Cookeville Regional Med. Ctr. v. Humphrey

• Decision Date: 20 February 2004
• Docket Number: No. M2001-00695-SC-R11-CV.,M2001-00695-SC-R11-CV.
• Citation: 126 S.W.3d 897
• Parties: CITY OF COOKEVILLE, TN by and through COOKEVILLE REGIONAL MED. CTR. v. William M. HUMPHREY, M.D., et al.
• Court: Tennessee Supreme Court

126 S.W.3d 897

CITY OF COOKEVILLE, TN by and through COOKEVILLE REGIONAL MED. CTR. v. William M. HUMPHREY, M.D., et al.

No. M2001-00695-SC-R11-CV.

Supreme Court of Tennessee, at Nashville.

October 1, 2003 Session.

February 20, 2004.

William H. West, Nashville, Tennessee, for the appellants, Daniel F. Coonce, M.D., William M. Humphrey, M.D., John P. Limbacher, M.D., George O. Mead, M.D., and Putnam Radiology, P.C.

Andrée Sophia Blumstein, Nashville, Tennessee, for the appellee, City of Cookeville by and through Cookeville Regional Medical Center.

William B. Hubbard, Nashville, Tennessee, for the amicus curiae, Tennessee Hospital Association.

Brian W. Holmes and David L. Steed, Nashville, Tennessee, for the amici curiae, American College of Radiology, American Medical Association, Medical Staff of Cookeville Regional Medical Center, Putnam County Medical Society, and Tennessee Medical Association.

OPINION

JANICE M. HOLDER, J., delivered the opinion of the court, in which FRANK F. DROWOTA, III, C.J., and E. RILEY ANDERSON, ADOLPHO A. BIRCH, JR., and WILLIAM M. BARKER, JJ., joined.

In this declaratory judgment action, the plaintiff, a private act hospital authority established pursuant to Tennessee Code Annotated sections 7-57-601 to -604, seeks a declaration that it has the authority to enter into an exclusive contract for professional imaging services. The defendants, four radiologists who currently have clinical privileges at the Imaging Department of a hospital operated by the plaintiff, filed a counterclaim. We affirm the judgments of the lower courts, holding that Tennessee Code Annotated section 7-57-603 permits the hospital authority to enter into an exclusive provider contract, that the Board of Trustee's decision to close the staff of the Imaging Department did not violate the medical staff bylaws, and that the defendants are not legally or constitutionally entitled to a hearing if their clinical privileges are terminated upon the entry of an exclusive provider contract.

I. FACTUAL AND PROCEDURAL BACKGROUND

Cookeville Regional Medical Center ("CRMC") is a private act hospital — commonly known as a "public hospital" — operated by the City of Cookeville, Tennessee, by and through the Cookeville Regional Medical Center Authority ("the Authority"). CRMC is established under the provisions of Tennessee Code Annotated sections 7-57-601 to -604, the Private Act Hospital Authority Act of 1996 ("Hospital Authority Act"). The defendants are four radiologists who are the sole shareholders in Putnam Radiology, PC ("Putnam"). The defendants are the only radiologists employed by Putnam. The defendants have staff privileges at CRMC's Imaging Department, which has historically operated as an "open staff" department. The Imaging Department staff is currently "open" to all qualified physicians with medical staff privileges who specialize in imaging services rather than "closed" pursuant to an exclusive provider contract.

In early 1999, the defendants, through an affiliated limited liability company, Premier Diagnostic Imaging Center, LLC ("Premier"), applied for a certificate of need to perform outpatient diagnostic imaging services in competition with CRMC. The Authority's Board of Trustees ("Board") decided to oppose Premier's certificate of need application. In addition, at its March 25, 1999 meeting, the Board determined that it would close the medical staff of CRMC's Imaging Department by seeking an exclusive provider contract for in-hospital imaging services.

A certificate of need was obtained by Premier in April of 1999.¹ That same month CRMC issued a request for a proposal ("RFP") from qualified radiology groups to operate and administer its Imaging Department under an exclusive provider contract. The medical staff of CRMC voted to support Putnam in becoming the providers of radiology services under an exclusive provider contract if an agreement could be reached.

Putnam objected to several provisions in the RFP, including a provision that medical staff access to the Imaging Department would terminate once an exclusive contract for the Imaging Department's operation and administration was executed. A letter written on behalf of Putnam stated, "It is our position that the medical staff bylaws of CRMC do not give the hospital the power to exclude radiologists on its staff from access to the devices and staff of the hospital."

In July of 1999, the plaintiff filed this action for declaratory judgment seeking a declaration of the right of CRMC to close the staff of its Imaging Department by means of an exclusive provider contract. The defendants filed a counterclaim, stating, among other things, that the medical staff bylaws of CRMC do not give CRMC power to exclude them from access to its Imaging Department and that the decision to close the staff of the Imaging Department was done in retribution against the defendants for their actions in obtaining a certificate of need for the establishment of an outpatient diagnostic imaging center in Cookeville. The case was heard on stipulated facts and cross motions for summary judgment. The competency of the defendant physicians is not at issue.

The trial court granted the plaintiff's motion for summary judgment. It found that the Hospital Authority Act permits the Authority to close the staff of a hospital department for competitive and economic reasons. In addition, the trial court found that the bylaws do not give the medical staff the right to veto a decision by the Authority to close the staff of a previously open department and that the defendants' contractual and due process rights were not violated. The Court of Appeals affirmed the judgment of the trial court.

We granted permission to appeal.

II. ANALYSIS

The issues before this Court are as follows: 1) whether the Hospital Authority Act permits the Authority to close the staff of the Imaging Department at CRMC by means of an exclusive provider contract, thereby overruling previous case law; 2) if such closing is authorized, whether the Board's decision to close the staff of the Imaging Department violates the medical staff bylaws; 3) whether closing the staff of CRMC's Imaging Department in the absence of a hearing constitutes a breach of contract with the defendants; and 4) whether closing the staff of CRMC's Imaging Department in the absence of a hearing violates the due process or impairment of contract provisions of the state and federal constitutions.

We review an appeal from a grant of summary judgment de novo, according no presumption of correctness to the trial court's disposition. See Edwards v. Hallsdale-Powell Util. Dist., 115 S.W.3d 461, 464 (Tenn.2003); Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn.2002). Summary judgment is proper only when no genuine issues of material fact exist and the movant is entitled to judgment as a matter of law. See Tenn. R. Civ. P. 56.04. In this case, the facts are stipulated, so that only questions of law are before the Court.

A. Authority to Close the Staff of the Imaging Department

When construing a statute, this Court's role is "to ascertain and give effect to the legislative intent without unduly restricting or expanding a statute's coverage beyond its intended scope." Houghton v. Aramark Educ. Res., Inc., 90 S.W.3d 676, 678 (Tenn.2002) (quoting Owens v. State, 908 S.W.2d 923, 926 (Tenn.1995)). Legislative intent is determined "from the natural and ordinary meaning of the statutory language within the context of the entire statute without any forced or subtle construction that would extend or limit the statute's meaning." State v. Flemming, 19 S.W.3d 195, 197 (Tenn. 2000). "When the statutory language is clear and unambiguous, we apply the plain language in its normal and accepted use." Boarman v. Jaynes, 109 S.W.3d 286, 291 (Tenn. 2003).

CRMC operates pursuant to the Hospital Authority Act. This act extends the powers granted to private act metropolitan hospital authorities under Tennessee Code Annotated sections 7-57-501 to -504 to private act hospital authorities. See Tenn.Code Ann. § 7-57-603 (1998). Tennessee Code Annotated section 7-57-502(c) provides in pertinent part that a metropolitan hospital authority, in the exercise of its powers, may "contract for or otherwise participate solely or with others" in furtherance of the hospital's operation. Additionally, the plain language of this statute permits private act metropolitan hospitals to enter into a contract "regardless of the competitive consequences [of the contract]." Tenn.Code Ann. § 7-57-502(c) (1998) (emphasis added). Therefore, it is clear that private act metropolitan hospital authorities are statutorily authorized to execute exclusive provider contracts. Tennessee Code Annotated section 7-57-603 explicitly states that "[a] private act hospital authority . . . has . . . all powers granted to private act metropolitan hospital authorities in title 7, chapter 57, part 5." Thus, it is also clear that public hospitals share the power of metropolitan hospitals to enter into exclusive provider contracts.

Moreover, Tennessee Code Annotated section 7-57-501(b) explains the policy behind the Private Act Metropolitan Authorities Act of 1995. According to this statute, the General Assembly found

that the demand for hospital, medical and health care services is rapidly changing as is the way and manner in which such services are purchased and delivered; that the market for hospital and health care services is becoming increasingly competitive; and that the hospital and other health care providers need flexibility to be able to respond to changing conditions by having the power to develop efficient and cost-effective methods to provide for hospital, medical and health care needs.

Tenn.Code Ann. § 7-57-501(b) (1998). The Legislature concluded that public hospitals in metropolitan areas are unable to effectively compete against private hospitals in the health care market without the removal of ...