Islami v. Covenant Medical Center, Inc.
| Decision Date | 22 December 1992 |
| Docket Number | No. C 90-2076.,C 90-2076. |
| Citation | 822 F. Supp. 1361 |
| Parties | Mohammad ISLAMI, M.D., Plaintiff, v. COVENANT MEDICAL CENTER, INC., Timothy Wilson, Richard D. Waldorf, and James F. Connell, Jr., Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
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Nick Critelli, Nick Critelli Associates, P.C., Richard M. Calkins, Zarley, McKee, Thomte, Voorhees & Sease, Des Moines, IA, for plaintiff.
Edward J. Gallagher, Jr., Gallagher, Langlas & Gallagher, P.C., Waterloo, IA, Myra C. Selby, Sherry A. Fabina-Abney, Ice, Miller, Donadio & Ryan, Indianapolis, IN, for defendants.
This matter comes before the court on the parties' cross motions for summary judgment. The plaintiff, Dr. Mohammad Islami (Dr. Islami) filed a motion for summary judgment on the portion of his complaint alleging breach of contract. The defendants, Covenant Medical Center, Inc., Dr. Timothy Wilson, Dr. Richard D. Waldorf, and Dr. James Connell, Jr., filed a motion for summary judgment on the portion of Dr. Islami's complaint alleging federal antitrust violations, intentional interference with a business relationship, and intentional infliction of emotional distress. Both summary judgment motions were resisted.
Chief Magistrate Judge John A. Jarvey already has held a full-scale evidentiary hearing in this case on Dr. Islami's application for a preliminary injunction. Judge Jarvey provided an extensive discussion of the factual background of this case in his Report and Recommendation denying the application for the preliminary injunction. The court will borrow heavily from Judge Jarvey's recitation of the facts in that document in providing the undisputed background facts here.1
Dr. Islami is a board certified cardiovascular and thoracic surgeon licensed to practice in Iowa and other states. He held staff privileges at defendant Covenant Medical Center ("Covenant" or "the hospital") in Waterloo, Iowa from 1984 until he was suspended on May 14, 1990. He presently holds staff privileges at Allen Memorial Hospital in Waterloo, Iowa, Sartori Memorial Hospital in Cedar Falls, Iowa, and Peoples Memorial Hospital in Independence, Iowa.
Covenant is a private, not for profit hospital with an inpatient capacity of 336 beds. It has an active staff of approximately 80 physicians. Together with the courtesy staff, approximately 140 physicians serve the hospital. It is a Medicare and Medicaid provider. It is the largest hospital in the Waterloo area.
Defendant Dr. Timothy Wilson (Dr. Wilson) is an oral and maxillofacial surgeon and was, at the times relevant to this lawsuit, chair of the surgery department at Covenant. Defendant Dr. Richard D. Waldorf (Dr. Waldorf) is a general surgeon with staff privileges at Covenant. He has performed thoracic surgeries as a part of his practice. Defendant Dr. James F. Connell, Jr. (Dr. Connell) is a radiologist and holds staff privileges at Covenant and operates the Covenant radiology laboratory. Dr. Connell is a radiologist and was a member of Covenant's Executive Committee.
Dr. Islami began practicing medicine in the Waterloo/Cedar Falls area in 1984. He had his offices at Allen Memorial Hospital from 1984 to 1988. He moved his offices to Covenant in 1988 upon the invitation of Lewis Raker, Covenant's chief operating officer.
Dr. Islami set up his practice in an office building attached to Covenant and obtained permission from Covenant's President, Ray Burfiend, to operate a vascular testing laboratory out of his office. On August 5, 1988, Dr. Islami signed a lease with Covenant to operate the lab.
Dr. Islami equipped the lab with over $400,000 worth of diagnostic equipment which he purchased from outside of Iowa. Since then he has purchased several hundred thousand dollars worth of lab supplies from outside of Iowa. Dr. Islami has used this lab only to perform noninvasive tests. Some of those tests initially were unavailable at the hospital's radiology lab at the time Dr. Islami opened his vascular lab.
Dr. Islami's laboratory became an immediate success. He received a large number of referrals to his lab from other physicians serving Covenant. Lewis Raker, Covenant's chief operating officer, raised concerns about the lab and its relationship to Covenant's own radiology lab (Exhibit 4, pp. 12-14). Covenant raised concerns about liability and quality assurance matters including the safety of patients being transferred to labs outside the hospital proper. Dr. Islami asserts that the hospital was concerned about the competition to the hospital's own lab presented by Dr. Islami's lab and the potential of other labs that other physicians might want to establish.
At one of the Executive Medical Staff Committee meetings where Dr. Islami's laboratory was being discussed, Dr. Connell expressed his displeasure with Dr. Islami's lab. Dr. Connell stated that he "wanted that vascular laboratory removed or there would be blood flowing in the hall." Dr. Connell does not recall making this statement but does not deny it.
Dr. Islami's lab also generated controversy over how patients would be billed for tests performed at Dr. Islami's lab. Dr. Islami treated a high percentage of Medicare patients. Medicare normally only reimbursed a hospital in a fixed sum for the patient's stay. Medicare expected laboratory costs to be absorbed by the hospital as part of that fixed sum. Dr. Islami, however, charged Medicare for both the costs of treatment and the costs of the tests that he conducted in his lab. Covenant was concerned this resulted in a "double-billing" which was contrary to Medicare's intentions. Dr. Islami eventually agreed to charge only for his interpretation of tests, not for the tests themselves.
These concerns about Dr. Islami's laboratory caused the Executive Medical Staff Committee to establish a committee to study the problem of independent labs owned by physicians and report back to the Executive Committee. On November 29, 1988, an ad hoc committee met and a majority of the committee recommended that patients should not be taken to a physician's lab for testing if the test was available in Covenant's own lab. It also recommended that a physician have lab equipment certified. Dr. Wilson was a member of the ad hoc committee.
On January 24, 1989, the Executive Committee voted to require all inpatients to be taken to Covenant's laboratories for testing if tests were available and to a physician's laboratory only if the proposed tests were not available in the Covenant laboratory. Committee members "felt that it was reasonable to support the hospital and that the hospital is ultimately liable for the patient." The Executive Committee determined that Dr. Islami be informed that "tests significantly different from those done within Covenant would be allowed ..." at his lab. Dr. Wilson and Dr. Connell were voting members of the Executive Committee.
In March of 1989, Dr. Wilson, the Chairman of the Surgery Department at Covenant, began a chart study of the vascular and thoracic surgeries at Covenant. Dr. Wilson asked that a computer search be made identifying all vascular and thoracic surgeries performed at Covenant Medical Center and that those files be pulled for study (Exhibit 6, p. 5). The record is unclear what prompted the study but it appears that it was originally suggested by Dr. Waldorf at some point prior to 1988 (Exhibit 27, p. 52-53). Of the 117 surgeries selected for the study, 95 were performed by Dr. Islami and the remaining were performed by 4 other surgeons (Exhibit 6, p. 5).
Because only a small number of physicians in the Waterloo-Cedar Falls area were performing these surgeries, Dr. Wilson determined that the medical charts should be reviewed at some point by an outside consultant with similar qualifications to Dr. Islami but who was not in competition with Dr. Islami. Dr. Wilson hired Dr. S. Alshabkhoun, a board certified thoracic, cardiac, and vascular surgeon to serve as the external consultant. Dr. Alshabkhoun practices in Chicago, Illinois, and was retained by agreement executed on March 14, 1989.
The review process began with an internal investigation. Dr. Wilson wanted the internal review to be performed by surgeons having the broadest range of relevant medical experience. He appointed Dr. Donald Hayes, a pathologist; Dr. Bernard Sand, a general surgeon; and Dr. Donald Bolin, an internist and head of the Department of Medicine, to conduct the internal review of the 117 surgeries conducted between January 1988 and April 1989. This panel was appointed on April 5, 1989.
The ninety-five charts from Dr. Islami were divided among the three physicians. The process of reviewing these surgeries took a considerable period of time. The physicians performed this peer review function without compensation and did it in addition to their ordinary duties, as time permitted. Of the 95 records of Dr. Islami reviewed, the reviewers questioned patient management or recommended further review in 45 of the cases. The questions ranged from claims of poor documentation to claims of unnecessary surgery.
In August of 1989, Dr. Wilson also requested Dr. Waldorf to do an independent review of Dr. Islami's charts. Dr. Wilson was aware that Dr. Waldorf wanted to do this study (Exhibit 6, p. 6). It is unclear from the record whether Dr. Waldorf reviewed all 95 of the charts or only the 45 identified for further review. Nonetheless, Dr. Waldorf's review completed the preliminary internal review.
On March 21, 1990, the Executive Committee of the Surgery Department met and were presented with the internal review preliminary report and notes of the reviewing physicians (Exhibit 6, p. 6). Of the 45 cases recommended for further review, 28 involved vascular procedures and 17 involved thoracic procedures (Exhibit 6, p. 43). The Executive Committee recommended 23 of the patient charts for outside review by Dr. Alshabkoun. The Committee did not notify Dr. Islami that the...
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