NORTH VALLEY HOSP v KAUFFMAN

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13057 No. I N THE SUPREME COURT OF THE STATE O M N A A F OTN 1975 NORTH VALLEY HOSPITAL, INC. , P l a i n t i f f arid Respondent, -vs DAVID V. - KAUFFMAN, M.D., Defendant and A p p e l l a n t . Appeal from: D i s t r i c t C o u r t of t h e E l e v e n t h J u d i c i a l D i s t r i c t , Honorable R o b e r t S. Keller, Judge p r e s i d i n g . Counsel of Record : For A p p e l l a n t : Warden, W a l t e r s k i r c h e n and C h r i s t i a n s e n , K a l i s p e l l , Montana M e r r i t t N. Warden a r g u e d , K a l i s p e l l , Montana For Respondent: Murphy, Robinson, Heckathorn and P h i l l i p s , Kalispe1.1, Montana I. James Heckathorn a r g u e d , K a l i s p e l l , Montana For Amicus C u r i a e : Smith, Smith and S e w e l l , Helena, Montana Chadwick Smith a r g u e d , Helena, Montana Submitted : December 1 2 , 1975 Decided: JAN 1 5 1976 'Jir. J u s t i c e John Conway ' i a r r i s u n 9 e L i v e r e J t h e a p i n i o n of t h e &:ourt. T h i s a p p e a l i s from t h e judgment e n t e r e d i n t h e d i s t r i c t c o u r t , F l a t h e a d County, Hon. Robert S. K e l l e r , p r e s i d i n g w i t h o u t 3 jury. That judgment o r d e r s , a d j u d g e s and d e c r e e s t h a t David V. Kauffman, M.D., b e e n j o i n e d from f u r t h e r u t i l i z a t i o n of t h e f a c i l i t i e s o f t h e North V a l l e y H o s p i t a l , I n c . The p r i n c i p a l s i n v o l v e d h e r e i n a r e : (1) North V a l l e y H o s p i t a l , I n c . , p l a i n t i f f and r e s p o n d e n t , hereiriafter referred t o a s Hospital. (2) David V. Icauffman, 1 . D. 1 , d e f e n d a n t and a p p e l l a n t , h e r e i n a i t e r r e f e r r e d t o a s Appellant. (3) The Board o f D i r e c t o r s of t h e H o s p i t a l , h e r e i n a f t e r z a l l e d the Board. ( 4 ) The p r i v a t e p h y s i c i a n s p r a c t i c i n g i n t h e s u r r o u n d i n g area who u t i l i z e t h e H o s p i t a l f o r p a t i e n t c a r e , h e r e i n a f t e r r e f e r r e d t o a s t h e Medical S t a f f . The H o s p i t a l i s a p r i v a t e , n o n p r o f i t c o r p o r a t i o n , con3i;~uc:~ed p a r t with Hill-Burton ln W h i t e f i s h , Montana. UT t h e community. iriterns. f e d e r a l funds, t h a t operates i n It i s governed by t h e Board, made up o f members H o s p i t a l h a s no p a i d s t a f f o f d o c t o r s o r It h a s a p a i d a d m i n i s t r a t o r , one B u r l H a t f i e l d , who h a n d l e s t h e day t o day o p e r a t i o n s o f t h e f a c i l i t y under t h e o v e r a l l z u p e r v i s i o n o f t h e Board. A p p e l l a n t was l i c e n s e d t o p r a c t i c e medicine i n Montana i n 1338 and h a s p r a c t i c e d i n t h e W h i t e f i s h a r e a s i n c e 1959. Ile a i i l i z e d t h e f a c i l i t i e s o f t h e H o s p i t a l d u r i n g t h a t p e r i o d and h e l d o f t h e v a r i o u s o f f i c e and s e r v e d on most of t h e H o s p i t a l ' s rilo~t For a number o f y e a r s A p p e l l a n t had problems a t t h e Y o s p i c i i i which b r o u g h t a b o u t s u s p e n s i o n s and d i s c i p l i n a r y measures irom t h e Medical S t a f f . During t h e 1 9 6 0 f s , f o r a one y e a r p e r i o d , he was r e q u i r e d t o have a t Least ane o c h e r surgeon w i t h him f o r a l l s u r g e r y done a t t h e H o s p i t a l . During much o f t h e t i m e h e p r a c t i c e d a t t h e H o s p i t a l he had d i f f i c u l t i e s w i t h t h e s t a f f i n not maintaining proper records i n regard t o h i s p a t i e n t s . F i n a l l y , i n t h e late summer 1974, t h e Medical S t a f f recommended and t h e Board a p p r o v e d , t h a t t h e H o s p i t a l p r i v i l e g e s o f A p p e l l a n t n o t b e renewed. S e v e r a l m e e t i n g s were h e l d a t which A p p e l l a n t was p r e s e n t , a t l e a s t f o r p a r t of t h e m e e t i n g , where t h e d e c i s i o n n o t t o renew was d i s c u s s e d i n some d e t a i l . Appel- l a n t r e q u e s t e d a h e a r i n g , a s p r o v i d e d i n t h e by-laws o f t h e Y o s p i t a l , and t h a t h e a r i n g was h e l d on November 26, 1974. A t t h e h e a r i n g a l i s t o f some 23 "charges" o r "problem dieas" was p r e s e n t e d t o A p p e l l a n t . H e a l l e g e s t h i s was t h e f i r s t islr~iehe had s e e n t h e agenda o f "charges" o r "problem a r e a s " 211 which t h e Medical S t a f f had a c t e d . T h e r e a f t e r , t h e Medical > < t a f fv o t e d t o recommend nonrenewal o f p r i v i l e g e s and t h e Board iiccepted t h e recommendation. Appellant w a s n o t i f i e d , b u t he c m t i n u e d t o u s e t h e f a c i l i t y and t h e H o s p i t a l b r o u g h t a n a c t i o n t o e n j o i n him from u s i n g t h e f a c i l i t i e s . On J a n u a r y 28, 1975, h e a r i n g was h e l d i n t h e d i s t r i c t c o u r t , F l a t h e a d County, on an o r d e r t o show c a u s e a s k i n g why A p p e l l a n t should n o t b e permanently r e s t r a i n e d from u t i l i z i n g t h e f a c i l i t i e s of t h e Hospital. The h e a r i n g l a s t e d f o r s e v e r a l days and b o t h p a r t i e s p r e s e n t e d e v i d e n c e . A t t h e h e a r i n g A p p e l l a n t i n d i c a t e d t h a t h e had n o t been ;lvea d m o p e r o p p o r t u n i t y t o d e f e n d h i m s e l f a t t h e November 26 h e a r i n g i n t h a t t h e l i s t o f "charges" was p r e s e n t e d t o him f o r t h e f i r s t time a t t h e hearing. The d i s t r i c t judge t o o k t h e o b j e c t i o n u~~Jer advisement and a t t h e c o n c l u s i o n o f t h e e v i d e n c e o r d e r e d hat a new h e a r i n g b e h e l d by t h e H o s p i t a l and t h a t A p p e l l a n t b e cully advised i n w r i t i n g , p r i o r t o t h e hearing, of t h e n a t u r e of ! ~ h eIc h a r g e s ' an3 tile b a s i s ~ n e recolnrnendatrrionb, 31 i n drdei: chat Appellant could b e prepared t o p r e s e n t evidence t o t h e *giedical S t a f f . T h i s was done and a f u l l h e a r i n g was h e l d on F e b r u a r y 6, 1315. A p p e l l a n t was p r e s e n t w i t h c o u n s e l . atcended s o l e l y a s an observer. The d i s t r i c t judge A t t h e c l o s e of t h i s hearing, i h e e n t i r e Medical S t a f f v o t e d unanimously t o recommend Appel- [ a n d ' s p r i v i l e g e s n o t be renewed. Thereafter the d i s t r i c t court r u l e d t h e a c t i o n s o f t h e H o s p i t a l were b a s e d on good c a u s e and were lio~ d i s c r i m i n a t o r y . The d i s t r i c t c o u r t i s s u e d a comprehensive niemorandum, a l o n g w i t h f i n d i n g s o f f a c t , c o n c l u s i o n s o f law and iudgment. Appellant appeals. While A p p e l l a n t s e t s f o r t h t e n i s s u e s f o r t h i s c o u r t ' s .:o~lsideratrion, w e f i n d two i s s u e s c o n t r o l l i n g : 1. Can t h e Board o f D i r e c t o r s o f a n o n p r o f i t h o s p i t a l - o r p o i - a t i o n r e f u s e m e d i c a l s t a f f p r i v i l e g e s t o a p h y s i c i a n upon ::he recommendation of t h e m e d i c a l s t a f f t h e r e b y denying t h a t uhysician t h e use of t h e h o s p i t a l ' s f a c t i l t i e s f o r t h e treatment 3f h i s p a t i e n t s ? 2. Did t h e p r o c e d u r e s f o l l o w e d l e a d i n g t o A p p e l l a n t ' s lislnls;;al from t h e Medical S t a f f o f t h e H o s p i t a l v i o l a t e Appel- L a n t ' s r i g h t t o due p r o c e s s o f law o r h i s r i g h t t o freedom from discrimination i n t h e treatment of h i s p a t i e n t s ? A p p e l l a n t a r g u e s t h a t c e r t a i n s p e c i f i c s t a t u t e s of t h i s ;iace t o n t r o l and t h e a c t i o n t a k e n a g a i n s t him i s no a u t h o r i z e d 3y ~ t a t u t e . A p p e l l a n t f i r s t a r g u e s t h a t C h a p t e r 1 0 , T i t l e 6 6 , Revised :;ode3 , i !~Iontana 1947, c o n t r o l s a s t o t h e l i c e n s i n g and s u p e r v i s i o n J : physicians of t h i s s t a t e . II S e c t i o n 66-1022 p r o v i d e s : S t a t e m e n t a s t o p r a c t i c e p e r m i t t e d . The c e r t i f i c a t e s i s s u e d s h a l l s t a t e t h e e x t e n t and c h a r a c t e r o f t h e [ ~ r a c t i c e h a t i s p e r m i t t e d , and s h a l l b e i n t h e form t o r e s c r i b e d by t h e b o a r d . N e i t h e r t h e p r i v i l e g e s n o r Lhe o b l i g a ~ i o n sg r a n t e d t o ar i n ~ p o s e dupon i i c e n s e e s may b e a l t e r e d e x c e p t by l e g i s l a t i v e enactment o r by a c t i o n of t h e b o a r d d u l y a u t h o r i z e d hereunder. t 1 , 4 p p e L l a n t r h e n c i t e s a r e c e n t o p i n i o n o f t h i s C o u r t , H u l l v. ~ i o r t hV a l l e y H o s p i t a l , 159 Mont. 375, 390, 498 P.2d 1 3 6 , where !:his Court h e l d : 11 The q u e s t i o n o f whether o r n o t a h o s p i t a l can l i m i t a medical l i c e n s e under t h e s t a t u t e i s n o t p a r t i c u l a r l y r e l e v a n t . T h i s power h a s been r e s e r v e d by s t a t u t e t o t h e Board o f Medical Examiners and is remedial only. I f a d u t y t o ' a c t ' were found and a d o c t o r would n o t v o l u n t a r i l y comply, a f o r m a l com~ l a i n t o t h e Board of Medical Examiners would s a t i s f y t h a t duty. It Such argument b e g s t h e q u e s t i o n i n t h e i n s t a n t c a s e , f o r h e r e , u n l i k e t h e f a c t s i n H u l l , t h e power i n q u e s t i o n i s relevant. The u n d e r l y i n g i s s u e h e r e i s whether o r n o t a h o s p i t a l , p r i v a t e o r p u b l i c , h a s a r i g h t t o e n a c t and e n f o r c e r e a s o n a b l e r u l e s and r e g u l a t i o n s t o govern i t s i n t e r n a l o p e r a t i o n s , i n c l u d i n g t h e a c t i v i t i e s o f i t s d o c t o r s who a r e g r a n t e d t h e p r i v i l e g e o f treating patients in its facilities? W answer i n t h e a f f i r m a t i v e . e \de need go no f u r t h e r i n s u p p o r t of such answer t h a n r e c e n t c a s e s o f t h i s C o u r t , though t h e r e a r e many s u p p o r t i v e c a s e s from most j u r i s d i c t i o n s i n t h i s country. 40 Am.Jur.2d, H o s p i t a l s and Asylums, 5 6 , p . 855. T h i s Court i n t h r e e r e c e n t d e c i s i o n s h e l d t h a t Montana h o s p i e a l s have t h e power t o e n a c t r e a s o n a b l e r u l e s and r e g u l a t i o n s LO govern t h e i r i n t e r n a l o p e r a t i o n s , i n c l u d i n g t h e a c t i v i t i e s of physicians p r a c t i c i n g there. Ham v. Holy Rosary H o s p i t a l , 165 (lont. 369, 529 P.2d 361, 3 1 S t - R e p . 948; H u l i t v. S t . inc cent's ~ i o s p i t a l , 164 Mont. 168, 170,174, 520 P.2d 99; H u l l v. North Valley Hospital, supra. - I n Ham w h i l e we were c o n s i d e r i n g a s t r i c t l y p r i v a t e h u s p i c a l , w e h e l d a p r i v a t e h o s p i t a l c o u l d p r e s c r i b e terms on which i t o f f e r s i t s s e r v i c e s t o t h e p u b l i c p r o v i d i n g i t d i d n o t d i s c r i m i n a t e a g a i n s t some p a t i e n t s i n p r o v i d i n g t h o s e s e r v i c e s . t11 &, w e a l s o rioted r h e ; t a c u t o i y x.C.M. 1947, which p r o v i d e s II Lariguage o f s e c t i o n 69-5217, P h y s i c i a n s s h a l l c o n t i n u e t o have d i r e c t i o n o v e r t h e i r p a t i e n t s . I t , means t h a t a p h y s i c i a n h a s exover 2 l u s i v e c ~ n t r o l / ~ a t i e n t ss,u b j e c t t o h o s p i t a l r u l e s b a s e d on r e l i g i o u s o r moral t e n e t s . In Hulit a case involving a h o s p i t a l p a r t i a l l y constructed w i t h i-iiil-Burton f u n d s , where we r e v i e w e d t h e h o s p i t a l r u l e f o r 4 i d d i n g t h e Lamaze method o f c h i l d b i r t h , t h i s Court s a i d : however, we approach t h i s c a s e w i t h t h e view t h a t l i c e n s e d h o s p i t a l s have t h e a u t h o r i t y , a c t i n g on t h e a d v i c e o f t h e i r m e d i c a l s t a f f s , t o a d o p t r u l e s of s e l f r e g u l a t i o n governing t h e h o s p i t a l ' s physicians. L i c e n s e d p h y s i c i a n s must l i v e a c c o r d i n g t o t h e r u l e s adopted by t h e i r c o l l e a g u e s , even though t h e p h y s i c i a n has d i r e c t i o n over h i s p a t i e n t . 11 ";k ? ; I n s u p p o r t o f t h e above c i t e d s t a t e m e n t from H u l i t , c h i s d o u r t c i t e d H u l l v. North V a l l e y H o s p i t a l , s u p r a , t h e v e r y h o s p i t a l h e r e jmvolved. However i n H u l l t h e H o s p i t a l was t h e d e f e n d a n t i n a c a s e where a n i n j u r e d p l a i n t i f f sued t o e s t a b l i s h t h a t t h e H o s p i t a l was n e g l i g e n t i n f a i l i n g t o remove D r . Kauffman from i t s m e d i c a l s t a f f . While t h i s Court found f o r t h e H o s p i t a l in H u l l , w e d i d f i n d t h a t a h o s p i t a l must e n a c t one s e t o f r u l e s to a p p l y t o a l l d o c t o r s t o p r e v e n t d i s c r i m i n a t i o n . A p p e l l a n t a r g u e s t h a t b e c a u s e t h e H o s p i t a l was p a r t i a l l y b u i i t with ill-~urton" f u n d s i t i s a " p u b l i c " h o s p i t a l and t h e Board c a n n o t p r e v e n t a p h y s i c i a n from p r a c t i c i n g i n a " p u b l i c " h o s p i t a l , b e c a u s e t h e s t a t e had g r a n t e d him a l i c e n s e which c o u l d u n l y be suspended o r t e r m i n a t e d by a l e g a l l y empowered a u t h o r i t y . W f i n d t h i s argument i r r e l e v a n t . e r e v o c a t i o n of a l i c e n s e . >i W e a r e n o t here involved i n t h e The t r i a l c o u r t found i n i t s c o n c l u s i o n law No. 1: hat t h e p l a i n t i f f i s a p r i v a t e , n o n p r o f i t c o r p o r a t i o n , b u t s p e c i f i c a l l y d i s c l a i m e d any r e l i a n c e upon t h e ' p r i v a t e ' n a t u r e o f t h e c o r p o r a t i o n , and r s k e d t o b e t r e a t e d a s i f i t were p u b l i c ; t h a t i n !ight o f t h e r e c e i p t and u s e o f H i l l - B u r t o n f u n d s , i t llust b e t r e a t e d a s i f i t i s p u b l i c , i n s o f a r as l i s c r i m i n a t o r y r u l e s and r e g u l a t i o n s a r e c o n c e r n e d . I I Undoubtedly, t h e H o s p i t a l agreed t o a garden v a r i e t y of r u l e s and r e g u l a t i o n s r e l a t e d t o b o t h i t s o p e r a t i o n and t o t h e u s e of Hill-Burton funds i n connection w i t h i t s acceptance of b e n e f i t s under t h e Act. Here, we a r e n o t faced w i t h t h e t y p e of d i s c r i m i n a t i o n t h a t a r o s e i n G.C. Simpkins v. Moses H. Cone Memorial H o s p i t a l , 323 F.2d 959, where negro p h y s i c i a n s , d e n t i s t s and p a t i e n t s brought an a c t i o n f o r d e c l a r a t o r y and i n j u n c t i v e r e l i e f a g a i n s t h o s p i t a l s r e c e i v i n g Hill-Burton funds which d i s c r i m i n a t e d a g a i n s t Negro c i t i z e n s . Such a r e n o t t h e f a c t s i n t h e i n s t a n t c a s e and we f i n d no b a s i s f o r concluding t h a t by a c c e p t i n g Hill-Burton funds t h e H o s p i t a l u n w i t t i n g l y surrendered any r i g h t s i t otherwise possessed t o determine t h e q u a l i t y of medical p r a c t i c e i n i t s h o s p i t a l . Montana i s b u t one of a number of s t a t e s where t h e r u l e making power has been considered f a v o r a b l e t o hospital authorities. Moore v. Board of T r u s t e e s of Carson-Tahoe H o s p i t a l , 88 Nev. 207, 495 P.2d 605; S i l v e r v. C a s t l e Memorial H o s p i t a l , (Hawaii-1972), 497 P.2d 564; v. Auburn General H o s p i t a l , 10 Wash.App. 361, 517 P.2d 240. The r a t i o n a l e of t h e s e c a s e s i s t h a t b o t h p u b l i c and p r i v a t e h o s p i t a l s have t h e d i s c r e t i o n a r y r i g h t t o exclude, suspend o r t a k e away s t a f f p r i v i l e g e s upon grounds s e t by t h e medical s t a f f . The f a c t t h a t Appellant i s a l i c e n s e d p r a c t i c i n g p h y s i c i a n i s n o t , a s Appellant a r g u e s , a c o n t r o l l i n g f a c t o r . The g e n e r a l r u l e throughout t h e c o u n t r y , a s noted i n t h e Anno. 37 ALR3d, P h y s i c i a n , Surgeon---Hospital Exclusion, pp. 645, 666, i s : 11 It i s w e l l s e t t l e d t h a t a l i c e n s e d p h y s i c i a n o r surgeon does n o t have an u n q u a l i f i e d r i g h t , c o n s t i t u t i o n a l motherwise, t o practice h i s profession i n a public h o s p i t a l . T h e r e f o r e , t h e c a s e s i n v o l v i n g charges of improper e x c l u s i o n o r d i s c r i m i n a t i o n a g a i n s t such i n s t i t u t i o n s have been decided upon o t h e r grounds. 1 1 W concur. e The l i c e n s i n g by t h e s t a t e i s a p r e r e q u i s i t e t o admission t o s t a f f membership i n any h o s p i t a l , p r i v a t e o r p u b l i c . Granting t h e p r i v i l e g e of s t a f f membership t o a h o s p i t a l i s a n e n t i r e l y s e p a r a t e m a t t e r and t h a t power r e s t s i n a board a c t i n g Such board i s i n accordance w i t h f a i r r u l e s and r e g u l a t i o n s . v e s t e d w i t h r e g u l a t i v e d i s c r e t i o n i n i t s powers of appointment and reappointment of medical personnel t o i t s s t a f f . T h i s power i n c l u d e s t h e r i g h t o f r e f u s a l of membership t o a p h y s i c i a n who f a i l s t o a b i d e by t h e r u l e s of t h e h o s p i t a l . Township H o s p i t a l , 18 Ill.App.2d Dayan v. Wood River 263, 152 N.E.2d 205. Here, t h e r e a l q u e s t i o n i s whether o r n o t t h e o p e r a t i n g r u l e s of t h e H o s p i t a l a r e r e a s o n a b l e and whether o r n o t t h e procedures provided by t h e by-laws f o r n o t i c e and h e a r i n g were followed. A p p e l l a n t ' s second i s s u e i s a s t o t h e procedure followed, and whether A p p e l l a n t ' s r i g h t t o due process was v i o l a t e d . While the r i g h t t o practice a profession i s a l i b e r t y i n t e r e s t protected by t h e Fourteenth Amendment, Shaw v. H o s p i t a l A u t h o r i t y of Cobb County, 507 F.2d 625, h e r e Appellant was n o t precluded from e x e r c i s i n g t h a t r i g h t by t h e by-laws of t h e H o s p i t a l . He need only have complied w i t h t h o s e requirements t o have continued h i s membership on t h e s t a f f . This c o n s i d e r a t i o n i s s u f f i c i e n t t o d i s p o s e of h i s p o s s i b l e p r o p e r t y i n t e r e s t a s w e l l . W find the ' e h e a r i n g s conducted a f f o r d e d due process. Appellant does n o t deny he r e c e i v e d proper n o t i c e b u t contends he was denied due process of law because t h e Medical S t a f f h e a r i n g h i s c a s e was p r e j u d i c e d a g a i n s t him. A s previously s e t f o r t h , t h e t r i a l c o u r t a f t e r h e a r i n g t h e c a s e f o r s e v e r a l days, r e f e r r e d t h e m a t t e r b c k t o t h e Medical S t a f f f o r a n o t h e r h e a r i n g and t o be c e r t a i n ellant ant's r i g h t s were p r o t e c t e d t h e c o u r t a t t e n d e d t h e h e a r i n g a s a s p e c t a t o r t o s e e t h a t t h e h e a r i n g was f u l l y and f a i r l y conducted. Following t h a t h e a r i n g every member of t h e Medical S t a f f of t h e H o s p i t a l voted t o deny Appellant staff privileges. This Court i n H u l i t , c o n s i d e r i n g t h e c o u r t ' s f u n c t i o n i n t h i s a r e a , r e f e r r e d t o a s t a t e m e n t i n Sosa v. Board of Managers of Val Verde Memorial H o s p i t a l ( 5 t h C i r . 1971), 437 F.2d 173, he c o u r t i s charged w i t h t h e narrow r e s p o n s i b i l i t y of a s s u r i n g t h a t t h e q u a l i f i c a t i o n s imposed by t h e Board a r e reasonably r e l a t e d t o t h e o p e r a t i o n of t h e h o s p i t a l and f a i r l y administered. I n s h o r t , so long a s [hospital a c t i o n s ] a r e administered with f a i r n e s s , geared by a r a t i o n a l e compatible w i t h h o s p i t a l respons i b i l i t y , and unencumbered w i t h i r r e l e v a n t c o n s i d e r a t i o n s , a c o u r t should n o t i n t e r f e r e . Courts must n o t a t t e m p t t o t a k e on t h e escutcheon of Caduceus."' Our f u n c t i o n i s twofold. due p r o c e s s was accorded. c l e a r t h a t i t was. F i r s t t o determine whether From our d i s c u s s i o n h e r e t o f o r e , i t i s Second, t o determine whether t h e r e was an a r b i t r a r y and c a p r i c i o u s d e c i s i o n made by t h e Medical S t a f f . That a c o n s c i e n t i o u s judgment was made i s c l e a r - - j u s t t h e o p p o s i t e of an a r b i t r a r y and c a p r i c i o u s one. The competent Medical S t a f f opinions a r e s u f f i c i e n t t o uphold t h e f i n d i n g s and d e c i s i o n o f t h e S t a f f , t h e Board and t h e t r i a l c o u r t . Accordingly, t h e d e c i s i o n of t h e t r i a l c o u r t i s a f f i r m e d .

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