Garrow v. Elizabeth General Hospital and Dispensary

• Decision Date: 15 May 1979
• Citation: 401 A.2d 533,79 N.J. 549
• Parties: Eugene GARROW, M. D., Plaintiff-Respondent, v. ELIZABETH GENERAL HOSPITAL AND DISPENSARY, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 549

79 N.J. 549

401 A.2d 533

Eugene GARROW, M. D., Plaintiff-Respondent, v. ELIZABETH GENERAL HOSPITAL AND DISPENSARY, Defendant-Appellant.

Supreme Court of New Jersey.

Argued Nov. 13, 1978.

Decided May 15, 1979.

Peter A. Somers, Westfield, for defendant-appellant (Lindabury, McCormick & Estabrook, Westfield, attorneys).

Harold J. Ruvoldt, Jr., Jersey City, for plaintiff-respondent (Ruvoldt & Ruvoldt, Jersey City, attorneys).

A brief was submitted on behalf of amicus curiae New Jersey Hospital Ass'n (Smith, Stratton, Wise & Heher, Trenton, attorneys; Mary K. Brennan, Princeton, of counsel and on the brief; Ann Reichelderfer, Trenton, on the brief).

The opinion of the court was delivered by

SCHREIBER, J.

Plaintiff, Dr. Eugene Garrow, filed a complaint accompanied by an order to show cause in the Superior Court, Chancery Division, seeking to restrain the Elizabeth General Hospital (Hospital) from conducting a hearing on his application for membership to the Hospital staff until plaintiff was permitted to examine all pertinent documents in defendant's possession. On his initial application for a restraining order, plaintiff expanded his claim to include the right to have counsel present during the hearing. The parties agreed that the hearing would be postponed until the trial court decided the merits of the controversy.

Defendant filed a motion to dismiss the complaint which was returnable on the same day as the final hearing before the trial court. At that time plaintiff again enlarged his demands with defendant's acquiescence by objecting to the proposed hearing being held by a committee of defendant's Board of Trustees. The trial court dismissed the complaint at the conclusion of the hearing. The Appellate Division reversed, 155 N.J.Super. 78, 382 A.2d 393 (1977), and we granted defendant's petition for certification. 76 N.J. 233, 386 A.2d 858 (1978).

No evidence was introduced at the hearing before the trial court. Rather, the parties stipulated to the facts recited in their respective briefs. ¹ In addition to the stipulated facts the trial court had the benefit of an affidavit of the president of the Hospital, a copy of the by-laws of the Hospital's Board of Trustees, and a copy of the by-laws of its Medical Staff.

An undisputed factual picture emerges from this record. Defendant Elizabeth General Hospital is a private non-profit eleemosynary institution organized pursuant to laws of the State of New Jersey. Its facilities are generally available to residents of Elizabeth and environs. There are approximately 225 physicians on the staff.

The ultimate governing body is a 21-member Board of Trustees who serve without compensation. The Board generally meets once a month (except during July and August). Much of its business is conducted through 11 standing committees. However, applications for membership are processed through the Hospital's Medical Staff.

A set of by-laws approved by the Board of Trustees governs the Medical Staff organization. They prescribe the procedure to be followed and the prerequisites to qualifications for staff membership. In addition to being legally licensed to practice medicine and surgery in the State, a person must be able to demonstrate competence, a good reputation, and ability to work with others, the Hospital's ultimate purpose being to assure a high quality of medical care treatment. The selection process is set in motion by the filing of an application in which detailed information concerning qualifications must be supplied. Included is a requirement to disclose whether membership or clinical privileges have ever been denied, revoked, suspended, reduced or not renewed at any other hospital. The Medical Staff by-laws provide that the applicant has the burden of producing adequate information for a proper evaluation of competence, character and ethics, and for resolving doubts about such qualifications. The by-laws also state that the applicant by applying for appointment agrees to appear for interviews, authorizes consultation with members of other hospital staffs with which the applicant has been associated, and releases from any liability all representatives of the Hospital for their acts performed in good faith in connection with evaluation of the applicant.

The completed application is presented to the Hospital's director who checks the applicant's references and transfers the results to the Credentials and Eligibility Committee. This committee conducts an investigation, interviews the applicant and submits its findings to the Medical Organization Committee of the Medical Staff. This committee recommends acceptance, rejection, or remand to the Credentials and Eligibility Committee for additional information. The Medical Organization Committee's recommendations are transmitted to the Board of Trustees.

If the Board of Trustees rejects the application, notice is given to the applicant who may request a hearing. If a hearing is requested, it is held before a hearing committee designated by the Board. The committee must include at least one member of the Medical Staff. The purpose of the hearing is to resolve matters bearing upon the professional ethics and competency of the applicant. The by-laws also provide that neither the applicant nor the Board of Trustees may have counsel unless the hearing committee permits both attorneys to be present. Court rules of evidence do not apply. An accurate record of the proceedings must be kept and the applicant must appear. The hearing committee submits its recommendations to the Board of Trustees which then reconsiders the matter and makes its final determination.

Plaintiff submitted his application to the defendant's director and this application was then processed. The Medical Organization Committee reviewed his application and recommended denial. The Board of Trustees adopted the committee's recommendation, notified the plaintiff and advised him that he was entitled to a hearing if he so desired. Upon plaintiff's request for a hearing, the Board designated a hearing committee and fixed May 21, 1976 as the hearing date.

After the hearing request, a copy of the minutes of the committee meeting in which the reasons for the adverse report were set forth was sent to plaintiff's counsel. The minutes described in some detail the investigation and summarized its conclusions in the following manner:

1. ON HIS APPLICATION, DR. GARROW DID NOT DISCLOSE THE FACT THAT HE HAD BEEN DENIED MEDICAL STAFF MEMBERSHIP AT BAYONNE HOSPITAL, EVEN THOUGH THE APPLICATION SPECIFICALLY REQUIRES SUCH DISCLOSURE. FURTHERMORE, THE APPLICATION SAYS THAT THE APPLICANT CONCURS THAT "ANY MISSTATEMENTS IN, OR OMISSIONS FROM, THIS APPLICATION SHALL CONSTITUTE CAUSE FOR REJECTION OF THIS APPLICATION AND, AT ANY TIME THEREAFTER,

FORFEITURE OF MEMBERSHIP ON THE MEDICAL STAFF, IN THE SOLE AND FINAL DISCRETION OF THE BOARD OF TRUSTEES." THE COMMITTEE CONSIDERED THIS OF ITSELF TO BE SUFFICIENT AND ADEQUATE REASON TO DENY THE APPOINTMENT.

2. DR. GARROW'S EXPLANATION AS TO WHY HIS APPLICATION WAS DENIED AT BAYONNE HOSPITAL WAS INADEQUATE.

3. ON HIS APPLICATION, DR. GARROW DID NOT DISCLOSE THAT HE WAS A MEMBER OF THE STAFF AT UNITED HOSPITALS, WHERE HE WAS THEN APPARENTLY UNDER SCRUTINY REGARDING HIS PRACTICE.

4. THERE APPEARS TO BE A SERIOUS QUESTION ABOUT DR. GARROW'S EXERCISE OF HIS CLINICAL JUDGMENT AT UNITED HOSPITALS. ALSO, THERE APPEARS TO BE A QUESTION AS TO WHETHER HE LIMITS HIS SURGICAL PRACTICE TO THE FIELD OF HIS SPECIALTY.

5. THERE IS A QUESTION AS TO DR. GARROW'S ABILITY TO GET ALONG WITH OTHER PHYSICIANS, AS INDICATED IN THE LETTER OF REFERENCE FROM THE DIRECTOR OF SURGERY AT JERSEY CITY MEDICAL CENTER AND IN THE LETTER FROM THE CHIEF EXECUTIVE OFFICER AT BAYONNE HOSPITAL.

After receipt of a copy of the minutes, plaintiff commenced this action in which he sought disclosure of all documents in the Hospital's file material to his application. The trial court concluded that the suit was premature. It pointed out that in every reported decision in this State, the legal proceedings were instituted after the hospital's final action. Referring to the principle that when factual and constitutional issues are presented in an administrative setting the exhaustion principle should be applied, the trial court reasoned that logic dictated application of the same principle to this suit. It noted that the proceedings were in an interlocutory status and that plaintiff might well be successful, in which event the controversy would become moot. Accordingly, the trial court held that the matter was not ripe for judicial review.

The Appellate Division reversed. Finding that adequacy of the hearing implicated concepts of fundamental procedural due process, it held that judicial intervention was justified. It found that procedural due process in the conduct of the hearing was required and that the right to counsel inhered in that process. It further decided that plaintiff's right to prehearing discovery should be honored. However, it perceived no impropriety in the Board of Trustees' delegating the hearing to a committee.

We do not agree that judicial review at this interlocutory stage was warranted. However, in view of the status of the matter, we shall discuss the merits of the issues raised so that the hearings may be expeditiously conducted and concluded.

This case deals with a non-profit private hospital serving the public generally, as distinguished from a purely private hospital or one owned by a governmental body. A non-profit private hospital serving the public generally is a quasi-public institution whose obligation to serve the public is the linchpin of its public trust and the fiduciary relationship which arises out of the management of that trust. Thus, the hospital board of trustees has been vested with the responsibility of attempting to elevate standards of medical care. See Greisman v. Newcomb Hosp., 40 N.J. 389, 403, 192 A.2d 817 ...