Healthcare Competition Reforms.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 2
SENATE BILL 978
Health Care Committee Substitute Adopted 6/11/26

Short Title: Healthcare Competition Reforms. (Public)
Sponsors:
Referred to:
May 4, 2026
*S978-v-2*
A BILL TO BE ENTITLED 1
AN ACT TO PROVIDE WH ISTLEBLOWER AND EMPL OYMENT PROTECTION TO 2
HEALTHCARE WORKERS, TO LIMIT THE CHIEF E XECUTIVE OFFICER 3
COMPENSATION OF NOT -FOR-PROFIT HOSPITALS THAT RECEIVE STATE 4
FUNDS, AND TO EXEMPT THE DEPARTMENT OF S TATE TREASURER FROM 5
DEPARTMENT OF HEALTH AND HUMAN SERVICES REVIEW. 6
The General Assembly of North Carolina enacts: 7
8
PART I. WHISTLEBLOWE R AND EMPLOYMENT PRO TECTIONS FOR 9
HEALTHCARE PROFESSIONALS 10
SECTION 1.1. G.S. 75-1.1 is amended by adding a new subsection to read: 11
"(c1) The learned profession ex ception of this section applies to health care providers, as 12
defined in G.S. 90-21.11, only for acts and omissions directly related to the provision of medical, 13
dental, or other health care that are subject to litigation under Article 1B of Chapter 90 of the 14
General Statutes." 15
SECTION 1.2.(a) Article 3 of Chapter 95 of the General Statutes is amended by 16
adding a new section to read: 17
"§ 95-28.1B. Health care professional whistleblower protection. 18
(a) The following definitions apply in this section: 19
(1) Health care professional. – An individual who is a licensed physician, 20
physician assistant, advanced practice registered nurse as defined by the North 21
Carolina Board of Nursing, or registered nurse. 22
(2) Hospital. – Any of the following: 23
a. A facility that has an organized medical staff and is designed, used, 24
and operated to provide health care , diagnostic and therapeutic 25
services, and continuous nursing care primarily to inpatients where 26
such care and services are rendered under the supervision and direction 27
of physicians licensed under Article 1 of Chapter 90 of the General 28
Statutes, to two or more persons over a period in excess of 24 hours. 29
b. A facility designated by the Centers for Medicare and Medicaid 30
Services as a rural emergency hospital as defined under 42 C.F.R. § 31
485.502 or under section 125 of Division CC of the Consolidated 32
Appropriations Act of 2021, Public Law 116-260. 33
c. Any outpatient department, including a portion of a hospital operated 34
as an outpatient department, on or off of the hosp ital's main campus, 35
that is operated under the hospital 's control or ownership and is 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 978-Second Edition
classified as a Business Occupancy by the Life Safety Code of the 1
National Fire Protection Association as referenced under 42 C.F.R. § 2
482.41. 3
d. Any hospital-owned medical practice. 4
(3) Medical staff bylaws. – A document that is required by a licensing, 5
accrediting, or regulatory body that governs the organization and operation of 6
a hospital's medical staff by defining the structure, roles, responsibilities, and 7
relationships between the medical staff, stakeholders, hospital administration, 8
and hospital governing board. 9
(4) Stakeholder. – An incorporator, officer, director, shareholder, or employee of 10
a (i) professional corporation as defined by G.S. 55B-2 or (ii) domestic or 11
foreign entity that provides nonclinical services to a professional corporation 12
as defined by G.S. 55B-2 rendering professional service under Article 1 of 13
Chapter 90 of the General Statutes. 14
(b) It is the policy of this State that health care professionals have the right to report 15
violations of medical staff bylaws to appropriate authorities and make comments concerning 16
patient care for the protection of the public . Therefore , n o person, firm, corporation, or 17
unincorporated association, or a stakeholder, may subject a health care professional to adverse 18
action, including, but not limited to, withdrawal of hospital privileges , termination, demotion, 19
compensation reduction, or hostile work environment for reporting a violation of medical staff 20
bylaws or making comments concerning patient care." 21
SECTION 1.2.(b) G.S. 95-241(a)(1) reads as rewritten: 22
"(a) No person shall discriminate or take any retaliatory action against an employee 23
because the employee in good faith does or threatens to do any of the following: 24
(1) File a claim or complaint, initiate any inquiry, investigation, inspection, 25
proceeding or other action, or testify or provide information to any person 26
with respect to any of the following: 27
… 28
f. G.S. 95-28.1A.G.S. 95-28.1A or G.S. 95-28.1B. 29
…." 30
SECTION 1.2.(c) The North Carolina Board of Medicine may adopt rules to 31
implement this section. 32
SECTION 1.2.(d) This section is effective when it becomes law and applies to 33
employers, employees, and prospective employees on or after that date. 34
SECTION 1.3.(a) Chapter 66 of the General Statutes is amended by adding a new 35
Article to read: 36
"Article 52. 37
"Limitations on Agreements With Health Care Professionals. 38
"§ 66-515. Definitions. 39
The following definitions apply in this Article: 40
(1) Health care professional. – An individual who is a licensed physician, 41
physician assistant, advanced practice registered nurse as defined by the North 42
Carolina Board of Nursing, or registered nurse. 43
(2) Medical staff bylaws. – As defined in G.S. 95-28.1B(a). 44
(3) Nondisclosure agreement. – An agreement that restricts the ability of a party 45
to disclose information. 46
(4) Non-compete clause or clause . – An agreement that restricts a party from 47
engaging in certain types of employment or business activities for a specified 48
period of time within a specified geographic area. 49
"§ 66-516. Nondisclosure agreements limited. 50
General Assembly Of North Carolina Session 2025
Senate Bill 978-Second Edition Page 3
(a) Any nondisclosure agreement entered into with a health care professional must 1
explicitly state that it does not restrict the health care professional from reporting safety concerns, 2
ethical violations, or illegal activities. 3
(b) No health care professional may be required to enter into a nondisclosure agreement 4
that would do any of the following: 5
(1) Prevent the health care professional from discussing patient safety concerns 6
with licensing agencies, accrediting bodies, or other regulatory or oversight 7
entities. 8
(2) Restrict the health care professional 's ability to report to the appropriate 9
authorities violations of law, medical ethics, or medical staff bylaws. 10
"§ 66-517. Certain non-compete clauses prohibited. 11
An employment contract for a health care professional employed by a hospital, as defined in 12
G.S. 95-28.1B, shall not contain a non-compete clause. 13
"§ 66-518. Provision of information. 14
Any policy, nondisclosure agreement, non-compete clause, medical staff bylaw, or any other 15
type of contractual agreement with a health care professional shall not prohibit the provision of 16
new practice information upon request by a patient, and, if available, the recipient of that request 17
shall provide that information upon that request. 18
"§ 66-519. Remedies. 19
(a) A nondisclosure agreement or non -compete clause that violates this Article is void 20
and unenforceable. 21
(b) A health care professional who prevails in an action under this Article challenging the 22
enforceability of a nondisclosure agreement or non -compete clause is entitled to damages plus 23
reasonable attorneys' fees and costs." 24
SECTION 1.3.(b) This section is effective July 1, 2026, and applies to contracts 25
entered into, modified, or renewed on or after that date. 26
27
PART II. NONPROFIT HOSPITAL CEO COMPENSATION LIMITS 28
SECTION 2.(a) Article 5 of Chapter 131E of the General Statutes is amended by 29
adding a new section to read: 30
"§ 131E-99.1. Hospital compensation fairness. 31
(a) Definitions. – The following definitions apply in this section. 32
(1) Chief executive officer. – The highest-ranking executive in a hospital who is 33
responsible for making major corporate decisions and managing overall 34
operations, regardless of the individual's actual job title. 35
(2) Compensation. – Salary; bonus payments, whether based on performance or 36
otherwise; incentive payments; severance payments; loans to be repaid on 37
terms, including interest less burdensome than the going market rate; value of 38
use of hospital-provided vehicles, housing, or other perquisites not generally 39
available to employees; stock or stock options and any dividends or other 40
benefits of the ownership of stock or stock options. 41
(3) Minimum compensation. – The value of the annual compensation received by 42
a full-time employee of a qualifying hospital who receives the minimum wage 43
defined in G.S. 95-25.3. If no employee receives the minimum wage defined 44
in G.S. 95-25.3, the minimum compensation s hall be the value of the annual 45
compensation received by the lowest-paid, full-time employee of a qualifying 46
hospital. 47
(4) Qualifying hospital. – A hospital licensed under this Article that accepts funds 48
from the State and is exempt from taxation under section 501(c)(3) of the 49
Internal Revenue Code (26 U.S.C. § 501(c)(3)). 50
General Assembly Of North Carolina Session 2025
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(b) Chief Executive Officer Compensation. – No chief executive officer of a qualifying 1
hospital shall receive an annual compensation that is more than 400 times greater than the 2
minimum compensation. 3
(c) Civil Penalty. – If the chief executive officer of a qualifying hospital receives an 4
annual compensation that is more than 400 times greater than the minimum compensation, the 5
qualifying hospital shall be assessed a civil penalty equal to the amount of the chief executive 6
officer's annual compensation. 7
(d) Reporting and Payment. – No later than March 1 of each year, all qualifying hospitals 8
shall report to the Commission the minimum comp ensation and chief executive officer 9
compensation for the preceding year. The Commission shall notify any qualifying hospital of any 10
civil penalty owed under subsection (c) of this section no later than April 1 of each year, and any 11
civil penalties must be paid by a qualifying hospital no later than May 1 of each year. 12
(e) Rules. – The Commission shall have the authority to adopt rules necessary to 13
implement the provisions of this section." 14
SECTION 2.(b) There is appropriated from the General Fund to the North Carolina 15
Medical Care Commission the sum of fifty thousand dollars ($50,000) in nonrecurring funds for 16
the 2026-2027 fiscal year to be used to administer the reporting provisions of G.S. 131E-99.1, as 17
enacted by subsection (a) of this section. 18
19
PART III. EXEMPT STATE TREASURER FROM DHHS REVIEW 20
SECTION 3. G.S. 131E-184 is amended by adding a new subsection to read: 21
"(i) The Department shall exempt from review any new institu tional health service 22
established, developed, or acquired by any entity working in partnership or conjunction with the 23
Department of State Treasurer." 24
25
PART IV. EFFECTIVE DATE 26
SECTION 4. Unless otherwise provided, this act is effective when it becomes law. 27