Nicholas v. NORTH COLORADO MEDICAL CENTER

• Decision Date: 09 December 1999
• Docket Number: No. 98CA1407.,98CA1407.
• Citation: 12 P.3d 280
• Parties: William John NICHOLAS, M.D., Plaintiff-Appellant, v. NORTH COLORADO MEDICAL CENTER, INC., a Colorado corporation commonly referred to as NCMC and its Board of Directors; Richard H. Stenner, President; Karl B. Gills, Executive Vice-President; Alyce Kantner, former Director of Medical Services; and Pat (Wilson) Kern, Director of Cardiovascular Services, Defendants-Appellees.
• Court: Colorado Court of Appeals

12 P.3d 280

William John NICHOLAS, M.D., Plaintiff-Appellant, v. NORTH COLORADO MEDICAL CENTER, INC., a Colorado corporation commonly referred to as NCMC and its Board of Directors; Richard H. Stenner, President; Karl B. Gills, Executive Vice-President; Alyce Kantner, former Director of Medical Services; and Pat (Wilson) Kern, Director of Cardiovascular Services, Defendants-Appellees.

No. 98CA1407.

Colorado Court of Appeals, Div. IV.

December 9, 1999.

As Modified on Denial of Rehearing April 13, 2000.

Certiorari Granted November 6, 2000.

Anthony, Nicholas & Sharpe, LLC., Phillip A. Nicholas, Jason M. Tangeman, Steven K. Sharpe, Laramie, Wyoming, for Plaintiff-Appellant.

Gallo, Reinan & Marek, LLC., J.M. Reinan, F. James Gallo, Sherman Marek, William L. Burk, Lisa M. Horvath, Denver, Colorado, for Defendants-Appellees. Opinion by Judge ROTHENBERG.

Plaintiff, Dr. William John Nicholas, appeals a summary judgment determining that: (1) defendants, North Colorado Medical Center, Inc. (NCMC), Karl Gills, and Alyce Kantner, were not state actors for purposes of liability under 42 U.S.C. § 1983 (1995); and (2) with respect to Nicholas' state contract and tort claims, defendants were immune from liability for damages under the federal Health Care Quality Improvement Act (HCQIA), 42 U.S.C. § 11101, et seq. (1995), and also immune from suit and liability for damages under the Colorado Professional Review of Health Care Providers Act (CPRA), § 12-36.5-101, et seq., C.R.S.1999. We reverse and remand for further proceedings.

I. Facts

Nicholas is a licensed physician specializing in the practice of invasive cardiology and angioplasty. Invasive cardiology involves placing catheters, or small tubes, into the blood vessels of the heart in order to determine whether blockages exist in those vessels. Angioplasty is a subspecialty of invasive cardiology involving the use of a catheter with a balloon on the tip to prevent heart attacks. Invasive cardiology is practiced in a cardiac catheterization lab.

In 1991, Nicholas' privilege to practice in NCMC's cardiac catheterization lab was summarily suspended as the result of an investigation into the quality of his practice. Problems with Nicholas' practice had been brought to the attention of NCMC's Department of Medicine Quality Assurance Committee (also referred to as the Quality Assessment Committee). Three of Nicholas' patients had suffered strokes in a relatively short period of time and one had died. There also was concern over Nicholas' ability properly to keep medical records.

The Quality Assurance Committee, composed of physicians chosen by the medical staff, perceived a problem and had Nicholas' practice reviewed by an outside physician who returned a report critical of Nicholas and the entire NCMC cardiac catheterization lab. The Quality Assurance Committee turned the matter over to NCMC's Credentials Subcommittee, recommending that Nicholas be proctored.

The Credentials Subcommittee was a subcommittee of the Board of Directors of NCMC composed of a majority of physicians, none of whom was in direct competition with Nicholas. The Credentials Subcommittee conducted further review and directed the President of the Hospital to suspend Nicholas' privileges pending an investigation.

Following an investigation, the Credentials Subcommittee found problems with Nicholas' practice, including poor judgment and the inability to maintain proper records. It recommended that his privileges be suspended for a year, after which he could reapply.

Nicholas appealed to NCMC's Fair Hearing Panel which was composed of three physicians, none of whom had anything to do with the investigation or was in direct competition with Nicholas. The Panel generally cleared Nicholas of wrongdoing, except with regard to his record-keeping, and recommended that he be proctored for a year.

Nicholas and the Subcommittee appealed the Panel's findings and recommendations to the House Committee, which under NCMC's bylaws consisted of three or more members of the Board of Directors. There was no requirement that any member be a physician. The House Committee was charged with the task of making such recommendations to the Board as it deemed appropriate. The House Committee included members who were also on the Credentials Subcommittee.

After hearing arguments, the House Committee found that: (1) the Credentials Subcommittee and the Fair Hearing Panel had agreed on Nicholas' inability properly to maintain medical records in his cases; and (2) the inability to maintain clear records interfered with quality medical care. The House Committee recommended to the Board of Directors that Nicholas' privileges be suspended for a year, a recommendation which the Board adopted.

Nicholas then appealed the Board of Directors' decision to the state Committee on Anticompetitive Conduct. Following a hearing, that committee concluded that the Board's decision to suspend Nicholas was proximately caused by the hostility and the anti-competitive feeling of another NCMC cardiologist, rather than by a desire to improve patient care. The Committee on Anticompetitive Conduct ordered Nicholas' privileges reinstated and that decision was upheld on appeal. See Nicholas v. North Colorado Medical Center, Inc., 902 P.2d 462 (Colo.App. 1995), aff'd, North Colorado Medical Center, Inc. v. Committee on Anticompetitive Conduct, 914 P.2d 902 (Colo.1996).

Following the reinstatement of his privileges, Nicholas filed this action against NCMC and certain of its administrators seeking damages plus injunctive and declaratory relief. His claims for injunctive and declaratory relief were dismissed by the trial court and Nicholas does not appeal that dismissal. He appeals only from the dismissal of his claim for damages under 42 U.S.C. § 1983, and from the dismissal of his remaining state claims against NCMC and two of its administrators, defendants Karl Gills and Alyce Kantner.

II. State Action under 42 U.S.C. § 1983

With regard to Nicholas' § 1983 claim, the trial court ruled that NCMC, a Colorado nonprofit corporation, was a private hospital, and therefore, that its actions and those of the other defendants did not constitute state action for purposes of § 1983. On that basis, the court granted summary judgment in favor of defendants and dismissed the federal claim.

Nicholas contends that NCMC's decision to suspend his privileges was professional peer review under CPRA, and constituted state action for the purposes of § 1983 liability. We agree.

In order for there to be liability under § 1983, "the conduct allegedly causing the deprivation of a federal right [must] be fairly attributable to the State." Lugar v. Edmondson Oil Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 2753-54, 73 L.Ed.2d 482, 495 (1982).

There is state action when the alleged deprivation of constitutional rights was "caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible." Lugar v. Edmondson Oil Co., supra, 457 U.S. at 937, 102 S.Ct. at 2754, 73 L.Ed.2d at 495.

In addition, "the party charged with the deprivation must be a person who may fairly be said to be a state actor." Lugar v. Edmondson Oil Co., supra, 457 U.S. at 937, 102 S.Ct. at 2754, 73 L.Ed.2d at 495; Gallagher v. "Neil Young Freedom Concert," 49 F.3d 1442 (10th Cir.1995) (under all of the state action tests, the conduct causing the deprivation of a federal right must be fairly attributable to the state).

The use of professional review committees is an extension of the authority of the Colorado State Board of Medical Examiners. Section 12-36.5-103(3)(a), C.R.S.1999. The State Board of Medical Examiners is a creature of statute whose members are appointed by the governor, and is an arm of the state. See § 12-36-103, C.R.S.1999. Accordingly, when it is performing peer review activities, the governing board of a hospital is "clothed with the status of a state agency." Nicholas v. North Colorado Medical Center, Inc., supra, 902 P.2d at 466; see Yu, The Committee on Anticompetitive Conduct: New Agency on the Block, 21 Colo. Law. 31 (January 1992). Here, in a March 1993 order denying defendants' motion to dismiss, the trial court initially rejected defendants' claim that no state action was involved because NCMC was a private hospital. The trial court concluded that it made no difference whether NCMC was private or public and that when the hospital engaged in professional review, it constituted state action. The court explained that:

The clear import of CRS 12-36.5-101 et seq. is to make the licensure, discipline, and professional review of persons licensed to practice medicine a matter of state control. Professional review committees act as an arm or division of the state board of medical examiners.

In December 1997, however, the trial court reversed its earlier ruling, concluding that "professional peer review at a private hospital did not qualify as `state action' for [the] purposes of 42 U.S.C. § 1983." The court explained that this contrary result was required by the recent announcement of Berg v. Shapiro, 948 P.2d 59 (Colo.App.1997).

In Berg v. Shapiro, supra, a division of this court held that professional peer review at a private hospital was not state action for purposes of § 1983 liability. But, in so holding, the panel there specifically distinguished Nicholas v. North Colorado Medical Center, Inc., supra, noting that Nicholas involved anticompetitive conduct and Berg did not.

The distinction made by the panel in Berg v. Shapiro, supra, is not without significance. While peer review has been deemed to be essential to quality medical care, physicians engaging in professional review proceedings have been concerned that they might be accused by the disciplined physicians of engaging in anticompetitive acts and later sued for violating federal antitrust laws. See Patrick v. Burget, 486 U.S....