Smith v. Adventist Health System/West
| Decision Date | 04 March 2010 |
| Citation | 182 Call App. 4th 729 |
| Court | California Court of Appeals Court of Appeals |
* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of parts I, IV.A, IV.C, V, and VI of the Discussion.
Manatt, Phelps & Phillips, Barry S. Landsberg , Doreen W. Shenfeld , Joanna S. McCallum , Zoey Kohn; van Hall Law Offices, Suzanne F. van Hall; DiCaro, Coppo & Popcke and Carlo Coppo for Defendants and Appellants.
Andrews & Hensleigh, Barbara Hensleigh and John Aumer for Plaintiffs and Respondents.
Opinion by Dawson, J., with Levy, Acting P. J., and Kane, J., concurring.
DAWSON, J.—This appeal is another chapter in the litigation between Dr. Brenton R. Smith and three hospitals run byAdventist Health System/West. (See Smith v. Selma Community Hospital (2008) 164 Cal.App.4th 1478 [hospital governing board erroneously revoked Smith’s staff membership and hospital privileges]; Central Valley General Hospital v. Smith (2008) 162 Cal.App.4th 501 [litigation resulting from failure to consummate sale of Smith’s clinics to hospital chain].)
To implement our decision in Smith v. Selma Community Hospital, the superior court ordered the hospital to allow Smith to exercise privileges at Selma Community Hospital for one year, after which Smith would be obliged to reapply. When Smith reapplied, his reapplication was rejected on the ground he was ineligible. Smith filed this lawsuit and asked that his status at Selma Community Hospital be restored until this lawsuit was decided. The superior court granted a preliminary injunction that restored Smith’s privileges.Adventist Health System/West and its affiliates appealed.
We conclude that the superior court did not err when it (1) impliedly found that a statutorily required injunction bond had been waived or forfeited, (2) expressly found that Smith was likely to prevail on the merits, and (3) balanced the likely interim harm to the parties of granting or denying the preliminary injunction. Consequently, the order granting the preliminary injunction will be affirmed.
FACTS AND PROCEEDINGS
Parties
Plaintiffs in this lawsuit are Smith and two corporations (jointly, Smith) through which he provides medical care to his patients: (1) Valley Family Health Center Medical Group, Inc., and (2) Central Valley Maternal and Child Care Centers, Medical Group, Inc.
Defendants include (1) Adventist Health System/West, (2) Selma Community Hospital, (3) Hanford Community Medical Center, (4) Central Valley General Hospital, and (5) Richard Rawson, chief executive officer of Hanford Community Medical Center and the former president of Selma Community Hospital. We refer to these defendants collectively as Hospital Group.
The other defendants are (1) the Consolidated Medical Staff of Central Valley General Hospital, Selma Community Hospital and Hanford Community Medical Center and (2) Nicolas E. Reiber, M.D., the chief of the consolidated staff. Collectively, these defendants are referred to as CMStaff. We refer to the combination of Hospital Group and CMStaff as Adventist Health.
Adventist Health System/West owns, directly or through its subsidiaries, Selma Community Hospital, Hanford Community Medical Center, and Central Valley General Hospital. Selma Community Hospital, Inc., the corporation that held the license to operate Selma Community Hospital, retired its license and leased the facilities to Hanford Community Medical Center. It appears that Hanford Community Medical Center has operated the Selma facility under its license since October 2005.
It also appears that the medical staffs of the hospitals were reorganized around the same time. Prior to the reorganization, the medical staff of Selma Community Hospital was organized as a separate entity. After the reorganization, the medical staffs of the hospitals were a single entity, CMStaff, which adopted its own bylaws (Bylaws).
Rejection of Smith’s Application
The disputes between Smith and Adventist Health are manifold. The dispute regarding Smith’s hospital privileges and medical staff membership at Selma Community Hospital is described in Smith v. Selma Community Hospital, supra, 164 Cal.App.4th 1478. We will not repeat the facts of that case here, but will pick up the description of the dispute with the Fresno Superior Court’s order of December 5, 2006. That order stated that Smith would be permitted to practice on the staff of Selma Community Hospital for one year and then would have to reapply for privileges as would any other physician practicing there.
In October 2007, Smith reapplied for privileges. In December 2007, Reiber sent Smith a letter telling him that his application could not be accepted because he had not satisfied a 36-month waiting period specified in section 4.5-10 of the Bylaws. In particular, the letter referenced denials of reappointment at Hanford Community Medical Center and Central Valley General Hospital that occurred in early 2004 and stated those decisions were not final because they were the subject of a still pending lawsuit. The letter also advised Smith that, after December 19, 2007, he would no longer have privileges to practice at Selma Community Hospital. The letter did not identify any internal procedure by which Smith could challenge the decision that he was not eligible to reapply for hospital privileges.
Proceedings in the Superior Court
Smith disagreed with the way Adventist Health interpreted and applied the 36-month waiting period in section 4.5-10 of the Bylaws. As a result, a week before his privileges at Selma Community Hospital were to end, Smith filed a complaint in Fresno Superior Court against Adventist Health seeking a preliminary and permanent injunction and damages. The complaint alleged causes of action for (1) intentional and unlawful interference with the right to pursue a lawful occupation, (2) intentional interference with prospective business advantage, and (3) unfair competition.
On December 20, 2007, the Fresno Superior Court filed an order denying Smith’s ex parte application for a temporary restraining order and an order to show cause regarding the issuance of a preliminary injunction. The order stated the reasons for the denial were (1) Smith’s failure to serve his moving papers properly, (2) Smith’s failure to exhaust his administrative remedies, and (3) improper venue.
As a result of Adventist Health ’s successful motion for a change in venue, the case was transferred to Kings Superior Court near the end of March 2008.
The superior court scheduled the hearing on Smith’s motion for preliminary injunction for June 3, 2008. Smith’s memorandum of points and authorities in support of motion for preliminary injunction chronicled (1) Adventist Health System/West’s acquisition of competing area hospitals—Central Valley General Hospital in 1998 and Selma Community Hospital in 2002, (2) Hospital Group’s attempt to purchase Smith’s clinics for $8 million and its failed attempt to renegotiate the purchase, which included threats to “see [him] in Lompoc [1] in six months,” (3) Hospital Group’s four illegal terminations of his privileges, which Smith alleges were motivated by a desire to eliminate him as competition, (4) Hospital Group’s appointment of biased members to the judicial review committee that conducted the hearing concerning the suspension of his privileges at Central Valley General Hospital and Hanford Community Medical Center, (5) Hospital Group’s active pursuit of Smith’s prosecution by the Medical Board of California (Medical Board), and (6) the 2008 decision of the Medical Board that exonerated Smith of the allegations against him. The evidence presented by Smith included declarations, his testimony before the Medical Board, documents from prior litigation and peer review proceedings, correspondence relating to CMStaff’s rejection of his reapplication, and the 2008 decision of the Medical Board.
Hospital Group’s opposition to the motion for preliminary injunction included as support (1) a September 2006 declaration from Rawson and (2) a copy of the 2003 “Decision and Report of the Judicial Review Committee” of the consolidated medical staff of Hanford Community Medical Center and Central Valley General Hospital. The decision addressed 34 charges of substandard care, 26 instances of abusive behavior, and 10 allegations of falsification of documents and found that only 11 were “not proven.” The decision concluded that Smith should not be reappointed. It noted his insistence on treating the peer review inquiry as a sham and stated he “demonstrated an unwillingness or inability to profit from criticism in a collegial way.”
The appellate record in the present matter contains no opposition to the preliminary injunction from CMStaff and no joinder by CMStaff in Hospital Group’s opposition.
During the June 3, 2008, hearing, the topic of an injunction bond was not addressed. Much of the argument concerned the proper interpretation of the Bylaws and the provision containing the 36-month waiting period.
The superior court took the matter under advisement and filed an order granting the preliminary injunction on June 10, 2008. The court stated the order was needed (1) to restore the status quo to what existed before the dispute regarding the waiting period arose and (2) because Smith’s damages would be difficult, if not impossible, to ascertain. The court specifically found that Smith “has a reasonable probability of prevailing on the merits of the dispute between the parties whether the three year waiting period set forth in the consolidated medical staff’s bylaws applies to [Smith], or if the bylaws do apply, if the waiting period has expired.” The court also weighed the harm to the parties and found that ...
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