronberg: 919-419-6648, @rcgronberg