964 F.2d 116 (2nd Cir. 1992), 964, Johnson v. Nyack Hosp.

Docket Nº:964, 1083, Dockets 91-7982, 91-9142.
Citation:964 F.2d 116
Party Name:Fletcher J. JOHNSON, M.D. and Benjay Realty Corp., Plaintiffs-Appellants-Cross-Appellees, v. NYACK HOSPITAL, Kenneth Steinglass, M.D., Daniel Berson, M.D., James Dawson and Rockland Thoracic Associates, P.C., Defendants-Appellees-Cross-Appellants.
Case Date:May 11, 1992
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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964 F.2d 116 (2nd Cir. 1992)

Fletcher J. JOHNSON, M.D. and Benjay Realty Corp.,



NYACK HOSPITAL, Kenneth Steinglass, M.D., Daniel Berson,

M.D., James Dawson and Rockland Thoracic

Associates, P.C.,


Nos. 964, 1083, Dockets 91-7982, 91-9142.

United States Court of Appeals, Second Circuit

May 11, 1992

Argued Feb. 19, 1992.

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George R. Clark, Washington, D.C. (Jill M. Lashay, Reed Smith Shaw & McClay, Washington, D.C., and Sidney H. Stein, Stein, Zauderer, Ellenhorn, Frischer & Sharp, New York City, of counsel), for plaintiffs-appellants-cross-appellees.

Jeffrey A. Mishkin (Francis D. Landrey, Lauren S. Albert, and Patricia J. Clarke, Proskauer Rose Goetz & Mendelsohn, New York City, of counsel), for defendants-appellees-cross-appellants.


McLAUGHLIN, Circuit Judge:

Plaintiff ("Johnson") appeals from a judgment of the United States District Court for the Southern District of New York (Robert W. Sweet, Senior District Judge ), dismissing his complaint, with costs, for failure to exhaust administrative remedies. See Johnson v. Nyack Hosp., 773 F.Supp. 625 (S.D.N.Y.1991) ["Johnson I "]. Defendants cross-appeal from the district court's order denying their motion for attorney's fees. Id. For the reasons set forth below, we affirm the district court's decision.

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New York State law requires all hospitals in the state to periodically review the services they are rendering. N.Y.Pub.Health L. § 2805-j. As part of the review, each hospital must evaluate the "credentials, physical and mental capacity and competence in delivering health care services of all persons who are employed or associated with the hospital." Id. § 2805-j1(c). Federal law similarly requires hospitals receiving Medicaid or Medicare reimbursement to "ensure that there is an effective, hospital-wide quality assurance program to evaluate the provision of patient care." 42 C.F.R. § 482.21.

To comply with these mandates, in 1985, defendant Nyack Hospital ("Nyack") asked Dr. Kenneth Steinglass, who was Chief of Nyack's Thoracic and Vascular Surgery section, to review the performance of the twelve surgeons in the section. Steinglass analyzed the medical records of the 222 operations performed by the section between December 1984 and June 1985. He used three criteria to evaluate the surgeons' performance: (1) medical judgment, (2) operative technique, and (3) documentation of procedure.

Steinglass spotted a number of inadequacies. Curiously, plaintiff, Dr. Fletcher J. Johnson, accounted for seventy-five percent of them. Johnson's deficiencies ranged from unsatisfactory surgical procedure to insufficient documentation of his work. The risks that Johnson posed to patient care prompted Steinglass to recommend to defendant Dr. Daniel Berson, who was Nyack's Director of Surgery, that Nyack rescind Johnson's thoracic and vascular surgery privileges.

Berson passed this recommendation to defendant James Dawson, the president of Nyack. Because of the severity of Steinglass' conclusion, Berson and Dawson decided to get the counsel of independent experts in the fields of thoracic and vascular surgery. With the advice of the New York Regional Vascular Society and the New York Society for Thoracic Surgery, Dawson selected Dr. W. Graham Knox to reevaluate Johnson's vascular surgery cases, and Dr. E.F. Conklin to review Johnson's thoracic surgery cases. Neither Knox nor Conklin had ever taught, trained, or worked with either Steinglass or Johnson. Neither doctor was told about Steinglass' recommendations.

Conklin reviewed ten of Johnson's thoracic surgery cases, and concluded that (a) Johnson had improperly diagnosed and treated two patients; (b) Johnson removed a patient's lung without due regard for whether the patient would benefit; and (c) two of Johnson's patients required major surgery to treat conditions that Johnson had failed to correct. Ultimately, Conklin confirmed Steinglass' opinion that Johnson's surgical performance endangered patient welfare.

Knox found that Johnson's vascular operations reflected severe deficiencies in medical judgment and operative technique, and that Johnson had failed to properly document the care that he had provided. Like Conklin, Knox determined that Johnson posed a threat to patient welfare.

The independent judgments of Steinglass, Conklin, and Knox led Berson and Dawson to conclude that Johnson's surgical performance posed a peril to Nyack's patients. Under Nyack's by-laws (the "By-Laws"), however, neither Berson nor Dawson could revoke a physician's privileges. Rather, the By-Laws require Berson, as Director of Surgery, to advise Nyack's Credentials Committee of his recommendation to terminate a physician's privileges. The Credentials Committee then investigates the Director of Surgery's findings, and reports its conclusions to the Medical Executive Committee ("MEC"). The MEC next decides whether Nyack should revoke the physician's privileges.

Under the By-Laws, if the MEC decides to terminate a doctor's privileges, the physician receives a hearing before Nyack's Peer Review and Ethics Committee. If the Peer Review and Ethics Committee agrees with the MEC's decision, the physician may request a hearing before an independent hearing officer.

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Following these procedures step-by-step, Berson recommended that the Credentials Committee revoke Johnson's privileges. The Credentials Committee unanimously did so on February 10, 1987, and passed the matter on to the MEC which, with one member opposed and one abstention, approved the revocation later that day. By a letter dated February 10, 1987, the MEC notified Johnson of its decision.

The Peer Review and Ethics Committee met fourteen days later to give Johnson an opportunity to refute the MEC's conclusion. At this meeting, the committee reviewed the Steinglass, Conklin, and Knox reports, and asked Johnson to rebut their evaluations. Johnson refused to address the charges head-on, but instead claimed that the MEC was motivated by racial bias and had based its decision on "incomplete" records.

Johnson's arguments did not persuade the Peer Review and Ethics Committee, which unanimously agreed with the MEC's decision. On July 22, 1987, the chairman of the MEC gave Johnson written notice of Nyack's final decision to terminate his privileges.

The next (and final) step in the procedure would be for the doctor to request the independent hearing to which the By-Laws entitle him. Johnson, however, made no such request and, instead, sought reinstatement of his privileges by commencing suit in New York State Supreme Court, Rockland County, against Nyack, Steinglass, Berson, Conklin, Knox, and each of the committees involved in the termination decision.

In his state complaint, Johnson alleged that the termination of his privileges was motivated by (1) Steinglass' "personal vendetta" against him; (2) Steinglass' racial prejudice; and (3) Steinglass' desire to monopolize the thoracic-vascular practice in the Nyack area. The state court dismissed the complaint, holding that Johnson had failed to exhaust his administrative remedies because (a) he had not requested review before an independent hearing officer pursuant to the By-Laws, and (b) he had ignored the mandate of N.Y.Pub.Health L. § 2801-b that a physician aggrieved by a hospital's termination of privileges file a complaint with the New York Public Health Council before seeking relief in the courts.

Backtracking, Johnson then requested the independent review under the By-Laws. Nyack appointed Dr. Julius H. Jacobson, a practicing vascular and thoracic surgeon, to serve as the hearing officer. Claiming that Jacobson had some "prior contacts" with the case, Johnson objected to Nyack's selection of Jacobson. Johnson, however, did not elaborate on his allegations, and the hearing proceeded on December 17, 1987.

Steinglass, Conklin, and Knox testified at the hearing, furnishing detailed descriptions of Johnson's inadequacies. Johnson had the opportunity to cross-examine the doctors, to comment upon their reports, to present witnesses, and to testify on his own behalf. His own testimony did little to dispel the doctors' depictions of his incompetence: he was unable to describe, or even draw, the basic anatomy of several regions of the body on which he had operated. Jacobson's conclusion mirrored the grim recommendations of Steinglass, Conklin, and Knox--Nyack should immediately revoke Johnson's thoracic and vascular surgery privileges.

After receiving word of Jacobson's decision, Johnson wrote a letter to Nyack's Joint Conference Committee, in which he renewed his assertion that Jacobson was not impartial. He claimed that shortly after the MEC first voted to terminate his privileges in February 1987, he asked Jacobson to review his cases with an eye toward providing favorable expert testimony for him. Jacobson did, in fact, review the file, but he claimed to have no recollection of this when Nyack appointed him as hearing officer.

Because of the unusual circumstances, Nyack wisely decided to offer Johnson yet another hearing. However, Johnson rejected each of the hearing officers proposed by Nyack. The bases for his objections often bordered on the bizarre. Johnson rejected one candidate because he was born and

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reared in Texas, and thus, according to Johnson, could not impartially pass on whether Steinglass' evaluation was motivated by racial bias. Johnson rejected a second candidate because he and Steinglass had interned at the same hospital a year apart, and had "concurrently served their residency some three...

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