In a new lawsuit, Duke University is accused of trying to illegally take over a large independent multidisciplinary medical practice without paying its fair value.
Anesthesiologist Dr. Eugene Moretti filed a lawsuit Monday on behalf of a private diagnostic clinic in Durham, North Carolina, where he works. Duke and PDC have a 50-year partnership agreement that allows the PDC to remain independent, but a lawsuit filed this week in the North Carolina County Durham Supreme Court claims Duke is rolling out a takeover plan without PDC’s 1,850 physicians.
The Complaints include the Duke, Duke University Health System and Dr. Anthony Viera as defendants. Viera, who did not respond to a request for comment, heads Duke’s family medicine and public health department, which recently moved from PDC to Duke. The PDC also declined to comment on the case.
Moretti’s complaint details several of the ways Duke is allegedly working to hire PDC doctors as part of his own clinical staff. All PDC doctors already teach at Duke, and hundreds are doing research there.
The lawsuit alleges that Duke notified PDC on October 22 that the partnership agreement, which took effect at the end of 2021, was terminated. The agreement has been in effect since 1972 and ensures the independence of the PDC, arguing that Duke will not interfere with its activities.
In addition to this, Duke allegedly demanded that PDC members who conduct research at Duke must leave PDC and take up positions at Duke’s School of Medicine by July 2022. The complaint says that at least 400 PDC members – about 21% of its total membership – conduct research at Duke. According to the complaint, they will be forced to choose between staying with PDC and losing their research grants, or continuing their Duke research but leaving PDC to work exclusively for Duke.
“The Duke decided to further disrupt the PDC by establishing a new mandate that physicians doing research at Duke must leave PDC and join (Duke Faculty Practice).”
Duke spokesman Michael Schoenfeld declined to comment on the termination of the agreement or the research mandate, but said in a statement that the claim was not based on factual or legal basis. The Duke and the PDC have had a “productive dialogue” for months on aligning their patient care, education and research missions, he said.
“Duke has proposed that the faculty already hired by Duke for teaching and research become Duke staff members for their clinical practice,” Schönfeld said. “We believe this will lead to greater operational efficiency, better patient experience, the ability to recruit and retain the best talent, and better public health.”
It is unclear if the location of doctors’ practices will change if their departments move from PDC to Duke, as almost all practice sites listed on the PDC website are affiliated with Duke.
The lawsuit also states that Duke pressured PDC department heads, who also head their respective academic departments at Duke, to move their clinical departments from PDC to Duke. It says that because each faculty is part of Duke School of Medicine, departments feel “indebted” to Dr. Mary Klotman, the school’s dean, who allegedly pressured the heads of five faculties to make the transition. The lawsuit says Klotman can hire, fire, demote, and promote department heads, and that “their careers are moving forward in the Dean’s favor.”
“These individual PDC members, whose careers are in jeopardy if they make Duke unhappy, will be under tremendous pressure,” said Erica Harris, Milberg Coleman partner of Bryson Phillips Grossman, representing Moretti.
PDC’s relatively small family medicine and public health department has already made the transition, but Klotman allegedly works with heads of five larger departments: medicine, neurology, psychiatry, behavioral sciences, and orthopedic surgery. Others said they would switch too. If that happens, “the PDC will be effectively destroyed,” Harris said.
After the department manager decides to make the transition, Harris said the department’s doctors will also become Duke clinical staff. “Whether the decision is voluntary depends on your definition of the word,” she said.
“If your department head says, ‘We’re moving, and if you refuse to move, you won’t have a job next year,’ is that a choice?” Harris said.
Moretti’s complaint says that after he explained his findings to PDC in a letter to management, he formed a committee to investigate the claims. The November 29 report said the committee unanimously found the claims to be substantiated, according to the complaint. The lawsuit also links to a survey of PDC members for feedback on Duke’s proposal. It states that the results “generally contradict the disbanding of the PDC,” but does not provide numerical results.
The committee appears to be still deciding how to move forward, but Moretti’s complaint says he doesn’t want to wait any longer. Moretti “decided to file a lawsuit now without further delay because he expected Duke to put more effort into causing irreparable harm to the PDC in the new year.”
In November, the PDC committee investigating Moretti’s claims shared a recent third-party estimate by the PDC from Focal Point Securities, which determined the practice was worth between $ 750 billion and $ 1.1 billion, according to the complaint, which also said PDC was attracting about $ 1 billion in annual revenue.
The complaint said the PDC board hired two law firms to advise the organization on Duke’s takeover plan. In an August note from one of them, Epstein Becker & Green, the plan is allegedly called “unexpected.” The specific attorney who wrote this has not been identified.
“In more than 35 years as a healthcare attorney, I have never seen a physician practice like PDC transferred to any acquirer at a cost of $ 0,” the complaint note was quoted as saying. “The lack of any proposal from Duke to actually acquire PDC at a fair market purchase price that takes into account the continuing business value of PDC is, in my opinion, the most surprising aspect of Duke’s job offerings.”
In 2018, the former Duke radiologist accused Duke and the University of North Carolina in an antitrust suit of conspiring to avoid poaching each other’s professors.