Jury's Verdict in Summary Suspension Case Nullified
by Michael Kurs, Pullman & Comley, LLC, Hartford, CT
In August of last year, after jurors returned a verdict against a Connecticut hospital in the amount of $250,000, plus punitive damages, in a case involving the summary suspension of a surgeon's privileges, Connecticut Superior Court Judge Carl J. Schuman granted motions that freed the hospital from any liability and entered judgments for the hospital. "The favorable termination doctrine," a doctrine borrowed from the law of malicious prosecution and vexatious litigation, lies at the center of the judge's decision. The application of the doctrine prevented the doctor from recovering against the hospital because he did not prevail in the course of the internal hospital due process proceedings. The significance of the favorable termination doctrine in court challenges in hospital staff privileges cases is that the doctrine prevents a jury from second guessing the results of internal hospital hearing and review procedures. Counsel involved in litigating like cases should not overlook the doctrine's utility and effect.
The surgeon had not made any claims of malicious prosecution or vexatious litigation against the hospital. Rather, the claims on which the verdicts entered were for breach of contract, violation of the covenant of good faith and fair dealing, tortious interference with business expectancies, and intentional injury to, or reckless disregard of, the surgeon's rights.
The judge also decided the surgeon's claim for an injunction in the hospital's favor. The surgeon had sought an injunction requiring the hospital to cease and desist from terminating his privileges and interfering with his patient relationships. After acknowledging that Connecticut's appellate courts "have not yet addressed ... whether the favorable termination rule applies to private hospital corrective action," the judge applied the favorable termination doctrine based upon the doctrine's use in a variety of other Connecticut cases concerning judicial and quasi-judicial proceedings and a California Supreme Court decision.
The case before Judge Schuman originated after the hospital suspended the surgeon's privileges to admit patients in February 2001. The surgeon had been an active member of the hospital's medical staff since 1994. Following the 1999 renewal of his privileges, the Hospital conducted a peer review of one of his cases that involved an error. The surgeon acknowledged the error and submitted voluntarily to partial supervision for six months. Subsequently, in June of 2000, the supervision ended and his full privileges were restored.
Between June 2000 and October 2000, no new issues arose. Still, the hospital retained an outside consultant after June 2000 to review 20 of his cases. Also, a "competitor" of the surgeon became chairman of the department of surgery in September. After he received a copy of the outside consultant's report, the new chairman conducted a review of all of the surgeon's major surgical cases, as well as some minor cases, to select cases for a peer review committee to review. Two of the members of the peer review committee were also "competitors" of the surgeon.
The hospital told the surgeon in November 2000 of the review and then only provided him a copy of the report in December, when he was also informed of the convening of the peer review committee. A meeting of the ad hoc peer review panel then convened on short notice to allow the surgeon to respond to the panel's concerns, and it heard his responses for several hours.
The court's opinion describes the results of the various reviews of the surgeon's cases in some detail. The outside consultant's review consisted of an evaluation of 20 cases by the chairman of the Department of Surgery at another hospital, who also served as a clinical professor of surgery at Yale Medical School. The review found 12 of the 20 cases demonstrated evidence of error in surgical technique and/or management -- nine of which led to "significant adverse outcome[s] including death." The panel review totaled 33 cases, which included the cases with complications that had been evaluated as part of the first review. The panel found that the surgeon's intra-operative decision-making and post-operative management were "suspect in a wide range of cases." Based on its chart review, the panel questioned the surgeon's ability "to safely function independently as a general surgeon" at the hospital at the time.
The summary suspension followed, imposed by the hospital's medical executive committee. Some 17 physicians approved the motion to summarily suspend the doctor's privileges. The applicable bylaws provided that the "Executive Committee of either the Medical Staff or the Governing Body shall have the right to summarily suspend the admitting and/or clinical privileges of a practitioner, upon a determination that action must be taken immediately in the best interest of patient care in the hospital or when there is a potential immediate risk to the well being of patients, employees or visitors."
The surgeon asked for and received a full review hearing on his suspension. The hearing included five sessions over a five month period. Both sides involved counsel in the hearings. A recording was made of the hearings. The hearings included opening statements, exhibits, testimony under oath, experts and post-hearing briefs. The panel concluded that the summary suspension was reasonable, sustained by the evidence and properly supportable. The surgeon appealed to the hospital's board of directors. He unsuccessfully presented evidence to a three-person appeal panel in an effort to show the suspension was unwarranted, tainted by the bad faith of his department chair and lacking in due process.
In Connecticut, state regulations require hospitals to adopt bylaws governing their procedure for hearing complaints regarding the conduct of their members and for referral of the complaints with recommendations to their governing boards. Connecticut courts have refrained from interfering with hospital disciplinary actions so long as reasonable procedures are followed and evidence exists from which the hospital board could have found that a physician's conduct posed a threat to patient care.
The court found that the procedural protections accorded to the surgeon were analogous to those of a regulated public administrative agency. This fact was significant to the court's assessment of the surgeon's claims. Also significant was a 1976 California Supreme Court case, which Judge Schuman identified as "the only appellate court explicitly to have addressed the question of whether the favorable termination rule should apply in the private hospital context." In that case, Westlake Community Hospital v. Superior Court of Los Angeles County, 17 Cal. 3d 465, 551 P.2d 410 (1976), the California Supreme Court ruled that a doctor must first succeed in overturning a hospital's action against his privileges before pursuing a tort claim against the hospital.
Judge Schuman quoted the California court's reasoning that "[a]lthough a quasi-judicial decision reached by a tribunal of a private association may not be entitled to exactly the same measure of respect as a similar decision of a duly constituted public agency . . . we believe that so long as such a quasi-judicial decision is not set aside through appropriate review procedures the decision has the effect of establishing the propriety of the hospital's action."
Despite some differences in Connecticut and California law, Judge Schuman ruled that the favorable termination rule should apply to this case, as the surgeon had failed to prevail in the hospital review proceeding against him when the summary suspension was challenged. Among other problems noted was that the surgeon's positions were logically inconsistent. The judge could find no justification for the argument that the initial summary suspension was invalid when the surgeon did not contest the review panel's determination that the summary suspension was substantially correct. "A doctor who does not challenge the hospital's final decision to suspend him permanently should not receive damages because the hospital suspended him summarily at the outset." 2007 Conn. Super. LEXIS 2249, *41.
By convincing the judge to apply the favorable termination rule, the hospital avoided the damages awarded by the jury, plus an attorney's fee claim of $456,678.74, and a claim for an additional $53,068.3 in costs.
The surgeon's case was hampered by a prior related ruling in the case. Before trial, another judge ruled on Health Care Quality Improvement Act (HCQIA) defenses raised by the hospital. The court's decision found the surgeon had a right to a trial on the question of whether the actions leading to the summary suspension satisfied statutory requirements for immunity under 42 U.S.C. §11112(a)(2) and (3). Since the surgeon did not bring forth proof of any flaws in the subsequent review proceedings, the hospital was shielded from any damages claims related to the post-summary suspension proceedings. The surgeon's injunction claim survived this ruling since the court the ruled the HCQIA does not provide immunity from injunctive or declaratory relief, citing Sugarbaker v. SSM Health Care, 190 F. 3d 905, 918 (8th Cir. 1999), cert. denied, 528 U.S. 1137 (2000).
The hospital first advanced the favorable termination argument on the eve of trial in two motions, a motion for summary judgment and a motion to exclude evidence. The court's decision includes a footnoted lament, regarding the fact that the favorable termination argument did not get litigated earlier in the case. "In view of the decision reached today," the court's footnote 13 remarks, "it is regrettable that the defendant did not raise this issue earlier in the five-year history of the case."
The surgeon filed an appeal from the ruling but court records indicate the appeal has since been withdrawn.
(Judge Schuman's ruling occurred in the case Harris, M.D. v. Bradley Memorial Hospital and Health Center, Inc., judicial district of New Britain, docket no. HHB CV 02-0516962-S (August 20, 2007), 2007 Conn. Super. LEXIS 2249. Judge Richard E. Burke decided the HCQIA motion issues in an earlier ruling in the case. The facts recounted here are drawn from both decisions, solely. The author and the author's firm had no involvement in the case.)