Cases and Comments on Contracts

Part 11: Due Process/California Style

by Robert V. West, MD JD FAAEM

Trend setting is something California is known for in fashion, film, music, and yes, even the law. Prior to the Federal minimum standards for peer review, which Congress enacted in 1986, California has had case law protecting a physician's hospital privileges as though they owned or possessed property rights in those privileges.

In 1977, the Supreme Court of California set forth a landmark case, Anton v. San Antonio Community Hospital, establishing the fact that a doctor's hospital privileges were a vested property right and not revocable without adequate cause. This decision entitles a doctor to a new trial in a state court as a safeguard to hospital peer review due process and insurance that the termination may be reviewed in state court as to adequacy for cause. The plaintiff in that case, Dr. Anton, resided in a small community one mile from the San Antonio Hospital, in San Bernardino, CA. Dr. Anton had been denied reappointment and his hospital privileges were suspended after a peer review action at the hospital. Dr. Anton petitioned the state district court for a trial de novo, irrespective of the hospital peer review process. The trial court refused and Dr. Anton appealed to the Supreme Court of California which agreed with him and instructed the lower court to give him a trial on the merits. In the process, the Court wrote into the legal reporters that, "once having become a member of the hospital...staff, a physician's right to use the facilities is a property interest which directly relates to the pursuit of his/her livelihood." In essence, the California Court invoked the protection of the courts of that state for a doctor's hospital privileges. The language of that decision follows the 14th Amendment to U.S. Constitution which states that no citizen will be denied life, liberty, or property without due process of the law.

Accordingly, when a California hospital wishes to terminate the staff privileges of a doctor, it must do so in a procedure comporting with the minimum common law requirements of due process, usually peer review by the medical staff. In California, if the doctor does not agree with the outcome, he or she can go to court and get a trial on the merits of the dispute with the hospital. That is great news for the non-hospital-based practitioner, but it is not that simple for the hospital-based ED physician.

In 1990, a California appellate court narrowed the scope of the Anton case in Mateo-Woodburn v. Fresno Medical Center. In that case, the plaintiff, an anesthesiologist, refused to sign a contract with an exclusive group providing anesthesia to the hospital. The hospital in Fresno was using a "closed" system for providing anesthesia staffing for its ORs. In the process, Dr. Mateo-Woodburn refused to sign on with the new group and was not reappointed to the medical staff. Because the termination was incidental to an administrative reorganization of the department rather than the result of an quasi-judicial action directed at a specific doctor, the court ruled there was no right to a due process hearing or day in court. The court rationalized this decision on the basis that elimination of privileges was due to a departmental reorganization and was not directed specifically toward the exclusion of a particular physician. Hence, the denial of reappointment in this situation does not reflect upon the doctor's professional qualifications and should not affect opportunities for employment at other hospitals. Such a decision to reorganize is an administrative one, requiring no hearing, so long as the decision is not irrational, arbitrary, contrary to public policy, or procedurally unfair.

Recently, another California appellate court has recently reassessed and disputed this logic in Fenton v. Centinela. This case arose in the setting of an Los Angeles county emergency department. Drs. Drew Fenton and Klaus Wagener petitioned a California appellate court to take a contrary view to the Fresno court. More specifically, Dr. Fenton's case creates an exception for those circumstances where a decision to terminate a group of physicians was not stated, but later alleged to be a department reorganization. The court reasoned that where a deliberate exclusion of certain physicians from the roster of an exclusive contract holder directly relates to the doctors' pursuit of their livelihood, this fundamental property interest is protected under the Anton decision and the hospital must show adequate cause for such exclusion.

Most important is to realize the fine line drawn between exclusion from a roster and revocation of your hospital privileges. In California, under Fenton, removal from a roster elevates your claim to a revocation of privileges. In Texas, your privileges may be left intact but you can be removed from the schedule at the discretion of the "closed" system contract manager. Since Texas is an at will employment state, that means for a good reason, a bad reason, or no reason at all. Furthermore, if your privileges are revoked, Texas is in compliance with Federal minimum standards which delegate quasi-judicial powers to hospital-based peer review committees as relates to the granting or denial of hospital privileges. The only recourse you have in Texas as a safeguard of your privileges is if you can allege and prove tortious activity on the part of the hospital peer review panel.