§ 131E-14.2. Conflict of interest. - North Carolina Statutes

§ 131E‑14.2.  Conflictof interest.

(a)        No member of theboard of directors or employee of a public hospital, as defined in G.S. 159‑39(a),or that person's spouse shall do either of the following:

(1)        Acquire anyinterest, direct or indirect, in any hospital facility or in any propertyincluded or planned to be included in a hospital facility.

(2)        Have any directinterest in any contract or proposed contract for materials or services to befurnished or used in connection with any hospital facility, except anemployment contract for an employee. This restriction shall not apply to anycontract, undertaking, or other transaction with a bank or banking institution,savings and loan association or public utility in the regular course of itsbusiness provided that the contract, undertaking, or other transaction shall beauthorized by the board by specific resolution on which no director havingdirect interest shall vote.

(b)        The fact that aperson or that person's spouse owns ten percent (10%) or less stock of a corporationor has a ten percent (10%) or less ownership in any other business entity or isan employee of that corporation or other business entity does not make theperson have a "direct interest" as this phrase is used in subsection(a) of this section; provided that, in order for the exception to apply, thecontract, undertaking, or other transaction shall be authorized by the board ofdirectors by specific resolution on which no director or employee having aninterest, direct or indirect, shall vote.

(c)        If a member of theboard of directors or an employee of a public hospital or that person's spouseowns or controls an interest, direct or indirect, in any property included orplanned to be included in any hospital facility, the member of the board of directorsor the employee shall immediately disclose the same in writing to the board andthe disclosure shall be entered upon the minutes of the board. Failure todisclose shall constitute misconduct in office and shall be grounds forremoval.

(c1)      Subsection (a) ofthis section shall not apply if the director or employee is not involved inmaking or administering the contract. A director or employee is involved inadministering a contract if the director or employee oversees the performanceof or interprets the contract. A director or employee is involved in making acontract if the director or employee participates in the development ofspecifications or terms or in the preparation or award of the contract. Adirector or employee is not involved in making or administering a contractsolely because of the performance of ministerial duties related to thecontract. A director is also involved in making a contract if the board ofdirectors takes action on the contract, whether or not the director actuallyparticipates in that action, unless the contract is approved under an exceptionto this section under which the director is allowed to benefit and isprohibited from voting.

(d)        Subsection (a) ofthis section shall not apply to any member of the board of directors of apublic hospital if (i) the undertaking or contract or series of undertakings orcontracts between the public hospital and one of its officials is approved byspecific resolution of the board adopted in an open and public meeting andrecorded in its minutes; (ii) the official entering into the contract orundertaking with the public hospital does not in an official capacityparticipate in any way or vote; and (iii) the amount does not exceed twelvethousand five hundred dollars ($12,500) for medically related services andtwenty‑five thousand dollars ($25,000) for other goods or services withina 12‑month period, or the contract is for medically related oradministrative services that are provided by a director who serves on the boardas an ex officio representative of the hospital medical staff pursuant to ahospital bylaw adopted prior to January 1, 2005, or that are provided by thespouse of that director.

(e)        Subsection (a) ofthis section shall not apply to any employment relationship between a publichospital and the spouse of a member of the board of directors of the publichospital.

(f)         A contract enteredinto in violation of this section is void. A contract that is void under thissection may continue in effect until an alternative can be arranged when: (i)immediate termination would result in harm to the public health or welfare, and(ii) the continuation is approved as provided in this subsection. A publichospital that is a party to the contract may request approval to continuecontracts under this subsection from the chairman of the Local GovernmentCommission. Approval of continuation of contracts under this subsection shallbe given for the minimum period necessary to protect the public health orwelfare. (2001‑409,s. 6; 2005‑70, s. 1; 2006‑264, s. 64(b).)