GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
SESSION LAW 2005-70
HOUSE BILL 869
AN ACT TO CLARIFY AND AMEND THE CONFLICT OF INTEREST LAW FOR PUBLIC HOSPITALS and to extend A SPECIAL DEADLINE FOR EXEMPT ADULT housing FACILITIES LOCATED IN A DOWnTOWN AREA AND BEING RELOCATED DUE TO A MAJOR ECONOMIC DEVELOPMENT PROJECT.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 131E-14.2 reads as rewritten:
"§ 131E-14.2. Conflict of interest.
(a) No member of the board 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 any interest, direct or indirect, in any hospital facility or in any property included or planned to be included in a hospital facility.
(2) Have any direct
interest interest, direct or indirect, in any contract or proposed
contract for materials or services to be furnished or used in connection with
any hospital facility, except an employment contract for an employee. This
restriction shall not apply to any contract, undertaking, or other transaction
with a bank or banking institution, savings and loan association or public
utility in the regular course of its business provided that the contract,
undertaking, or other transaction shall be authorized by the board by specific
resolution on which no director having an interest, direct or indirect,
shall vote.direct interest shall vote.
(b) The fact that a
person or that person's spouse owns ten percent (10%) or less stock of a
corporation or has a ten percent (10%) or less ownership in any other business
entity or is an employee of that corporation or other business entity does not
make the person have an "interest, direct or indirect" a
"direct interest" as this phrase is used in subsection (a) of
this section; provided that, in order for the exception to apply, the contract,
undertaking, or other transaction shall be authorized by the board of directors
by specific resolution on which no director or employee having an interest,
direct or indirect, shall vote.
(c) If a member of the board of directors or an employee of a public hospital or that person's spouse owns or controls an interest, direct or indirect, in any property included or planned to be included in any hospital facility, the member of the board of directors or the employee shall immediately disclose the same in writing to the board and the disclosure shall be entered upon the minutes of the board. Failure to disclose shall constitute misconduct in office and shall be grounds for removal.
(c1) Subsection (a) of this section shall not apply if the director or employee is not involved in making or administering the contract. A director or employee is involved in administering a contract if the director or employee oversees the performance of or interprets the contract. A director or employee is involved in making a contract if the director or employee participates in the development of specifications or terms or in the preparation or award of the contract. A director or employee is not involved in making or administering a contract solely because of the performance of ministerial duties related to the contract. A director is also involved in making a contract if the board of directors takes action on the contract, whether or not the director actually participates in that action, unless the contract is approved under an exception to this section under which the director is allowed to benefit and is prohibited from voting.
(d) Subsection (a) of
this section shall not apply to any member of the board of directors of a
public hospital if (i) the undertaking or contract or series of undertakings or
contracts between the public hospital and one of its officials is approved by
specific resolution of the governing body board adopted in an
open and public meeting and recorded in its minutes minutes; (ii) the
official entering into the contract or undertaking with the public hospital
does not in an official capacity participate in any way or vote; and (iii)
the amount does not exceed twelve thousand five hundred dollars ($12,500) for
medically related services and twenty-five thousand dollars ($25,000) for other
goods or services within a 12-month period; and (ii) the official entering
into the contract or undertaking with the public hospital does not in an
official capacity participate in any way or vote.or the contract is for
medically related services that are provided by a director who serves on the
board as an ex officio representative of the hospital medical staff pursuant to
a hospital bylaw adopted prior to January 1, 2005, or that are provided by the
spouse of that director.
(e) Subsection (a) of this section shall not apply to any employment relationship between a public hospital and the spouse of a member of the board of directors of the public hospital.
(f) A contract entered into in violation of this section is void. A contract that is void under this section 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 public hospital that is a party to the contract may request approval to continue contracts under this subsection from the chairman of the Local Government Commission. Approval of continuation of contracts under this subsection shall be given for the minimum period necessary to protect the public health or welfare."
SECTION 2. Section 3(a) of S.L. 2004-2 reads as rewritten:
"SECTION 3.(a) In applying to a
"specially impacted adult care home", Section 11.69(b2) of S.L. 1997-443,
as enacted by Section 3 of S.L. 2001-234, "June 1, 2004" shall be
read as "June 1, 2005 June 1, 2006", and "December
1, 2004" shall be read as "December 1, 2005 December 1,
2006".
SECTION 3. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 31st day of May, 2005.
s/ Beverly E. Perdue
President of the Senate
s/ James B. Black
Speaker of the House of Representatives
s/ Michael F. Easley
Governor
Approved 7:15 p.m. this 31st day of May, 2005