Todd v. Physicians & Surgeons Community Hosp., Inc.

• Decision Date: 15 February 1983
• Docket Number: No. 64757,64757
• Citation: Todd v. Physicians & Surgeons Community Hosp., Inc., 302 S.E.2d 378, 165 Ga.App. 656 (Ga. App. 1983)
• Court: Georgia Court of Appeals
• Parties: , 1983-1 Trade Cases P 65,234 TODD et al. v. PHYSICIANS & SURGEONS COMMUNITY HOSPITAL, INC. et al.

Page 378

302 S.E.2d 378

165 Ga.App. 656, 1983-1 Trade Cases P 65,234

TODD et al. v.PHYSICIANS & SURGEONS COMMUNITY HOSPITAL, INC. et al.

No. 64757.

Court of Appeals of Georgia.

Feb. 15, 1983.

Rehearing Denied March 8, 1983.

Mary Margaret Oliver, Conyers, for appellants.

R. Harold Meeks, Jr., Atlanta, for appellees.

McMURRAY, Presiding Judge.

Doctors Todd and Poeppelman are podiatrists (Doctors of Podiatric Medicine) duly licensed to practice podiatric medicine in the State of Georgia.Dr. Todd was a member in good standing of the Active Medical Staff at Physicians & Surgeons Community Hospital, Inc., while Dr. Poeppelman was a member of the Courtesy Medical Staff at this hospital.As such members they were accorded full podiatrist's privileges including the right to admit and treat patients at the hospital.Subsequently, on November 30, 1978, the board of directors of the hospital corporation approved a new article of the corporate bylaws concerning the hospital's medical staff so as to allow only doctors eligible for membership in the American Medical and American Dental Associations to practice or be appointed to the medical staff, and specifically deleted provisions allowing podiatrists to be appointed to the staff.Dr. Todd and Dr. Poeppelman were then notified during the month of December that their medical staff privileges would terminate as of December 31, 1978, and that they would not be appointed to the staff for the year 1979.

The hospital operates under a permit, issued by the Georgia Department of Human Resources, as required by Code Ann. § 88-1905(Ga.L.1964, pp. 499, 612;1981, p. 920, effective July 1, 1981)(now OCGA § 31-7-3, effective November 1, 1982).In April 1979 the hospital was purchased and became a wholly owned subsidiary of Southern Health Services of Georgia, Inc., which had prior to that date represented the hospital under a management contract.The hospital is a certified health care provider under the Medicaid and Medicare programs (Federal) and derives over 55% of its revenues through its participation in these programs.

With the adoption of the new article of the bylaws, as doctors of podiatric medicine are not eligible for membership in the American Medical Association or the American Dental Association, the above doctors were not reappointed to the staff.Whereupon, they requested a hearing and appellate review with respect to the refusal of the hospital to reappoint them to the staff.Their requests for hearings were subsequently denied.Since January 1, 1979, they have been unable to admit or treat patients at the hospital, although they have had privileges at other Atlanta hospitals for treatment of podiatric patients.

Generally, all medical staff personnel other than physicians who are under contract with this hospital, are informed that they are appointed to the medical staff for one year periods and are given no guarantee of reappointment.The defendantSouthern Health Services of Georgia, Inc. has never been issued a certificate of need by the State Health Planning and Development Agency of Georgia and same was not required by the state at the time of the hospital's acquisition by Southern Health Services of Georgia, Inc.The defendant hospital has not received approval from the State Health Planning and Development Agency nor the North Central Health Systems Agency for Capital Expenditures to establish a rehabilitation unit because such expenditures were not large enough to require approval.The hospital has never operated for-profit medical clinics on premises owned by the Atlanta Housing Authority, nor has it been licensed by the Atlanta Housing Authority to operate such a medical clinic.At one time the hospital and Southern Health Services of Georgia, Inc. did derive income from the Head Start Program, but since September 1979 the hospital has not received any money from the state or federal governments under the Head Start Program as it no longer has any such contract.

After Dr. Todd and Dr. Poeppelman were notified of their loss of medical staff privileges and the adverse decision of their request for a hearing they filed suit against Physicians & Surgeons Community Hospital, Inc. and Southern Health Services of Georgia, Inc., the various directors and officers of the two defendant corporations and the administrator of the hospital who had advised them that they no longer were members in good standing and were not afforded full podiatric privileges.Their action set forth in substance the above facts contending they had been wrongfully terminated from practicing their profession at the hospital without regard to and in contravention of the reappointment procedures set forth in the hospital medical staff bylaws.They allege that the acts of all the defendants amount to a conspiracy to injure them and has caused them to suffer irreparable damage to their business and professional reputations in summarily terminating their medical staff privileges in an unreasonable, arbitrary, and capricious manner amounting to invidious discrimination in violation of the equal protection of the law guaranteed by the federal and state constitutions.In Count 1 they sought injunctive relief.In Count 2 they allege the conspiracy amounts to a restraint of trade and free and open competition in violation of Code Ann. § 26-2308(Ga.L.1968, pp. 1249, 1308)(now OCGA § 16-10-22, effective November 1, 1982), seeking injunctive relief as having no adequate remedy at law.In Count 3 they allege breach of a contract resulting in irreparable injury unless the defendant hospital corporation is compelled to reinstate them to membership.In Counts 4 and 5 they contend the loss of privileges resulted from malicious and wrongful acts of the conspirators for which they sought exemplary damages in Count 4, and compensatory and exemplary damages in Count 5.They prayed for permanent injunctive relief including an interlocutory injunction, a declaration that the amended corporate bylaws adopted be declared to be unconstitutional and invalid, the issuance of a mandatory order requiring the reinstatement of the original corporate bylaws as they existed prior to the unconstitutional amendment thereto, and for judgment against the defendants, jointly and severally, in favor of plaintiff Todd in the amount of $5,000, plus an additional $5,000 for each month subsequent to January 1979 during which time he was denied reappointment; $25,000 for injury resulting from defamation of his professional reputation and $25,000 exemplary damages.As to plaintiff Poeppelman, judgment against the defendants was sought, jointly and severally, in the amount of $1,000, plus an additional $1,000 for each month subsequent to January 1979 during which time he was denied reappointment to the medical staff, plus $25,000 resulting from defendants' defamation of his professional reputation, plus $25,000 exemplary damages; and for such other and further relief as the court deemed just and proper.Each plaintiff also sought attorney fees and costs of court.

The defendants answered separately denying the claims and some of the individual defendants cross-claimed against the corporate defendants in the event judgment was obtained against them.However, certain of the defendants later voluntarily dismissed without prejudice their cross-claims, and the plaintiffs also voluntarily dismissed without prejudice certain of the individual defendants.

A motion for interlocutory injunction was heard and denied, the trial court finding that the hospital corporation had properly amended its corporate bylaws to limit membership in its medical staff to physicians and dentists eligible for membership in the American Medical Association and the American Dental Association and because plaintiffs had failed to show they had suffered irreparable harm or to have an inadequate remedy at law.

After discovery the defendants moved for summary judgment, and after further discovery the plaintiffs also filed a motion for partial summary judgment as to liability against defendantPhysicians & Surgeons Community Hospital, Inc. under Counts 1 and 3.

Based upon the above-admitted and stipulated facts which the court determined in its findings of fact in considering defendants' motion for summary judgment and plaintiffs' cross-motion for partial summary judgment as to Counts 1 and 3, the trial court concluded that all the remaining defendants(some of the individual defendants having been dismissed by plaintiffs without prejudice) were entitled to summary judgment on all counts and denied plaintiffs' motion for partial summary judgment on Counts 1 and 3 (order dated May 22, 1981, filed May 26, 1981).The court therein concluded as a matter of law that the defendants' actions did not constitute state action in the receipt of medicare and medicaid funds by defendant hospital, its licensing by the state and its regulation as a certified provider under the medicare and medicaid programs, citing such cases as Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477);Madry v. Sorel, 558 F.2d 303;andGreco v. Orange Memorial Hosp. Corp., 513 F.2d 873(seeplaintiffs' claims as to Count 1).As to plaintiffs' claims with reference to Count 2 brought under the criminal statute(Code Ann. § 26-2308, supra) designed to punish persons who entered into contracts, combinations or conspiracies in restraint of trade or restraint of free and open competition in any transaction with the state, or any agency thereof, no...