North Valley Hospital, Inc. v. Kauffman

• Decision Date: 15 January 1976
• Docket Number: No. 13057,13057
• Citation: 169 Mont. 70,544 P.2d 1219
• Parties: NORTH VALLEY HOSPITAL, INC., Plaintiff and Respondent, v. David V. KAUFFMAN, M.D., Defendant and Appellant.
• Court: Montana Supreme Court

Page 1219

544 P.2d 1219

169 Mont. 70

NORTH VALLEY HOSPITAL, INC., Plaintiff and Respondent, v. David V. KAUFFMAN, M.D., Defendant and Appellant.

No. 13057.

Supreme Court of Montana.

Submitted Dec. 12, 1975.

Decided Jan. 15, 1976.

Warden, Walterskirchen & Christiansen, Merritt N. Warden (argued), Kalispell, for defendant and appellant.

Murphy, Robinson, Heckathorn & Phillips, I. James Heckathorn (argued), Kalispell, for plaintiff and respondent.

Smith Law Firm, Chadwick H. Smith (argued), Helena, amicus curiae.

JOHN C. HARRISON, Justice.

This appeal is from the judgment entered in the district court, Flathead County, Hon. Robert S. Keller, presiding without a jury. That judgment orders, adjudges and decrees that David V. Kauffman, M.D., be enjoined from further utilization of the facilities of the North Valley Hospital, Inc.

The principals involved herein are:

(1) North Valley Hospital, Inc., plaintiff and respondent, hereinafter referred to as Hospital.

(2) David V. Kauffman, M.D., defendant and appellant, hereinafter referred to as Appellant.

(3) The Board of Directors of the Hospital, hereinafter called the Board.

(4) The private physicians practicing in the surrounding area who utilize the Hospital for patient care, hereinafter referred to as the Medical Staff.

The Hospital is a private, nonprofit corporation, constructed in part with Hill-Burton federal funds, that operates in Whitefish, Montana. It is governed by the Board, made up of members of the community. Hospital has no paid staff of doctors or interns. It has a paid administrator, one Burl Hatfield, who handles the day to day operations of the facility under the overall supervision of the Board.

Appellant was licensed to practice medicine in Montana in 1958 and has practiced in the Whitefish area since 1959. He utilized the facilities of the Hospital during that period and held most of the various offices and served on most of the Hospital's committees.

For a number of years Appellant had problems at the Hospital which brought about suspensions and disciplinary measures from the Medical Staff. During the 1960's, for a one year period, he was required to have at least one other surgeon with him for all surgery done at the Hospital. During much of the time he practiced at the Hospital he had difficulties with the staff in not maintaining proper records in regard to his patients.

Finally, in the late summer 1974, the Medical Staff recommended the Board approved, that the Hospital privileges of Appellant not be renewed. Several meetings were held at which Appellant was present, at least for part of the meeting, where the decision not to renew was discussed in some detail. Appellant requested a hearing, as provided in the by-laws of the Hospital, and that hearing was held on November 26, 1974.

At the hearing a list of some 23 'charges' or 'problem areas' was presented to Appellant. He alleges this was the first time he had seen the agenda of 'charges' or 'problem areas' on which the Medical Staff had acted. Thereafter, the Medical Staff voted to recommend nonrenewal of privileges and the Board accepted the recommendation. Appellant was notified, but he continued to use the facility and the Hospital brought an action to enjoin him from using the facilities.

On January 28, 1975, hearing was held in the district court, Flathead County, on an order to show cause asking why Appellant should not be permanently restrained from utilizing the facilities of the Hospital. The hearing lasted for several days and both parties presented evidence.

At the hearing Appellant indicated that he had not been given a proper opportunity to defend himself at the November 26 hearing in that the list of 'charges' was presented to him for the first time at the hearing. The district judge took the objection under advisement and at the conclusion of the evidence ordered that a new hearing be held by the Hospital and that Appellant be fully advised in writing, prior to the hearing, of the nature of the 'charges' and the basis of the recommendations, in order that Appellant could be prepared to present evidence to the Medical Staff.

This was done and a full hearing was held on February 6, 1975. Appellant was present with counsel. The district judge attended solely as an observer. At the close of this hearing, the entire Medical Staff voted unanimously to recommend Appellant's privileges not be renewed. Thereafter the district court ruled the actions of the Hospital were based on good cause and were not discriminatory. The district court issued a comprehensive memorandum, along with findings of fact, conclusions of law and judgment. Appellant appeals.

While Appellant sets forth ten issues for this Court's consideration, we find two issues controlling:

1. Can the Board of Directors of a nonprofit hospital corporation refuse medical staff privileges to a physician upon the recommendation of the medical staff thereby denying that physician the use of the hospital's facilities for the treatment of his patients?

2. Did the procedures followed leading to Appellant's dismissal from the Medical Staff of the Hospital violate Appellant's right to due process of law or his right to freedom from discrimination in the treatment of his patients?

Appellant argues that certain specific statutes of this state control and the action taken against him is not authorized by statute.

Appellant first argues that Chapter 10, Title 66, Revised Codes of Montana 1947, controls as to the licensing and supervision of physicians of this state. Section 66-1022 provides:

'Statement as to practice permitted. The certificates issued shall state the extent and character of the practice that is permitted, and shall be in the form prescribed by the board. Neither the privileges nor the obligations granted to or imposed upon licensees may be altered except by legislative enactment or by action of the board duly authorized hereunder.'

Appellant then cites a recent opinion of this Court, Hull v. North Valley Hospital, 159 Mont. 375, 390, 498 P.2d 136, where this Court held:

'The question of whether or not a hospital can limit a medical license under the statute is not particularly relevant. This power has been reserved by statute to the Board of Medical Examiners and is remedial only. If a duty to 'act' were found and a doctor would not voluntarily comply, a formal complaint to the Board of Medical Examiners would satisfy that duty.'

Such argument begs the question in the instant case, for here, unlike the facts in Hull, the power in question is relevant. The underlying issue here is whether or not a hospital, private or public, has a right to enact and enforce reasonable rules and regulations to govern its internal operations, including the activities of its doctors who are granted the privilege of treating patients in its facilities? We answer in the affirmative. We need go no further in support of such answer than recent cases of this Court, though there are many supportive cases from most jurisdictions in this country. 40 Am.Jur.2d, Hospitals and Asylums, § 6, p. 855.

This Court in three recent decisions held that Montana hospitals have the power to enact reasonable rules and regulations to govern their internal operations, including the activities of physicians practicing there. Ham v. Holy Rosary Hospital, 165 Mont. 369, 529 P.2d 361, 31 St.Rep. 948; Hulit v. St. Vincent's Hospital, 164 Mont. 168, 170, 174, 520 P.2d 99; Hull v. North Valley Hospital, supra.

In Ham while we were considering a strictly private hospital, we held a private hospital could prescribe terms on which it offers its services to the public providing it did not discriminate against some patients in providing those services. In Ham, we also noted the statutory language of section 69-5217, R.C.M. 1947, which provides 'Physicians shall continue to have direction over their patients.', means that a physician has exclusive control over patients, subject to hospital rules based on religious or moral tenets.

In Hulit a case involving a hospital partially constructed whth Hill-Burton funds, where we reviewed the hospital rule forbidding the Lamaze method of childbirth, this Court said:

'* * * however, we approach this case with the view that licensed hospitals have the authority, acting on the advice of their medical staffs, to adopt rules of self regulation governing the hospital's physicians. Licensed physicians...