Duke is facing a lawsuit for the alleged hostile takeover of an affiliated yet independent business.
Eugene Moretti, an anesthesiologist and critical care specialist at Duke University Hospital, filed the suit against the University for unlawful business practices at the Private Diagnostic Clinic, where Moretti works.
The PDC is a private, for-profit medical clinic staffed by 1,850 physicians who all hold Duke faculty positions. The PDC has been “self-governed and not subject to University direction” since it was founded in 1931, according to the complaint Moretti filed in the Durham County Superior Court.
Before the dispute, the PDC and the University had an agreement dating back to 1972 that allowed physicians to practice medicine or dentistry for private gains while maintaining an academic relationship with Duke. That agreement was terminated in October 2021, a few months before Moretti filed the suit.
Moretti alleges that Duke made a wrongful agreement with chairs of some departments at the School of Medicine who were also PDC managers, Moretti's attorney Erica Harris explained to The Chronicle.
“They got together and agreed that they would come up with a strategy for pulling entire departments [from the PDC],” Harris explained. Each department oversees hundreds of doctors.
These chairs—Anthony Joseph, Kathleen Cooney, Richard O’Brien, Moira Rynn and Benjamin Almon—are also named as defendants in the case.
“This was after several attempts from Duke to purchase, merge or align with the PDC and bring the PDC out from being an independent organization and into the Duke organization, [but] each time, the negotiations have failed,” Harris said.
Specifically, Harris said that the lawsuit was filed after School of Medicine Dean Mary Klotman sent an email giving PDC employees an ultimatum: any PDC employee who conducted research for the School of Medicine would be required to quit the PDC and become employees of a Duke-owned entity. This policy change would force 400 PDC physicians to leave the group.
Michael Schoenfeld, vice president for public affairs and government relations, characterized events differently.
“Duke has proposed that faculty physicians who are already employed by Duke for education and research become full-time Duke employees for their clinical practice as well,” he wrote in an email to The Chronicle.
Schoenfeld added that the University’s goal is to achieve “greater operational efficiency, a better patient experience, [and] the ability to recruit and retain top talent and enhancements in community health.”
While Schoenfeld described talks between Duke and the PDC as a “productive dialogue around alignment of our respective patient care, teaching and research missions,” the lawsuit disputes this.
According to Harris, the PDC wrote an email to the University in August 2021 alleging inappropriate tactics.
“Stop talking to our managers about pulling departments from the PDC,” Harris paraphrased the email. “We’re happy to talk to you about an all-in merger or alignment but stop talking about taking entire departments.”
Moretti also claimed that these PDC managers conspired with Duke to try to dissolve the private clinic, according to Harris. In preparation for the trial, Moretti’s legal team discovered that certain managers were talking to the University about encouraging members of their departments to vote to dissolve the PDC.
“After hearing Moretti’s demands, the PDC Board of Managers appointed a committee to evaluate his claims and found that they had merit,” Harris said.
“Certainly, PDC members are entitled, and [Moretti] is not complaining about the idea that PDC members could determine [its] fate,” Harris said. “What Duke is doing … pushing for the dissolution of the PDC is wrongful because it’s getting certain managers to breach their fiduciary duties to the PDC.”
Schoenfeld wrote that the lawsuit “has no basis in fact or law” and that Duke will “vigorously defend it.”
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Anisha Reddy is a Trinity junior and a senior editor of The Chronicle's 118th volume.