Kessel v. MONONGALIA COUNTY GENERAL HOSP.

• Citation: 600 S.E.2d 321,215 W.Va. 609
• Decision Date: 19 May 2004
• Docket Number: No. 31547, No. 31548.
• Court: Supreme Court of West Virginia
• Parties: James W. KESSEL, M.D., Richard M. Vaglienti, M.D., and Stanford J. Huber, M.D., Plaintiffs v. MONONGALIA COUNTY GENERAL HOSPITAL COMPANY, DBA Monongalia General Hospital, a West Virginia Nonprofit Corporation; Mark Bennett, M.D., Individually; Bennett Anesthesia Consultants, PLLC; and Professional Anesthesia Services, Inc., Defendants.

600 S.E.2d 321

215 W.Va. 609

James W. KESSEL, M.D., Richard M. Vaglienti, M.D., and Stanford J. Huber, M.D., Plaintiffs v. MONONGALIA COUNTY GENERAL HOSPITAL COMPANY, DBA Monongalia General Hospital, a West Virginia Nonprofit Corporation; Mark Bennett, M.D., Individually; Bennett Anesthesia Consultants, PLLC; and Professional Anesthesia Services, Inc., Defendants.

Nos. 31547, 31548.

Supreme Court of Appeals of West Virginia.

Submitted February 10, 2004.

Decided May 19, 2004.

Frank E. Simmerman, Jr., Esq., Simmerman Law Office, PLLC, Clarksburg, West Virginia, Attorney for Dr. Kessel.

C. Michael Bee, Esq., Susan B. Tucker, Esq., Hill, Peterson, Carper, Bee & Deitzler, PLLC, Charleston, West Virginia, Attorneys for Drs. Vaglienti and Huber.

Gordon H. Copland, Esq., Steptoe & Johnson, PLLC, Clarksburg, West Virginia, Attorney for Monongalia General Hospital.

Thomas A. Heywood, Esq., Bowles Rice McDavid Graff & Love, PLLC, Attorney for Amicus Curiae, West Virginia Hospital Association.

MAYNARD, Chief Justice:

We are called upon to answer a certified question from the Circuit Court of Monongalia County. In the exercise of our discretion, we reformulate the certified question as follows:¹

May a public or quasi-public hospital enter into an exclusive contract with a medical service provider that has the effect of completely excluding physicians who have staff privileges at the hospital from the use of the hospital's medical facilities.²

For the reasons that follow, we answer the question in the negative.³

I. FACTS

The plaintiffs below, Dr. James W. Kessel, Dr. Richard M. Vaglienti, and Dr. Stanford J. Huber, are anesthesiologists who have been granted staff privileges⁴ at defendant Monongalia General Hospital (hereafter "Monongalia General" or "the hospital"), a 207-bed acute facility which provides surgical services to patients. The plaintiffs were employees and shareholders of Monongalia Anesthesia Associates, Inc. (hereafter "MAA") which originally entered into a contract with Monongalia General in 1975 for the provision of anesthesia services. This contract extended indefinitely, with a termination clause upon sufficient advance notice.

In 1987, Monongalia General entered into an exclusive contract with another medical service provider to provide cardiac anesthesia services. At that time, MAA remained the primary provider of all other types of anesthesia services. In 1989, contract negotiations between the hospital and MAA failed to produce an extension of the contract, apparently due in part to the hospital's desire to add a contractual provision that tied staff privileges of MAA anesthesiologists to the exclusive contract. As a result, MAA continued to provide the primary non-cardiac anesthesia services for the hospital for approximately the next decade without a contract.

In 1999, Monongalia General entered into an agreement with Dr. Mark Bennett and Bennett Anesthesia Consultants, PLLC, defendants below, to exclusively provide all anesthesia services for orthopedic patients at the hospital. Thereafter, the hospital sought a provider for all, save cardiac and orthopedic, general anesthesia services.

At that point, MAA asserted that such actions constituted a reduction in privileges previously granted to its physicians for reasons unrelated to clinical competency in violation of the medical staff bylaws. A hearing was held before the Fair Hearing Panel as provided in the bylaws.⁵ The Panel recommended, inter alia, approval of contracting for anesthesiology services, since the privileges of MAA doctors had not been compromised. MAA appealed the recommendations to the Hospital Board of Directors which essentially accepted the recommendations.

Thereafter, the hospital entered into a contract with Professional Anesthesia Services, Inc., which granted it the exclusive right to provide all other general anesthesia services at the hospital, with the exception of cardiac and orthopedic surgery patients. As a result, even though the plaintiffs maintain privileges at the hospital, they no longer are permitted to provide operative and orthopedic anesthesia in the hospital.⁶ The plaintiffs subsequently sued the Hospital, Dr. Bennett, Bennett Anesthesia Consultants, and Professional Anesthesia Services alleging tortious interference with business relationships; due process violation/failure to provide a fair hearing; restraint of trade; breach of contract; and breach of covenants of good faith and fair dealing. The hospital sought summary judgment on every count but the alleged antitrust violation. The circuit court, finding the matter was controlled by a question not yet addressed by this Court, certified the question, set forth above, as dispositive of the hospital's motion for summary judgment.

II. STANDARD OF REVIEW

"The appellate standard of review of questions of law answered and certified by a circuit court is de novo." Syllabus Point 1, Gallapoo v. Wal-Mart Stores, Inc., 197 W.Va. 172, 475 S.E.2d 172 (1996).

III. DISCUSSION

The plaintiffs argue, first, that Monongalia General's medical staff bylaws constitute a contract between the plaintiffs and the hospital which the hospital breached. We disagree. "The fundamentals of a legal `contract' are competent parties, legal subject-matter, valuable consideration, and mutual assent. There can be no contract, if there is one of these essential elements upon which the minds of the parties are not in agreement." Syllabus Point 5, Virginian Export Coal Co. v. Rowland Land Co., 100 W.Va. 559, 131 S.E. 253 (1926). In the instant case, the essential element of valuable consideration is absent. This Court has held that "[t]he doing by one of that which he is already legally bound to do is not a valuable consideration for a promise made to him, since it gives to the promisor nothing more than that to which the latter is already entitled." Syllabus Point 2, Thomas v. Mott, 74 W.Va. 493, 82 S.E. 325 [1914]." Pursuant to 64 C.S.R. § 12-7.2.1.1 and 7.2.1.1.2 (July 1, 1994), concerning hospital licensure, "[t]he governing authority [of a hospital] shall adopt and amend bylaws which require it to... [a]pprove the bylaws and regulations of the medical staff[.]" In addition, pursuant to 64 C.S.R. § 12-14.1.4, "[t]he medical staff shall initiate and, with the approval of the governing board of the hospital, adopt rules, bylaws and regulations governing its professional organization and functional work." Because the hospital was already bound by law to approve the bylaws of the medical staff, and the medical staff was bound to initiate and adopt bylaws, neither party conferred on the other any more than what the law already required. Thus, we conclude that the medical staff bylaws do not constitute a contract. See Gianetti v. Norwalk Hosp., 211 Conn. 51, 557 A.2d 1249 (1989) (ruling that medical staff bylaws, by themselves, do not constitute enforceable contract between hospital and medical staff because hospital board had legal duty to adopt bylaws); Virmani v. Presbyterian Health Services, 127 N.C.App. 71, 488 S.E.2d 284 (1997) (finding that mere enactment of a set of bylaws pursuant to a statute is a preexisting duty and cannot itself constitute consideration for the formation of a contract); O'Byrne v. Santa Monica-UCLA Medical Center, 94 Cal.App.4th 797, 114 Cal.Rptr.2d 575 (Cal.Ct.App.2001) (determining that there was no consideration given for bylaws where hospital had a statutory duty to appoint medical staff, and medical staff had a statutory duty to adopt bylaws and abide by them).⁷

The plaintiffs assert, however, that even if this Court determines that the staff bylaws are not an enforceable contract, we must nevertheless find that the bylaws control the relationship between the plaintiffs and Monongalia General. Again, we disagree. Several courts have held, and we agree, that generally fair hearing and due process provisions in a hospital's medical staff bylaws are not implicated unless there are allegations against a physician bearing on professional competency and conduct. See Van Valkenburg v. Paracelsus Healthcare, 606 N.W.2d 908, 917 (N.D.2000)

(stating that "[m]ajority of courts ... have held hearing and due process provisions in similar medical staff bylaws are not implicated unless there are allegations against a physician bearing on professional competency and conduct" (citations omitted)); Engelstad v. Virginia Mun. Hosp., 718 F.2d 262, 267 (8th Cir.1983) (finding that "staff privileges serve to delimit a doctor's authority to practice in the hospital based upon the doctor's overall competence in his particular field(s) of practice. Staff privileges do not establish an employment contract with the hospital"); Dutta v. St. Francis Reg. Med. Center, 254 Kan. 690, 867 P.2d 1057 (1994) (holding that radiologist was not entitled to hearing upon revocation of access to radiology facilities in connection with hospital's entry into exclusive contract with another radiologist because hospital's managerial decision was based on business considerations and not allegations of unprofessional conduct); Gonzalez v. San Jacinto Methodist Hosp., 880 S.W.2d 436 (Tex.Ct. App.1994) (concluding that fair hearing procedures in medical staff bylaws were not intended to cover cases in which a doctor's staff privileges have been affected by some administrative decision not directly involving that doctor). In other words, medical staff bylaws generally are intended to require fair proceedings when an individual practitioner is alleged to be substandard in skill and are not intended to apply to hospital board management decisions.⁸ The parties herein agree that this is not a peer review case, and there have been no allegations of professional incompetence against the plaintiffs. Therefore, we hold that, absent express language to the contrary, a hospital's medical staff bylaws do not constitute a contract between the hospital and its staff physicians. However, where...