Fried v. Straussman

• Decision Date: 22 February 1977
• Citation: 393 N.Y.S.2d 334,361 N.E.2d 984,41 N.Y.2d 376
• Parties: , 361 N.E.2d 984 Allan FRIED et al., Respondents, v. Edward STRAUSSMAN et al., copartners, doing business under the name of Grace Plaza of Great Neck, Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 334

393 N.Y.S.2d 334

41 N.Y.2d 376, 361 N.E.2d 984

Allan FRIED et al., Respondents, v. Edward STRAUSSMAN et al., copartners, doing business under

the name of Grace Plaza of Great Neck, Appellants.

Court of Appeals of New York.

Feb. 22, 1977.

Bernard S. Meyer and Robert M. Calica, Mineola, for appellants.

Harry Kamer, Great Neck, for respondents.

BREITEL, Chief Judge.

Defendants, owners of a proprietary nursing home, appeal from an affirmance of a judgment of Supreme Court, after trial, which enjoined defendants from barring two physicians, husband and wife, from visiting their patients in the nursing home. The exclusion resulted from practices which defendants found objectionable, including alleged overvisiting, improper billing, and refusal to comply with administrative directives.

The issue is whether a physician, excluded from a private nursing home in good faith and on objectively reasonable grounds, is entitled to a judicial hearing and determination to establish the truth of the facts upon which the otherwise reasonable grounds depend.

The order of the Appellate Division should be reversed, and a new trial ordered. At common law, a private proprietary hospital or nursing home could bar a physician for any reason or for no reason. Section 2801--b of the Public Health Law changed the common-law rule to permit exclusion of a physician for reasons limited to patient welfare, institutional objectives, and character or competency of the physician. The statute does not, however, authorize plenary judicial review of every exclusion of a physician. Consequently, judicial review may assure only that the exclusion was made in good faith and on objectively reasonable grounds. Since the legal standard applied below was incorrect, there must be a new trial.

Defendants Edward and George Straussman have owned and operated a nursing home and health-related facility, the Grace Plaza of Great Neck, since May, 1972. Plaintiffs, Allan and Maxine Fried, were granted visiting privileges not long after the Grace Plaza was opened by the Straussmans. By 1974, the Frieds had been designat personal physicians for about 50 of the home's approximately 200 residents. Dr. Allan Fried visited the home several times a week and Dr. Maxine Fried much less frequently, perhaps a dozen times a year.

The Frieds apparently were in frequent conflict with the administration of the nursing home. In 1973, they left for a two-week summer vacation without notifying the home so that their substitute physician could, when necessary, be located. They refused to adhere to a policy forbidding the use of mechanically reproduced physicians' orders, and objected to other administrative policies. The Frieds apparently acquired as patients 20 of Grace Plaza's residents at the expense of other physicians treating patients at the home.

More significant, however, is that the administration received complaints of overvisiting and improper billing by the Frieds.

All of their patients at Grace Plaza were covered by Medicare and most by Medicaid, and, given the advanced age and deteriorating physical condition of many of the patients, the potential for abuse was present. The unfavorable public image of nursing homes, combined with the widespread publicity of Medicaid and Medicare abuses, would naturally have made any charges of improper billing or overvisiting matters of concern to the Grace Plaza administrators.

Finally, on January 31, 1975, Dr. Allan Fried, on his own initiative and without consulting the Grace Plaza administration, called the Nassau County Police to report an alleged sexual assault on one of his patients by a security guard nearly two days earlier. The home administrators had already investigated the matter and, after interviewing and examining the alleged 'victim', concluded that there had been no criminal assault. The implicated guard was nevertheless discharged. Thus, the Straussmans were understandably disturbed by the sudden appearance of uniformed police.

On February 4, four days later, the Frieds' visiting privileges were revoked. Faced with arrest as trespassers if they attempted to re-enter the nursing home, plaintiffs brought this action on February 7. A temporary restraining order was served on the Straussmans simultaneously. On February 26, a preliminary injunction was issued, and, after trial without a jury, a permanent injunction was entered on May 19, 1975. The Appellate Division affirmed, with one Justice dissenting.

The evidence on the trial was in sharp conflict, especially the opinion evidence supplied by experts offered by both parties on the issue of overvisiting. Similarly, there was conflict on the issue of the occasion for calling the police, and the one instance of the 'false billing'. Depending on the fact finder's view of the conflicting evidence, the issues could have been decided either way, and either way would have been supported by sufficient evidence.

At the outset, plaintiffs' vaguely outlined constitutional and Federal statutory claims should be rejected. State regulation of nursing homes is not 'state action' sufficient to require a due process hearing before a physician may be excluded from the home (cf. Jackson v. Metropolitan Edison Co., 419 U.S. 345, 350, 358--359, 95 S.Ct. 449, 42 L.Ed.2d 477; Ascherman v. Presbyterian Hosp., 9 Cir., 507 F.2d 1103, 1104--1105; Mulvihill v. Butterfield Mem. Hosp., D.C., 329 F.Supp. 1020, 1024). Moreover, the nursing home's exclusion of the physicians, at least perhaps so long as the patients were able and free to move, does not deprive Medicare or Medicaid patients of any right, constitutional or statutory, to free choice of a physician. On the submitted and present analysis, plaintiffs' only legal remedy must come from the Public Health Law.

Subdivision 1 of section 2801--b of the Public Health Law provides, in relevant part: 'It shall be an improper practice for the governing body of a hospital to * * * terminate or diminish in any way a physician's * * * professional privileges in a hospital, without stating the reasons therefor, or if the reasons stated are unrelated to standards of patient care, patient welfare, the objectives of the institution or the character or competency of the applicant.' 'Hospital' is defined to include nursing homes ( § 2801, subd. 1; see Matter of Sigety v. Hynes, 38 N.Y.2d 260, 268, 379 N.Y.S.2d 724, 731, 342 N.E.2d 518, 523, cert. den. Kent Nursing Home v. Office Special State, etc., 425 U.S. 974, 96 S.Ct. 2174, 48 L.Ed.2d 798). Section 2801--c provides for injunctive relief in the event that violations occur.

It is true that the Frieds were excluded from the nursing home before they were provided with explicit, written reasons for the home's action. Previous communications between the Frieds and the Grace Plaza administration, however, notified the physicians of the sources of dissatisfaction. Moreover, explicit reasons were set forth in an affidavit in opposition to plaintiffs' motion for a preliminary injunction.

Mere failure to provide reasons at the moment of exclusion should not forever bar a hospital or nursing home from excluding a physician when satisfactory reasons do exist and are communicated to the physician on request. Hence, the home's failure to provide stated reasons on its own initiative should not be dispositive of the case.

As noted earlier, the statutes marked a change from the common-law rule that, absent a contractual obligation to the contrary, denial of visiting privileges constituted no legal wrong (Leider v. Beth Israel Hosp. Ass'n, 11 N.Y.2d 205, 208--209, 227 N.Y.S.2d 900, 901, 182 N.E.2d 393, 394; Van Campen v. Olean Gen. Hosp., 210 App.Div. 204, 209, 205 N.Y.S. 554, 557, affd., 239 N.Y. 615, 147 N.E. 219; Halberstadt v. Kissane, 31 A.D.2d 568, 294 N.Y.S.2d 841; Exclusion of Physician by Hospital, Ann., 37 A.L.R.3d 645, 659--661). No longer may a physician be denied professional privileges arbitrarily (Matter of Fritz v. Huntington Hosp., 39 N.Y.2d 339, 348, 384 N.Y.S.2d 92, 98, 348 N.E.2d 547, 554; but see General Municipal Law, § 128, subd. 4, providing that the board of managers of a municipal hospital may remove physicians 'at pleasure'). Reasons must be given for any termination, and those reasons must relate to legitimate concerns of the hospital or nursing home: patient care, patient welfare, objectives of the institution, or competency of the physician.

Thus, in Matter of Fritz v. Huntington Hosp., supra, where physicians were denied visiting privileges for reasons assertedly wholly unrelated to proper concerns of the hospital, judicial intervention was warranted. In the Fritz case, physicians who were originally trained at osteopathic colleges, but later fully licensed as general physicians, and who had completed fully accredited internship programs, were denied privileges solely because of their failure to complete American Medical Association accredited formal training programs (pp. 341--343, 384 N.Y.S.2d pp. 94--95, 348 N.E.2d pp. 549--551). No questions as to the competency of the physicians were raised.

In Fritz, the only question presented immediately of interest was whether he stated reason for the exclusion was related to institutional concerns and needs, and the matter was remitted to Special Term for a determination. There was no need to consider whether the stated reasons were fabrications of the hospital administration, since it was conceded that the osteopathic physicians had not completed the AMA programs. It was not necessary, therefore, in the Fritz case to consider whether the underlying facts upon which the hospital acted were true or false, let alone to determine whether a hospital has the right to act on apparent facts as reasonably perceived by it.

One must not confuse the issue in the Fritz case with the one involved in this appeal. The issue in Fritz was whether the grounds for refusing hospital privileges to the osteopathic physicians were 'relat...