Eidelson v. Archer, s. 5494

• Decision Date: 21 May 1982
• Docket Number: 5495,Nos. 5494,s. 5494
• Citation: 645 P.2d 171
• Parties: Stewart EIDELSON, Ernest Webb, and Teamsters Union Local 959, Appellants and Cross-Appellees, v. Gary ARCHER, Appellee and Cross-Appellant.
• Court: Alaska Supreme Court

Page 171

645 P.2d 171

Stewart EIDELSON, Ernest Webb, and Teamsters Union Local 959, Appellants and Cross-Appellees, v. Gary ARCHER, Appellee and Cross-Appellant.

Nos. 5494, 5495.

Supreme Court of Alaska.

May 21, 1982.

Louis R. Veerman, Ely, Guess & Rudd, Joseph W. Evans, and Stanley B. Malos, and Lori S. Kornblum, Law Clerks, Birch, Horton, Bittner, Monroe, Pestinger & Anderson, Anchorage, for appellants and cross-appellees.

Lester W. Miller, Anchorage, for appellee and cross-appellant.

OPINION

Before RABINOWITZ, C. J., BURKE, MATTHEWS, and COMPTON, JJ., and DIMOND, Senior Justice. ^*

RABINOWITZ, Chief Justice.

Gary Archer, M.D., filed an action against William Ivy, M.D., Stewart Eidelson, M.D., Ernest Webb, and Teamsters Union Local No. 959 (Local 959) following the summary suspension of his medical staff privileges at the Alaska Hospital and Medical Center, Inc. Archer, in part, alleged that defendants had conspired to accomplish his "wrongful removal" from the hospital medical staff, had intentionally interfered with his contractual and professional relationships with the hospital and had defamed him. ¹

Prior to trial Archer amended his complaint, substituting for the three claims for relief initially pled a single claim for wrongful use of civil proceedings grounded upon Restatement (Second) of Torts § 680 (1976), "Proceedings Before an Administrative Board". ² The jury returned a verdict in Archer's favor for $150,000 in compensatory damages and $500,000 in punitive damages. The superior court thereafter denied motions for judgment n.o.v. and for a new trial but granted remittitur in the amount of $200,000, thereby reducing the award of punitive damages from $500,000 to $300,000.

Appellants' primary contention in this appeal is that the judgment should be reversed and the suit dismissed because of Archer's failure to exhaust his administrative remedies. ³ We conclude that Archer's failure to exhaust the hospital's internal remedies requires the dismissal of his suit. ⁴

Summary of the Facts

On August 8, 1977, Dr. Gary Archer, then director of the Critical Care Unit (CCU) at the Alaska Hospital and Medical Center (the hospital), was summoned to a meeting being held in the office of Dr. Stewart Eidelson. Dr. William Ivy, president of the medical staff of the hospital, had asked Dr. Eidelson to arrange this meeting between Ivy, Eidelson, Archer, and hospital administrators Charles Rigden and Ernest Webb. ⁵ Ivy testified he called this meeting to deal with allegations of misconduct on the part of physicians, including Dr. Archer, working in the CCU.

Prior to Archer's arrival, Ivy, Webb, Eidelson and Rigden discussed the problems in the CCU revealed by a committee investigation ⁶ and a report that Archer had been involved in a dispute with a hospital janitor. ⁷ According to Archer, when he arrived at the meeting Eidelson asked him to relate his version of the janitor incident and then asked him to wait in the outer office. Several minutes later Archer was called back into the office where Ivy informed him that his hospital privileges were summarily suspended for an indefinite term. ⁸ Archer testified that when he asked Ivy for an explanation, Ivy stated that it was for past and present disruptions. Ivy testified that his response to Archer was that he would not attempt to delineate all the reasons for the suspension, but that in general it was for past and present disruptions involving patient care.

The following day, August 9, 1977, Ivy sent a letter to Archer formally notifying him of the summary suspension and of his right to a hearing under the hospital bylaws. ⁹ On August 16, Archer wrote Ivy a letter requesting a hearing on the summary suspension; however, Archer rescinded this request on August 18. Archer stated that he withdrew his request for a hearing upon the advice of Webb and Dr. Sherman Beachman who suggested that it would be better to await Ivy's announcement of the duration of the suspension before deciding whether to request a hearing.

On August 23, at a meeting of the executive committee ¹⁰ of the hospital medical staff, Ivy advised the committee members of the suspension and received the committee's support for the actions he had taken concerning Archer. Two days later, August 25, Ivy informed Archer that his suspension would continue until December 1, 1977. Archer claims that he again asked why he was being suspended and that he received no answer. The following day, August 26, Ivy sent written notification of his decision to Archer, stating that the action was being taken in the interest of patient care and advising that Archer had 30 days to request a hearing on his suspension. ¹¹

On August 29, the hospital executive committee held a special meeting. The members of the committee were issued copies of the investigation into the problems in the CCU, and Ivy informed them of his extension of Archer's suspension. The committee voted to support Ivy and to continue the investigation into the allegations of misconduct.

Archer apparently decided not to request a hearing on his summary supension, and on September 7, 1977, he filed this action in the superior court. On September 30, 1977, Ivy instituted corrective action procedures against Archer via a letter to the executive committee containing 37 allegations of misconduct. ¹² Archer's counsel received notice of the investigation and a request to appear before the committee, but Archer declined to participate.

On December 1, the executive committee voted to permanently suspend Archer's hospital privileges. Written notice was sent to Archer's attorney of Archer's right to request a hearing. Archer did not request a hearing, proceeding instead with the court action he had already filed.

In the superior court appellants then moved for summary judgment on the ground that Archer had failed to exhaust the remedies available under the hospital's bylaws. The superior court denied the motion, ruling that Archer was entitled to a trial to determine the validity of the original summary suspension. Appellants contend the superior court's refusal to apply the exhaustion of remedies requirement and thus grant summary judgment in their favor was erroneous.

I. Does The Exhaustion of Remedies Doctrine Apply?

The threshold question is whether the exhaustion of remedies doctrine is applicable to the internal peer review and disciplinary procedures of a privately owned hospital. ¹³ Although several courts ¹⁴ have applied the exhaustion doctrine to private hospital proceedings, this is a question of first impression in Alaska.

The exhaustion of remedies doctrine is well established in the field of administrative law. ¹⁵ A central principle of this doctrine is that a party is not entitled to seek judicial relief for a supposed or threatened injury until the available administrative remedies have been exhausted. McKart v. United States, 395 U.S. 185, 193, 89 S.Ct. 1657, 1662, 23 L.Ed.2d 194, 203 (1969); Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 51, 58 S.Ct. 459, 463, 82 L.Ed. 638, 644 (1937). In this case, however, we are not dealing with the actions of an administrative agency. Instead of an action taken by a public governmental body, we are presented with the summary suspension and later termination of a physician's privileges by the medical staff and governing board of a privately operated hospital. To determine whether the exhaustion rule should be applied in this context it is necessary to examine the underlying objectives of the exhaustion doctrine and the nature of the proceedings involved.

In Van Hyning v. University of Alaska, 621 P.2d 1354, 1355 (Alaska 1981) we stated:

"The basic purpose of the exhaustion doctrine is to allow an administrative agency to perform functions within its special competence-to make a factual record, to apply its expertise, and to correct its own errors so as to moot judicial controversies." Parisi v. Davidson, 405 U.S. 34, 37 (92 S.Ct. 815, 817) 31 L.Ed.2d 17, 25 (1972).

The reasons underlying the exhaustion doctrine apply equally to cases such as the instant case where a party seeks judicial review of a decision that was not appealed through the administrative process. McKart v. United States, 395 U.S. at 194, 89 S.Ct. at 1662, 23 L.Ed.2d at 203-04. As the Supreme Court stated:

(J)udicial review may be hindered by the failure of the litigant to allow the agency to make a factual record, or to exercise its discretion or apply its expertise .... A complaining party may be successful in vindicating his rights in the administrative process. If he is required to pursue his administrative remedies, the courts may never have to intervene. And notions of administrative autonomy require that the agency be given a chance to discover and correct its own errors. Finally, it is possible that frequent and deliberate flouting of the administrative processes could weaken the effectiveness of an agency by encouraging people to ignore its procedures.

Id. at 194-95, 89 S.Ct. at 1662-63, 23 L.Ed.2d at 204.

We must ascertain whether the basic purposes of the exhaustion doctrine are relevant to the peer review decisions and procedures of an association of physicians at a privately operated hospital. When faced with this precise issue, the California Supreme Court concluded:

(T)he policy considerations which support the imposition of a general exhaustion requirement remain compelling in this context. In the first place, even if a plaintiff no longer wishes to be either reinstated or admitted to the organization, an exhaustion of remedies requirement serves the salutary function of eliminating or mitigating damages. If an organization is given the opportunity quickly to determine through the operation of its internal procedures that it has committed error, it may be able to minimize, and sometimes eliminate, any monetary injury to the plaintiff by immediately reversing its initial decision....

Moreover, by...