An attempt by Mission Hospital’s corporate owner to counter a lawsuit filed against it last year by North Carolina Attorney General Josh Stein has been dismissed.
North Carolina Business Court Judge Julianna Theall Earp filed an opinion Dec. 6 dismissing HCA’s counterclaims against Stein, who had sued HCA and its Mission Health system in December 2023. Stein’s lawsuit alleged they had violated the Asset Purchase Agreement (APA) entered into when HCA bought the hospital system in 2019 for $1.5 billion.
Earp’s opinion focused on the argument the attorney general and his team had made that he is shielded from HCA’s counterclaims by a legal concept known as sovereign immunity. News of the dismissal was first reported by the Asheville Citizen Times.
Sovereign immunity is defined as “the state’s immunity from most kinds of lawsuits unless the state consents to be sued,” according to the University of North Carolina School of Government.
“We are confident that Mission has fulfilled its obligations under the Asset Purchase Agreement, and we intend to defend the lawsuit filed by the Attorney General aggressively,” Mission Health spokesperson Nancy Lindell said Tuesday. “Unfortunately, the lawsuit continues to be a distraction from the important work that Mission continues to do in Western North Carolina.”
The attorney general’s office did not immediately respond to Asheville Watchdog’s request for comment.
Stein’s 2023 lawsuit on behalf of Dogwood Health Trust – the entity responsible for ensuring HCA complies with the APA – alleged the company had violated commitments it made to maintain services related to emergency and oncology care at the Asheville hospital. Those agreements were solidified in the APA, which Stein‘s office oversaw and agreed to before the sale.
In February, HCA sought dismissal of the suit, countering that it had never promised to provide quality health care but had honored its APA commitments. As Earp’s opinion noted, “HCA characterizes the Hospital Service Commitments at issue as requiring that HCA: “(1) maintain Level II trauma capabilities at Mission Hospital; and (2) maintain the capabilities to provide the emergency services and oncology services that were provided at Mission as of January 2019.”
Only a small portion of Earp’s opinion focused on the issue of HCA commitments to the APA, instead explaining why sovereign immunity justified dismissing the counterclaims.
Stein had relied on sovereign immunity in response to HCA’s counterclaims, arguing he could not be a target of legal action. HCA had countered that he couldn’t rely on such protection.
“HCA rejects the contention that sovereign immunity applies because, it argues, this action was brought by the Attorney General, not in his state-sanctioned role, but on behalf of Dogwood Health Trust, a private, non-profit corporation,” the opinion said.
Stein disagreed.
“Plaintiff [Stein] maintains that the APA’s protections and the right to enforce those protections were borne from the Attorney General’s statutory review authority and are consistent with his broad consumer protection mandate and his ‘common law’ right and power to protect the beneficiaries of charitable trusts,’” the opinion said.
No conditions for immunity
In deciding the matter, Earp turned to conditions under which immunity might be waived. None applied, she stated.
She followed that decision by explaining she would not make broad declarations about the case, sidestepping issues related to the APA, stating: “[T]o the extent Defendant’s [HCA’s] declaratory judgment claims present no new controversies and simply amount to the converse of Plaintiff’s declaratory judgment claims already pending before the Court, the Court concludes, in its discretion, that allowing Defendant’s claims to proceed would not serve a useful purpose and would ‘conflict with the interests of judicial economy and efficiency.’”
While Earp dismissed the counterclaims, she denied Stein’s request to avoid having to pay attorneys’ fees, noting it was too early in the case to make such a decision.
Stein’s lawsuit is not the only legal issue facing Nashville-based HCA in western North Carolina.
Buncombe County, the cities of Asheville and Brevard, and Madison County are suing HCA in a separate antitrust lawsuit in federal court.
Mission Hospital also fell under scrutiny of state and federal investigators earlier this year when the U.S. Centers for Medicare & Medicaid Services (CMS) found it had violated federal standards of care and placed it under immediate jeopardy, the toughest sanction a healthcare facility can face. A report following that investigation showed that four patients died in two years related to those violations of care and leadership mismanagement.
CMS lifted the immediate jeopardy sanction in February.
Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. Andrew R. Jones is a Watchdog investigative reporter. Email arjones@avlwatchdog.org. The Watchdog’s local reporting during this crisis is made possible by donations from the community. To show your support for this vital public service go to avlwatchdog.org/support-our-publication/.
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