A closer look at transparency concerns with possible NHRMC sale

Updated: Sep. 20, 2019 at 6:23 PM EDT
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NEW HANOVER COUNTY, N.C. (WECT) - It was a tumultuous week for members of the New Hanover County Commission, leadership of New Hanover Regional Medical Center and the thousands of people who work at or utilize the county’s largest employer.

The week began with a split vote ultimately in favor of exploring the possible sale of the hospital system at an emotionally-charged meeting that followed a public protest outside.

On Tuesday, Commissioner Rob Zapple detailed his concerns over what he thinks was a lack of transparency in the months leading up to Monday’s vote.

Two days later on Thursday, Commissioner Pat Kusek came on WECT News at 5, saying in a live interview those concerns were unfounded. She added while Zapple told a WECT reporter he did not sign a non-disclosure agreement, she was able to produce one bearing his signature as well as one bearing her own.

In response, WECT engaged in further investigation, consultation with subject matter experts and a follow-up conversation with Zapple.

The referenced non-disclosure agreements (NDA) were presented to WECT staff minutes before the live interview on the 5 o’clock news. After further inspection, there were significant differences between the one signed by commissioner Zapple, and the one signed by commissioner Kusek.

Zapple’s document references his legal duty to “act in good faith and exercise [his] duty of care as a New Hanover County Commissioner” and when required, “safeguard critical proprietary and confidential information of New Hanover County shared in closed session.”

The document does not reference New Hanover Regional Medical Center, and is dated June 3.

The document signed by Kusek is inherently different, beginning with “As a member of the Board of Trustees for NHRMC” — which Kusek is not — and refers to closed sessions of the hospital board, and says “This is especially important as it relates to strategic planning and potential transactions or affiliations with third parties.”

When asked why she signed a document indicating she is part of a board she is not on, Kusek said she was given the document to sign at a meeting of the board of trustees and asked to keep the discussion private, and did not realize that it would indicate she was a member of the board.

Brooks Fuller with the North Carolina Open Government Coalition explained signing an NDA or confidentiality agreement is not unheard of when it comes to members of an elected board.

“The implications depend on how the NDAs are crafted,” Fuller said, noting that they are fairly commonly used when public bodies are considering competitive bids.

He added, however: “I have seen some that appear to extend far beyond the spirit of the open meetings and public records laws, which already exempt disclosure of certain information during the bidding process. Generally, I think public bodies should act consistent with pre-existing law and avoid NDAs except to the extent that they may be necessary to specifically identify private matters and clarify existing law.”

Attorney Jonathan Jones, who has previously served as executive director for the Open Government Coalition, said while it happens, it still isn’t a common practice.

“It might make some sense that they would," he said. "The hospital would want to have some kind of non-disclosure agreement in place, but it’s certainly surprising to see the commissioners using them and being willing to sign them.”

Beyond the documents themselves, members of the commission and a spokesperson for the hospital have referenced a state statute regarding hospitals and confidential information as the reason behind keeping some details close to the vest.

When WECT requested copies of the agreements with Navigant, the firm NHRMC uses regularly and hired to “test the waters” of a potential sale, spokesperson Julian March responded that the records are governed by the statute, and not subject to release under the public records law.

“Our state legislature intentionally put that protection in and clarified the law a number of years ago so that public hospitals could survive in a highly competitive and heavily regulated industry,” March said.

Not only did March claim the agreements were confidential, but that “any document or information gathered by Navigant in connection with such engagements” are protected as well, because they fall under the statute’s protection of “competitive healthcare information.”

Commissioner Zapple disagrees, saying to his recollection the information he is aware of is not as detailed as the statute requires in order to be confidential — which is why he was surprised it was not released when the effort to explore the sale was announced in July.

Jones said whether or not the information is confidential isn’t cut and dry, but that it is highly unlikely the entire document would be protected.

“In a situation like this, where a hospital is exploring a potential sale and is sharing information with a third party about who might be negotiating on their behalf — some of that information they’re sharing probably does fall under this definition,” he said, “but it doesn’t exempt everything, and it certainly doesn’t exempt the things that aren’t [competitive] healthcare information.”

The other issue raised by Zapple in his concerns over lack of transparency is the idea of “serial meetings” — when members of a public body meet with fewer than a quorum in order to avoid the requirement of public meetings law.

Under state law, if three or more members of the New Hanover County Commission meet together, that meeting is required to be properly noticed and open — meaning the date and time must be advertised 10 days in advance, and minutes must be taken and published later on.

If only one or two commissioners meet together, those legal requirements are not necessary, meaning the entire board could meet in pieces over the course of a handful of meetings and be fully briefed on any issue without ever having to alert the public.

Commissioner Kusek claims this is a usual practice for the New Hanover County Commission, saying conducting serial meetings is a way of following the law.

“We have been, all along, following the letter of the law. We are required to do under state statute, public meeting laws, is to meet in small groups, less than two — two or less — to discuss all kinds of issues,” she said. “We are briefed all of the time on all kinds of issues.”

Jones noted North Carolina law doesn’t prohibit the practice, but it does raise eyebrows.

“I have some concerns about the commissioners meeting in serial meetings,” Jones said. “The principle behind the open meetings law is that business should be conducted in public, and so when the attitude becomes ‘We need to meet in groups of one or two with the people providing us information so we can have a basis to make our decision when we finally unveil to the public,’ to me that sounds like you’re coming to some conclusion, at least as an individual, before you ever engage in public discussion.”

If the reason for having the serial meetings is to prevent the disclosure of rightfully confidential information, to protect attorney-client priviledge, or one of the other handful of approved reasons, the commission has the ability to conduct a legal closed session — something Zapple said did not occur in this case.

Jones said it isn’t clear if all aspects of a potential hospital sale would be cleared for a closed session.

The vote is over, and while non-binding, the county is now on the path of a Request for Proposal process expected to begin in the coming weeks.

Zapple said to him, the important thing now is to remember those across Southeastern North Carolina the decision will ultimately effect.

“Right now, New Hanover Regional Medical Center is owned by the county, and we’re responsible for the hospital,” he said. “But this hospital effects hundreds of thousands of people out in those other six counties.”

Instead of selling, Zapple hopes the commission can at least consider the possibility of expanding NHRMC — and the governments financially responsible for it — out beyond the borders of New Hanover County.

Either way, Zapple said a lot more needs to be known about the healthcare landscape and what it would mean for the hospital to change in any major way.

“It’s the information that we all are craving about this,” he said. “If we are going to go down this road, which it seems now we will ... let’s crunch that down into real numbers, because we have a wonderful gem in New Hanover Regional Medical Center.”

Kusek, too, said in closing Thursday that the goal now is to move forward in a process she says will be public.

“Let’s get together. Let’s all roll up our sleeves. Let’s look at what’s out there,” she said. “Come on this journey with us.”

The RFP process the county began Monday does require public meetings, which Kusek and Zapple both hoped the entire community — including the medical community and those outside New Hanover county — will attend.

Ann McAdams, Brandon Wissbaum, Brad Myers and Frances Weller contributed to this report.

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