Northeast Georgia Radiological Associates, P. C. v. Tidwell

• Citation: 670 F.2d 507
• Decision Date: 15 March 1982
• Docket Number: No. 79-3450,79-3450
• Parties: NORTHEAST GEORGIA RADIOLOGICAL ASSOCIATES, P. C., and Kenneth W. Horne, M.D., Plaintiffs-Appellants, v. Dr. Owen TIDWELL, individually, H. Virgil Parker, individually, Herman Avery, individually, Thomas Carter, individually, Jack Queen, individually, W. B. Stephens, individually, W. E. Briscoe, individually, Jim Gornto, individually, George Prather, individually, Walton County Hospital Authority, Dr. Catherine Foster and Estate of J. T. Byrd, Deceased, Harold Byrd, Executor, Defendants-Appellees. . Unit B *
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 507

670 F.2d 507

NORTHEAST GEORGIA RADIOLOGICAL ASSOCIATES, P. C., and Kenneth W. Horne, M.D., Plaintiffs-Appellants, v. Dr. Owen TIDWELL, individually, H. Virgil Parker individually, Herman Avery, individually, Thomas Carter individually, Jack Queen, individually, W. B. Stephens individually, W. E. Briscoe, individually, Jim Gornto individually, George Prather, individually, Walton County Hospital Authority, Dr. Catherine Foster and Estate of J. T. Byrd, Deceased, Harold Byrd, Executor, Defendants-Appellees.

No. 79-3450.

United States Court of Appeals, Fifth Circuit.

Unit B ^*

March 15, 1982.

Cook, Noell, Tolley & Aldridge, John S. Noell, Jr., Athens, Ga., for plaintiffs-appellants.

Sorrells, Hearn & Childers, George J. Hearn, III, William R. Childers, Jr., Monroe, Ga., for defendants-appellees.

Appeal from the United States District Court for the Middle District of Georgia.

Before SIMPSON, RONEY and THOMAS A. CLARK, Circuit Judges.

SIMPSON, Circuit Judge:

Appellants, Kenneth W. Horne, M.D., and Northeast Georgia Radiological Associates, P. C., appeal the granting of appellees' motion for summary judgment and the denial of their claims under 42 U.S.C. § 1983. ¹

On May 18, 1977, appellant Kenneth W. Horne, M.D., a licensed radiologist, applied for and received medical staff privileges at Walton County Hospital. Later that month, Dr. Horne appeared before the hospital's Medical Staff Executive Committee and informed the physicians that he could provide the hospital with radiological services three hours a day, six days a week, and cover all emergencies, during a transition period caused by the previous radiologist's retirement, until he could acquire an associate radiologist. Subsequently, in June, Dr. Horne, through his wholly owned professional corporation, Northeast Georgia Radiological Associates, P. C. (hereinafter P. C.), ² entered into a contract with appellee, Walton County Hospital Authority, (hereinafter Authority), to provide the hospital with exclusive radiological services. The contractual terms provided for continuous employment with termination only for cause. ³ All P. C. employees were required to be members of the hospital medical staff. ⁴ The contract also provided that P. C. employees' staff privileges would be withdrawn if the radiology services agreement was terminated. ⁵ All other matters not included in the contract were to be governed by the Medical Staff By-Laws and Hospital policies. ⁶

After the contract period had begun, Dr. Horne did provide the hospital with eighteen hours a week of radiological services and did seek an associate to supplement his hospital radiological coverage. After writing to more than one hundred and twenty radiologists, Dr. Horne began discussions with Owen Tidwell, M.D., one of the appellees.

On October 14, 1977, five months into the contract, Hospital Administrator Virgil Parker announced to the medical staff that Dr. Tidwell would be joining the hospital's radiology department as Dr. Horne's associate. The two radiologists, however, failed to reach an employment agreement. Consequently, radiological coverage at the hospital remained at eighteen hours a week.

On October 18, unknown to Dr. Horne, Dr. Tidwell met with the Hospital Authority at Mr. Parker's invitation. At the meeting, Authority members asked Dr. Tidwell whether he was interested in a full time position as the Hospital Radiologist. According to his deposition, Dr. Tidwell replied that he was seeking employment as a radiologist and would work for the Authority if no contract existed between the Authority and Dr. Horne. Thereafter, according to the minutes of the meeting, the Authority voted to terminate the P. C.'s contract as of October 31, 1977. Later, on October 25, Mr. Parker wrote Dr. Tidwell and asked him to join the medical staff on November 1, 1977.

No pre-termination hearing was afforded either the P. C. or Dr. Horne. Two letters dated October 25 (one to the P. C. and the other to Dr. Horne) stated that the Authority had terminated the radiological services contract. In response, Dr. Horne wrote Mr. Parker that he did not consider the contract terminated and, in addition, requested a hearing pursuant to the medical staff by-laws. On October 31, Mr. Parker replied by mail that the contract was terminated, and officially withdrew Dr. Horne's medical staff privileges effective October 31, 1977. Mr. Parker invited Dr. Horne to attend the next scheduled Authority meeting but did not offer a termination hearing. The Medical Staff Executive Committee met on November 1, and the Authority met on November 14, but Dr. Horne did not attend either meeting. Meanwhile, on Monday, November 1, when Dr. Horne appeared at the hospital's radiological laboratory, he was met by Dr. Tidwell, who told Dr. Horne that he, Tidwell, was now the Walton County Hospital Radiologist.

Dr. Horne and the P. C. sued Dr. Tidwell et al., in the United States District Court for the Middle District of Georgia under 42 U.S.C. § 1983, accompanied by pendent state claims for breach of contract and tortious interference with a contract. Subsequently, the defendants filed a motion to dismiss, asserting that the complaint failed to state a claim under which relief could be granted. The District Court, under Federal Rules of Civil Procedure 12(b) and 56, sua sponte converted the motion into a motion for summary judgment. ⁷ Then, after reviewing the pleadings and supplemental materials, the court granted the motion for summary judgment, holding that no genuine issue existed as to any material fact regarding Dr. Horne and the P. C.'s § 1983 claim. As a result of the court's ruling, the plaintiffs voluntarily dismissed the pendent state claims and filed suit in Georgia Superior Court with respect to said claims.

The propriety of the District Court's granting of the defendants' motion for summary judgment, both as to the P. C. and Dr. Horne, is the pivotal issue on appeal. The lower court characterized the action as a breach of contract between the P. C. and the Authority with jurisdiction in state court. From this, the court determined Dr. Horne's status exclusively as a P. C. employee, thereby lacking a property interest protected by due process:

(U)ntil he (Dr. Horne) evidences a real intention to engage in the private practice of radiology in Walton County, applies to defendant hospital to be granted staff physician privileges usually granted to private practitioners, and is denied those privileges, he has no claim of deprivation of constitutionally protected due process rights. See, e.g., Klinge v. Lutheran Charities Ass'n of St. Louis, 523 F.2d 56 (8th Cir. 1975); Burkette v. Lutheran General Hospital, 595 F.2d 255 (5th Cir. 1979). This having not occurred, Dr. Horne may not prevail on his individual claim of constitutional deprivation. (Record, Vol. 1 at 280).

The grant of summary judgment under Rule 56(c) F.R.Civ.P. requires that two separate showings be made: "... that there is no genuine issue as to any material fact" and (2) "that the moving party is entitled to judgment as a matter of law." ⁸

In this case, as we demonstrate below, the second prerequisite was missing. Disregarding the presence or absence of issues as to any material fact, the District Court erred in concluding that the movants were entitled to judgment as a matter of law. They were not.

Our analysis begins with an examination of the written contract between the P. C. and the Authority. "Principles of contract law naturally serve as useful guides in determining whether or not a constitutionally protected property interest exists." Jago v. Van Curen, --- U.S. ----, ----, 102 S.Ct. 31, 34, 70 L.Ed. --- (1981); see, Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972); Stewart v. Bailey, 556 F.2d 281 (5th Cir. 1977). As custom or habit may supplement a contract, so too may property interests emerge from explicit mutual understandings adjunct to the contract. "Explicit contractual provisions may be supplemented by other agreements implied from 'the promisor's words and conduct in the light of the surrounding circumstances.' A. Corbin on Contracts § 562 (1960). And '(t)he meaning of (the promisor's) words and acts is found by relating them to the usage of the past.' Ibid." Perry v. Sindermann, supra, 408 U.S. at 602, 92 S.Ct. at 2700. A part of the contract was the understanding provided Dr. Horne-and all Walton County Hospital physicians with medical staff privileges-of procedural due process prior to the suspension or termination of staff privileges. The medical staff by-laws, incorporated into the Authority's by-laws, detail the procedure to be followed when corrective action against a medical staff physician is warranted. Notice and hearing ⁹ within a seven day period is required when staff privileges are suspended or terminated. ¹⁰ In addition, appellate review is provided by the Medical Staff Executive Committee, and in addition, by the Hospital Authority. ¹¹ Accordingly, in the present case, the contract, incorporating the medical staff by-laws, and the by-laws per se, established "the existence of rules or mutually explicit understandings," Perry v. Sindermann, 408 U.S. at 601, 92 S.Ct. at 2699, and sustained appellants' claim to a protected property interest. See, Winkler v. County of Dekalb, 648 F.2d 411 (5th Cir. 1979); Thurston v. Dekle, 531 F.2d 1264 (5th Cir. 1976), vacated on other grounds, 438 U.S. 901, 98 S.Ct. 3118, 57 L.Ed.2d 1144 (1978).

Our decision recognizing the appellants' property interest follows principles established in prior Fifth Circuit cases which identify a physician's medical staff privileges as an interest protected by the Fourteenth Amendment. Shaw v. Hospital Authority of Cobb Cty., 507 F.2d 625 (5th Cir. 1975), aff'd on rehearing, 614 F.2d 946 (5th Cir. 1980); Woodbury v. McKinnon, 447 F.2d 839 (5th Cir. 1971); see also, Foster v. Mobile County Hospital Board, 398 F.2d 227 (...