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Judge dismisses public records suit filed against Carolinas Healthcare System

A judge has dismissed a lawsuit contending that one of the nation’s largest public hospital chains, Carolinas HealthCare System, violated the state public records law.

In an order signed Monday, Superior Court Judge Robert Sumner agreed that the Charlotte-based hospital system has a right to keep confidential a legal settlement that it obtained against the former Wachovia Bank.

Gary Jackson, the Charlotte lawyer who filed the public records lawsuit, says he will appeal that ruling to the N.C. Court of Appeals.

Carolinas HealthCare, the public hospital authority that runs Carolinas Medical Center and more than 30 other hospitals, filed suit against Wachovia in 2008, accusing the bank of breaking promises to put the system’s money in low-risk investments. The system now has more than $2 billion in investments.

One of the Wachovia investments plummeted from about $15 million to $1.8 million, the Carolinas HealthCare suit said.

In 2011, the hospital system agreed to settle that case confidentially and subsequently refused to release a copy of the settlement agreement.

Jackson contended that Carolinas HealthCare has no legal right to keep the settlement confidential – an argument that the judge rejected.

Sumner agreed with the assertion by Carolinas HealthCare attorney Mark Merritt that the law does not entitle the public to inspect settlements in lawsuits filed by public agencies – only in cases filed against them.

In his dismissal order, the judge cited a segment of the N.C. public records law stating that settlement documents are public records “in any suit, administrative proceeding or arbitration instituted against any agency of North Carolina government.”

The law doesn’t explicitly say that settlement documents are public records in suits filed by government agencies, Merritt told the judge during a court hearing last week.

Because the Wachovia suit was filed by Carolinas HealthCare rather than against it, the hospital system isn’t required to release the settlement agreement, the judge wrote in his dismissal order.

The judge quoted from a 2012 N.C. Supreme Court ruling: “If the language of a statute is clear and unambiguous, there is no room for judicial construction and the courts must give the statute its definite meaning, and are without power to interpolate…”

The law’s intent

Jackson contended the law is ambiguous, and said he believes legislators never intended to allow confidential settlements in any lawsuits involving government agencies.

Former state Sen. David Hoyle, who sponsored most of the N.C. public records laws in recent years, agrees.

“The intent was that if it becomes a court case, the results of the settlement were to be made public,” said Hoyle, who served in the legislature from 1992 to 2010.

The language that appears to allow confidential settlements in lawsuits filed by public agencies, Hoyle said, may have been “a glitch in the way the law was written.”

Two N.C. media lawyers – Amanda Martin and John Bussian – say they believe such settlement documents are public, regardless of whether the public agency is the one suing or being sued.

Settlement documents are public unless exempted by statute, said Martin, who serves as general counsel to the N.C. Press Association.

“And I know of no statute that provides an exemption here, so I believe these are public records,” she said.

But Merritt has compared the state’s public records law to “a Swiss cheese” because of the many holes in it.

Planning for an appeal

“CHS is pleased that Judge Sumner ruled in its favor and validated its interpretation of the Public Records Act,” Merritt wrote in an email Monday. “CHS is confident in its ability to defend Judge Sumner’s decision should this matter be appealed.”

Said Jackson: “There are good legal arguments on both sides. And it deserves the attention of our appellate courts.”

Alexander: 704-358-5060
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