Nemazee v. Mt. Sinai Medical Center

• Decision Date: 19 December 1990
• Docket Number: No. 89-1648,89-1648
• Citation: 56 Ohio St.3d 109,564 N.E.2d 477
• Parties: NEMAZEE, Appellee, v. MT. SINAI MEDICAL CENTER, et al., Appellants.
• Court: Ohio Supreme Court

Page 109

56 Ohio St.3d 109

564 N.E.2d 477

NEMAZEE, Appellee, v. MT. SINAI MEDICAL CENTER, et al., Appellants.

No. 89-1648.

Supreme Court of Ohio.

Submitted Oct. 17, 1990.

Decided Dec. 19, 1990.

Syllabus by the Court.

A physician in a private hospital whose employment and/or hospital privileges have been terminated must exhaust all internal administrative remedies prior to seeking judicial review.

In July 1986, appellee, Mahmoud Nemazee, M.D., began his employment as a first-year resident with the Mt. Sinai Medical Center ("Medical Center") in its training program for pediatric residents. In November 1986 appellee's supervisors determined that his performance was substandard. Appellee was placed on probation by the Medical Center and, by memorandum dated November 7, 1986, he was specifically advised of the extent of the deficiencies in his performance. ¹ Despite being so informed, appellee's performance did not improve. On January 8, 1987, appellee was informed that his probationary status would be continued. Appellee's supervisors once again advised him, in writing, of the specific problem areas in his professional development. ²

After these two written notices appellee's professional conduct remained substandard. As a result, on March 12, 1987 appellee was again notified that his employment would continue on a probationary basis. By April 16, 1987 the Medical Center determined that appellee lacked the technical and personal skills necessary to provide appropriate care to infants and children. Furthermore, his supervisors concluded that he did not exhibit satisfactory progress in developing those skills. Thus, the Medical Center found it necessary to terminate appellee's employment. The Medical Center informed appellee of this decision by letter, and that the action was taken in accordance with the "Due Process Policy" as set forth in the House Staff Manual. The Due Process Policy was referred to in appellee's employment contract which he signed at the beginning of his residency. Appellee was informed he could consult the House Staff Manual (Due Process Policy) regarding his rights, which included the right to a hearing. Initially, appellee agreed to participate in an administrative hearing. Subsequently, however, appellee refused to participate.

Instead, appellee filed a complaint against the Medical Center and his supervisors, appellants herein, alleging breach of contract and intentional infliction of emotional distress. The complaint also maintained that appellants' administrative Due Process Policy was so tainted and lacking in due process that his participation in it would be futile, and thus would constitute a vain act.

Appellants responded to the complaint by filing a motion to dismiss under both Civ.R. 12(B)(1) and 12(B)(6). The motion was made on the grounds that appellee's failure to exhaust administrative remedies both deprived the court of subject matter jurisdiction and prevented appellee from stating a claim upon which relief may be granted. The trial court granted appellants' motion. The court of appeals, in a split opinion, reversed and remanded the case.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Robert E. Sweeney Co., L.P.A., Lawrence M. Oberdank, David P. Pavlik and Robert E. Davis, Cleveland, for appellee.

Hahn, Loeser & Parks, Pat E. Morgenstern-Clarren, R. Steven DeGeorge and Jeffrey D. Van Niel, Cleveland, for appellants.

Bricker & Eckler and James J. Hughes, Jr., Columbus, urging reversal for amicus curiae, Ohio Hosp. Ass'n.

Arter & Hadden, Irene C. Keyse-Walker and Edward S. Jerse, Cleveland, urging reversal for amicus curiae, Greater Cleveland Hosp. Ass'n.

ALICE ROBIE RESNICK, Justice.

The issue before this court is whether a physician employed by a private hospital must, upon termination, exhaust the administrative remedies provided for in an employment contract prior to seeking judicial review. In other words, does the exhaustion-of-administrative-remedies doctrine apply to the internal review procedures of privately owned hospitals. Appellant contends that the doctrine does apply to privately owned hospitals and, hence, the trial court was correct in dismissing the action because appellee had failed to exhaust his administrative remedies. While appellee appears to concede that the exhaustion doctrine applies to staffing procedures for private hospitals, he asserts that this case falls within one of the recognized exceptions to the doctrine, i.e., the "vain act" exception. ³

We begin by summarizing the case law and general policies pertaining to the exhaustion-of-administrative-remedies doctrine. "It is a well-established principle of Ohio law that, prior to seeking court action in an administrative matter, the party must exhaust the available avenues of administrative relief through administrative appeal." Noernberg v. Brook Park (1980), 63 Ohio St.2d 26, 29, 17 O.O.3d 16, 18, 406 N.E.2d 1095, 1097 (citing State, ex rel. Lieux v. Westlake [1951], 154 Ohio St. 412, 43 O.O. 343, 96 N.E.2d 414.) In Ohio, the exhaustion-of-admistrative-remedies doctrine is a court-made rule of judicial economy. See G.S.T. v. Avon Lake (1976), 48 Ohio St.2d 63, 65, 2 O.O.3d 217, 218, 357 N.E.2d 38, 40. As the United States Supreme Court has stated, "[e]xhaustion is generally required as a matter of preventing premature interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review." Weinberger v. Salfi (1975), 422 U.S. 749, 765, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522. The purpose of the doctrine " * * * is to permit an administrative agency to apply its special expertise * * * and in developing a factual record without premature judicial intervention." Southern Ohio Coal Co. v. Donovan (C.A. 6, 1985), 774 F.2d 693, 702. The judicial deference afforded administrative agencies is to " * * * 'prepare the way, if the litigation should take its ultimate course, for a more informed and precise determination by the Court * * *.' " Ricci v. Chicago Mercantile Exchange (1973), 409 U.S. 289, 306, 93 S.Ct. 573, 582, 34 L.Ed.2d 525.

With these policies behind the exhaustion doctrine in mind, we proceed to an analysis of the issues in the case at bar. Initially, it must be noted that this case does not involve a governmental agency or any administrative procedures prescribed by statute. Rather, we are confronted by private parties who, by way of an employment contract, have established administrative procedures to deal with conflicts regarding hospital staff privileges. Thus, of necessity we must review the employment contract. Paragraph Seven of the employment contract is entitled "Termination and Discipline" and contains the following language:

"(c) When it is determined through an evaluation process performed in accordance with the Due Process Policy, as the same may be modified or amended from time to time, that the Physician is not meeting the standards of the Program and/or profession for reasons which include, but are not limited to, (1) professional incompetence with respect to carrying out his duties and responsibilities, (2) ethical or moral character of the Physician which is detrimental to MSMC's patients or employees, (3) conduct or action taken by the Physician in a matter which interferes with the delivery of quality patient care, or (4) demonstration by the Physician of an inability to work effectively with others, thereby adversely affecting the quality of patient care at MSMC[,] disciplinary action which may result in termination will be pursued in accordance with the Due Process Policy." (Emphasis added.)

As can be seen, the employment agreement refers to a "Due Process Policy." This policy is designed to handle both academic and disciplinary actions, and sets forth in detail certain procedures and requirements. For example, the policy provides that residents shall be evaluated on a semiannual basis for academic, personal and professional development; that if they are not meeting the standards of the training program, they are to be notified of that fact; that such notice is to include specific measures that must be taken to correct the performance deemed substandard; and that the residents are to be re-evaluated within a prescribed period of time. The pertinent portion of the Due Process Policy provides as follows:

"4. If at the time of re-evaluation it is determined that the resident still has not met the standards of the training program and profession due to a failure or inability to comply with the corrective measures outlined in the notice, any of the following disciplinary measures may be invoked either singularly or in combination, where appropriate:

"a. The residency may be extended in increments of one month beyond the end of the contract year to assure that performance will meet the standards of the program which all residents at the same PGY level are expected to meet.

"b. The resident may be temporarily suspended from patient care responsibility pending identifiable progress in correcting deficiencies, such progress to be determined by observation, documentation, and/or verbal communication from a variety of sources either within or outside the hospital.

"c. The resident may be informed that his contract may not be renewed for the next postgraduate year.

"d. The resident may be dismissed prior to the termination of his contract.

"Written notice of adverse action shall be mailed or delivered to the resident within ten days of such action.

"5. Following the exhaustion of the above steps, the resident may request review of the matter by a hearing committee composed of the program director, a chief resident, and three other medical staff members of the department. The request...