North Colorado Medical Center v. Nicholas

• Decision Date: 25 June 2001
• Docket Number: No. 00SC418.,00SC418.
• Citation: 27 P.3d 828
• Parties: NORTH COLORADO MEDICAL CENTER, INC., a Colorado corporation, commonly referred to as NCMC, and its Board of Directors; Richard H. Stenner, its President; Karl B. Gills, its Executive Vice-President; Alyce Kantner, its former Director of Medical Services; Pat (Wilson) Kern, its Director of Cardiovascular Services; and Does 1 through 15, Petitioners, v. William John NICHOLAS, M.D., Respondent.
• Court: Colorado Supreme Court

27 P.3d 828

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

No. 00SC418.

Supreme Court of Colorado, En Banc.

June 25, 2001.

As Modified on Denial of Rehearing August 6, 2001.

Law Offices of J.M. Reinan, Jerome M. Reinan, Denver, CO, Attorney for Petitioners.

Anthony, Nicholas, Goodrich & Tangeman, LLC, Philip A. Nicholas, Jason M. Tangeman, Laramie, WY, Attorneys for Respondent.

Yu Stromberg Cleveland, P.C., Frederick Y. Yu, Denver, CO, Attorney for Amicus Curiae Colorado Health and Hospital Association.

Montgomery Little & McGrew, P.C., Patrick T. O'Rourke, Englewood, CO, Attorney for Amicus Curiae Colorado Medical Society.

Justice HOBBS delivered the Opinion of the Court.

We granted certiorari to review the court of appeals' decision in Nicholas v. North Colorado Medical Center, Inc., 12 P.3d 280 (Colo.App.1999) (Nicholas III).¹ In reversing the trial court's orders for summary judgment, the court of appeals held that the peer review process in a private hospital constitutes state action for the purpose of 42 U.S.C. § 1983. The court of appeals also held that the peer review process did not conform to the requirements of the Colorado Professional Review Act, sections 12-36.5-101 to -203, 4 C.R.S. (2000) (CPRA), and the Health Care Quality Improvement Act, 42 U.S.C. §§ 11101 to 11152 (1995) (HCQIA). We hold that professional peer review conducted in a private medical facility does not constitute state action for the purposes of 42 U.S.C. § 1983. We further hold that the participants in the peer review of Nicholas acted in accordance with the CPRA and HCQIA, and are therefore immune from suit and liability for damages for Nicholas's state contract and tort claims. Accordingly, we reverse the judgment of the court of appeals.

I.

This case returns to us in the latest stage of what has become a decade-long saga of litigation and administrative proceedings. In 1989, respondent William Nicholas, a licensed physician specializing in invasive and interventional cardiology, joined the medical staff of the North Colorado Medical Center (NCMC) in the facility's heart catheterization lab. Shortly after his arrival, NCMC's Department of Medicine Quality Assurance Committee (QA Committee) received reports of problems with Nicholas's practice. The QA Committee was composed of several NCMC staff physicians, none of whom directly competed with Nicholas. Based on initial concerns over inadequate medical chart documentation, the QA Committee began investigating Nicholas's practice. During the course of the investigation, three of Nicholas's patients suffered strokes, one patient died, Nicholas's privileges in the heart catheterization lab were suspended, and Nicholas was terminated from his concurrent employment with another medical facility in the Greeley area.

The QA Committee hired an outside physician, Dr. G. David Jang, to conduct an independent review of Nicholas's medical practice. Jang toured the NCMC facility, met with Nicholas and members of the NCMC staff, and reviewed several of Nicholas's patient charts and cardiac catheterization films. Jang subsequently submitted a report that was critical of Nicholas's practice. The QA Committee furnished Nicholas with a copy of Jang's report, and referred the matter to NCMC's Credentials Subcommittee. Like the QA Committee, the Credentials Subcommittee was composed primarily of physicians, none of whom was in direct competition with Nicholas.

The Credentials Subcommittee reviewed Jang's report and interviewed Nicholas. In July 1991 the Subcommittee concluded that allowing Nicholas to continue practicing invasive cardiology posed a risk to patient care at NCMC, and directed NCMC's president to suspend Nicholas's invasive cardiology privileges pending further investigation. Continued investigation uncovered further problems with Nicholas's practice. The Credentials Subcommittee issued a Corrective Action Report recommending that Nicholas be retained on the NCMC staff but not be granted privileges to practice invasive cardiology. The Subcommittee provided Nicholas with written notice of adverse action and his right to request a Fair Hearing pursuant to NCMC's bylaws.

In March 1992, Nicholas was afforded a hearing by NCMC's Fair Hearing Panel. The Panel was comprised of three physicians, none of whom was in direct competition with Nicholas or had anything to do with his investigation. The Panel expressed concern over Nicholas's continued documentation deficiencies, and recommended that he be closely supervised and monitored. The Panel did not recommend, however, that Nicholas's privileges be suspended.

Both Nicholas and the Credentials Subcommittee appealed the Panel's decision to NCMC's House Committee of the Board of Directors. The House Committee considered the Fair Hearing Panel report, evidence produced at the hearing, and the Credentials Subcommittee's Corrective Action Report. The House Committee concluded that Nicholas should be suspended from invasive cardiology privileges and placed on probation for a period not to exceed one year, after which time Nicholas could seek restoration of his invasive cardiology privileges. At a special meeting one week later, NCMC's Board of Directors considered Nicholas's case and ratified the House Committee's recommendations.

In June 1992, Nicholas appealed to the state Committee on Anticompetitive Conduct (CAC), arguing that the suspension of his privileges resulted from unreasonable anti-competitive conduct. Following a hearing, the CAC concluded that Nicholas's loss of privileges was initiated by the hostility and anti-competitive feeling of another NCMC cardiologist, and ordered Nicholas's invasive cardiology privileges reinstated. The CAC's decision was upheld on appeal. See Nicholas v. North Colo. Med. Ctr., Inc., 902 P.2d 462 (Colo.App.1995) (Nicholas I)

, aff'd, North Colo. Med. Ctr., Inc. v. Committee on Anticompetitive Conduct, 914 P.2d 902 (Colo. 1996) (Nicholas II). In 1993, Nicholas applied for and received reinstatement of his Level III cardiology privileges at NCMC.

In addition to filing an appeal with the CAC, Nicholas brought a civil suit against NCMC and certain of its administrators (collectively NCMC), seeking damages as well as declaratory and injunctive relief. After our decision in Nicholas II, NCMC filed a motion for summary judgment in the civil suit, asserting in part that Nicholas's claim for damages under 42 U.S.C. § 1983 must fail because NCMC's activities did not constitute state action. NCMC also asserted that Nicholas's state law claims² must be dismissed because NCMC was immune from damages under the CPRA and the HCQIA.

In December 1997, the trial court granted NCMC's motion for summary judgment on the section 1983 issue. The trial court concluded that NCMC was a private corporation and that its actions are not "state action" for the purposes of section 1983. The trial court subsequently held a hearing on the other immunity issues, and granted summary judgment for NCMC on those claims in June 1998.

Nicholas appealed, and the court of appeals reversed each of the summary judgment orders. The court of appeals first held that Nicholas could maintain his section 1983 action, because (1) NCMC is "clothed with the status of a state agency" when performing peer review activities, Nicholas III, 12 P.3d at 285, and (2) NCMC's review procedure violated Nicholas's due process right to a fair and impartial determination by the Board. Id. at 287. The court of appeals also concluded that NCMC was not immune from state law claims, because NCMC's actions fell or could have fallen outside the scope of the CPRA and the HCQIA. Id. at 287, 289.

II.

We hold that professional peer review conducted in a private medical facility does not constitute state action for the purposes of 42 U.S.C. § 1983. We further hold that the participants in NCMC's peer review of Nicholas acted in accordance with the CPRA and HCQIA, and are therefore immune from suit and liability for damages for Nicholas's state contract and tort claims. Accordingly, we reverse the judgment of the court of appeals.

A. Section 1983 Liability

Section 1983 allows a party to bring a cause of action for an alleged violation of the Fourteenth Amendment and provisions of the Bill of Rights incorporated into the Fourteenth Amendment. See Scott v. Hern, 216 F.3d 897, 906 (10th Cir.2000)

. "The purpose of [section] 1983 is to deter state actors from using the badge of their authority to deprive individuals of their federally guaranteed rights and to provide relief to victims if such deterrence fails." Wyatt v. Cole, 504 U.S. 158, 161, 112 S.Ct. 1827, 118 L.Ed.2d 504 (1992). To be actionable under section 1983, the challenged conduct must satisfy two conditions. First, the conduct must constitute state action; that is, action under color of state law. Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 930-31, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982). Second, the conduct must deprive the claimant of a federally protected right or interest. Id.; State v. Nieto, 993 P.2d 493, 507 (Colo.2000).

The trial court held that NCMC's peer review process was not state action, and that consequently, section 1983 was not applicable. The court of appeals determined that NCMC's peer review both constituted state action and deprived Nicholas of property and liberty interests without due process. Nicholas III, 12 P.3d at 286-87. We agree with the trial court that NCMC's professional review of Nicholas did not constitute state action.

1. Public vs. Private Entities

Where a section 1983 claim is based on the conduct of a private hospital, the...