Lawyer wins key round in public records suit against Carolinas HealthCare

A Charlotte lawyer has scored a victory in a lawsuit alleging that North Carolina’s largest hospital system violated the state public records act.

On Wednesday, the N.C. Court of Appeals ruled that a lower court erred when it dismissed Gary Jackson’s lawsuit. The lawyer had sued Carolinas HealthCare System, the public agency that runs Carolinas Medical Center and more than 30 other hospitals, arguing that it had no right to keep the terms of a court settlement confidential.

“It’s a victory for the public and for taxpayers,” Jackson said of the appeals court ruling.

Jackson’s 2012 suit revolves around a confidential settlement that Carolinas HealthCare won in a court complaint that it filed against the former Wachovia bank.

The multibillion-dollar hospital system filed suit against Wachovia in 2008, accusing the bank of breaking a promise to put the system’s money in low-risk investments. One of the Wachovia investments plummeted from about $15 million to $1.8 million, the Carolinas HealthCare suit said.

Three years later, the hospital system agreed to settle that case confidentially and 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 Superior Court Judge Robert Sumner rejected in 2013. Hospital lawyers had argued that the state public records law doesn’t cover settlements arising from litigation by a government agency.

But in Wednesday’s ruling, a three-judge panel of the appeals court unanimously rejected that argument. The public records act doesn’t specifically exempt such settlement documents, the court concluded.

Jackson applauded the decision.

“Sunlight is an effective disinfectant,” he said. “Nobody’s saying CHS did anything wrong. But we have a right to know what they did.”

Open to scrutiny?

Attorneys for Carolinas HealthCare didn’t immediately return calls Wednesday. A spokeswoman for Carolinas HealthCare said that hospital officials need time to review the appeals court ruling before offering an opinion.

Jackson expects that the hospital system’s attorneys will ask the N.C. Supreme Court to review the decision. Historically, though, the state high court rejects the large majority of such requests in cases involving unanimous appeals court rulings.

Carolinas HealthCare is a public, tax-exempt entity called a hospital authority, created by state law in 1943. But the system has a self-perpetuating board, and elected officials have little oversight. The county commissioners chairman routinely approves nominations for the board, but has no power to select members.

Jackson said he filed the suit largely because he believes the public deserves more information than it’s getting from Carolinas HealthCare, Mecklenburg County’s largest employer. The system is “not known for transparency,” despite its status as a public hospital authority, Jackson told the Superior Court judge last year.

Mecklenburg County officials have in recent years leveled similar criticisms, saying the hospital system has often operated more like a private organization than a public one.

Mark Merritt, a lawyer representing the hospital system, said last year that Jackson’s contention about the hospital system’s transparency was “demonstrably false.”