Virmani v. Presbyterian Health Services Corp.

• Decision Date: 05 August 1997
• Docket Number: No. COA96-1263,COA96-1263
• Citation: 488 S.E.2d 284,127 N.C.App. 71
• Court: North Carolina Court of Appeals
• Parties: A. Ron VIRMANI, M.D., Plaintiff v. PRESBYTERIAN HEALTH SERVICES CORP., Defendant

Page 284

488 S.E.2d 284

127 N.C.App. 71

A. Ron VIRMANI, M.D., Plaintiff v. PRESBYTERIAN HEALTH SERVICES CORP., Defendant

No. COA96-1263.

Court of Appeals of North Carolina.

Aug. 5, 1997.

Underwood, Kinsey, Warren & Tucker by William L. Sitton, Jr., Charlotte, for plaintiff-appellee.

Johnston, Taylor, Allison & Hord by Patrick E. Kelly, and Greg C. Ahlum, Charlotte, for defendant-appellant.

GREENE, Judge.

Presbyterian Health Services Corp. (Presbyterian) appeals an order granting A. Ron Virmani's, M.D., (Virmani) request for an injunction directing compliance with certain Medical Staff Bylaws (Bylaws).

Virmani filed suit against Presbyterian (which operates two hospitals in the Charlotte area) claiming a breach of contract when his medical staff privileges (in those hospitals operated by Presbyterian) were suspended without the benefit of an opportunity to respond (at an early stage of the investigation) to allegations regarding his competence to practice medicine in hospitals operated by Presbyterian. Specifically Virmani claims the investigation was conducted pursuant to section 8.0-2 of the Bylaws and that section (entitled Peer Review Referral) requires that he, prior to any action by the Committee, be given notice of allegations and an opportunity to be heard before the Committee. Virmani seeks actual and consequential damages, attorneys' fees, and an injunction to prevent Presbyterian from suspending his privileges except in accordance with the Bylaws.

The matter came on for hearing before the trial court pursuant to competing motions for summary judgment. The evidence presented at the hearings on these motions reveals that Virmani was board-certified in obstetrics and gynecology and maintained a solo practice in Matthews, North Carolina, at the time he applied for and was granted staff privileges at one of the hospitals operated by Presbyterian. The Bylaws, a copy of which he received upon his application for privileges, provide that the granting of privileges is conditioned upon the applicant's agreement to be bound by the terms of the Bylaws. Bylaws § 6.2-2(a). As a member of the medical staff Virmani is granted the privilege to "formulate ... and recommend" amendments to the Bylaws. Bylaws § 16.1.

Fourteen months after receiving his privileges Virmani, while performing a pelvic laparoscopy in the hospital, punctured a patient's iliac artery. Two weeks later, Simon V. Ward, M.D., (Ward), the Chairman of the OB/GYN Department, met with Virmani and informed him that Paul F. Betzold, (Betzold) President and CEO of Presbyterian, requested that an inquiry of the incident be conducted. Ward sought the assistance of the standing OB/GYN Peer Review Committee (Committee) to conduct the inquiry. During the next five months the Committee examined 102 of Virmani's cases and found 24 of them to be problematic in one of three areas: procedures performed without indication, documentation discrepancies, and medical management issues. At no time during the inquiry was Virmani questioned or given an opportunity to respond with regard to his treatment of the 102 cases investigated by the Committee. The Committee, upon completion of its investigation, made its report to Ronald L. Brown, M.D., (Brown) the new OB/GYN chairman. Several months later Betzold notified Virmani that after reviewing the Committee's report he was suspending his "clinical privileges ... at the Presbyterian Hospitals," pending review by the Medical Board. Virmani received permission to address the Medical Board to present reasons why his privileges should not be suspended. The Medical Board upheld Virmani's summary suspension. Virmani then made a timely request for a de novo hearing before a three-person Hearing Committee as provided by Article IX of the Bylaws. Three months later the de novo hearing was conducted at which time Virmani was given full due process rights, including the right to be present, the right to call and examine witnesses, and to cross examine witnesses. The Hearing Committee voted to affirm the suspension.

Upon review of the Hearing Committee's report, the Medical Board unanimously voted to terminate Virmani's staff privileges and submitted its decision to the Board of Trustees of the Hospital for approval. Virmani requested an appeal before the Board of Trustees which was granted. The Board of Trustees unanimously upheld the decision to terminate Virmani's physician privileges.

The trial court granted Presbyterian's motion for summary judgment on Virmani's claim for monetary damages and granted Virmani's motion for summary judgment seeking injunctive relief. The order directed Presbyterian to conduct a new Peer Review hearing allowing Virmani to respond to written queries from the Committee, prior to its recommendation to the department chairman. The order further provided that the "members of the ... Committee are to be different from the prior physicians who served on that Committee, and they are not to be OB-GYN physicians who maintain an office within the town limits of Matthews, North Carolina, or part of a medical group that maintains such an office." The order directed that there must be a "substitute" selected to act as chairman of the OB/GYN department for the purposes of receiving and acting on the recommendations of the Committee. The trial court denied Presbyterian's claim that it should be awarded attorney's fees under the Health Care Quality Improvement Act (Act), 42 U.S.C. § 11113.

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The issues are (I) whether the termination of Virmani's privileges was conducted pursuant to section 8.0-2 of the Bylaws, and if so; (II) whether the provisions of section 8.0-2 were violated, and if so; (III) whether a breach of the Bylaws gives rise to a claim for breach of contract, and if so; (IV) whether the Bylaws provide Presbyterian immunity from damages and injunctive relief, and if not; (V) whether the trial court can style injunctive relief so as to set the membership of the Committee; and (VI) whether Presbyterian is entitled to attorneys' fees.

I

Presbyterian argues that Virmani's privileges were not suspended pursuant to section 8.0-2 ¹ of the Bylaws but instead pursuant to section 8.2 ² and the latter section allows for summary suspension without the benefit of any prior notice or hearing. We disagree. Although it does appear (an issue we need not decide in this case) that section 8.2 allows for the summary suspension of the privileges of any physician whose conduct "requires that immediate action be taken to protect the life of any patient(s)," in this case the issue of Virmani's suspension was directed to the Committee which was asked to make a recommendation to the department chair. Thus, although the suspension may have qualified for a summary suspension under section 8.2-1, it was not handled in that manner and instead was treated as a peer review referral under section 8.0-2, with the Committee making a recommendation to the department chair who in turn submitted the recommendation to the President who then suspended Virmani.

II

Presbyterian makes no argument that a section 8.0-2 hearing does not require a written query from the Committee to Virmani, prior to making a recommendation to the department chair. Indeed section 8.0-2 is specific in permitting referrals to the department chair only after providing the physician under investigation an opportunity to respond to written queries from the Committee.

III

Presbyterian argues that even if the Bylaws were not followed there does not arise any claim by Virmani for breach of contract. Specifically it argues that because it is required by statute to have bylaws governing the suspension and termination of a physician's privilege to practice in hospitals, see N.C.G.S. § 131E-85(a) (1994), and because Virmani was required by statute to comply with the Bylaws, N.C.G.S. § 131E-85(d), "there was no mutual exchange of consideration" and therefore no contract.

We acknowledge the general rule that the promise to perform an act which the promisor is already bound to perform cannot constitute consideration to support an enforceable contract. Warzynski v. Empire Comfort Sys., 102 N.C.App. 222, 231, 401 S.E.2d 801, 806 (1991). Thus the mere enactment of a set of bylaws pursuant to the statute is a preexisting duty and cannot itself constitute consideration for the formation of a contract. When, however, a hospital offers to extend a particular physician the privilege to practice medicine in that hospital it goes beyond its statutory obligation. See N.C.G.S. § 131E-85(a) (granting of privilege to physician not mandated and to be determined by hospital on a "non-discriminatory basis"). If the offer is accepted by the physician, the physician receives the benefit of being able to treat his patients in the hospital and the hospital receives the benefit of providing care to the physician's patients. If the privilege is offered and accepted, each confers a benefit on the other and these benefits constitute sufficient and legal consideration for the performance of the agreement. See 17A Am.Jur.2d, Contracts § 113, at 129 (1991) (consideration defined to include any "benefit accruing to one party"). If the offer includes a condition that the physician be bound by certain bylaws promulgated by the hospital and the physician accepts the offer, those bylaws become a part of the contract, as there is mutual assent to be bound by the bylaws. See 17A Am.Jur.2d, Contracts § 26, at 54 (mutual assent necessary for formation of contract); see also Lewisburg Community Hosp. v. Alfredson, 805 S.W.2d 756, 761 (Tenn.1991) (medical staff member has a "contractual right to insist that the Hospital follow its bylaws"); Lawler v. Eugene Wuesthoff Mem'l Hosp., 497 So.2d. 1261, 1264, (Fla.Dist.Ct.App.1986) (hospital bylaws binding and enforceable contract between hospital and physicians privileged to practice in hospital); St. John's Hosp. Med. Staff v. St. John...