Court Rulings Affect Hospital-based Physicians

News

Have a proposal for FOGS or looking for a service?
Use this link to contact our office.
More...

Thank You!
FOGS and the Florida Section ACOG recognize their corporate supporters
More...

Liability Issues Report
Please use this form liberally to report the related practice problems you are facing
The Form

On Call Medical Coats
FOGS has teamed up with On Call Medical Coats to offer our members quality embroidered labcoats
Shop for Coats

FOGS Endorsed Malpractice Carrier offering a 5% discount to FOGS members
More Info

Lubell & Rosen
FOGS Endorsed
Pre-Paid Legal Defense
More Info

Your practice could receive a dividend of up to 24.8% of your workers compensation premium.
More Info

Court Rulings Affect Hospital-based Physicians

by Jeffrey L. Cohen

Read Other Legal News
Addressing ER Staffing Issues Legal Insight - The Physician Assistant PharmaStem Amnesty Agreement Court Rulings Affect Hospital-based Physicians

A recent appellate court decision raised the issue of whether a hospital may terminate the privileges of an existing hospital-based physician because it awarded an exclusive contract to a competing doctor. Palm Springs General Hospital v. Valdes, 26 Fla. L. Weekly D664 (Fla. 3rd DCA, 2001).

In Valdes, two things occurred: (1) a radiologist was terminated from the hospital medical staff without any due process; and (2) the hospital awarded the radiology contract to a competing radiology group. The hospital conceded that Dr. Valdes would have been entitled to receive a hearing if he was terminated for clinical reasons, but insisted that the reason for terminating Dr. Valdes was the award of an exclusive contract to a competing radiology group, a mere "administrative decision," which the hospital argued did not trigger fair hearing rights. There was testimony, however, that there were clinical reasons for terminating Dr. Valdes’ privileges, which the hospital tried to disavow, but which the appellate court accepted.

Dr. Valdes ultimately prevailed in the case and was awarded damages, and some aspects of the case should be noted. One critical issue not addressed by the court was the "administrative decision" argument. The dissenting opinion in the case honed in on the argument, and screamed for recognition of the "administrative decision" argument, as it cited Illinois caselaw. If the dissenting chief judge had had his way, the hospital would have been able to terminate Dr. Valdes’ privileges because it decided to award an exclusive contract to another radiology group. Had the dissenting view been adopted by the majority, it would have had a huge impact in this state by having the effect of permitting hospitals to close hospital-based departments unilaterally. Now, one can expect that the issue will arise each time a hospital attempts to award an exclusive contract "over" an incumbent medical staff member.

It is not the first time the issue has floated around in serious litigation involving a hospital-based physician. In 1991, the issue was on the front burner in a circuit court case in Tallahassee, Bilek v. Tallahassee Regional Memorial Medical Center, No. 91-973 (Leon Co. Cir Ct. April 29, 1991). In that case, the court specifically found that a hospital does not have the right to avoid the fair hearing provisions of medical staff bylaws by awarding an exclusive contract. Unfortunately, the hospital dropped its appeal of the case, leaving the state without any precedent on the issue. Courts around the state occasionally touch the issue, but have yet to tackle it head on.

Earlier this year, in The University of Miami v. Spunberg, Fla. Dist. Ct. App., No. 4D, 99-2166, 2/7/01, a far more complex case, the privileges of a group of hospital-based radiation oncologists hung in the balance as the hospital and doctors fought over whether the hospital was within its rights for terminating the doctors’ privileges because it had awarded an exclusive contract to the University of Miami. The trial court awarded the doctors nearly $23 million, but the decision was overturned on appeal, and the case likely will be tried again. As in the Valdes case, the hospital made the "administrative decision" argument, but the argument received no serious treatment from the trial judge.

Some of the conceptual underpinnings in this area of the law are well settled. Hospital medical staff bylaws are a contract between the hospital and the medical staff members; and neither statute nor rule specifically permits a hospital to terminate the medical staff membership of a physician without a contract with the hospital without due process because the hospital decides to award an exclusive contract to a competing group. While that result can certainly occur as a result of appropriately worded contracts between hospitals and hospital-based physicians, a hospital is tied when it comes to terminating the privileges of a physician who does not have a contract with a hospital. In other words, a hospital currently has no effective legal mechanism by which to remove a physician from the medical staff simply because he or she stands in the way of an exclusive contract, unless there is a contract with the physician that addresses the issue.

What Valdes and Spunberg do is float a legal argument that may lead to the creation of specific legislative remedies and perhaps at some time to an interpretation by a court that supports the assertion. Even more, the chief judge in Valdes was outspoken on the issue, which could be foretelling for future similar cases appealed to the third district. Regardless, hospitals and physicians need to carefully consider the issue when drafting contracts between them, in the legislative arena and in drafting medical staff bylaws.

Jeffrey L. Cohen is a shareholder in the Delray Beach law firm of Strawn, Monaghan & Cohen, P.A. He is board certified by The Florida Bar as a specialist in health law. Mr. Cohen may be reached by calling 561/278-9400.