Alzadon v. Highlands Hosp. Corp.

• Decision Date: 08 August 2014
• Docket Number: NO. 2012-CA-000102-MR,2012-CA-000102-MR
• Parties: JOSE W. ALZADON, M.D. APPELLANT v. HIGHLANDS HOSPITAL CORPORATION, INC., AND CONSOLIDATED HEALTH SYSTEMS, INC. APPELLEES
• Court: Court of Appeals of Kentucky

JOSE W. ALZADON, M.D. APPELLANT
v.
HIGHLANDS HOSPITAL CORPORATION, INC.,
AND CONSOLIDATED HEALTH SYSTEMS, INC. APPELLEES

NO. 2012-CA-000102-MR

Commonwealth of Kentucky Court of Appeals

AUGUST 8, 2014

NOT TO BE PUBLISHED

APPEAL FROM FLOYD CIRCUIT COURT
HONORABLE JOHN DAVID CAUDILL, JUDGE
ACTION NO. 08-CI-00450

OPINION
AFFIRMING

BEFORE: DIXON, LAMBERT, AND NICKELL, JUDGES.

LAMBERT, JUDGE: Jose Alzadon, M.D., appeals from the Floyd Circuit Court's entry of summary judgment in favor of Consolidated Health Systems, Inc., d/b/a Highlands Health System, and Highlands Hospital Corporation, Inc., d/b/a Highlands Regional Medical Center (hereinafter collectively "Highlands"). After careful consideration of the parties' briefs and the record, we affirm.

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In 2005, Alzadon was recruited by Highlands to practice medicine in the Floyd County, Kentucky, area to fulfill a need for surgeons. Alzadon executed an Agreement and Note under which he agreed to work in the area as a general surgeon for two years in exchange for receiving a one-year income guarantee from Highlands. Under the Agreement and Note, Alzadon agreed to reimburse Highlands for the income guarantee payments if he failed to practice for two years or otherwise breached the Agreement.

The Agreement stated that, among other reasons, it could be terminated and Alzadon declared in breach thereof if his clinical privileges to practice at Highlands' facility were reduced, suspended, or terminated. Alzadon's privileges at Highlands were first suspended less than two months after he was granted temporary privileges. Highlands notified Alzadon that the Medical Executive Committee (MEC) had been provided with information relative to his substandard performance as a surgeon and that he was being placed on probationary suspension. Alzadon was advised of the relevant section of the Medical Staff Bylaws (Bylaws) and was advised that if the MEC decided an investigation was warranted, he would have an opportunity to provide information to the investigating body under Section 1.3 of the Bylaws.

On October 7, 2005, Alzadon was advised that the MEC determined his privileges would be restricted to certain limited procedures (basically minor procedures, not including open abdominal cases), and he would be required to complete a surgical mini-residency and submit a report thereof to the MEC prior to

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reinstatement of full privileges. When Alzadon failed to enter a mini-residency, Highlands advised him on December 16, 2005, that he was not performing under the Agreement and provided him with an additional 30 days to arrange the training.

Alzadon attended a meeting with the MEC on January 13, 2006, at which the mini-residency requirement was further explained. Due to his claimed confusion, Highlands again offered Alzadon a thirty-day extension to complete the request. By letter dated February 15, 2006, Alzadon wrote the MEC claiming a university in Louisiana had agreed to work with him. However, Alazdon never actually worked with the university as claimed in his letter.

After five months passed with Alzadon failing to complete additional training and being unable to safely practice in the area of general surgery for which he was recruited, in March 2006, Highlands issued a letter to Alzadon advising him that the MEC had decided to recommend that his privileges be suspended. The letter further advised him of his right to request a hearing and stated in part: "If you do not request a hearing within 30 days of the date of your receipt of this letter, you will be deemed to have waived the right to a hearing and appellate review of the current restriction on your privileges." The letter also contained a copy of Part III, Section 4.5 of the Bylaws. On May 19, 2006, Highlands advised Alzadon he was in breach of the Agreement and Note due to the reduction of his privileges. That letter also included an amortization schedule and offered to accept monthly payments from Alzadon towards the outstanding balance due of

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$305,217.00, as well as a copy of the Note. On May 23, 2006, Highlands notified Alzadon of the MEC's recommendation to suspend his privileges.

After Alzadon received notification that his privileges were suspended and his repayment obligation would begin, Highlands received a letter from a physician in Louisiana who had agreed to work with Alzadon. In reliance on that letter, Highlands lifted the total suspension of Alzadon's clinical privileges and reinstated the prior limited privileges. Highlands also agreed to defer Alzadon's repayment obligation until February 1, 2007.

However, in order to be accepted into the Louisiana program, Alzadon intentionally concealed the nature of his status to the Louisiana program. As a result, Alzadon was terminated from the program, and at no point did he actually complete the required additional training.

Highlands then advised Alzadon that he was in breach of the Agreement as a result of his failure to complete the training and further advised him that his repayment obligations would begin. Highlands also notified Alzadon that the unappealed suspension of his clinical privileges was converted to a revocation of his privileges. Additionally, Highlands advised Alzadon that he had waived his right to a hearing as to the MEC's adverse recommendation to suspend his privileges for quality deficiencies since he had failed to request a hearing within 30 days after notice of same. Alzadon was then notified that Highlands' Board had voted to revoke his privileges.

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Pursuant to Kentucky Revised Statutes (KRS) 311.606, by reference back to KRS 311.595 (20) and (21), Highlands was legally required to notify the Kentucky Board of Medical Licensure (KBML) of the revocation of Alzadon's privileges. KBML thereupon instituted proceedings against Alzadon. Highlands received several subpoenas requiring the testimony of its staff during the proceedings. After KBML's initial review of the information alleging "substandard or inadequate care," the KBML Panel found that disciplinary action was warranted against Alzadon's medical license.

KBML and Alzadon subsequently entered into an Interim Agreed Order on November 30, 2007, pursuant to which Alzadon agreed that he "SHALL NOT perform general surgery unless and until approved to do so by the Panel" and that should he violate any "term or condition of this Interim Agreed Order, the licensee's practice will constitute an immediate danger to the public health, safety, or welfare, as provided in KRS 311.592and 13B.125." At the time he executed the Interim Agreed Order, Alzadon was represented by legal counsel.

On April 16, 2009, Alzadon executed an Agreed Order of Indefinite Restriction with KBML pursuant to which he acknowledged the following facts, among others:

4. The licensee [Alzadon] was granted temporary privileges in August 2005, with his specialty being general surgery. Shortly after the licensee began practicing at HRMC, there were 6 surgical cases where there was either a written or a verbal occurrence report. After a quality review, which determined that there were multiple errors in technique and judgment by the licensee. [sic] His privileges were restricted and the

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[MEC] requested that he complete additional hands-on training, or a mini-residency, within 90 days to improve his skills. When he did not meet that deadline, he was granted additional time, until August 2006, to complete this re-training. When he failed to do so, his privileges were revoked.

5. The licensee did not exercise his right to challenge the hospital action through a due process hearing.

Additionally, Alzadon agreed to the following Stipulated Conclusion of Law:

While the licensee denies any wrongdoing and/or violation of any statutes, he understands and agrees that the [KBML] Hearing Panel could conclude from the evidence outlined in the Stipulations of Fact that he has engaged in conduct which violates the provisions of KRS 311.595(21) and (9), as illustrated by KRS 311.597(3) and (4).

This Agreed Order remains in effect; thus Alzadon's medical license remains restricted, including a prohibition against performing general surgery.

As noted above, Alzadon accepted income guarantee payments from Highlands throughout the year (during most of which his privileges were suspended in whole or in part) in the total amount of $305,217.10. Pursuant to the terms of the Recruitment Agreement:

[Alzadon] acknowledges and agrees that all amounts

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