Silver v. Castle Memorial Hospital

• Decision Date: 24 May 1972
• Docket Number: No. 4998,4998
• Citation: 497 P.2d 564,53 Haw. 475
• Parties: , 53 Haw. 563, 1972 Trade Cases P 74,016 Maurice L. SILVER, M. D., Plaintiff-Appellant, v. CASTLE MEMORIAL HOSPITAL, a Hawaii non-profit corporation, et al.,Defendants-Appellees.
• Court: Hawaii Supreme Court

Page 564

497 P.2d 564

53 Haw. 475, 53 Haw. 563, 1972 Trade

Cases P 74,016

Maurice L. SILVER, M. D., Plaintiff-Appellant,

v.

CASTLE MEMORIAL HOSPITAL, a Hawaii non-profit corporation,

et al.,Defendants-Appellees.

No. 4998.

Supreme Court of Hawai'i.

May 24, 1972.

Rehearings Denied June 15, 1972.

Syllabus by the Court

1. The administrative decision of a private hospital in declining to renew the staff privileges of a licensed doctor is subject to judicial review if the hospital has received more than nominal governmental funding.

2. The decision of the hospital board, made in its discretion, must be upheld unless the doctor involved was denied procedural due process or the hospital board in making its decision abused its discretion. Such decision must not be based on insubstantial evidence resulting in an arbitrary, capricious or unreasonable exclusion.

3. Procedural due process requires that a hearing be provided a doctor applying for initial appointment or reappointment to the hospital staff. Such a hearing must comply with certain procedural safeguards, including timely notice of the hearing and a statement specifying the reasons for the initial decision of the hospital board.

Joseph A. Ryan, Honolulu (Ryan & Ryan and Edward Y. N. Kim, of counsel), Honolulu, for appellant.

Dennis E. W. O'Connor, Honolulu (Anthony, Hoddick, Reinwald & O'Connor, Honolulu, of counsel), for defendants-appellees Castle Memorial Hospital et al.

Edmund Burke, Honolulu (Conroy & Hamilton, Honolulu, of counsel), for defendant-appellee John J. Lowrey, M.D. Richard E. Stifel, Lonolulu (Jenks, Kidwell, Goodsill & Anderson, Honolulu, of counsel), for defendants-appellees Robert A. Rose, J. I. F. Reppun, Don E. Poulson and Ralph B. Cloward.

Richard Hirai, Honolulu (Chuck & Fujiyama, Honolulu, of counsel), for defendant-appellee Great American Ins. Co.

Before RICHARDSON, C. J., ABE, LEVINSON and KOBAYASHI, JJ., and Circuit Judge VITOUSEK in place of MARUMOTO, J., disqualified.

KOBAYASHI, Justice.

Appellant, Dr. Silver, a neurosurgeon, appeals from the judgment of the trial court granting directed verdicts in favor of appellees. The trial court found in favor of appellees, defendants below, on all counts alleged by appellant, including a conspiracy in violation of antitrust laws of the State of Hawaii, a common law conspiracy to monopolize and restrain competition, defamation by certain individual appellees, and an injunction against appellee, Castle Memorial Hospital, compelling them to permit appellant to use their facilities.

For an adequate disposition of this case the facts need be simply stated.

Appellant first applied for staff privileges at appellee hospital in 1963. After having been given a hearing, appellant's application was denied. In 1965 appellant reapplied for privileges and in 1966 the appellee's hospital board of trustees granted appellant temporary surgery privileges for one year under observation by other doctors. At the close of the probationary period an investigation was conducted into the performance of appellant. The hospital board, acting with recommendation of the committee that had conducted the investigation, decided not to renew appellant's staff privileges. Appellant was granted a hearing and at that time, for the first time, was confronted with the allegations against him and given an opportunity to make an explanation. The earlier decision to deny privileges was upheld.

We find appellant's allegations of conspiracy, defamation, and antitrust violations to be without merit and as to those issues the judgment of the trial court is affirmed. Appellant is not left, however, without a viable claim against appellee Castle Memorial Hospital. This case presents the issue of whether the administrative decision of a private hospital in refusing to grant licensed doctors staff privileges is subject to judicial review. ¹ This question has been decided in other jurisdictions on the basis of two distinctly divergent views.

JUDICIAL REVIEW OF PRIVATE HOSPITAL

The majority of jurisdictions have held that a private hospital, as opposed to a public hospital, has the absolute right to exclude any physician from practicing therein. Such a decision of a private hospital board has been held not subject to judicial review, ² unless the hospital has failed to conform to its own procedural requirements as set forth in its constitution, by-laws, or rules and regulations. The rationale of the majority position has been aptly set forth in Shulman v. Washington Hospital Center, 222 F.Supp. 59, 64 (D.D.C.1963).

There are sound reasons that lead the courts not to interfere in these matters. Judicial tribunals are not equipped to review the action of hospital authorities in selecting or refusing to appoint members of medical staffs, declining to renew appointments previously made, or excluding physicians or surgeons from hospital facilities. The authorities of a hospital necessarily and naturally endeavor to their utmost to serve in the best possible manner the sick and the afflicted who knock at their door. Not all professional men, be they physicians, lawyers, or members of other professions, are of identical ability, competence, or experience, or of equal reliability, character, and standards of ethics. The mere fact that a person is admitted or licensed to practice his profession does not justify any inference beyond the conclusion that he has met the minimum requirements and possesses the minimum qualifications for that purpose. Necessarily hospitals endeavor to secure the most competent and experienced staff for their patients. Without regard to the absence of any legal liability, the hospital in admitting a physician or surgeon to its facilities extends a moral imprimatur to him in the eyes of the public. Moreover not all professional men have a personality that enables them to work in harmony with others, and to inspire confidence in their fellows and in patients. These factors are of importance and here, too, there is room for selection. In matters such as these the courts are not in a position to substitute their judgment for that of professional groups.

The private status of a private hospital has been held to constitute sufficient justification for the existence of an absolute exclusionary right. Edson v. Griffin Hospital, 21 Conn.Supp. 55, 144 A.2d 341 (1958). It is reasoned that even though a doctor may have exemplary qualifications, he has no vested right to practice in a private hospital but merely a privilege which may be granted or denied at the election of the private corporation in exercising its fundamental right to manage its own internal affairs. ³

We agree that the board of directors of a private hospital should have broad discretionary power in determining which doctors will be given staff privileges and on what basis. Here are many justifications for such power aside from the general malpractice considerations. Apparently the state licensing procedure does not distinguish between general practitioners and specialists such as neurosurgeons. Nor does the state licensing system provide for adequate periodic review of a doctor's skill and performance, both of which are of primary improtance to the beneficiaries of the services of the hospital and doctors involved, the patients themselves. When considering the interest of the patient, it is not enough that his doctor possess the necessary skills of his profession. The absence of a compatible team working together could impair the doctor's performance and consequently undermine the effectiveness of the treatment given the patient. ⁴ All of the above criteria are and should be weighed by the board in granting staff privileges. This staff privileges determination is, as a system, the general method utilized by hospitals throughout the country for screening and reviewing applicants in terms of qualifications, current skills, performance, personality and character.

We cannot agree, however, that the discretionary power of a hospital is absolute or that a decision of a private hospital board in refusing to grant a licensed doctor staff privileges is not subject to judicial review. The better rule ⁵ provides that such review be available as to whether the doctor excluded was afforded procedural due process, and as to whether an abuse of discretion by the hospital board occurred, resulting in an arbitrary, capricious or unreasonable exclusion. As to what constitutes such an abuse it has been held that 'the managing authorities of a private hospital are vested with broad discretionary powers in the selection of its medical and surgical staffs. If the exclusion of a person from its medical or surgical staff is based on the sound and reasonable exercise of discretionary judgment, courts will not intervene, but if the exclusion stems from unreasonable, arbitary, capricious or discriminatory considerations, equitable relief is available.' Davidson v. Youngstown Hospital Association, 19 Ohio App.2d 246, 251, 250 N.E.2d 892, 896 (1969).

The basis for this departure from the traditional rule was first voiced in Greisman v. Newcomb Hospital, 40 N.J. 389, 402-404, 192 A.2d 817, 824-825 (1963).

(W)hile the managing officials (of a private hospital) may have discretionary powers in the selection of the medical staff, those powers are deeply imbedded in public aspects, and are rightly viewed, for policy reasons . . . as fiduciary powers to be exercised reasonably and for the public good.

* * *

* * * Hospital officials are properly vested with large measures of managing discretion and to the extent that they exert their efforts toward the elevation of hospital standards and higher medical care, they will receive broad judicial support. But they must never lose sight of the fact that the hospitals are operated not for private ends but for the benefit of the public, and that their existence is for the purpose of faithfully furnishing facilities to the...