A lawsuit filed Friday in U.S. District Court in Greeneville claims there are conflicts of interest and antitrust violations involving board members of Ballad Health and East Tennessee State University.
It names Ballad Health, Medical Education Assistance Corp. [MEAC] doing business as East Tennessee Physicians and Associates and University Physicians Practice Group as defendants. It also names all individual members of Ballad Health’s Board of Directors, including Ballad CEO Alan Levine, ETSU President Brian Noland, Scott Golden and Scott Niswonger.
Specifically, the complaint claims that Golden and Niswonger have a direct conflict of interest because each also serves on the Board of Trustees of East Tennessee State University.
The plaintiffs are 10 individuals who live in Sullivan and Washington counties in Tennessee who challenge the practice of having some individuals serving on the governing board of each entity or “interlocking” governance. It was filed by attorney Frank Santore of Greeneville.
It claims the Certificate of Public Advantage approved by the Tennessee Department of Health and state Attorney General’s office “does not provide for active state supervision of the composition of the Ballad Board of Directors with respect to conflicts of interest … therefore the COPA cannot offer immunity from the [federal] prohibition against interlocking directorates.”
Individuals serving on boards of two entities are prohibited under antitrust laws, if the two corporations are competitors.
The complaint further asserts that Ballad and ETSU Physicians “are and have been economic competitors,” citing combined 2017 revenue figures of $1.37 billion for Mountain States Health Alliance and Wellmont Health System — the two systems that merged to form Ballad in 2018 — and $42.5 million for ETSU Physicians.
Ballad operates 21 hospitals across Northeast Tennessee and Southwest Virginia plus other clinics and diagnostic centers. ETSU Physicians operate family medicine clinics in Bristol, Kingsport and Johnson City.
“Ballad Health will respond to the lawsuit when it has been served and we have had a chance to review it,” according to a written statement issued Friday afternoon. “The members of the Ballad Health board of directors were carefully selected in accordance with the law and with the consent of the regulatory agencies in Tennessee and Virginia. All have acted with complete integrity and in the best interest of the communities we serve.”
ETSU said its policy is to not comment on litigation.
The suit claims “at the extreme,” Niswonger and Golden could vote to dissolve ETSU Physicians and “stifle its status as a market competitor with Ballad.”
It further claims there is “reasonable basis for concern that more such prohibited interlocking directorates exist” within the “complex corporate structures” of the defendant organizations and seeks discovery to review any other possible conflicts.
The complaint asks the court to “enjoin the defendants from any interlocking directorates,” reconstitute one or both boards, declare the Ballad COPA “does not provide adequate state supervision of interlocking directorates, among Ballad board members” and does not provide “allowable exemptions from federal prescriptions against interlocking directorates” and that the COPA therefore doesn’t satisfy the state action immunity doctrine.”
It also seeks unspecified “relief to which they may be entitled, including the costs of the case and reasonable attorney’s fees.”
The plaintiffs are Christine Bearden, David Bearden, Teri Cook, Carolyn Gibbons, Elmer Darrell Greer, Ladonna F. Greer, Mark Hutchins, Kevin Mitchell, Jamie Strange Pierson and Crystal Gail Regan.