Cole v. Huntsville Memorial Hosp.

• Decision Date: 15 February 1996
• Docket Number: No. 01-93-00085-CV,01-93-00085-CV
• Citation: 920 S.W.2d 364
• Parties: Thomas C. COLE, Jr., M.D., Thomas C. Cole, Jr., M.D. P.A., and Dorothy Cole, Appellants, v. HUNTSVILLE MEMORIAL HOSPITAL, Ralph E. Beaty, William L. Nix, M.D., HCA Management Company, Methodist Retirement Services, Inc., Joe Helms, Chester Freeman, Jr., David Knuth, M.D., Nathan W. Colwell, M.D., Michael C. Deberardinis, M.D., James M. Hanna, M.D., Robert L. Hart, M.D., R. Carl Mahaffey, M.D., J. Stan Hines, M.D., Susan E. Nelson, M.D., Howell Towler, M.D., Paul Vilardi, M.D., and Lawrence H. Wells, M.D., Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 364

920 S.W.2d 364

Thomas C. COLE, Jr., M.D., Thomas C. Cole, Jr., M.D. P.A. and Dorothy Cole, Appellants, v. HUNTSVILLE MEMORIAL HOSPITAL, Ralph E. Beaty, William L Nix, M.D., HCA Management Company, Methodist Retirement Services, Inc., Joe Helms, Chester Freeman, Jr., David Knuth, M.D., Nathan W. Colwell, M.D., Michael C Deberardinis, M.D., James M. Hanna, M.D., Robert L. Hart M.D., R. Carl Mahaffey, M.D., J. Stan Hines, M.D., Susan E. Nelson, M.D., Howell Towler, M.D., Paul Vilardi, M.D., and Lawrence H. Wells, M.D., Appellees.

No. 01-93-00085-CV.

Court of Appeals of Texas, Houston (1st Dist.).

Feb. 15, 1996.

Clinard J. Hanby, Houston, for appellants.

Keith S. Dubanevich, John F. Kapacinskas, Houston, William L. Durham, Huntsville, Robert T. Cain, Jr., Kenzy D. Hallmark, Lufkin, Deanna H. Livingston, Houston, Larry G. Black, Austin, Kathleen Quiroz, San Antonio, for appellees.

OPINION

COHEN, Justice.

Appellants, Dr. Cole, his professional association, and his wife, Dorothy Cole (collectively, the Coles), appeal from a take-nothing judgment. The Coles contend the trial court erred by granting summary judgment in favor of Huntsville Memorial Hospital (the Hospital) and by striking their pleadings against the remaining appellees. We affirm.

Facts

In 1987, the Hospital's executive committee recommended to the board of trustees that Dr. Cole's medical staff privileges be denied. After the Hospital notified Cole of its recommendation, Cole demanded that the recommendation be withdrawn and requested a hearing. Cole then filed this lawsuit against the Hospital. Cole sought an injunction, claimed the Hospital violated his right to due process, and sought damages under the Texas Medical Practice Act, TEX.REV.CIV.STAT.ANN. art. 4495b (Vernon Pamph.1996), and the Hospital Licensing Act, TEX.HEALTH & SAFETY CODE ANN. § 241.101(c) (Vernon Supp.1996). The parties agreed that the Hospital would consider Cole's request for privileges for 1988, and Cole remained on the Hospital's staff.

The executive committee recommended against Cole's reappointment for 1988. In a mandamus proceeding, the court of appeals abated the lawsuit until Cole exhausted his administrative remedies. See Huntsville Mem. Hosp. v. Ernst, 763 S.W.2d 856 (Tex.App.--Houston [14th Dist.] 1988, orig. proceeding). During this time, Cole remained on the Hospital's staff.

In 1989, the executive committee again recommended that Cole's reapplication for staff privileges for 1990 be denied. The Hospital notified Cole of the committee's decision and his right to a hearing. The committee provided Cole with a statement of grounds for denying his reappointment: (1) his continued pattern of inappropriate and unprofessional conduct; (2) his continued pattern of inappropriate use of inpatient, diagnostic, and ancillary services; (3) ongoing concerns about his clinical judgment and competence; and (4) the adverse financial impact on the Hospital caused by his patient care management and failure to abide by Hospital peer review recommendations.

Cole requested a hearing, After one postponement at Cole's request, a three-day hearing was held on March 28-30, 1990. The hearing panel unanimously upheld the recommendation of the executive committee. Cole requested appellate review of the panel's decision. The appellate review panel unanimously recommended that the decision of the hearing panel be upheld. On June 28, 1990, the board of trustees voted not to renew Cole's medical staff privileges. Cole then reasserted his original claims against the Hospital.

In 1989, the Coles sued twelve physicians, two corporations, and three other individuals (collectively, the Doctors). This second suit, which was consolidated, related to attempts to deny Cole's privileges at the Hospital and at Community Methodist Retirement Home. The Coles claimed damages for libel, slander, tortious interference, and antitrust violations.

The trial court granted the Hospital's summary judgment. At a later hearing to enforce sanctions for discovery abuse, the trial court struck the Coles' pleadings against the Doctors and entered final judgment.

The Summary Judgment

In point of error two, Cole contends that the trial court erred by granting the Hospital's motion for summary judgment. He asserts that (1) fact issues exist as to whether the Hospital violated his due process rights, (2) the motion for summary judgment did not address his due process cause of action under the Texas Constitution, (3) the motion for summary judgment did not address his first amendment cause of action, and (4) the trial court erred in finding no private cause of action exists under the Texas Medical Practice Act and the Hospital Licensing Act.

Summary Judgment Standard of Review

Summary judgment is proper only when a movant establishes that no genuine issue of material fact exists, thereby entitling the movant to judgment as a matter of law. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991). A defendant is entitled to summary judgment if the evidence disproves as a matter of law at least one element of each of the plaintiff's causes of action. Marchal v. Webb, 859 S.W.2d 408, 412 (Tex.App.--Houston [1st Dist.] 1993, writ denied). In reviewing the summary judgment, we must indulge every reasonable inference in favor of the nonmovant and resolve any doubts in its favor. Id.

Objections to Summary Judgment Evidence

The Hospital objected to Cole's summary judgment evidence, two affidavits, and now reasserts its objections. The Hospital did not secure a ruling on its objections; therefore, nothing is preserved for review. Fox Elec. Co. v. Tone Guard Sec., Inc., 861 S.W.2d 79, 81 (Tex.App.--Fort Worth 1993, no writ).

Is the Hospital's Action "State Action" under the Fourteenth

Amendment and 42 U.S.C. § 1983?

In its cross-point, the Hospital contends that the trial court properly granted summary judgment but incorrectly ruled that the Hospital is a state hospital and therefore subject to 42 U.S.C. § 1983 and the fourteenth amendment. Because the issue was considered and decided by the trial court and is dispositive of several claims, we consider it first. See State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380-82 (Tex.1993).

The due process clause of the fourteenth amendment does not apply to private conduct. Jackson v. Metropolitan Edison Co., 419 U.S. 345, 349, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974). Similarly, under 42 U.S.C. § 1983 (1988), the defendant must have acted under color of state law. Wong v. Stripling, 881 F.2d 200, 202 (5th Cir.1989); Mitchell v. Amarillo Hosp. Dist., 855 S.W.2d 857, 864 (Tex.App.--Amarillo 1993, writ denied). If a defendant's conduct constitutes state action under the fourteenth amendment, it is also state action under section 1983. Rendell-Baker v. Kohn, 457 U.S. 830, 838, 102 S.Ct. 2764, 2769-70, 73 L.Ed.2d 418 (1982); Mitchell, 855 S.W.2d at 864. Thus, the issue is whether the Hospital's act is "fairly attributable to the State." Kohn, 457 U.S. at 838, 102 S.Ct. at 2770. If not, the Coles have no claim under section 1983 or the United States Constitution.

A private entity may be deemed a state actor when it performs a function that is traditionally the State's exclusive province. Wong, 881 F.2d at 202. Obviously, operating a hospital is not such a function. Alternatively, state action may be found where there is a nexus between the state and the private defendant that makes the action fairly attributable to the state. Id. The purpose of the nexus requirement is "to assure that constitutional standards are invoked only when it can be said that the State is responsible for the specific conduct of which the plaintiff complains." Blum v. Yaretsky, 457 U.S. 991, 1004, 102 S.Ct. 2777, 2786, 73 L.Ed.2d 534 (1982).

Several Fifth Circuit cases have discussed whether a hospital's actions could be attributed to the state. Albright v. Longview Police Dept., 884 F.2d 835, 841 (5th Cir.1989); Jatoi v. Hurst-Euless-Bedford Hosp. Auth., 807 F.2d 1214, 1220-22 (5th Cir.1987), cert. denied, 484 U.S. 1010, 108 S.Ct. 709, 98 L.Ed.2d 660 (1988); Greco v. Orange Memorial Hosp. Corp., 513 F.2d 873, 877, (5th Cir.), cert. denied, 423 U.S. 1000, 96 S.Ct. 433, 46 L.Ed.2d 376 (1975). In each, the defendants were nonprofit corporations that leased hospital facilities from the county and were responsible for their own daily operation. Id. at 876.

In Greco, the Fifth Circuit considered six factors in concluding that there was no state action. First, the claims against the hospital did not involve racial discrimination. 513 F.2d at 879. Second, financial support was given to the hospital by the county in the form of a nominal, one-dollar-per-year rent charge. Id. at 880. Third, the hospital was ultimately responsible for the operation of the facility under its lease with the county. Id. Fourth, there was no showing of any benefits conferred on the county directly attributable to the objectionable activity. Id. Fifth, there was no nexus between the county's involvement with the hospital and the disputed action. Id. Sixth, the county had no power to change the hospital's decision nor did it directly or indirectly participate in the formulation of the disputed policy. Id. at 881. In Albright, the court used these same factors in deciding that no state action existed. 884 F.2d at 841.

By contrast, in Jatoi, the Fifth Circuit found a nexus between the hospital authority and the private manager's decision to terminate a doctor's staff privileges that was close enough to justify a finding of state action. 807 F.2d at 1221-22. Jatoi is distinguishable from Albright and Greco. First, in Jatoi, the repayment of the bonds used to build the hospital was directly linked to and entirely dependent on the successful operation of the hospital. 807 F.2d at 1221. Thus, a financially interdependent relationship existed between the hospital and the hospital authority. Id. Second, Jatoi involved...