Major v. Memorial Hospitals Assn.
| Citation | 84 Cal.Rptr.2d 510,71 Cal.App.4th 1380 |
| Decision Date | 03 May 1999 |
| Docket Number | No. F022775,F022775 |
| Parties | Mitchell A. MAJOR et al., Plaintiffs and Appellants, v. MEMORIAL HOSPITALS ASSOCIATION et al., Defendants and Appellants; Gould Medical Foundation et al., Defendants and Respondents. |
| Court | California Court of Appeals Court of Appeals |
When considering quality hospital care, three main interest groups generally come to mind: patients, physicians, and hospital administration. No one could seriously question that the primary goal of physicians and hospital administration is to provide quality medical care. Even so, that does not prevent disputes from arising between these groups, and even within an individual group. Such was the case here where various problems ultimately led to Memorial Hospitals' decision to change its anesthesiology department from an open staff system to a closed system with an exclusive provider.
The rub occurred when the new exclusive provider did not offer subcontracts to the three plaintiff physicians, all former members of the anesthesiology department's open staff. Plaintiffs sued based on multiple theories, including alleged violations of the Unruh Civil Rights Act (Civ. Code, § 51), breach of contract, civil conspiracy, and tortious interference with plaintiffs' professional business relationships. Plaintiffs lost on all counts during a lengthy court trial, and this appeal followed. We affirm.
In the published portions of this opinion, we clarify our holding in Mateo-Woodburn v. Fresno Community Hospital & Medical Center (1990) 221 Cal.App.3d 1169, 270 Cal.Rptr. 894 (Mateo-Woodburn ). In doing so, we reject any inference that a hospital has a legal obligation to offer an incumbent physician a position in a closed department as a precondition to finding a closure decision is quasi-legislative rather than adjudicative. We also reject plaintiffs' claim challenging the exclusive provider's selection of subcontractors.
In the unpublished portions, we address plaintiffs' remaining claims, including the alleged violation of the Unruh Civil Rights Act, and find there was substantial evidence of compliance with the medical staff bylaws.
On July 31, 1992, Dr. George M. Turner filed suit against Memorial Hospitals Association, dba Memorial Hospital/Medical Center Modesto and Memorial Hospital Ceres (collectively Memorial Hospitals), William K. Piche, Gould Medical Foundation, Drs. Kenneth Imanaka, Daniel E. Sucha, Douglas Diehl, Larry Todd, Bruce Gesson, and Does 1 through 30 (defendants). The complaint alleged seven causes of action: (1) violation of the Unruh Civil Rights Act; (2) injunctive relief to prevent interference with the right to practice a profession; (3) restraint of trade; (4) tortious interference with plaintiff's professional business relationships; (5) breach of contract; (6) defamation; and (7) civil conspiracy. On the same date, Drs. Douglas Freeman and Mitchell Major filed an identical complaint against the same defendants. Both complaints were subsequently amended to add Dr. Marcus Shouse and Gould Medical Group, Inc. 1 as defendants.
On September 30, 1992, the trial court denied plaintiff's request for a preliminary injunction, and on October 22, 1992, the two actions were consolidated for all purposes. On September 28, 1993, the court granted defendants' motion for summary adjudication with respect to the third cause of action, restraint of trade. Trial began on November 11, 1993, and the parties waived trial by jury. On the third day of trial, Dr. Gesson was dismissed as a defendant. On February 7, 1994, the trial court granted the defendants' motion for judgment under Code of Civil Procedure section 631.8 in favor of Drs. Diehl, Todd, and Sucha.
After posttrial briefing and argument, the court entered judgment in favor of defendants on all remaining causes of action. The court subsequently denied defendants' motion for attorney fees. Plaintiffs filed a timely appeal raising seven contentions: (1) the trial court erred when it found there was no violation of the Unruh Civil Rights Act; (2) the trial court erred in concluding the plaintiffs waived any objection to the procedure used by Memorial Hospitals to close the anesthesiology department; (3) the trial court erred when it found the decision to close the anesthesiology department was not directed at a particular physician or group of physicians; (4) the trial court erred in holding the process of closing the anesthesiology department was not arbitrary, capricious, contrary to established public policy or procedurally unfair; (5) the trial court erred in not considering the closure of the anesthesiology department as an "integrated whole"; (6) the process used to close the anesthesiology department did not comply with the provisions of the medical staff bylaws; and (7) Memorial Hospitals had a legal obligation to ensure plaintiffs were offered a subcontract to work in the closed department. Memorial Hospitals filed a cross-appeal claiming the trial court abused its discretion in denying its motion for attorney fees.
During all relevant times, Memorial Hospitals was a nonprofit, private organization. It operated two hospitals in Stanislaus County, with its main facility in Modesto, and a smaller hospital in Ceres. The active medical staff of Memorial Hospitals consisted of 32 different subspecialties and was very involved in trauma, cardiac, orthopedic and general surgery. Memorial Hospitals had a chief executive officer as well as a board of directors made up primarily of lay people. The active medical staff was divided into 11 clinical departments, one of which was anesthesiology. Each department had a chairperson who served a two-year term and whose responsibilities included administration of the department, enforcement of the medical staff bylaws, and monitoring the quality of patient care.
The medical staff of Memorial Hospitals was governed by the provisions of the medical staff bylaws which provided "the professional and legal structure for Medical Staff operations, organized Medical Staff relations with the Board of Directors, and relations with applicants to and members of the Medical Staff." These bylaws provided for the creation of a number of committees, one of which was the medical executive committee (MEC). The MEC was composed of the officers of the medical staff and the department chairpersons. The MEC's responsibilities included making recommendations to Memorial Hospitals' board of directors, evaluating the medical care rendered to patients, as well as reviewing the qualifications, credentials and professional competence of medical staff members. The MEC was authorized to represent and act on behalf of the medical staff in the intervals between medical staff meetings. Another committee of the Memorial Hospitals' medical staff was the quality assessment committee (QAC). The QAC was responsible for identifying potential problems in patient care, referring the problems to the appropriate department for assessment and corrective action, and monitoring the results of quality assessment throughout the hospitals.
As a general rule, a physician was not entitled to exercise clinical privileges at the hospitals operated by Memorial Hospitals unless he or she had received appointment to the medical staff. Initial appointment was for no more than two years and was subject to a biennial review on the date of the physician's medical license renewal date. Once appointed to the medical staff, a physician was entitled to a hearing before his or her appointment or clinical privileges could be revoked, terminated or suspended. Article VII of the medical staff bylaws established the procedures required for such a hearing, including a mechanism for appealing any adverse decision. However, section 7.6-1(b) of the medical bylaws specifically exempted from the hearing requirements of Article VII: "[T]he termination of privileges following the decision determined to be appropriate by the Medical Staff to close a department/service pursuant to an exclusive contract ."
Section 7.6-1 of the medical staff bylaws also provides for participation of the MEC in any decision to close a department in the hospitals:
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...104 Cal.Rptr.3d 275), we independently review a claim that due process rights have been violated ( Major v. Memorial Hospitals Assn. (1999) 71 Cal.App.4th 1380, 1398, 84 Cal.Rptr.2d 510). 3. Although the majority presents Hialeah and City of Miami independently, as emanating from separate f......
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