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Litigation of Hospital Medical Staff Matters
by Robert J. Conroy and Manasa Gopal

A key distinction between an occupation and a profession is that the latter is self-regulating. In a hospital, the self-regulation of the practice of medicine, or as it is known in the medical world, peer review, falls to the entity known as the organized medical staff.¹ The medical staff is a juridical entity separate and apart from the
hospital’s corporate body.² While primarily autonomous, medical staffs operate in collaboration with the hospital’s governing body.³

A physician or other practitioner cannot practice at a given hospital unless he or she is a member in good standing of that hospital’s medical staff.⁴ Thus, medical staff membership is critical to many physicians (like surgeons and emergency physicians) whose practices require access to a hospital’s facilities. For that reason, denials of membership or adverse disciplinary actions by medical staffs engender a fair share of litigation.⁵

New Jersey has a well-evolved body of case law governing medical staffs. But before an aggrieved practitioner can get into court, the practitioner must usually exhaust his or her rights to an internal, administrative hearing sometimes known as a fair hearing. ⁶ Thus, medical staff litigation is not confined solely to the courtroom. This article will explore the basic law underlying the litigation of medical staff issues.

The Rules of Engagement
New Jersey medical staffs are required to have bylaws that govern the conduct of their business.⁷ Although a staff is a separate juridical entity from its affiliated hospital, its bylaws must be approved by the hospital’s governing body.⁸ The bylaws constitute a contract between the hospital and the medical staff, as well as a contract between the hospital and each member of the medical staff.⁹ They serve as a roadmap for appointment, reduction, expansion or termination of staff
membership and privileges. Accordingly, a medical staff’s bylaws govern the relationship between the hospital and the staff, as well as the relationship between the staff and its members or prospective members.

When a medical staff does not follow or fails to enforce its own bylaws, it can be sued under various legal theories, including breach of contract.¹⁰ Aggrieved practitioners frequently sue not only the hospital and its medical staff, but also the individuals involved.¹¹

Federal and state law, as well as common industry accrediting agencies, require hospitals to have an organized medical staff and a functioning system of peer review.¹²

The Adverse Medical Staff Action
Most commonly, medical staff bylaws allow one of the medical staff’s committees to make a recommendation to the hospital regarding the membership and/or privileges of an applicant or member. When an applicant is denied appointment, or a recommendation is made to reduce, restrict, suspend, revoke or not renew the privileges of an existing staff member, that action is considered adverse, and the aggrieved practitioner is entitled to certain procedural due process rights before the action becomes final.¹³

Initiation
When a practitioner with clinical privileges engages in behavior that is likely to adversely affect patient safety, or brings into question the practitioner’s professional competence, or disrupts a hospital’s operations, the medical staff is generally required by its bylaws to initiate corrective action against that practitioner. Corrective action taken on the basis of economic or competitive matters, however, is specifically prohibited and can be the basis of litigation.¹⁴

Investigation Before Medical Staff Committee Action
Once a concern has been raised regarding a member’s competency or conduct, or a formal request has been made for corrective action against a particular practitioner, the medical staff, usually through a specially designated committee, conducts an investigation. Investigations are not deemed to be a hearing for purposes of triggering any due process requirements. Most medical staffs, however, usually provide the aggrieved practitioner the right to representation by an attorney or by a member of the medical staff during the investigative process.

Upon conclusion of an investigation, the committee charged with the investigation drafts a written report and recommends a course of action. That recommended course of action may include recommending a specific form of corrective action or the dismissal of any further consideration of the concerns initially brought to its attention.

The Right Procedure and Procedural Rights
Any action taken on the basis of an investigating committee’s recommendations that is “based on the competence or professional conduct of an individual practitioner (whose behavior affects or could adversely affect the health or welfare of a patient or patients), and which may adversely affect the practitioner’s clinical privileges or membership in a professional society” entitles the subject practitioner to certain basic due process rights. If those rights are afforded the practitioner before any adverse action becomes final, the hospital, medical staff and involved individuals are afforded a qualified good faith immunity from suit.¹⁵

The New Jersey courts have clarified that due process means that an applicant for medical staff privileges must be treated with “fundamental fairness,” and that the methods used in arriving at a decision must protect a practitioner’s rights.¹⁶ For example, a practitioner must be afforded notice informing him or her of the reasons for the proposed adverse action, the right to a hearing and any relevant time limits.¹⁷

Triggering a Hearing
When a practitioner is the subject of an adverse recommendation or an adverse action by the medical staff, the practitioner has the right to a fair hearing. ¹⁸ Not all adverse recommendations are alike, however. Mere admonitions and warnings do not trigger fair hearings or give rise to procedural due process rights.

Notice of Right to Hearing - Timing Can be Everything
Federal law provides that the aggrieved practitioner have not less than 30 days from the receipt of a notice to request a hearing.¹⁹ The medical staff should strictly adhere to the notice time limitations set forth in its bylaws. Otherwise, an aggrieved practitioner may be able to claim that his or her due process rights were violated.
Such a claim, if successful, could expose all involved to liability.

Hearing Committees and Hearing Officers
Most medical staff bylaws permit the staff president to appoint a hearing panel or a hearing officer to conduct a fair hearing requested by an aggrieved practitioner. A panel may not include direct economic competitors of the aggrieved practitioner. A hearing officer is often used when a panel that is willing to serve, unbiased and qualified cannot be constituted. Hearing officers can be quite effective when they are attorneys knowledgeable in medical staff law and hearing procedures.

Discovery
Federal law does not mandate any formal right to discovery in a fair hearing process. State law, however, does require that an aggrieved practitioner be allowed to have copies of all relevant reports and materials, including, but not limited to, the underlying data referenced in materials provided to the body responsible for initiating or recommending the adverse action.²⁰

Conduct of the Hearing
Burden of Proof
The burden of proof most often falls on the charging party. Accordingly, the medical staff or the hospital usually has the burden of proving by a preponderance of the evidence the charges against the aggrieved practitioner.²¹ Some medical staffs, at the insistence of their hospitals and in an ill-conceived effort to discourage staff litigation, place the burden of proof firmly on the aggrieved practitioner. In those instances, the aggrieved practitioner must prove - sometimes by clear and convincing evidence - that the adverse staff recommendation or action lacks any substantial factual basis or that the basis for the recommendation or action is arbitrary, unreasonable, or capricious.²²

Evidence
Evidentiary matters are usually addressed at a pre-hearing conference in order to avoid the surprise of unanticipated written or oral testimony. In New Jersey, parties to a staff hearing are not bound by statutory or common law rules of evidence.²³ Evidentiary rulings should promote the fundamental principles of fairness and justice, and aid in the ascertainment of truth.²⁴ Even though all relevant evidence is usually admissible, including hearsay, a hearing panel or officer often has the right to exclude any evidence if its probative value is substantially outweighed by the risk that its admission will either necessitate undue consumption of time or create substantial danger of undue prejudice or confusion.

Confrontation
Under both federal and state law, aggrieved practitioners have a right to confront and cross-examine witnesses, and to be represented by counsel in the presentation of their case at hearing. ²⁵ An aggrieved practitioner also must be given the opportunity to appear, cross-examine, confront adverse witnesses, and present evidence. One New Jersey court has permitted subpoenas to be issued in the context of a staff hearing to compel the attendance of witnesses.²⁶

Hearing Record
A record of the hearing always should be maintained. Typically hearing proceedings are stenographically recorded, and the bylaws provide the details of
who pays for the record and the like.²⁷

Committee Decisions, Recommendations and Reports
After a hearing is concluded, the hearing committee must make a written report of its findings to the body whose actions or recommendations occasioned the hearing, and to the aggrieved practitioner. ²⁸ If the action of the medical staff or of the hospital continues to be adverse to the practitioner, the aggrieved practitioner should be permitted to seek an appellate review of the action before the hospital’s governing body or a committee.

Final Hospital Governing Board Action
Since the organized medical staff is responsible to the governing body of the hospital, the governing body makes the ultimate internal decision in all medical staff hearings.²⁹ It must provide the aggrieved practitioner with written notice of its decision. If the aggrieved practitioner is not satisfied with the hospital’s decision, he or she may seek judicial relief.

Judicial Review and Relief
Standards of Review
With public hospitals, there has been little doubt that the fairness of the procedures employed must pass muster under the Constitution, and may not arbitrarily foreclose otherwise qualified doctors from utilizing its facilities.³⁰ With private hospitals, initially it was not so clear whether medical staff actions were subject to judicial review or what measure of fairness had to be provided to aggrieved practitioners.

The New Jersey Supreme Court first determined, in Greisman v. Newcomb Hospital, that the decisions of private hospitals also are subject to judicial review.³¹ It concluded that it “must never lose sight of the fact that the hospitals are operated not for private ends but for the benefit of the public” and, thus, their decisions are reviewable by the state judiciary.³² Accordingly, private hospitals also must follow fair hearing procedures when considering staff privileges, and may not arbitrarily foreclose otherwise qualified practitioners from their staffs.³³

The scope of judicial review available depends upon the nature of the issues presented. The courts will not interfere with a hospital decision setting a standard for the grant of privileges “if it is reached in the normal and regular course of conducting the affairs of the hospital and is based on adequate information, regardless of form, origin, or authorship, that is generally considered feasible and reliable by professional persons responsibly involved in the health care field.”³⁴ Courts will sustain a
hospital’s standard for granting staff privileges if that standard is rationally related to the delivery of healthcare.³⁵ A decision is so related if it advances the interests of the public, particularly patients, the hospital, or those who are essential to the hospital’s operations, such as physicians and nurses.³⁶

When reviewing decisions denying or revoking staff privileges, courts also apply a more relaxed standard of review; the courts look to see whether a decision is supported by “sufficient reliable evidence, to justify the result.”³⁷ The courts will, therefore, sustain a hospital’s internal peer review procedure if it reasonably serves an evident public health purpose.³⁸

Special Cases
Certain situations may arise where a hospital must temporarily suspend or automatically revoke a practitioner’s partial or full privileges prior to conducting a hearing.

Summary Adverse Actions
A hospital may summarily suspend a practitioner’s privileges when it is in the best interest of patient care or safety, or for the continued effective operation of the hospital.³⁹ Such suspensions are effective immediately upon imposition. Prior to suspending a practitioner, the hospital and involved practitioners should have a reasonable factual basis for making a determination of summary suspension or risk liability for violating the Health Care Quality Improvement Act and state laws. Summary suspensions are not final, and are subject to subsequent notice and hearing and other due process rights.

Automatic Adverse Actions
Other actions, while not affecting patient care immediately and directly, can trigger adverse action by the medical staff. For example, when a practitioner’s license is limited, restricted, suspended or placed on probation by a court or a governmental agency, his or her staff membership and clinical privileges or specified services may be automatically suspended. Failure to request reinstatement after a leave of absence, or failure to maintain professional liability insurance, also may lead to automatic termination of privileges. These actions often do not entitle the aggrieved practitioner to the procedural rights afforded in other instances.

Conclusion
Medical staff litigation should be approached with great care. The rules governing the litigation of staff issues are not as forgiving and quite different from those governing proceedings in other arenas. Furthermore, the scope of judicial review is quite limited, and the potential risk of loss to an aggrieved practitioner can be career threatening.

Endnotes
^{1. In addition to hospitals, most other licensed health facilities (e.g. ambulatory surgery centers and nursing homes) have organized medical staffs. For the sake of brevity in this article the authors will use “hospital” to mean all health facilities with organized medical staffs.}
^{2. The medical staff is, in most instances, an unincorporated membership organization that can sue and be sued. Corleto v. Shore Memorial Hospital, 138 N.J. Super. 302, 312 (Law Div. 1975).}
^{3. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) is a private, nonprofit organization which evaluates medical facility compliance based on a focused set of core standards for quality patient care, including peer review. See JCAHO Medical Standard 1.10; N.J.A.C. 8:43G-16.1.}
^{4. The authors refer to practitioners throughout this article because a growing number of dentists, advanced practice nurses and others now hold staff privileges or some measure of membership in medical staffs and may be entitled to similar procedural rights and safeguards should their membership or privileges be threatened.}
^{5. Even though medical staffs enjoy a measure of qualified immunity under federal law, the frequency of such litigation can be easily understood when one considers that a physician faced with exclusion from a staff or an adverse peer review action may be branded for life with the modern day, medical equivalent of Hester Prynne’s scarlet letter.}
^{6. A practitioner may bypass internal administrative processes and seek judicial relief when he or she is being denied a “fair hearing” by a medical staff or is concerned with the integrity of the hearing process. Ende v. Cohen, 296 N.J. Super. 350, 359 (App. Div. 1997).}
^{7. N.J.A.C. 8:43G-16.1(a); N.J.A.C. 8:43G-16.2(a).}
^{8. Belmar v. Cipolla, 96 N.J. 199, 207-08 (1984).}
^{9. Joseph v. Passaic Hospital Association, 26 N.J. 557 (1958); see also American Medical Association Policy Compendium H-235.976 which states that “the medical staff bylaws are a contract between the organized medical staff and the hospital…”}
^{10. The New Jersey courts have held that a hospital and its medical staff can be held liable for negligence when they fail to enforce their bylaws. Corleto, 138 N.J. Super. at 308.}
^{11. See, e.g., Ende, 296 N.J. Super. at 362.}
^{12. The Healthcare Quality Improvement Act (HCQIA) is a federal act that exempts hospitals from certain antitrust provisions as they apply to credentialing and peer review so long as they adhere to due process standards that are outlined in 42 U.S.C. §11133. The immunity applies, however, only in relation to physician and dentist staff members. See N.J.A.C. 8:43G-2.12; see also JCAHO Medical Standard 4.20.}
^{13. HCQIA 42 U.S.C. § 11151(4).}
^{14. Edelman v. John F. Kennedy Hospital (No.c-2104-80 [N.J. Super., App. Div., June 25, 1982], cert. denied, 96 N.J. 289 [1984]).}
^{15. HCQIA 42 U.S.C. § 11151.}
^{16. Garrow v. Elizabeth General Hospital, 79 N.J. 549 (1979); Gresiman v. Newcomb Hospital, 40 N.J. 389 (1963).}
^{17. Guerrero v. Burlington Cty. Memorial Hosp., 70 N.J. 344 (1976).}
^{18. 42 U.S.C. §11151(b)(1).}
^{19. 42 U.S.C. §11133.}
^{20.See Garrow, 79 N.J. at 567-568.}
^{21. HCQIA § 412[b][3][C]; Garrow, 79 N.J. at 565.}
^{22. See Garrow, 79 N.J. at 565.}
^{23. N.J.A.C. 1.1-1.15(c).}
^{24. N.J.A.C. 1:1-15.1(b).}
^{25. See Garrow, 79 N.J. at 564; 42 U.S.C. § 11112(b)(2).}
^{26. In re Mossavi, 334 N.J. Super. 112 (Ch. Div. 2000).}
^{27. 42 U.S.C. § 412[b][3][C][ii].

^{28. HCQIA § 412[b][3][D].}

^{29. N.J.A.C. 8:43G-16.1.}

^{30. Nanavati v. Burdette Tomlin Memorial Hosp., 107 N.J. 240, 247 (1987); Bloom v. Clara Maass Medical Ctr., 295 N.J. Super. 594, 608 (App. Div. 1996).}

^{31. See Greisman, 40 N.J. at 395.}

^{32. See Greisman, 40 N.J. at 395-96.}

^{33. See Joseph, 26 N.J. at 568.}

^{34. Desai v. St. Barnabas Medical Center, 103 N.J. 79, 93 (1986).}

^{35. See Nanavati, 107 N.J. at 249.}

^{36. See Garrow; 79 N.J. at 561; see also Nanavati, 107 N.J. at 249.}

^{37. See Desai, 103 N.J. at 90-91.}

^{38. HCQIA, § 412(a)(3), (b), (b)(1), (c); 42 U.S.C. § 11112(c).}

^{39. State law claims may include breach of contract, defamation and tortious interference with business. By incorporating the imminent danger language in their bylaws, medical staffs can attempt to avoid breach of contract claims.}}

Robert J. Conroy is a principal in the firm Kern Augustine Conroy & Schoppmann, P.C. His practice is focused on the litigation of complex medical and healthcare matters of both a civil and criminal nature. Manasa Gopal is an associate with the firm and concentrates on regulatory and transactional matters, including medical staff organization, structure and governance.

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