Crowder v. Conlan

• Decision Date: 02 August 1984
• Docket Number: No. 83-5427,83-5427
• Parties: Bennett L. CROWDER, II, Plaintiff-Appellant, v. J.K. CONLAN, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 447

740 F.2d 447

Bennett L. CROWDER, II, Plaintiff-Appellant, v. J.K. CONLAN, et al., Defendants-Appellees.

No. 83-5427.

United States Court of Appeals, Sixth Circuit.

Argued June 6, 1984.

Decided Aug. 2, 1984.

Daniel B. Boone, Jack M. Lowery, Boone & Lowery, Louisville, Ky., Edward L. Hardin, Jr. (argued), Hardin & Hollis, Birmingham, Ala., for plaintiff-appellant.

William O. Guethlein, Boehl, Stopher, Graves & Deindoerfer, William P. Swain, Louisville, Ky., Lee T. White, White & White, Hopkinsville, Ky., Ben S. Fletcher, III (argued), Hopkinsville, Ky., Galen J. White, Jr. (argued), Boehl, Stopher, Graves & Deindoerfer, Louisville, Ky., for defendants-appellees.

Before MARTIN, Circuit Judge, CELEBREZZE, Senior Circuit Judge, and McRAE, Chief Judge. ^*

BOYCE F. MARTIN, Jr., Circuit Judge.

Dr. Bennett L. Crowder, II, appeals the district court's grant of summary judgment for the defendants in this 42 U.S.C. Sec. 1983 action. Dr. Crowder initiated this suit on December 19, 1980, charging that the Jennie Stuart Memorial Hospital in Hopkinsville, Kentucky, its staff and other defendants had violated his civil rights by restricting his staff privileges at the hospital.

In October, 1979, Dr. Crowder made a formal application for emergency room privileges at the hospital. At the time, Dr. Crowder already held surgical privileges. On December 15, 1979, a petition, signed by twenty-four physicians of the hospital's staff, was filed with the hospital's Executive Committee, Hospital Administrator, and Board of Trustees, opposing Dr. Crowder's application for emergency room privileges as well as his continuation on the hospital's surgical staff. From January through June, 1980, an investigation was conducted concerning Dr. Crowder's medical practices. ¹ As a result of this investigation, a report was issued to the hospital's Executive Committee on June 14, 1980. The report recommended that Dr. Crowder not be granted emergency room privileges and also recommended restrictions on his surgical practices. This report was adopted by the Executive Committee in November 1980. In December, Dr. Crowder commenced this lawsuit.

After the Executive Committee's actions, Dr. Crowder was given formal notice of the charges against him and told he could request a hearing. After several postponements, a full hearing was held on July 6 and 7, and on August 24 and 25, 1981. By a four-to-one vote, the hearing committee recommended that various restrictions be placed on Dr. Crowder's surgical privileges. Dr. Crowder then requested an appeal to the hospital's Board of Trustees. After the presentation of oral arguments and submission of written statements, on March 4, 1982, an appellate review committee affirmed the recommendations of the hearing committee. This decision was eventually adopted by the hospital's Board of Trustees, and was implemented effective April 1, 1982.

In the district court, Dr. Crowder alleged several federal and state claims. At the conclusion of the hospital's administrative review process, the district court, in its initial opinion, granted the defendants' summary judgment motion "because [Dr. Crowder had] neither pleaded any constitutionally-protected liberty or property interest which was denied him, nor [had] he established as a material issue that he has been deprived of any arguably protected interests without adequate procedural safeguards." Dr. Crowder then filed a recusal motion and a motion to reconsider. The district court denied the first motion on its merits. The court also found that this motion was untimely filed. Regarding the motion to reconsider, the court issued a second opinion which held that Dr. Crowder had not been deprived of due process of law by the defendants' decision to restrict his hospital privileges.

On appeal, Dr. Crowder argues the district court erred in finding that he had not been denied procedural due process and that defendant's actions were not "state action."

The ultimate issue in determining whether a party is subject to liability under 42 U.S.C. Sec. 1983 is whether the alleged infringement of federal rights is "fairly attributable to the state." Lugar v. Edmondson Oil Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 2754, 73 L.Ed.2d 482 (1982). Therefore, if the actions of the defendants here were not state action, our inquiry ends. Rendell-Baker v. Kohn, 457 U.S. 830, 838, 102 S.Ct. 2764, 2770, 73 L.Ed.2d 418 (1982).

Dr. Crowder claims defendants' actions were 'state action' due to the multiple connections between the hospital and the Commonwealth of Kentucky, Christian County, Kentucky, and the town of Hopkinsville, Kentucky. To support this claim, Dr. Crowder notes, among other things, that: (1) a considerable percentage of the hospital's revenues are derived from governmental sources, including Medicare and Medicaid payments; (2) the hospital is subject to extensive state regulation; (3) the Mayor of Hopkinsville and County Judge/Executive of Christian County serve on the hospital's Board of Trustees by virtue of their public office; and (4) the hospital facility was purchased in 1980 by Christian County and then leased back to the Board of Trustees through a financial arrangement authorized by state statute.

In Blum v. Yaretsky, 457 U.S. 991, 102 S.Ct. 2777, 73 L.Ed.2d 534 (1982), the Supreme Court held that the State of New York could not be held responsible for the decisions of private nursing homes to discharge or transfer patients without notice or an opportunity for a hearing. The plaintiffs in Blum contended that state Medicaid regulations "affirmatively" ordered the decisions of the private nursing homes because the nursing homes were required to periodically assess whether their patients were receiving an appropriate level of care warranting the patient's continued stay in the facility. Blum, 457 U.S. at 994-95, 102 S.Ct. at 2780-2781. Adopting the standard set forth in Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1975), the Court held that the plaintiffs had to demonstrate "a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself." Blum, 457 U.S. at 1004, 102 S.Ct. at 2785, quoting Jackson v. Metropolitan Edison Co., 419 U.S. at 351, 95 S.Ct. at 453. See also Rendell-Baker v. Kohn, 457 U.S. at 838-40, 102 S.Ct. at 2770-2771. Newsom v. Vanderbilt University, 653 F.2d 1100, 1113-16 (6th Cir.1981); cf. Lugar v. Edmondson Oil Co., Inc., 457 U.S. at 937, 102 S.Ct. at 2754. Applying that test, the court found that the plaintiffs in Blum had failed to establish "state action" in the nursing homes' decisions to transfer or discharge patients because "[t]hose decisions ultimately turn on medical judgments made by private parties according to professional standards that are not established by the State." Blum, 457 U.S. at 1008, 102 S.Ct. at 2788. The Court pointed out that mere approval or acquiescence by the state in the decision of a private party does not constitute state action. Id. at 1004-05, 102 S.Ct. at 2785-2786. See also Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 164-65, 98 S.Ct. 1729, 1737-1738, 56 L.Ed.2d 185 (1978); Jackson v. Metro Edison Co., 419 U.S. at 357, 95 S.Ct. at 456. Instead, the Court noted that a "State normally can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State." Blum, 457 U.S. at 1004, 102 S.Ct. at 2786.

Factually, Blum differs from the present case because the plaintiffs there sued the State of New York in an attempt to hold it responsible for the actions of private nursing homes. Here, Dr. Crowder is suing a private entity claiming that its actions are "state action", even though the state was not directly involved in the challenged activities. This factual difference, however, does not undercut our applying the legal reasoning of Blum to the issue posed here. See Rendell-Baker v. Kohn, 457 U.S. 830, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982) (legal reasoning of Blum applied when deciding whether private school acted under color of state law when it discharged certain school employees).

Dr. Crowder begins by arguing that state action is present because the hospital derives a considerable percentage of its revenues from governmental funding. In Blum this same claim was rejected even though the State subsidized the operating and capital costs of the nursing homes, and paid the medical expenses of more than ninety percent of the patients. Blum, 457 U.S. at 1011, 102 S.Ct. at 2784. The actions of a private entity do not become state action merely because the government provides substantial funding to the private party. See Rendell-Baker, 457 U.S. at 840, 102 S.Ct. at 2771; Newsom v. Vanderbilt Univ., 653 F.2d at 1115; Jackson v. Norton-Children's Hospitals, 487 F.2d 502, 503 (6th Cir.1973) (per curiam), cert. denied Y416 U.S. 1000, 94 S.Ct. 2413, 40 L.Ed.2d 776 (1974).

Next, Dr. Crowder contends state action is established because the hospital is subject to extensive state regulation. State regulation of a private entity, even if it is "extensive and detailed," is not enough to support a finding of state action. Jackson v. Metro. Edison Co., 419 U.S. at 350, 95 S.Ct. at 453; see also Griffith v. Bell-Whitley Community Action Agency, 614 F.2d 1102, 1109 (6th Cir.), cert. denied, 447 U.S. 928, 100 S.Ct. 3025, 65 L.Ed.2d 1122 (1980). In order to invoke the doctrine of "state action," a complaining party must demonstrate a sufficient nexus between the challenged action and the regulatory scheme alleged to be the impetus behind the private action. See Blum, 457 U.S. at 1004-05, 102 S.Ct. at 2785-2786; Watson v. Kenlick Coal Co., Inc., 498 F.2d 1183, 1192 (6th Cir.1974), cert. denied, 422 U.S. 1012, 95 S.Ct. 2639, ...