Hospital decision to close department was quasi-legislative, not adjudicative, because not directed at specific physician or group of physicians.
Cite as
1999 DJDAR 4321Published
Apr. 19, 2001Filing Date
May 3, 1999Summary
The C.A. 5th has found, in the published portion of its opinion, that a hospital's decision to close its anesthesiology department and contract its work to an exclusive provider was quasi-legislative, not adjudicative, because it was not directed at a specific physician or group of physicians.
Memorial Hospitals Association, an operator of three hospitals, experienced significant problems in its anesthesiology department for a period of approximately six years beginning in 1986. Memorial operated the department as an open staff system, wherein independent anesthesiologists provided services for independent surgeons, and anesthesiologists affiliated with Gould Medical Foundation provided services for Gould surgeons, each group making its own schedule and functioning autonomously. Documented problems included: failures of anesthesiologists to respond in a timely manner; difficulty in locating anesthesiologists who were on call; problems with scheduling, problems with narcotics accountability and documentation; refusal to provide services for cardiac surgery; claims of misfeasance and malfeasance of anesthesiologists; and numerous personality conflicts within the department. Memorial's medical executive committee (MEC), composed of the officers of the medical staff and department chairpersons, were charged with making recommendations to Memorial's board of directors and evaluating the medical care rendered to patients. The anesthesiologists were informed the MEC had recommended that Memorial investigate the possible closing of the department. Later, requests for proposals (RFP) from potential exclusive providers were solicited. An RFP subcommittee of the MEC interviewed three candidates, and eventually contracted with Gould, which would provide six Gould anesthesiologists and four independent anesthesiologists who would subcontract with Gould. Three independent anesthesiologists on Memorial's staff who were not hired by Gould brought suit against Memorial, Gould, and others, arguing that Memorial's decision was adjudicative and denied them due process for their effective termination from the medical staff. The trial court ruled against the three.
The C.A. 5th affirmed. "A decision is quasi-legislative if it is one of general application intended to address an administrative problem as a whole and not directed at specific individuals." Such a decision does not have the due process requirement of an adjudicative decision in a termination of a physician's staff privileges. Thus, the legal standard requires only some reasonable basis for a decision to pass muster on review, and a court will not substitute its judgment for that of the administrative body. Memorial's decision "was based on a genuine concern about the overall function of the anesthesiology department and directed at improving the quality of patient care provided by that department." In the unpublished portion of the opinion, there was insufficient evidence of disparate treatment based on sex, race, color or religion to find violation of the Unruh Act.
—
MITCHELL A. MAJOR et al.,
Plaintiffs and Appellants,
v.
MEMORIAL HOSPITALS ASSOCIATION et al.,
Defendants and Appellants;
GOULD MEDICAL FOUNDATION et al.,
Defendants and Respondents.
No. F022775
(Super. Ct. No. 283988 & 283986)
California Court of Appeal
Fifth Appellate District
Filed May 3, 1999
CERTIFIED FOR PARTIAL PUBLICATION*
APPEAL from a judgment of the Superior Court of Stanislaus County. Aldo Girolami, Judge.
Strauss, Neibauer, Anderson & Ramirez and Mina L. Ramirez for Mitchell A. Major, Plaintiff and Appellant; Robert N. Meals for George Maurice Turner and Douglas E. Freeman, Plaintiffs and Appellants.
Sagaser, Hansen, Franson & Jamison, Daniel O. Jamison and Kristi R. Culver for Memorial Hospitals Association, William K. Piche and Marcus Shouse, Defendants and Appellants; and Trimbur, Davis & Clark and Gary S. Davis for Marcus Shouse, Defendant and Appellant.
Schuering, Zimmerman & Scully, Leo H. Schuering, Jr. and Lawrence S. Giardina for Gould Medical Foundation and The Gould Medical Group, Inc., Defendants and Respondents.
Hassard Bonnington and David E. Willett for Amicus Curiae on behalf of Plaintiffs and Appellants; California Medical Association, Catherine I. Hanson and Kimberly S. Davenport for Amicus Curiae on behalf of Plaintiffs and Appellants.
McDonough, Holland & Allen, Ann O'Connell and Mary Powers Antoine for Amicus Curiae on behalf of Memorial Hospital Association, Defendant and Appellant and Gould Medical Foundation and The Gould Medical Group, Inc., Defendant and Respondent.
When considering quality hospital care, three main interest groups generally come to mind: patients, physicians, and hospital administration. No one could seriously question that the primary goal of physicians and hospital administration is to provide quality medical care. Even so, that does not prevent disputes from arising between these groups, and even within an individual group. Such was the case here where various problems ultimately led to Memorial Hospitals' decision to change its anesthesiology department from an open staff system to a closed system with an exclusive provider.
The rub occurred when the new exclusive provider did not offer subcontracts to the three plaintiff physicians, all former members of the anesthesiology department's open staff. Plaintiffs sued based on multiple theories, including alleged violations of the Unruh Civil Rights Act, breach of contract, civil conspiracy, and tortious interference with plaintiffs' professional business relationships. Plaintiffs lost on all counts during a lengthy court trial, and this appeal followed. We affirm.
In the published portions of this opinion, we clarify our holding in Mateo-Woodburn v. Fresno Community Hospital & Medical Center (1990) 221 Cal.App.3d 1169 (Mateo-Woodburn). In doing so, we reject any inference that a hospital has a legal obligation to offer an incumbent physician a position in a closed department as a precondition to finding a closure decision is quasi-legislative rather than adjudicative. We also reject plaintiffs' claim challenging the exclusive provider's selection of subcontractors.
In the unpublished portions, we address plaintiffs' remaining claims, including the alleged violation of the Unruh Act, and find there was substantial evidence of compliance with the medical staff bylaws.
PROCEDURAL HISTORY On July 31, 1992, Dr. George M. Turner filed suit against Memorial Hospitals Association, dba Memorial Hospital/Medical Center Modesto and Memorial Hospital Ceres (collectively Memorial Hospitals), William K. Piche, Gould Medical Foundation, Drs. Kenneth Imanaka, Daniel E. Sucha, Douglas Diehl, Larry Todd, Bruce Gesson, and Does 1 through 30 (defendants). The complaint alleged seven causes of action: (1) violation of the Unruh Civil Rights Act; (2) injunctive relief to prevent interference with the right to practice a profession; (3) restraint of trade; (4) tortious interference with plaintiff's professional business relationships; (5) breach of contract; (6) defamation; and (7) civil conspiracy. On the same date, Drs. Douglas Freeman and Mitchell Major filed an identical complaint against the same defendants. Both complaints were subsequently amended to add Dr. Marcus Shouse and Gould Medical Group, Inc. 1 as defendants.
On September 30, 1992, the trial court denied plaintiff's request for a preliminary injunction, and on October 22, 1992, the two actions were consolidated for all purposes. On September 28, 1993, the court granted defendants' motion for summary adjudication with respect to the third cause of action, restraint of trade. Trial began on November 11, 1993, and the parties waived trial by jury. On the third day of trial, Dr. Gesson was dismissed as a defendant. On February 7, 1994, the trial court granted the defendants' motion for judgment under Code of Civil Procedure section 631.8 in favor of Drs. Diehl, Todd, and Sucha.
After posttrial briefing and argument, the court entered judgment in favor of defendants on all remaining causes of action. The court subsequently denied defendants' motion for attorney fees. Plaintiffs filed a timely appeal raising seven contentions: (1) the trial court erred when it found there was no violation of the Unruh Civil Rights Act; (2) the trial court erred in concluding the plaintiffs waived any objection to the procedure used by Memorial Hospitals to close the anesthesiology department; (3) the trial court erred when it found the decision to close the anesthesiology department was not directed at a particular physician or group of physicians; (4) the trial court erred in holding the process of closing the anesthesiology department was not arbitrary, capricious, contrary to established public policy or procedurally unfair; (5) the trial court erred in not considering the closure of the anesthesiology department as an "integrated whole"; (6) the process used to close the anesthesiology department did not comply with the provisions of the medical staff bylaws; and (7) Memorial Hospitals had a legal obligation to ensure plaintiffs were offered a subcontract to work in the closed department. Memorial Hospitals filed a cross-appeal claiming the trial court abused its discretion in denying its motion for attorney fees.
FACTUAL HISTORY During all relevant times, Memorial Hospitals was a nonprofit, private organization. It operated two hospitals in Stanislaus County, with its main facility in Modesto, and a smaller hospital in Ceres. The active medical staff of Memorial Hospitals consisted of 32 different subspecialties and was very involved in trauma, cardiac, orthopedic and general surgery. Memorial Hospitals had a chief executive officer as well as a board of directors made up primarily of lay people. The active medical staff was divided into 11 clinical departments, one of which was anesthesiology. Each department had a chairperson who served a two-year term and whose responsibilities included administration of the department, enforcement of the medical staff bylaws, and monitoring the quality of patient care.
The medical staff of Memorial Hospitals was governed by the provisions of the medical staff bylaws which provided "the professional and legal structure for Medical Staff operations, organized Medical Staff relations with the Board of Directors, and relations with applicants to and members of the Medical Staff." These bylaws provided for the creation of a number of committees, one of which was the medical executive committee (MEC). The MEC was composed of the officers of the medical staff and the department chairpersons. The MEC's responsibilities included making recommendations to Memorial Hospitals' board of directors, evaluating the medical care rendered to patients, as well as reviewing the qualifications, credentials and professional competence of medical staff members. The MEC was authorized to represent and act on behalf of the medical staff in the intervals between medical staff meetings. Another committee of the Memorial Hospitals' medical staff was the quality assessment committee (QAC). The QAC was responsible for identifying potential problems in patient care, referring the problems to the appropriate department for assessment and corrective action, and monitoring the results of quality assessment throughout the hospitals.
As a general rule, a physician was not entitled to exercise clinical privileges at the hospitals operated by Memorial Hospitals unless he or she had received appointment to the medical staff. Initial appointment was for no more than two years and was subject to a biennial review on the date of the physician's medical license renewal date. Once appointed to the medical staff, a physician was entitled to a hearing before his or her appointment or clinical privileges could be revoked, terminated or suspended. Article VII of the medical staff bylaws established the procedures required for such a hearing, including a mechanism for appealing any adverse decision. However, section 7.6-1(b) of the medical bylaws specifically exempted from the hearing requirements of Article VII: "[T]he termination of privileges following the decision determined to be appropriate by the Medical Staff to close a department/service pursuant to an exclusive contract ...."
Section 7.6-1 of the medical staff bylaws also provides for participation of the MEC in any decision to close a department in the hospitals:
Drs. Major and Turner joined the medical staff of Memorial Hospitals as independent anesthesiologists in 1986, and Dr. Freeman joined as an independent in 1988. When Dr. Freeman became a member of the medical staff, there were five Gould anesthesiologists in the department: Drs. Imanaka, Sucha, Gesson, Todd, and Vanderwalker.
As early as May 1986, there were documented problems with the operation of the anesthesiology department of Memorial Hospitals. At a meeting of the department on May 12, 1986, an incident involving the failure of an anesthesiologist to respond appropriately to a scheduled emergency surgery was discussed. Over the next five years, there were numerous other documented incidents of anesthesiologists not responding in a timely manner. These included one time when an anesthesiologist failed to appear for a scheduled Cesarean section; a delay in obtaining an anesthesiologist for a patient with severe head trauma; and delays in scheduled surgery at the Ceres hospital due to lack of an anesthesiologist. Additionally, there were numerous incidents of difficulty in locating anesthesiologists who were on call. The delays in obtaining an anesthesiologist for Cesarean sections resulted in Memorial Hospitals not meeting the national standards for those deliveries.
There were also numerous documented incidents of problems with scheduling anesthesiologists. There were allegations made by both Gould and independent anesthesiologists that other anesthesiologists were manipulating the schedule for financial reasons. There were incidents of conflict between anesthesiologists' schedules, and miscommunication of scheduled vacations that resulted in gaps in coverage of scheduled surgeries. Drs. Major and Freeman were upset about often having to cover for Dr. Turner because he lived in Oakland.
Contributing to the scheduling problem was an insufficient number of independent anesthesiologists to cover all the surgery scheduled at both Memorial Hospitals' facilities. For example, at one point Dr. Major said he could not continue surgery because he was beginning to hallucinate due to fatigue. The shortage of anesthesiologists also resulted in the inability of the department to fill the OB/GYN department's request for epidural anesthesia services except on a case by case basis. The independent anesthesiologists claimed to have made efforts to recruit additional physicians beginning in January 1990. However, although on one or two occasions a new anesthesiologist would work for a short period of time, none of them stayed on a permanent basis. Additionally, some temporary anesthesiologists did not have acceptable credentials. One "locum tenens" 3 recruited by an independent anesthesiologist did not have his drug license because of prior incidents of drug abuse. The problems resulting from a shortage of anesthesiologists were also exacerbated because some of those who were available, including Drs. Major, Turner, and at least two Gould anesthesiologists, declined to provide anesthesia services for cardiac surgery.
The conflicts in scheduling often resulted in anesthesiologists being late for scheduled surgery, and one time Dr. Freeman did not show for a scheduled case because he was too tired to continue. Between 1986 and 1991, the problems of obtaining anesthesia services at Memorial Hospitals' facilities was discussed not only in meetings of the anesthesiology department, but also in meetings of the OB/GYN department, the orthopedic department, the QAC, and MEC.
Beginning in 1988, there was a long history of problems with narcotics accountability and documentation in the anesthesiology department. These problems were discussed at various staff meetings between August 1989 and March 1990. A new narcotics documentation procedure was implemented in April 1990, but problems with accountability and documentation of controlled drugs persisted into September 1990.
The minutes of the MEC meeting on October 23, 1990, indicate the narcotic documentation problem had been resolved. However, on June 28, 1991, the anesthesiology department was informed that some anesthesiologists were still not filling out the narcotics documentation correctly. Michael Spencer, the pharmacy director at Memorial Hospitals, stated that it took Dr. Freeman four to six months to comply with the new procedures, and Dr. Turner never did fully comply. In addition, a survey of the anesthesia carts conducted on November 6, 1991, found many of them unlocked and medication vials and/or syringes on the carts or in open drawers. A similar survey on January 24, 1992, revealed continuing problems with security and cleanliness of the anesthesia carts.
The failure to adequately document and account for narcotics was a serious problem for Memorial Hospitals. Failure to adequately account for narcotics posed a danger that they could be diverted and misused. In fact, there was an operating room (OR) nurse at Memorial Hospitals who was taking unused narcotics from the anesthesia carts and using them. In addition, failure to adequately account for controlled substances could result in the hospital losing its accreditation.
There was considerable evidence of other problems in the anesthesiology department. At a meeting of the orthopedic department in October 1986, concern was voiced about an anesthesiologist entering the OR in street clothes. Dr. Turner's clinical privileges were suspended in 1989 and 1991, when he allowed his Drug Enforcement Agency (DEA) drug certificate to lapse. In 1989, there were problems with anesthesia administered to two patients, ages 69 and 10.
The anesthesiology department was also dilatory in responding to requests to review issues referred by the QAC. On June 16, 1990, the QAC sent a letter to the anesthesiology department requesting that it respond with a plan to address six reviews in Dr. Turner's file regarding delays in providing anesthesia, and personality conflicts. The department did not respond until October 2, 1990. It stated Dr. Turner had been counseled on the incident where he responded to a call with alcohol on his breath, and the personality conflicts he was having with other staff members. In March 1991, the QAC discussed the fact the anesthesiology department was delinquent in reviewing charts referred to it. On April 7, 1992, the QAC sent a letter to the anesthesiology department requesting a response to a March 5th inquiry concerning action taken by the department on three case reviews in Dr. Turner's file regarding quality of care and physician misconduct. The department responded on April 13th, stating Dr. Turner was counseled on personality conflicts and indicating the department would continue to monitor his behavior for any further episodes.
There were numerous other claims of misfeasance and malfeasance on the part of anesthesiologists, including one incident where poor communication between an anesthesiologist and a surgeon resulted in surgery being performed on the wrong hip of a patient. Dr. Imanaka was critical of Dr. Major's behavior, which included playing guitar in OR and inattention to patients. It was alleged by both physicians and nurses that Dr. Major spent an inordinate amount of time on the telephone in OR tending to his commodities trading. Dr. Major allegedly installed a coffeemaker on his anesthesia cart and brought it into the OR, in violation of health and safety regulations. He was also observed in the OR to mix liquid diet drinks on his cart. David Benn, Chief Operating Officer of Memorial Hospitals, received complaints about the anesthesia department from Orthopedics, Emergency Medicine, OB/GYN, the trauma committee, and the QAC.
In addition to the other problems in the anesthesiology department, there were persistent difficulties with communication and personality conflicts within the department and with other medical staff members. As early as September 1989, Dr. Turner stated at a meeting of the anesthesiology department that he would discontinue giving anesthetic care for a particular surgeon with whom he had a conflict. There were requests by surgeons to not be assigned particular anesthesiologists--both independent and Gould. Due to the severity of the problem, on December 11, 1990, Dr. Salahuddin Bibi, the chief of staff, sent a letter to the anesthesiology department advising them of the need to resolve the conflicts they were having with surgeons at Memorial Hospitals. However, the problems continued, with Dr. Turner reporting to the department on July 26, 1991, of two incidents of personality conflicts with a surgeon.
The personality conflicts were not confined to the anesthesiologists' relationship with the surgeons at Memorial Hospitals. They also had serious personality conflicts among themselves. For a long period while Dr. Major was chairman of the department, he and Dr. Turner would not speak to each other. Dr. Major complained repeatedly to Benn about Dr. Turner, stating he believed Dr. Turner abused drugs and came to work with alcohol on his breath. There was one incident reported where Dr. Turner argued with Dr. Major over helping a child who had just come out of surgery, was having trouble breathing, and was turning blue. Dr. Turner reportedly elbowed Dr. Major out of the way, claiming the child was his patient. As a result, Dr. Major refused to ever cover any of Dr. Turner's patients. Dr. Turner told a nurse he believed Dr. Major was making crank calls to him and on one occasion had placed a gasoline soaked rag under the hood of Dr. Turner's car.
There was also an incident when Dr. Turner and Dr. Freeman were arguing in the presence of a patient who was awake, lying on a gurney. As a result, Dr. Bibi sent another letter to the anesthesiology department warning that any similar situations in the future would be dealt with by the MEC and board of directors. In October 1991, Dr. Freeman had a conflict with Dr. Imanaka over a patient, which resulted in a discussion at an anesthesiology department meeting of the need for cooperation between the independent and Gould anesthesiologists. Dr. Turner often had conflicts with nurses, would shout at them, and at least one time in March 1992, physically struck a nurse.
On May 14, 1990, the anesthesiology department was notified the MEC had formed an ad hoc committee to address complaints by surgeons about the department, including quality, personality conflicts and the availability of anesthesia services. The members of the department were also informed the MEC had recommended an outside anesthesiologist be commissioned to review their charts. The members of the ad hoc committee were Dr. Marcus Shouse, medical director of the emergency department, Dr. Mary Ann Piskun, a Gould surgeon, and Dr. Phillip Deos, a pathologist. After the ad hoc committee was formed, Dr. Bibi contacted Dr. Maher Abadir, an anesthesiologist, and asked him to review the delivery of anesthesia at Memorial Hospitals.
Dr. Abadir was asked to conduct a review of the entire department. He was also told Memorial Hospitals wanted a neutral opinion on the quality of anesthesia services at its facilities. When he first arrived to conduct the review, Dr. Abadir was only given three charts: two pertained to cases of Dr. Major; and one to a case of Dr. Turner. Dr. Abadir requested 50 charts selected randomly for each physician. After reviewing them, Dr. Abadir prepared a report which he addressed to Dr. Bibi. However, the only person who recalled ever seeing Dr. Abadir's written report was Dr. Shouse. Dr. Abadir did not keep a copy, Dr. Shouse could not find his, and at the time of trial a copy could not be located in Memorial Hospitals' files.
Dr. Abadir testified he recalled his report stated the rate of complications in the charts he reviewed was acceptable, and he did not remember saying anything about a high complication rate in young, healthy patients. Dr. Abadir recalled his report did indicate he identified two complications in cases involving young people. However, he testified he found these complications were acceptable. At one time Dr. Abadir had been a member of the California Society of Anesthesiologists (CSA), but was not sure if he was still a member when he conducted the review at Memorial Hospitals.
Dr. Shouse testified he recalled Dr. Abadir's report stated he had found a high complication rate in young, healthy patients. However, the report did not specifically identify Drs. Major and Turner as the anesthesiologists whose charts were reviewed, and did not single out either doctor for criticism. At a meeting of the ad hoc committee, it was reported that Dr. Abadir's review had found a higher than expected rate of complications in young, healthy patients, and that one of the doctors to whom this finding applied was Dr. Major. On July 24, 1990, Dr. Shouse reported to the MEC that an outside consultant performed a retrospective chart review and concluded there was a possible quality problem, particularly a high complication rate in young, healthy patients. It was noted that two unidentified anesthesiologists were found to have higher than acceptable rates of complication.
On August 8, 1990, Dr. Major requested all anesthesiologists in the department attend a meeting to discuss the potential impact of closure of the department. No one attended the meeting except him. On December 3, 1990, Dr. Bibi reported to the board of directors that the MEC had discussed whether the anesthesiology department should be open or closed. On March 20, 1991, Dr. Major sent a letter to William Piche, the CEO of Memorial Hospital. He acknowledged the problems in the anesthesiology department, expressing frustration with his inability to solve them, and recommending closure of the department on a trial basis as a possible solution. Dr. Major felt the problems applied to both independent and Gould anesthesiologists. Although he was chairman of the department, Dr. Major had no authority to enforce any standards or rules. In fact, on one occasion when Dr. Major attempted to counsel an anesthesiologist, the doctor said to him: "What are you going to do? Fire me?"
On March 21, 1991, at an MEC meeting, Dr. Bibi voiced concern over problems in the anesthesiology department, including quality issues and inappropriate behavior. He reported that several attempts had been made to resolve disagreements within the department without success, and stated that a long-term resolution was needed. At this same meeting Carolyn Quick, vice president of nursing at Memorial Hospitals, presented a summary of problems in the anesthesia department of which she was aware. These included: Dr. Turner's problems with an OR nurse; his conflict and shouting match with a surgeon; Dr. Turner's argument with Dr. Freeman in the presence of an awake patient; Dr. Turner's failure to respond to a call for an immediate Cesarean section because he was in Oakland; Dr. Major's failure to respond to a call; Dr. Freeman's failure to show for a scheduled surgery because of a misunderstanding in the vacation schedule; Dr. Turner's failure to comply with the requirements of narcotics documentation; and the practice of the independent anesthesiologists to disparage each other in the presence of staff and patients creating tension in the OR staff to the point that some were considering resignation.
After the statements by Dr. Bibi and Carolyn Quick, Dr. Charles Stitt, an independent physician, stated he believed closure of the anesthesiology department would be beneficial. The minutes of this meeting indicate Dr. Edward Kody, another independent physician, recommended the administration of Memorial Hospitals look into closing the anesthesiology department and develop a mechanism for the procedure. The motion was passed. At trial, Dr. Kody testified he did not believe his comment was a recommendation to close the department, only a suggestion that it be considered as one alternative to solving the problems that were being experienced. Dr. Joseph Skokan, a Gould physician and chief of staff-elect in March 1991, testified it was his impression that on March 21, 1991, the MEC voted to recommend closure of the anesthesiology department.
On March 22, 1991, at a staff meeting attended by Drs. Major, Freeman, and Turner, the anesthesiologists were informed the MEC had recommended Memorial Hospitals investigate the possibility of closing the department. On April 23, 1991, Benn briefed the new members of the MEC on events leading up to the closure recommendation. Benn informed the members of the MEC that the process would begin with a solicitation of requests for proposal (RFP). The minutes of this meeting reflect the MEC supported the proposal which would be referred to the board of directors. Dr. Skokan testified that although the MEC did not specifically recommend closure of the anesthesiology department on April 23d, the recommendation to begin the RFP process was tantamount to such a recommendation.
On April 25, 1991, at a meeting attended by Drs. Major and Freeman, Dr. Eugene Sucha, a Gould anesthesiologist and new chairman of the anesthesiology department, informed the anesthesiologists that the MEC had been discussing closure of the department and that RFPs would be available to interested doctors. On May 6, 1991, Benn reported to the board of directors that the MEC had requested the administration develop a mechanism for closure of the anesthesiology department. There was no formal action by the Board to approve issuance of an RFP and the Board did not instruct the administration to prepare and distribute one. On June 20, 1991, copies of the RFP were mailed to numerous individuals and entities including all the anesthesiologists in Stanislaus County.
On June 25, 1991, Benn reported to the MEC that RFPs had been mailed to interested parties. Benn stated that closure would apply to all anesthesiologists, without exception. On June 28, 1991, at a staff meeting attended by Drs. Major, Freeman, and Turner, the anesthesiologists were informed that RFPs had been mailed out. On September 9, 1991, the MEC appointed a subcommittee to evaluate the seven responses to the RFP that had been received. Among the members of the subcommittee were Drs. Skokan, Shouse, Piskun, and Stitt. One response was from Dr. Major. On September 27, 1991, at a staff meeting attended by Drs. Freeman and Turner, the anesthesiologists were informed that an RFP subcommittee had been appointed. On October 25, 1991, at a staff meeting attended by Drs. Major, Freeman, and Turner, the anesthesiologists were advised that seven responses to the RFP had been received by the subcommittee. They were also told the names of the subcommittee members.
On February 2, 1992, Benn informed the board of directors that the RFP subcommittee had met with three finalists, including Gould, Dr. Major and Premier Anesthesia. Benn reported the RFP subcommittee had been unable to resolve some problems and recommended the board establish another subcommittee to help conclude the process.
After interviewing all three candidates, the RFP subcommittee considered Gould the best candidate and entered into negotiations with it on the exact terms of the contract to provide anesthesia services to Memorial Hospitals. Gould's response to the RFP called for six Gould anesthesiologists and four independent anesthesiologists who would subcontract with Gould, but would be selected by Memorial Hospitals. Memorial Hospitals rejected this provision, insisting that Gould be responsible for selecting the independent anesthesiologists who would be offered subcontracts. The subcommittee kept the negotiations with Gould confidential and did not inform the medical staff of their progress.
On May 26, 1992, Dr. Shouse informed the MEC that the RFP subcommittee had determined Gould's proposal was in the best interest of the patients and the hospital. The minutes of this meeting indicate the MEC discussed that medical staff bylaws required input from the MEC regarding quality of care issues prior to a decision to close the department. Questions were raised regarding whether the proposed contract adequately addressed quality of care. The MEC was informed the contract included a quality assessment process and that reports would be made to the MEC on a quarterly basis. However, a copy of the proposed contract was not presented to the MEC and the committee was not aware of its specific terms. The MEC unanimously approved a recommendation to award the contract to Gould. On May 29, 1992, the professional practices committee was informed of the MEC's recommendation to award an exclusive contract to Gould to provide anesthesia services to Memorial Hospitals. This committee unanimously endorsed awarding this contract.
On June 1, 1992, Benn informed the board of directors that the RFP subcommittee recommended award of the exclusive contract to provide anesthesia services to Gould. At this same meeting, Dr. Major made an alternative presentation to the board. He also presented a letter signed by approximately 50 surgeons supporting his proposal. Dr. Major was excused and the board discussed the contract, with Quick voicing her concern that Dr. Major's proposal would not resolve the problems in the anesthesiology department. The board unanimously approved the motion to award the contract to Gould.
On June 1, 1992, Dr. Imanaka was advised Memorial Hospitals had accepted Gould's proposal. Dr. Imanaka, identified in the Gould proposal as director of the anesthesiology department, then began putting together a subcommittee to select the independent anesthesiologists who would provide services under the contract. He sought not only anesthesiologists, but also surgeons to serve on his selection committee. Among those who agreed to serve were Dr. Shouse, Dr. Donn Fassero, a Gould surgeon, and Dr. Louis Cimino, an independent surgeon. The other members of the committee were all Gould anesthesiologists.
On July 1, 1992, Piche sent letters to Drs. Major, Freeman, and Turner advising them that Gould had been awarded the contract to provide anesthesia services for Memorial Hospitals, and effective August 1, 1992, the anesthesiology department would be operated on a closed staff basis. The letter further stated that Gould had formed a committee to select the independent anesthesiologists with whom it would subcontract and identified the members of that committee. Piche's letter advised plaintiffs to contact Dr. Imanaka for further information regarding the application process.
Also, on July 1, 1992, Memorial Hospitals signed a contract with Gould as the exclusive provider of anesthesia services for both its facilities. The contract provided that Gould could provide the required anesthesia services through its own members or through independent physicians with whom it subcontracted. The contract designated Dr. Imanaka as the director of the department. It required that any person who was to provide anesthesia services meet the requirements for membership in the medical staff of Memorial Hospitals and actually be admitted as a member. The contract established an initial requirement of ten anesthesiologists, six of whom were to be Gould providers, and four to be subcontracted providers. Gould was given the responsibility of providing the services required "by employment, contractual relationship, or other arrangement ...." However, the physicians or certified nurse anesthetists (CRNA) selected by Gould were subject to approval by Memorial Hospitals.
Plaintiffs submitted applications to Gould for positions as independent anesthesiologists who would provide services to Memorial Hospitals. On July 8, 1992, Dr. Imanaka sent letters to all three plaintiffs informing them they had not been selected for one of the subcontracted positions. The committee did select five individuals, three of whom were coming directly out of residency in anesthesiology. One of the five selected, Dr. James Barnette, ultimately declined the offer. Subsequently, Gould allowed the final position to be shared by three anesthesiologists who provided anesthesia service to a group of surgeons specializing in cardiac surgery. On July 13, 1992, Piche informed the executive committee of the board of directors that the anesthesia contract had been executed, and Gould's selection committee had chosen six anesthesiologists as subcontractors, not including Drs. Freeman, Turner and Major. On July 17, 1992, Piche sent letters to each of the plaintiffs informing them that if they were not under contract with Gould to provide anesthesia services for Memorial Hospitals, their anesthesia privileges would be terminated effective at midnight on July 31, 1992.
DISCUSSION Any discussion of the issues raised by plaintiffs must be prefaced by a discussion of the general principles of law applicable to this case. The most important is the nature of plaintiffs' rights as physicians with staff privileges at Memorial Hospitals. In Anton v. San Antonio Community Hosp. (1977) 19 Cal.3d 802, our Supreme Court held that a physician's hospital privileges constitute a property right.
However, a key consideration in Anton's holding that a physician was entitled to minimal due process before termination of staff privileges was its determination that the action taken was adjudicative in nature. "The decision in question is clearly final and is adjudicatory rather than legislative in character." (Anton v. San Antonio Community Hosp., supra, 19 Cal.3d at p. 815.)
The distinction between an adjudicative decision and a legislative or quasi-legislative decision is critical in resolving plaintiffs' claim for two reasons. First, the requirement of a proceeding with minimal due process prior to termination of a physician's staff privileges is not applicable if it is the result of a quasi-legislative act by the hospital.
"If the action is legislative or quasi-legislative in nature, '" ... a hearing of a judicial type is not required; a hearing allowed by legislative grace is not circumscribed by the restrictions applicable to judicial or quasi judicial adversary proceedings."' [Citation.] In a quasi-legislative proceeding there is no constitutional right to any hearing. [Citation.]" (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1183; accord Centeno v. Roseville Community Hospital (1979) 107 Cal.App.3d 62, 71; City of Santa Cruz v. Local Agency Formation Com. (1978) 76 Cal.App.3d 381, 388 .)
Reduced to its essence, plaintiffs' argument is two-fold. First, they claim the hospital's decision to close the anesthesiology department was directed specifically at them. Therefore, the decision was adjudicative and they were entitled to due process in accordance with the medical staff bylaws prior to termination of their medical staff privileges. Second, even if the decision to close the department was quasi-legislative, it was arbitrary, capricious, and did not comply with the procedures set forth in the medical staff bylaws.
It is with the above concepts firmly in mind that we evaluate plaintiffs' contentions.
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I. Violation of the Unruh Act*
The first step in untangling the Gordian Knot of issues presented here, is to address plaintiffs' claim that the trial court erred in finding Memorial Hospitals did not violate the Unruh Civil Rights Act (Unruh Act) which provides:
"All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, or disability are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever." (Civ. Code, § 51.)
Plaintiffs contend the evidence established Memorial Hospitals discriminated against Dr. Turner, who is Black, because of his race. They argue Dr. Turner's race was a motivating factor in the decision to close the department, which ultimately resulted in his loss of staff privileges. Additionally, plaintiffs claim Memorial Hospitals violated the Unruh Act because it chose the administrative process of closing the anesthesiology department rather than going through the adjudicative process of revoking Dr. Turner's staff privileges. They claim this procedure was chosen because of a fear that Dr. Turner would file a claim of racial discrimination if it attempted to revoke his staff privileges by any other means.
Although both Drs. Major and Freeman are White, they contend they were affected by the discrimination against Dr. Turner because Memorial Hospitals sought to insulate itself from charges of racial discrimination by revoking their privileges through closure of the anesthesiology department as well. In other words, they argue Memorial Hospitals attempted to mask its actual discriminatory action against Dr. Turner by revoking the privileges of all the independent anesthesiologists in the department.
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A. Standard of review
Plaintiffs' claim goes to the sufficiency of the evidence to support the trial court's finding that there was no violation of the Unruh Act. Therefore, on appeal we "must review the whole record in the light most favorable to the judgment below to determine whether it discloses substantial evidence-that is, evidence which is reasonable, credible, and of solid value ...." (People v. Johnson (1980) 26 Cal.3d 557, 578; Estate of Teed (1952) 112 Cal.App.2d 638, 644.) Substantial evidence includes circumstantial evidence and its reasonable inferences. (In re James D. (1981) 116 Cal.App.3d 810, 813.)
B. Analysis
The trial court found Dr. Turner was a member of a protected class, but that plaintiffs had failed to show "any discrimination against him on the basis of his protected class status." It further found Drs. Major and Freeman were not members of a protected class within the meaning of the Unruh Act, but if they were, "there was no discrimination against them on the basis of their status as a member of a protected class." The court found the decision to not award subcontracts to Drs. Major and Freeman was not based on a fear that Dr. Turner would file a lawsuit for racial discrimination if he was the only one excluded from the department. Further, the court determined the initial decision to close the anesthesiology department was not based on a fear that Dr. Turner would bring a racial discrimination lawsuit if he was subjected to disciplinary proceedings in accordance with the medical staff bylaws. The court stated "[t]he possibility that Dr. Turner might assert a claim for racial discrimination was not a motivating factor in the decisions to close the Department of Anesthesia or any independent subcontractor selection process." Finally, the court found that if racially derogatory remarks were made as claimed by Dr. Major, they were insufficient to establish discrimination against Dr. Turner.
If the revocation of Dr. Turner's medical staff privileges was based on his race in violation of the Unruh Act, regardless of whether the decision was adjudicatory or quasi-legislative, it was unlawful. However, the same cannot be said with respect to Drs. Major and Freeman. They have not alleged they were discriminated against because of their race. Neither have they alleged, as did the plaintiff in Winchell v. English (1976) 62 Cal.App.3d 125, that they were discriminated against because of the race of a person with whom they associated. Therefore, a finding that the revocation of Dr. Turner's staff privileges was based on his race, does not mandate a similar finding as to Drs. Major and Freeman. However, the decision regarding whether Memorial Hospitals violated the Unruh Act with respect to Dr. Turner is not without significance to Drs. Major and Freeman. A determination that Dr. Turner's staff privileges were revoked based on his race would be substantial evidence the decision was targeted at a specific individual, indicating the decision was adjudicatory rather than quasi-legislative.
In the same vein, evidence that Memorial Hospitals feared a racial discrimination suit by Dr. Turner if he were disciplined is irrelevant to whether Drs. Major and Freeman were discriminated against. However, it may be relevant to determine whether closure of the anesthesiology department was truly the result of a quasi-legislative decision, or merely a sham to mask the actual purpose of eliminating Dr. Turner.
Both Memorial Hospitals and Gould argue that as a matter of law, plaintiffs have no cause of action under the Unruh Act because it does not apply to employment-related discrimination. They claim their relationship with plaintiffs was that of employer-employee, which is not covered by the Unruh Act.
Memorial Hospitals and Gould are correct that courts have consistently held the Unruh Act does not apply to employment actions. "[T]he Unruh Civil Rights Act has no application to employment discrimination. [Citations.]" (Rojo v. Kliger (1990) 52 Cal.3d 65, 77; accord Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 500; Ibister v. Boys' Club of Santa Cruz, Inc. (1985) 40 Cal.3d 72, 83, fn. 12.) However, whether the relationship between a physician and the hospital at which he or she has medical staff privileges is that of employer and employee is not so easily resolved.
Neither parties' briefs nor independent research have disclosed any California decision which addressed this issue. Further, review of the federal cases which have addressed it reveals a split of authority. Although interesting, we decline to resolve this issue since there is ample evidence to support the trial court's finding that the Unruh Act was not violated. Thus, plaintiffs' employment status is irrelevant.
Dr. Turner claims the testimony of several witnesses proves he was discriminated against because of his race. First, he cites the testimony of Piche that he feared Dr. Turner would file a claim of racial discrimination against Memorial Hospitals if his medical staff privileges were terminated as a result of the closure process. However, Piche denied this fear played any part in the decisions not to take disciplinary action against Dr. Turner in accordance with the medical staff bylaws.
Dr. Turner points to the testimony of Dr. Louis Cimino, an independent surgeon at Memorial Hospitals, as evidence of discriminatory intent in the action taken against him. Dr. Cimino testified he had a discussion with Dr. Shouse in the spring of 1992, when Dr. Shouse stated the administration of Memorial Hospitals wanted to let Dr. Turner go, but was afraid of a lawsuit and, therefore, may also have to let go one or two of the other independent anesthesiologists. Dr. Cimino also testified he was asked by Dr. Imanaka to be a member of the committee that would select the independent anesthesiologists to receive subcontracts from Gould. He stated that just prior to one of the committee meetings in July 1992, he called Piche to ask him what would be the best thing to come out of the committee. Piche told him the hospital had been having trouble with Dr. Turner and would like to see him go. Dr. Cimino stated he never heard Dr. Shouse, any Memorial Hospitals' employee, or anyone from Gould make any racial comments about Dr. Turner.
Dr. Shouse and Piche denied making the statements that Dr. Cimino attributed to them. Piche testified that during the telephone conversation referred to by Dr. Cimino, he said the committee should pick the best anesthesiologists available. Piche did bring up Dr. Turner during the conversation with Dr. Cimino, but only to state that he did not think the selection process should be directed personally at him, or Drs. Major and Freeman. Piche testified he told Dr. Cimino the selection committee should use the criteria it developed to select the anesthesiologists without any interference from Memorial Hospitals.
Dr. Turner also claims the testimony of Ronald McDaniel, the vice-president of marketing for Premier Anesthesia, supports his claim of racial discrimination. McDaniel testified he met with Benn in July 1991, to discuss the RFP for anesthesia services to which Premier Anesthesia was responding. The purpose of the visit was for McDaniel to find out what problems existed in the anesthesiology department. McDaniel testified Benn said Memorial Hospitals had some quality concerns about one specific physician, who Benn described as a "black physician." However, Benn also told McDaniel of other problems including a lack of cooperation and organization, scheduling problems and overall quality concerns. McDaniel claimed Benn stated he did not feel the "black physician" would be welcome in a newly formed anesthesia group because of quality problems related to his work. However, Benn did not tell McDaniel to not include him in its group if awarded the contract. Additionally, McDaniel did not believe race was a factor in any of the concerns voiced to him. He perceived Benn's use of the term "black physician" as a means of identifying the physician about whom he was speaking.
Benn testified he did discuss the state of the anesthesiology department with McDaniel in the summer of 1991. He explained to McDaniel the problems Memorial Hospitals was experiencing in the anesthesiology department, including the personal conflict between Drs. Major and Turner. During this explanation, Benn described Dr. Turner in the manner in which Dr. Major described him, including the fact he was Black. Benn stated he did not tell McDaniel the "black physician" would not be accepted by the medical staff in the new anesthesiology group.
Finally, Dr. Turner points to the racial epithets used in reference to him as evidence of the discriminatory intent in the revocation of his staff privileges. Dr. Major testified that during one conversation prior to initiation of the action to close the anesthesiology department, Dr. Shouse was complaining about Dr. Turner and said "That dumb f----ing nigger doesn't know what he's doing." Dr. Major also claims on at least two other occasions Dr. Shouse said to him, "When are you going to get rid of that black bastard." However, he also stated he did not believe Dr. Shouse's comments were motivated by racial animus. Dr. Major testified that another time he was discussing his problems with Manny Gonzales, the OR supervisor at Memorial Hospitals, when Gonzales stated: "You know Mitchell, the problem you have, we have a nigger with a chip on his shoulder."
Dr. Shouse denied making any racially derogatory statements about Dr. Turner or telling Dr. Major he had to get rid of Dr. Turner. Dr. Shouse testified that when he was a freshman in college at Tulane, his roommate was Black. This caused other White students in the dormitory to put a cross on the door to his room and set it on fire. Further, after he graduated from college, Dr. Shouse moved to Chattanooga, Tennessee, where he attended a number of NAACP meetings to show his support. After one meeting of a White citizens group at which he appeared along with six members of the NAACP, Dr. Shouse was beaten by police.
Dr. William Bell, Jr., a Black physician, testified Dr. Shouse hired him as a staff doctor at a hospital in Nashville. Dr. Bell testified he and Dr. Shouse not only worked together, but also socialized on a regular basis and he often stayed at Dr. Shouse's home. Dr. Bell said Dr. Shouse was assisting a Black female physician in obtaining her board certification in emergency medicine so she could continue to work at a hospital in Nashville. Dr. Bell stated Dr. Shouse retained this physician after the company for which Dr. Shouse worked obtained the contract to provide emergency services at the hospital. Dr. Bell never heard Dr. Shouse refer to Black people in a racially derogatory manner.
The burden of proof in an action under the Unruh Act is much the same as that applicable to an action under the FEHA. (See Green v. Rancho Santa Margarita Mortgage Co. (1994) 28 Cal.App.4th 686, 694-695.)
If a defendant does present evidence of a legitimate nondiscriminatory basis for the disparate treatment, the plaintiff must then prove the proffered reason was not the true reason, but merely a pretext. (Texas Dept. of Community Affairs v. Burdine, supra, 450 U.S. at pp. 255-256.) Proving pretext involves more than proving the asserted basis for disparate treatment is false-the plaintiff must show the reason was actually illegal discrimination.
"Crediting as we must the statements offered by the plaintiff to be inferential evidence of racial prejudice, such statements are not, however, sufficient to demonstrate that the defendant relied on both legitimate and illegitimate criteria, or mixed motives.... Such remarks, as offered by the plaintiff, when unrelated to the decisional process, are insufficient to demonstrate that the employer relied on illegitimate criteria, even when such statements are made by the decision-maker in issue." (Smith v. Firestone Tire and Rubber Co. (7th Cir. 1989) 875 F.2d 1325, 1330; see Geier v. Medtronic, Inc. (7th Cir. 1996) 99 F.3d 238, 242 ["To be probative of discrimination, isolated comments must be contemporaneous with the discharge or causally related to the discharge decision making process."]. )
There is sufficient evidence to support the trial court's finding that Dr. Turner failed to prove he was discriminated against based on his race. Assuming he established the elements of a prima facie case, evidence was presented of a legitimate, nondiscriminatory basis for the action: to solve the systemic problems in the anesthesiology department that had been in existence for years. Dr. Turner failed to present any evidence that the decision to close the anesthesiology department and award contracts to other individuals was merely a pretext for revoking Dr. Turner's staff privileges because of his race. No witness testified the closure process was motivated by a racial animus against Dr. Turner. Nor does the evidence circumstantially support such a conclusion.
There was evidence presented that members of the administration of Memorial Hospitals did fear Dr. Turner would bring a racial discrimination lawsuit if his staff privileges were revoked. However, as the trial court found, there was no evidence the decision to close the department or to not take disciplinary action against Dr. Turner was motivated by fear that he would make a claim of racial discrimination. The mere fact Memorial Hospitals was concerned about Dr. Turner's reaction to losing his hospital privileges, by whatever means, does not equate to a finding that its action was motivated by that fear.
As previously stated, a finding that the closure decision was motivated by fear that Dr. Turner would claim racial discrimination, may be relevant to determine if the decision was directed at a specific individual. However, it has no bearing on whether the Unruh Act was violated. In order for there to be a violation of the Unruh Act, there must be evidence of disparate treatment based on one of the personal characteristics listed in the statute, i.e., sex, race, color, religion. (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1160-1161.) The statute is not violated by actions which are allegedly motivated by fear of how a person will react unless the evidence also establishes the action was based on one of the enumerated personal characteristics.
Finally, assuming as the trial court did that Dr. Shouse and Gonzales made the racially derogatory remarks ascribed to them, there is no nexus between the statements and the decision to close the anesthesiology department or to not award Dr. Turner a contract. Dr. Shouse was a member of the MEC, the ad hoc committee charged with looking into the problems in the anesthesiology department, and the subcontractor selection committee. However, there is no evidence he uttered any racial epithets concerning Dr. Turner to any of the other members of these committees. There is no evidence they knew Dr. Shouse had previously made these statements or that they played any part in the decisions of any committee involved in the closure of the department. Almost every committee decision leading to the closure of the anesthesiology department was unanimous. Thus, there is sufficient evidence to support the trial court's finding that the uttering of the racially derogatory statements did not establish a violation of the Unruh Act.
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II. Waiver*
The trial court found "[e]ach plaintiff waived objections to closure by participating and not objecting to the process that led to the closed department." The court found plaintiffs were on notice at least as early as the time they received copies of the RFP that the only way they could retain their anesthesia privileges at Memorial Hospitals was to either have the exclusive contract for anesthesia services or receive a subcontract from the contractor that did. The court found the decision to close the department was a long and open process that resulted in fair notice of the decision process to plaintiffs and other members of the medical staff. The court also found plaintiffs consented to and waived any objection to consideration of their competence, character or qualifications by their agreement to section 7.6-1 of the medical staff bylaws.
Defendants urge us to adopt the trial court's position and find plaintiffs waived any objection to the process by which the anesthesiology department was closed. They argue plaintiffs' failure to object during the closure process, and their agreement to be bound by the medical staff bylaws when they applied and reapplied for staff privileges at Memorial Hospitals, waived any objection to the procedure used to effect closure of the department. Logic dictates the claim of waiver be addressed prior to consideration of the other issues involving the closure of the anesthesiology department. If plaintiffs did waive any objection to the process by which the department was closed and their staff privileges were revoked, all their allegations of error are moot.
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A. Standard of review
"Whether there has been a waiver here is a question of fact to be determined in light of all the evidence. [Citations.]" (Brookview Condominium Owners' Assn. v. Heltzer Enterprises-Brookview (1990) 218 Cal.App.3d 502, 513.) Therefore, a trial court's determination that there has been a waiver is reviewed for substantial evidence. (In re Marriage of Paboojian (1987) 189 Cal.App.3d 1434, 1438.)
B. Analysis
The court based its conclusion that plaintiffs waived any objection to the closure of the anesthesiology department in part upon its determination that plaintiffs received copies of the RFP. "On June 20, 1991, requests for proposals were sent to interested parties including the plaintiffs." The court found the terms of the RFP put defendants on notice that they were in jeopardy of having their staff privileges in the anesthesiology department revoked by the award of the exclusive contract. There is a problem with the court's finding.
Even if we assume all plaintiffs received copies of the RFP (there was no evidence it was actually sent to Drs. Freeman and Turner), the RFP does not specifically state that they would lose their clinical privileges if they were not awarded the contract. Nor does it state that the physicians who were presently providing anesthesia services would not be retained. Under the section entitled: "HOSPITAL'S OBJECTIVES TO BE ACHIEVED THROUGH EXCLUSIVE CONTRACT," the RFP states:
"To support a finding of waiver, there must be an existing right, benefit, or advantage, actual or constructive knowledge of the right's existence, and either an actual intention to relinquish it or conduct so inconsistent with any intent to enforce the right as to induce a reasonable belief that it has been relinquished. [Citations.]" (Brookview Condominium Owners' Assn. v. Heltzer Enterprises-Brookview, supra, 218 Cal.App.3d at p. 513.) The burden to prove waiver lies with the party claiming it has occurred.
"The waiver of a legal right cannot be established without a clear showing of intent to give up such right. [Citation.] The burden is on the party claiming the waiver 'to prove it by evidence that does not leave the matter doubtful or uncertain and the burden must be satisfied by clear and convincing evidence that does not leave the matter to speculation.' [Citation.]" (Ibid.)
Plaintiffs' vested right was in their staff privileges at Memorial Hospitals to provide anesthesia services, not necessarily in the maintenance of an open or closed anesthesiology department. Thus, it was only when they were not granted subcontracts by Gould that their vested property rights were affirmatively and unequivocally affected. Therefore, it was at this time that they had an obligation to object to the procedure employed to revoke their privileges. They did so by filing this lawsuit. Mere suspicion during the course of the closure of the department that their staff privileges may be affected, did not require plaintiffs to object to the process in order to preserve their right to practice at Memorial Hospitals. In other words, it was the end result of the process of closing the department that adversely affected plaintiffs-not the closure procedure in and of itself.
Further, we note that during the closing process, plaintiffs were never offered a formal opportunity to make objections to the procedure. It is true that plaintiffs received notice that the process was ongoing, but the evidence indicates this notice was informational. There is no evidence that any noticed hearing on closing the anesthesiology department was scheduled or that plaintiffs' input was solicited. Further, the evidence indicates the process by which the RFP was awarded was maintained in relative secrecy, and the award of the Gould subcontracts was based on criteria established without any input from plaintiffs. The fact plaintiffs could have expressed their opinion on the procedure does not mean they were required to do so, or that they waived any objection to the process by failing to do so. Thus, we conclude plaintiffs did not waive any objection to closure of the department and revocation of their staff privileges.
III. Adjudicative vs. quasi-legislative decision
We now examine the heart of this legal patient: whether the decision to revoke plaintiffs' staff privileges was adjudicative or quasi-legislative. As previously stated, plaintiffs contend Memorial Hospitals' decision to close the anesthesiology department was adjudicatory because it was directed toward the exclusion of a particular physician or group of physicians. In addition to his claim of discrimination under the Unruh Act, Dr. Turner contends the closing process was directed at him based on allegations of his behavior problems and clinical incompetence. Citing our decision in Mateo-Woodburn v. Fresno Community Hospital & Medical Center, supra, 221 Cal.App.3d 1169, Dr. Turner argues a hospital's action is considered quasi-legislative when the action is "limited to eliminating organizational deficiencies or systemic quality of care concerns ...." However, he contends that if the decision to close a department, "reflects on the character, competency or qualifications of any particular physician ..." it is reviewable as an adjudicatory decision.
Dr. Freeman echoes Dr. Turner's argument. He contends that in order for the closing of a hospital department to be quasi-legislative, not only must the action not be directed at a specific physician or group of physicians, but there must be nothing about the process which adversely reflects on the professional qualifications of the doctors affected. Dr. Freeman argues the circumstances of the closure of the anesthesiology department at Memorial Hospitals related to allegations of his incompetence, and therefore reflected adversely on his professional qualifications. Further, he claims the fact he was not offered one of the available subcontractor positions adversely reflected on his professional qualifications. Thus, he contends the decision to close the anesthesiology department was adjudicative in nature.
Dr. Major adopts the arguments made by Drs. Turner and Freeman.
A. Standard of review
The trial court's findings concerning what factors, if any, were considered and motivated the decision to close the anesthesiology department are issues of fact which we review for substantial evidence. However, the court's conclusion regarding whether the action was adjudicatory or quasi-legislative is an issue of law which is reviewed de novo. (See Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at p. 387.)
B. Analysis
The trial court found the decision to close the anesthesiology department "was motivated by an honest, reasonable, and factually based concern about improving the overall functioning of the entire department and in improving employee morale.... In short, it was made to rid the Hospital of the undesirable effects of an open department and not directed specifically [at] excluding part of the plaintiffs." It then concluded: "The action to close the Department of Anesthesia was quasi-legislative, reasonable, rational, lawful, and in conformity with public policy. It was not arbitrary, capricious, or entirely lacking in evidentiary support."
Any analysis of this issue must begin with a recognition of the right of Memorial Hospitals to make a policy decision to close the anesthesiology department, even if it affects the clinical privileges of one or more physicians.
The shortage of anesthesiologists also impacted the department's ability to provide services for other members of the medical staff, such as OB/GYN's longstanding request for epidural services. The delays in obtaining anesthesia services had reached the point that Memorial Hospitals was failing to meet the national standards for timely performance of Cesarean sections. Finally, the shortage was further exacerbated by the refusal of some anesthesiologists, both independent and Gould, to provide anesthesia services in cases of cardiac surgery. As a result, this workload disproportionately fell on the remaining anesthesiologists.
The members of the anesthesiology department had also demonstrated an inability to maintain professional relations between themselves and other members of the medical staff at Memorial Hospitals. They squabbled among themselves, refused to talk to one another, and had numerous personal conflicts with surgeons. Dr. Turner was even involved in physical altercations, including at least one occasion when he punched a nurse. The anesthesiologists' practice of airing their dissatisfaction with each other in the presence of other staff members and patients impacted morale to the extent that some of the OR staff considered resigning. The personality conflicts in the anesthesiology department were not limited to plaintiffs. There was evidence of conflicts between the independent and Gould anesthesiologists as well as between Gould anesthesiologists and other physicians.
The problems in the anesthesiology department were compounded by an absence of anyone with the authority to require the anesthesiologists to resolve their problems. The department was not a cohesive, integrated organization working toward a common goal. Rather, it was a loose association of independent contractors, divided into two separate factions, independents and Gould, who did not recognize any central authority over them. The problem attendant to this organization was obvious in the narcotics documentation problem the department experienced. The fact this problem existed is not as significant as the length of time it took to solve it, even though it jeopardized Memorial Hospitals' accreditation and posed a danger that narcotics would be diverted and misused. The lack of leadership also manifested itself in the department's failure to timely address and resolve quality of care issues involving anesthesiologists.
Considering the evidence, the question that comes to mind is not whether there were systemic problems in the anesthesiology department which would justify closure of the department, but why it took Memorial Hospitals as long as it did to make this decision. The department can most aptly be described as dysfunctional to the extent it jeopardized the overall quality of patient care at Memorial Hospitals.
It was the overall problems associated with the operation of the department that motivated the closure decision rather than an intent to specifically exclude plaintiffs. Undoubtedly, plaintiffs' conduct contributed to the systemic troubles of the department. However, the mere fact the overall problems considered in the closure decision included the individual difficulties plaintiffs created, does not mandate a finding that the decision was directed at them. It is axiomatic that the whole is the sum of its parts. A systemic problem is nothing more than the aggregation of a number of individual ones. Although plaintiffs' conduct accounted for a disproportionate share of the anesthesiology department's problem, they did not account for all of them. Additionally, Memorial Hospitals' decision to close the department was directed not just at solving the existing problems, but also to creating an organization capable of effectively dealing with similar issues in the future.
Moreover, the committees which considered, recommended, and authorized closure of the department were focusing on the systemic and organization problems rather than on the exclusion of any particular physician or group of physicians. Undoubtedly, plaintiffs' names came up in the course of discussing the troubles within the department, but no one testified there was any discussion of excluding them as the objective of the closure. Rather, the evidence indicates the overriding concern was for the overall quality of care provided by the anesthesiology department and the fact the troubles it was experiencing seemed to be getting worse over time. In fact, Dr. Major recommended closure of the department should be considered as a means of solving the organizational and quality issues it was experiencing and which he had been unable to correct. Therefore, the evidence was sufficient to support the trial court's finding that the decision to close the department was not directed at excluding plaintiffs.
Plaintiffs argue that even if Memorial Hospitals' decision to close was not directed at them, it cannot be characterized as quasi-legislative if the hospital's decision is a de facto adverse reflection on their character, competency or qualifications. Plaintiffs contend Memorial Hospitals' decision to close the anesthesiology department, coupled with its failure to require Gould to offer them subcontracts which resulted in their replacement by other anesthesiologists, constituted such a de facto decision. Therefore, it must be adjudicatory in nature. Put simply, plaintiffs contend the fact they were deprived of their staff privileges as a result of Memorial Hospitals' decision to close the anesthesiology department is evidence that eliminating them was the purpose of the action.
Plaintiffs cite several cases which they claim support their argument, the primary one being our decision in Mateo-Woodburn, supra, 221 Cal.App.3d 1169. Although Mateo-Woodburn involved facts very similar to those in plaintiffs' case, it does not stand for the proposition attributed to it by plaintiffs.
In Mateo-Woodburn, the defendant decided to change the system of delivery of anesthesia services at the hospital from an "open staff" to a "closed" system. (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1175) The decision was made because of problems the hospital was having with administration of the open staff system that presented a real risk to patients and affected the morale of the department and support staff. (Id. at pp. 1177-1178.) Prior to making the final decision to go to a closed system, the hospital scheduled a noticed hearing at which physicians, including the plaintiff, were allowed to make comments. (Id. at pp. 1178-1179.) After the hearing, the plaintiff made a counter-proposal to the board of trustees which was rejected. The board then decided the department would be closed upon appointment of a permanent director. (Id. at p. 1179.)
After the director was appointed, all the anesthesiologists with privileges were notified that unless they entered a contract with the director with whom defendant had a contract, they would not be permitted to practice in the hospital. The contract with the director provided that he was the exclusive provider of clinical anesthesiology services at the hospital; provided for the minimum qualifications of any physicians with whom he contracted; and reserved for the defendant the right to review and approve the form of any contract prior to execution. (Mateo-Woodburn, supra, 221 Cal.App.3d at pp. 1180-1181.) Six anesthesiologists did not sign a contract with the new director. Five refused to do so, and one was not offered a contract, although he said he would not have signed the contract even if it had been offered. (Id. at p. 1181.)
We went on to hold the decision of the defendant hospital was quasi-legislative in nature.
"Here, the policy decision by FCH to go from an open to a closed system of delivery of anesthesia services was not irrational, arbitrary, contrary to public policy or procedurally unfair. The chronic problems existing in the department under the rotation system adversely affected the efficient delivery of anesthesia services to patients, lowered the quality of patient care, and created a potential risk to patients which included the risk of paralysis and/or death. The defects, including the lack of leadership, control and discipline in the system, were patent. Contrary to plaintiffs' argument the hospital was not required to wait until serious consequences occurred before taking action." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1184.)
We explained the distinction between an adjudicatory and a quasi-legislative decision on the reputation of a physician.
"[W]here a doctor loses or does not attain staff privileges because of professional inadequacy or misconduct, the professional reputation of that doctor is at stake. In that circumstance, his or her ability to become a member of the staff at other hospitals is severely impaired. On the other hand, a doctor's elimination by reason of a departmental reorganization and his failure to sign a contract does not reflect upon the doctor's professional qualifications and should not affect his opportunities to obtain other employment." (Mateo-Woodburn v. Fresno Community Hospital & Medical Center, supra, 221 Cal.App.3d at p. 1185.)
Plaintiffs claim the phrase "and his failure to sign a contract," in the Mateo-Woodburn decision indicates our holding was "premised upon the assumption that all doctors in the department will have the opportunity to stay on under the closed system, provided that a sufficient number of positions exist." Based on this assumption, plaintiffs conclude that if a hospital does not require the contractor to offer subcontracts to the incumbent physicians when a department is closed, it is a de facto decision which reflects on their character, competency or qualifications. Thus, coming full circle, the initial decision to close the department must be deemed to have been adjudicatory. We reject plaintiffs' exercise in circuitous logic for several reasons.
First, notwithstanding the phrase in Mateo-Woodburn, referring to the fact the plaintiffs' professional qualifications were not called into question when they refused to sign a subcontract offered to them, one of the plaintiffs there was not offered a subcontract. Our decision applied equally to him and to those physicians who were offered but declined a subcontract.
Second, there is nothing in Mateo-Woodburn to suggest that a hospital has a duty to offer a subcontract to incumbent physicians upon closure of a department as a precondition to finding the decision is quasi-legislative. To the contrary, the express language we used undermines plaintiffs' contention.
"Thus, the vested rights of a staff doctor in an adjudicatory one-on-one setting, wherein the doctor's professional or ethical qualifications for staff privileges is in question, take on a different quality and character when considered in light of a rational, justified policy decision by a hospital to reorganize the method of delivery of certain medical services, even though the structural change results in the exclusion of certain doctors from the operating rooms. If the justification is sufficient, the doctor's vested rights must give way to public and patient interest in improving the quality of medical services." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1185, italics added.)
Considering this language, it is difficult to understand how plaintiffs find support for their argument in Mateo-Woodburn. However, to the extent the decision could be read to require that subcontracts be offered to incumbent physicians as a precondition to finding the decision to close a department is quasi-legislative, we expressly reject that interpretation. Further, plaintiffs can find no support for their contention in any of the other cases which have considered the closure of a department in a hospital.
In Blank v. Palo Alto-Stanford (1965) 234 Cal.App.2d 377, the defendant had an exclusive contract with a partnership of radiologists to provide radiological services for the hospital. The plaintiff was a physician and member of the hospital staff who was excluded from the facilities of the radiology department. The plaintiff brought suit seeking damages and injunctive relief. Following trial, the court found against the plaintiff. (Id. at pp. 379-382.) In affirming the trial court, the appellate court focused on the justification for the action and noted that evidence of practice among hospitals is relevant to the issue. (Id. at p. 385.) The court also recognized that a hospital may legitimately exclude some physicians from certain departments:
Plaintiffs claim Blank is distinguishable because there were not enough positions available in the closed radiology department to retain all the incumbents. Therefore, unlike their case, the closure of the department in Blank did not reflect adversely on the professional qualifications of the plaintiff who was excluded. This argument is specious. By selecting a physician other than the plaintiff, the hospital in Blank made a de facto decision concerning the relative merit of the two candidates just as assuredly as did Gould in selecting anesthesiologists other than plaintiffs. Further, there is nothing in Blank to suggest the court based its finding that closure was warranted on the fact that it did not reflect adversely on the plaintiff. To the contrary, the primary thrust is that closure was justified regardless of the negative impact it had on the physician who was excluded.
Similarly, in Letsch v. Northern San Diego County Hosp. Dist. (1966) 246 Cal.App.2d 673, the defendant hospital had a contract with the plaintiff and another physician to act as the hospital's radiologists. The board of directors made a decision to close its radiology department and terminated its agreement with the plaintiff because it entered into an agreement with the other physician to be the hospital's sole radiologist. (Id. at p. 675.) Relying on the reasoning in Blank v. Palo Alto-Stanford, supra, 234 Cal.App.2d 377, on appeal the court found the defendant was entitled to operate its radiology department as a closed staff even though it excluded the plaintiff. The court summarily rejected the plaintiff's complaint that the closed staff operation unlawfully interfered with his right and that of his patients to select a radiologist of their own choosing. "The interference resulting from the closed staff operation of which [the plaintiff] complains is reasonable." (264 Cal.App.2d at p. 677.)
Plaintiffs claim Letsch is also distinguishable because again there were insufficient positions available after closure of the department to offer positions to all the physicians. However, what is truly significant in Letsch is the fact plaintiff was not offered the option to be the sole radiologist providing services to the hospital when the radiology department was closed. Yet, the court had no trouble finding the closure decision was justified.
In Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d 368, the court considered the rights of a physician to practice in a closed department. In Lewin, the defendant's dialysis unit was operated on a closed staff basis. The plaintiff requested the defendant grant him privileges in the dialysis unit. The defendant declined to do so, and elected to maintain its closed staff system. The plaintiff was afforded a hearing on the issue, and made a presentation to the defendant's executive committee of the medical staff association. The committee recommended maintaining the closed staff system and the defendant's board of trustees approved the recommendation. (Id. at pp. 376-380.)
Plaintiffs correctly note Lewin is distinguishable from their case, since it did not involve a decision by the hospital to close a department, but rather a decision to maintain a closed department. However, the case is relevant for the court's broad statement concerning the right of a hospital to close a department in spite of the impact on the practicing physicians.
The effect of closure of a department on the physicians involved was also considered in Centeno v. Roseville Community Hospital, supra, 107 Cal.App.3d 62. In Centeno, the plaintiff was a partner in a group that was granted an exclusive contract to provide radiology services to defendant's hospital. The plaintiff had a falling out with the other members of the partnership and left. The defendant then refused to permit the plaintiff to use its radiology facilities because it had an exclusive contract with the remaining partners. The plaintiff sued, claiming the hospital could not deny him privileges to use the radiology facilities. (Id. at p. 66.) The trial court and Court of Appeal disagreed.
Plaintiffs contend Centeno is again distinguishable because the plaintiff in Centeno was excluded from the radiology department when he voluntarily left the group that had the exclusive contract with the hospital, rather than as the result of the hospital's decision to close the department. Therefore, plaintiffs argue there was nothing about the circumstances of the case which reflected adversely on the plaintiff's qualifications. However, again there is nothing in Centeno which suggests the outcome would have been different if the hospital's decision had met plaintiff's definition of adverse reflection on the professional qualifications of the excluded physician. To the contrary, the court quoted the broad language of Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d 368, when it discussed the right of a hospital to close or maintain the closure of a department.
Finally, Redding v. St. Francis Medical Center, supra, 208 Cal.App.3d 98, addressed the rights of physicians who lose their staff privileges as the result of the closure of a department in a hospital. In Redding, the defendant hospital was concerned about the quality of heart bypass surgery at its hospital because of an unacceptably high mortality rate and other problems very similar to those present in plaintiffs' case. As a result, the hospital decided to go from an open-staffing system, to a closed program. The plaintiffs were surgeons who had performed bypass surgeries at the hospital with a very low mortality rate. The court noted "[t]he proposed change was openly discussed at St. Francis during early 1988." The decision to close the department was made in June 1988. Both plaintiffs declined to be the surgeon in charge of the new closed department, and were subsequently notified they would no longer be able to perform bypass surgery at defendant's hospital. (Id. at pp. 101-103.)
In upholding the trial court's determination that the defendant could close the heart bypass surgery department, the court first noted the decision in Anton (Anton v. San Antonio Community Hosp., supra, 19 Cal.3d 802) did not preclude a hospital from ever taking any action which could affect a physician's hospital privileges without an adjudicatory hearing.
"The California Courts have protected physicians from unreasonable and arbitrary exclusion from hospital staffs....
"
"There is, however, a definite distinction in the case law between the intentional actions of a hospital directed specifically toward the exclusion of a particular physician or groups of physicians, and the actions of a hospital which may, as a practical matter, result in the exclusion of individual practitioners but were undertaken for less personally directed reasons. Cases in the first category have protected physicians; cases in the latter category have often balanced the equities in favor of the hospitals.
"
"Thus it may be seen that the 'property right' of a physician in hospital staff privileges is subject to protection in some contexts but not in others...." (Redding v. St. Francis Medical Center, supra, 208 Cal.App.3d at pp. 103-105.)
Plaintiffs contend Redding is distinguishable because the two plaintiffs were extended an opportunity to be the surgeon in charge of the new closed department. Thus, there is no evidence the hospital's decision to close the heart surgery program was directed at a particular physician or group of physicians. The facts of Redding belie plaintiffs' argument.
First, it is significant that one of the primary reasons the defendant hospital in Redding considered closing its heart surgery program was a quality of care issue--an unacceptably high mortality rate. Although the plaintiffs' mortality rate was very low, some or all of the other surgeons who performed heart surgery at defendant hospital must have been experiencing problems for the overall program to experience a higher than expected mortality rate. Yet the court had no problem finding the closure was the result of a valid policy decision (quasi-legislative) and not directed at any specific individual.
Second, although the opinion indicates both of the plaintiffs in Redding were offered the opportunity to be in charge of the new heart surgery program, it does not indicate they were to simultaneously occupy the position. The logical inference is that one, and then the other was offered the position. Thus, if one had accepted the position, the other would necessarily have been excluded. This fact undercuts plaintiffs' claim that Redding is inapposite because it involved a situation where the plaintiffs were offered a position and declined. In addition, once the plaintiffs in Redding declined the director position, there is no evidence they were offered a subcontract which would have allowed them to continue to practice at the hospital.
When a hospital department is going through the process of closure, the end result will be to either increase or decrease the number of physicians, or have their numbers remain the same. Regardless of the outcome, it is quite possible that any individual physician will not be offered a subcontract. In these times, when corporate change is so common, the fact an incumbent physician is not offered a subcontract by the incoming corporation does not necessarily reflect on his or her competence. In any job search where there are a limited number of positions, there can only be so many successful applicants. For the unsuccessful ones, their failure to receive an offer may not reflect favorably on them; however, it does not necessarily reflect negatively.
Plaintiffs urge us to draw a line based on how they claim some nebulous public perceives a physician, following his or her failure to be offered a subcontract after closure of a department. They claim the only situation where a hospital may legally close a department without all department members receiving subcontract offers is when the department is downsized. Apparently they believe this scenario somehow softens the impact on a physician's reputation. Simply put: plaintiffs will never be satisfied short of a complete pairing of physicians with newly created positions following closure of a department. However, a judicial pronouncement of a rule requiring a hospital to do as plaintiffs suggest smacks of court meddling in hospital administration, a strongly disfavored practice. (See Lewin v. St. Joseph's Hospital of Orange, supra, 82 Cal.App.3d at p. 385.) Plaintiffs want us to give them insurance not available to the vast majority of the working public-absolute job security. This, we decline to do.
We conclude that Memorial Hospitals' decision to close the anesthesiology department was quasi-legislative, since it was not directed at any specific physician or group of physicians. Rather, it was based on a genuine concern about the overall function of the anesthesiology department and directed at improving the quality of patient care provided by that department. Further, we expressly reject any inference in Mateo-Woodburn that a hospital has a legal obligation to offer an incumbent physician a position in a closed department as a precondition to finding a closure decision is quasi-legislative rather than adjudicative.
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IV. Adequacy of the closure procedures
Having found Memorial Hospitals' decision to close the anesthesiology department was quasi-legislative, we next consider plaintiffs' other assertions of error, which are two-fold. First, they contend the procedure by which Memorial Hospitals closed the anesthesiology department was so fundamentally flawed and unfair that it did not satisfy the requirements of a valid quasi-legislative decision. Second, plaintiffs argue the trial court erred when it failed to consider the closure decision as an "integrated whole."
A. Standard of review*
The appropriate level of judicial review of Memorial Hospitals' decision to close the anesthesiology department is that which is applied to the quasi-legislative decision of any administrative agency. (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at p. 384.) We stated the standard of review for these decisions in Mateo-Woodburn, supra, 221 Cal.App.3d 1169:
"[A] court will not set aside a quasi-legislative or administrative decision of a nonadjudicatory nature 'unless it is substantively irrational, unlawful, contrary to established public policy, or procedurally unfair.' [Citations.]" (Id. at p. 1183.)
There are two assumptions implicit in this standard. First, we apply the same standard of review as does the trial court. Therefore, on appeal we do not give any deference to the trial court's ultimate conclusion.
Second, although we review de novo a quasi-legislative decision, the standard is one of extreme deference. The reason for this deference is the presumed specialized knowledge and experience of the administrative body making the decision. (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at pp. 384-385.) The need for this deference is especially appropriate to the decisions of a hospital's governing board which may affect the quality of patient care:
"Judges are untrained and courts ill-equipped for hospital administration, and it is neither possible nor desirable for the courts to act as supervening boards of directors for every nonprofit hospital corporation in the state.... [I]n reviewing the rule-making or policy-making decisions of the governing board of a nonprofit hospital corporation, the court must guard against unduly interfering with the board's autonomy by substituting judicial judgment for that of the board in an area where the competence of the court does not equal that of the board. [Citations.]" (82 Cal.App.3d. at p. 385.)
Additionally, the degree of deference we accord a quasi-judicial decision is inherent in the term "substantive irrationality." "Substantive irrationality is equivalent to 'arbitrary, capricious, or entirely lacking in evidentiary support'; procedurally unfair is the same as 'failed to follow the procedure and give the notices required by law.'" (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at pp. 385-386, italics added.) Thus, the standard of review of a quasi-legislative decision is even more deferential than the substantial evidence standard. "It follows that review is not under Code of Civil Procedure section 1094.5, nor, on judicial review, is either the substantial evidence test or independent judgment test applied." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1183; see 2 Childress & Davis, Federal Standards of Review (2d ed. 1992) § 15.04, pp. 15-21-15-22.)
B. Analysis*
The trial court concluded: "The action to close the Department of Anesthesia was quasi-legislative, reasonable, rational, lawful, and in conformity with public policy. It was not arbitrary, capricious, or entirely lacking in evidentiary support." As a factual predicate to this conclusion the court found, notwithstanding his testimony to the contrary, that: "Dr. Abadir did make the statement in his report regarding 'high complication rate in young healthy patients.'" Further, the court found that if Dr. Shouse did make a misstatement concerning Dr. Abadir's findings, it was not a material misrepresentation and not significant. The court also found the decision to close the anesthesiology department was the result of "an extremely long and open process," with fair notice having been given to plaintiffs.
1. Public policy*
Beginning with the public policy aspect of the standard of review first, it is clear there was no violation of public policy in the procedure by which the anesthesiology department was closed. As described earlier at length, courts have consistently held there is no violation of public policy when a hospital makes a quasi-legislative decision to close a department. This is true even if the decision has an adverse impact on an individual physician or group of physicians. To the contrary, the courts have recognized the need to uphold the right of a hospital to close a department when it is deemed to be in the best interests of the patients served by the hospital.
"It is important, we believe, to remember that [the hospital] is attempting to redress a problem area in its medical care, and that it may in the future, after experience, refine the new program or completely redefine the new program. Public policy compels this court to protect [the hospital's] right to do just that in carrying out the purpose for which it has been established, without being 'locked in' to a system which may no longer, at some point in time, meet current patient needs." (Redding v. St. Francis Medical Center, supra, 208 Cal.App.3d at p. 108.)
The trial court dismissed plaintiffs' cause of action for restraint of trade and found against plaintiffs on the cause of action based on tortious interference with professional business relationships. Plaintiffs have not appealed these rulings, and in fact, Dr. Major has conceded these findings, along with the court's finding of no civil conspiracy, are not in issue in this appeal.
Further, plaintiffs have not identified any other public policy violated by Memorial Hospitals in the closure decision. However, Dr. Freeman and the amicus curiae brief of the California Medical Association (CMA) suggest the closure decision is contrary to the public policy that substandard performance by a physician should be addressed through the peer review process. They argue this policy benefits not only the individual physician, but also the public by ensuring the highest standards of practice are maintained in health care.
The argument forwarded by Dr. Freeman and the CMA presupposes the decision to close the anesthesiology department was merely a pretext for eliminating specific physicians--namely plaintiffs. Therefore, their argument is undermined by our determination that the decision was not directed at any specific individual, but rather a valid quasi-legislative decision aimed at ridding the anesthesiology department as a whole of the problems that plagued it. 5
2. Procedural fairness*
This brings us to plaintiffs' claim that the process by which Memorial Hospitals closed the anesthesiology department was procedurally unfair. Although previously stated, it bears repeating that "when the action is quasi-legislative, no particular notice and hearing is required." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1186.) Thus, an administrative agency is not limited to consideration of evidence provided at a particular place and time or in a particular manner.
"If a municipality can grant exclusive common carrier privileges without violating the due process clause, a hospital should be able to grant an exclusive contract of the nature of the contract in question.
"The contention that a hearing is required is untenable. We could not give serious consideration to the demand that before a public contract is awarded, an evidentiary hearing must be held so as to afford all potentially interested persons an opportunity to contest the award. Yet such a contention is exactly what plaintiff advances here." (Centeno v. Roseville Community Hospital, supra, 107 Cal.App.3d at pp. 75-76.)
Despite the clear state of the law on this subject, plaintiffs contend our decision in Mateo-Woodburn, established a "test" for procedural fairness in a closure decision. They claim this test includes a requirement for open meetings, opportunities to comment and public presentation of the various options the hospital is considering. Plaintiffs' argument is based on a misinterpretation of our holding in Mateo-Woodburn.
It is true that we detailed the steps the hospital took to inform the physicians in Mateo-Woodburn that closure of the anesthesiology department was contemplated. However, we did not suggest the procedures employed by the hospital in Mateo-Woodburn were the only ones which would suffice or even that they were required by law. To the contrary, we specifically restated the general rule that no hearing is required. "[The plaintiffs] claim they did not receive proper notice and a hearing. Again they are confusing an adjudicatory proceeding with quasi-legislative action. As stated above, when the action is quasi-legislative, no particular notice and hearing is required. [Citation.]" (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1186.)
In any case, the trial court's finding that the decision to close the anesthesiology department was a long and open process which provided plaintiffs fair notice is supported by substantial evidence. The plaintiffs were informed as early as May 1990, that an ad hoc subcommittee had been formed to look into complaints about the anesthesiology department. In August 1990, Dr. Major requested a meeting of all anesthesiologists to discuss the potential impact of closure of the department-a meeting no one attended except him. The members of the anesthesiology department were informed the MEC had recommended consideration be given to closing the department the day after the recommendation was made. Dr. Major was a member of the MEC and therefore aware of the discussions that occurred in that committee concerning closure. In fact, Dr. Major provided his input to Memorial Hospitals on the subject of department closure prior to the MEC's recommendation. Finally, like the plaintiff in Mateo-Woodburn, Dr. Major was afforded an opportunity to present a counter-proposal to the board of governors prior to its decision to award the anesthesia services contract to Gould.
Additionally, plaintiffs were informed when the RFP was released, when responses were received, and who were the members of the RFP evaluation subcommittee. Dr. Freeman testified that although he was aware closure was being considered and informed of the progress of the RFP, he did not understand what an RFP was or the potential significance of the action to him. In other words, Dr. Freeman claimed no one ever specifically notified him that closure of the anesthesiology department and award of an exclusive contract for anesthesia services could result in loss of his privilege to practice in Memorial Hospitals. However, the fact plaintiffs may not have fully understood what impact the closure decision would have on them does not mean they were denied adequate notice the decision was being contemplated. Nor does it mean they were denied an opportunity to determine what the decision would mean to them. Although plaintiffs' failure to inquire about the ultimate objective of closure of the anesthesiology department does not constitute waiver, it does blunt any claim the procedure was unfair.
Plaintiffs highlight the problems and misrepresentations concerning the exact nature of Dr. Abadir's report as support for their claim that the procedure used to close the anesthesiology department was unfair. Dr. Major claims this report and the characterization given to it by Dr. Shouse when he reported to the ad hoc subcommittee and the MEC served as the "linchpin of the entire closing process." Plaintiffs overstate the significance of this report.
First, the trial court specifically found Dr. Abadir's report did include a statement that his review had detected a high complication rate in young, healthy patients. Thus, the court resolved the credibility issue in favor of Dr. Shouse. In assessing whether there is substantial evidence to support a court's factual finding, the credibility of a witness "is the exclusive province of the trial judge or jury to determine ...." (People v. Jones (1990) 51 Cal.3d 294, 314.) Applying this standard, there was substantial evidence to support the trial court's determination that there was no misrepresentation by Dr. Shouse concerning Dr. Abadir's finding.
In addition, even if Dr. Shouse did misrepresent that the review was conducted by the CSA versus a private physician, there was substantial evidence to support the court's finding that any such misrepresentation was inconsequential. It must be remembered the ad hoc subcommittee had been formed to look into problems experienced with the operation of the anesthesiology department before Dr. Abadir conducted his review. Moreover, although cited as evidence of one of the problems in the department, it was by no means the only or even the most serious problem. Aside from the results of Dr. Abadir's review, the MEC was provided substantial evidence of problems in the anesthesiology department including other quality of care issues, inappropriate behavior, personality conflicts, and scheduling. No evidence was presented that, but for the report of Dr. Abadir's review, the MEC would not have recommended closure of the department or that Memorial Hospitals would not have made the decision to do so. To the contrary, the testimony of those involved in the decision indicated they had concerns about the operation of the anesthesiology department independent of and predating Dr. Abadir's review.
Plaintiffs also claim the procedural unfairness of the closure decision is demonstrated by the statistical report generated by Catherine Martin, the manager of Memorial Hospitals' quality assurance department. In June 1990, at the request of Dr. Deos, Martin, a member of the ad hoc subcommittee appointed to look into problems in the anesthesiology department, prepared a summary of all the cases reviewed within the anesthesiology department in the previous two and one-half years. The report purported to compare each anesthesiologist with the others in the department. The anesthesiologists involved were not identified by name, but rather assigned a letter. However, at the time of trial Martin was unable to identify with any degree of certainty which letter referred to which anesthesiologist because the key she previously prepared had been destroyed.
Plaintiffs contend this summary was seriously flawed and misidentified the anesthesiologists who had a higher than normal rate of complications as Drs. Turner and Major. Therefore, the decision to commission Dr. Abadir to conduct a review of the anesthesiology department which was based on the results of this statistical summary was unfair and unwarranted. However, any flaws in the statistical summary prepared by Martin had an insignificant impact on the decision to close the department.
First, Martin was asked to prepare the statistical summary after the ad hoc committee had been formed because of concerns by the MEC about the operation of the anesthesiology department. Second, regardless of the basis for seeking a quality review by Dr. Abadir, it was completed, and it was the results of his review that were reported to the MEC. Third, the results of Martin's summary were presented to plaintiffs on July 9, 1990, and based on their expressed concern with the validity of the statistics, Martin made further calculations. Fourth, it must again be emphasized that the decision to close the anesthesiology department did not hinge on the results of Dr. Abadir's review, but was based on the overall problems in the department.
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3. Closure process as an "integrated whole"
Quoting our language in Mateo-Woodburn, 6 plaintiffs argue the trial court erred because it failed to consider the steps in the closure of the anesthesiology department as an "integrated whole." Plaintiffs claim that in accordance with Mateo-Woodburn, Memorial Hospitals' legal responsibility extended to the selection of the subcontractors by Gould because the terms of the subcontracts were "'part of the [hospital's] administrative decision.'" (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1187.) Plaintiffs claim the trial court did not consider the closure decision as an integrated whole, but "artificially divided" it into distinct phases. They argue the court considered the closure of the anesthesiology department in three distinct phases: Memorial Hospitals' decision to close the department; the award of the anesthesiology services contract to Gould; and the selection of subcontractors by Gould. Plaintiffs argue this procedure resulted in minimization of the impact of the irregularities in each separate phase, allowing the court to conclude the process as a whole was fair. Additionally, plaintiffs argue that somehow this procedure contributed to the trial court's failure to recognize that Medical Hospitals had a legal duty to ensure subcontracts were offered to plaintiffs, even though Gould did not. Plaintiffs are incorrect on both counts.
Initially, we recognize plaintiffs' argument that the closure process must be considered as an integrated whole, is akin to claiming it must be reviewed for cumulative error. In other words, they argue the court failed to consider the cumulative impact of problems in each phase of the overall process on the fairness of the closure decision. However, implicit in this argument is the assumption that errors occurred in each phase of the process. The only rational way to make this determination is to do exactly what the trial court did: consider each discrete step in the process separately. Having done this, the court found no error in each step of the process. Therefore, it is difficult to understand how the court could have erred in failing to consider the cumulative effect of the absence of error in each phase of the closure process on the overall decision to close the department.
Second, to the extent plaintiffs' claim that the closure decision, including the selection of subcontractors by Gould, implies the existence of a conspiracy or sub rosa agreement between Memorial Hospitals and Gould to exclude plaintiffs, we reject it. The trial court specifically found there was no conspiracy between Memorial Hospitals and Gould to discriminate against plaintiffs or exclude them from the anesthesiology department. Plaintiffs have not appealed this finding, and therefore, are bound by it.
Third, it is important to recognize the context in which we discussed the requirement to consider the closure process as an integrated whole in Mateo-Woodburn. The passage quoted by plaintiffs is from our discussion of the plaintiff's claim in Mateo-Woodburn, that the terms of the subcontracts offered them were unfair and "Draconian." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1186.) Based on the fact the defendant hospital had contractually reserved the right to review and approve the form of any subcontract offered, we concluded the terms of the contract were an integral part of the closure decision. (Id. at p. 1187.) It was in this context that we stated the closure process was to be considered as an integrated whole. Thus, we held the terms of the subcontracts would be reviewed according to the same deferential standard as the rest of the closure process and would be upheld unless it was substantially irrational. (Ibid.)
However, the holding in Mateo-Woodburn should not be read to mean a hospital retains responsibility for every part of the subcontracting process by the contractor who receives an exclusive contract. In Mateo-Woodburn, we found the terms of the subcontracts were reviewable as part of the closure process because the hospital contractually retained the right to review them as part of its contract with the contractor. However, the opinion does not state that the procedure by which the contractor decided which physicians it would offer subcontracts was reviewable by the court as an integral part of the closure decision.
Reviewing the facts in plaintiffs' case, it is apparent Memorial Hospitals attempted to extricate itself entirely from the subcontractor selection process. First, the RFP it issued did not dictate the manner in which a bidder would satisfy the requirements of the contract. It did not dictate the number of anesthesiologists, who they would be, or whether they were required to be directly employed by the bidder or independent contractors. 7 It only required the anesthesiologists who were to provide services under the contract be licensed in California, be certified or eligible for certification by the American Board of Anesthesiology, and obtain medical staff membership at Memorial Hospitals. The RFP required any bidder to list the names of proposed staff, including anyone who had agreed to enter a subcontract with the bidder in the event it was awarded the contract. However, the only specified criteria which Memorial Hospitals stated was required was board certification or board eligibility.
There is nothing in the RFP or final contract which dictates what criteria Gould had to use in selecting subcontractors or direct employees, or the manner in which they should be selected. 8 Further, Memorial Hospitals rejected Gould's initial proposal which would have required Memorial Hospitals to select the independent anesthesiologists who would be offered subcontracts under its proposal. Gould was specifically required to take responsibility for selecting the independent anesthesiologists with whom it would subcontract. Moreover, the evidence supports the trial court's finding that after award of the contract to Gould, Memorial Hospitals did not direct to whom Gould should or should not offer a subcontract.
Neither did Memorial Hospitals play any part in the development of criteria used by Gould in selecting subcontractors or suggest who the members of the subcontractor selection committee should be. When Gould sought advice on how to select subcontractors, Memorial Hospitals suggested the selection process should be objective and open to all current members of the anesthesiology department. The criteria for selection of the subcontractors was developed by Dr. Imanaka after discussion with members of the selection committee. After the members of the selection committee scored each candidate individually, it was Dr. Imanaka who compiled the total scores and decided how to rank the applicants. Memorial Hospitals played no part in this process and there is no evidence it ever saw the completed score sheets. The only apparent connection between the subcontractor selection committee and Memorial Hospitals was that it allowed the committee to meet in its facility. Thus, there was sufficient evidence to support the trial court's finding that the subcontractor selection committee did not act on behalf of Memorial Hospitals.
Based on the express terms of the RFP and the evidence presented at trial, we conclude that review of Memorial Hospitals' quasi-legislative decision to close the anesthesiology department does not include the process by which Gould selected the subcontractors. That does not mean this process is immune from review. However, this review is much more circumscribed. The court's role in reviewing an employment decision is limited to determining whether it was based on unlawful criteria:
In addition to the discrepancies in the selection process, plaintiffs highlight the personal animosity of Dr. Imanaka and other members of the selection committee toward them, and Dr. Imanaka's incorrect statement to the selection committee that a CSA review had found plaintiffs' work to be substandard. There is no question the selection process was not a model of consistency and could have been done better or differently. However, it is not the role of a reviewing court to question the wisdom of an employment decision. "[T]he factual dispute at issue is whether discriminatory animus motivated the employer, not whether the employer is wise, shrewd, prudent or competent. [Citations.]" (Fuentes v. Perskie (3d Cir. 1994) 32 F.3d 759, 765.)
The evidence does not support a conclusion that plaintiffs were not selected as subcontractors based on consideration of unlawful criteria. As explained earlier, plaintiffs have failed to establish that any action taken by either Memorial Hospitals or Gould was motivated by racial animus against Dr. Turner. Neither have they identified any other unlawful criteria used by Gould in its decision to not offer them subcontracts. Therefore, plaintiffs' claim that the subcontractor selection process improperly excluded them is without merit.
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V. Medical staff bylaws*
1. Medical staff bylaws as a binding contract
Plaintiffs claim the trial court erred when it found Memorial Hospitals did not violate the terms of the medical staff bylaws when it closed the anesthesiology department. Although not explicitly stated, it is apparent plaintiffs' contention goes to two of their causes of action. First, whether Memorial Hospitals' failure to comply with the terms of the medical staff bylaws constituted a breach of contract. Second, even if the medical staff bylaws did not constitute a binding contract, Memorial Hospitals' failure to comply with them renders the closure of the anesthesiology department to be procedurally unfair.
Memorial Hospitals' counter-argument is that any failure to comply with the terms of the medical staff bylaws could not be the basis for a claim of breach of contract because they did not constitute a binding contract between it and plaintiffs.9 However, Memorial Hospitals claim that regardless of whether the bylaws constitute a binding contract, the procedure by which it closed the anesthesiology department complied with their provisions.
The issue of whether medical staff bylaws constitute a binding contract is one of first impression in California. Neither parties' briefs nor independent research have identified any case in which a California court has determined whether medical staff bylaws constitute an enforceable contract between the hospital and the physicians on its medical staff.
Again, although interesting, we decline to resolve this issue. Regardless of whether the medical staff bylaws constitute an enforceable contract, Memorial Hospitals was obligated to comply with them in closing the anesthesiology department. (See Janda v. Madera Community Hosp., supra, 16 F.Supp.2d at p. 1186; Gianetti v. Norwalk Hosp. (Conn. 1989) 557 A.2d 1249, 1254-55; Robles v. Humana Hospital Cartersville (N.D.Ga. 1992) 785 F.Supp. 989, 1002.) The failure of Memorial Hospitals to follow the procedures for closure set forth in the medical staff bylaws is part of the determination of whether the procedures were unfair, or not in compliance with that required by law. As discussed earlier, this is an integral part of the judicial review of a quasi-legislative decision. And, as we discuss below, there is ample evidence to support the trial court's finding that the medical staff bylaws were followed. Thus, their status as a binding contract is irrelevant.
Compliance with the medical staff bylaws
In a related argument, plaintiffs contend Memorial Hospitals failed to comply with the medical staff bylaws in making the decision to close the anesthesiology department. As previously explained, regardless of whether the medical staff bylaws constituted a binding contract between Memorial Hospitals and plaintiffs, Memorial Hospitals was required by law to comply with the medical staff bylaws adopted by it. Consequently, if it failed to comply with the provisions of the bylaws concerning the closure of a department, the decision to close could be considered both illegal and procedurally unfair.
The court found with respect to the provisions of the medical staff bylaws, that sections 7.6-1 and 13.10 did require the MEC, not the medical staff as a whole, to review related quality of care issues before a decision was made by the board of directors to close a department. The court found the bylaws did not specify any particular format or method of conducting the required review and, therefore, it only need be reasonable and adequate. The court found the MEC did discuss related quality of care issues at its May 26, 1992 meeting in sufficient detail and was reasonable and adequate. Therefore, the court concluded the requirements of the medical staff bylaws had been met.
Plaintiffs argue the "review" required by sections 7.6-1 and 13.10 of the bylaws prior to a decision to close a department contemplates more than the mere "discussion" engaged in by the MEC. They claim the MEC's review was also deficient because it focused on prospective quality of care issues that may arise if an exclusive contract was awarded, rather than on existing quality of care issues that gave rise to consideration of department closure. Plaintiffs contend that if the MEC had undertaken a "comprehensive" review of the quality of care provided by the anesthesiology department, it would have determined the plaintiffs were performing their jobs capably. Further, the review would have resulted in "informed recommendations for improvements." Additionally, plaintiffs contend the review did not take place prior to the date the decision was made to close the department. Rather, it was not undertaken by the MEC until the decision had already been made by the board of directors. Plaintiffs' argument is not supported by the law or the facts.
Plaintiffs' argument concerning the adequacy of the review conducted by the MEC is in reality a claim that it could have been done better. As the trial court correctly found, the bylaws do not define precisely what the review of related quality of care issues must entail. Neither do they specify a procedure or format for the review. The bylaws only require the MEC10 undertake a review and "make recommendations to the Board of Directors regarding quality of care issues related to exclusive arrangements for Physician and/or professional services, prior to any decision being made ...." (§ 13.10.) The MEC clearly understood this requirement. The minutes of its meeting on May 26, 1992, indicate it performed this review and did provide input to the board of directors.
"The Medical Staff Bylaws requires that input from the Medical Executive Committee regarding quality of care issues be received when a change in exclusive contracts is contemplated. Questions arose as to how to evaluate if closing the Department improved quality of care. Were the issues of concern adequately resolved by the contract? It was explained that a quality assessment process was included in the contract and that reports would be made to the Medical Executive Committee on a quarterly basis.
"Recommendation was made and approved unanimously for support of the anesthesia contract as proposed."
Thus, there was substantial evidence to support the trial court's finding that the MEC did conduct a review as required by the medical staff bylaws. The fact the review was in the form of an informal discussion, does not mean it was not conducted. It bears emphasis that our role in reviewing a quasi-legislative decision is not to determine if it could have been done better, or more comprehensively, but whether it was so unreasonable as to be deemed arbitrary or capricious.
"It is not our role to pick and choose among various alternatives and to determine exactly what factors the hospital administrators must consider. Even if alternative solutions would equally satisfy the need for radiology services, we must find that unless the action complained of can be seen to be violative of the previously mentioned standard as being unreasonable, arbitrary or capricious, it is valid. [Citation.]" (Centeno v. Roseville Community Hospital, supra, 107 Cal.App.3d at p. 73; accord Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1185.)
Moreover, the MEC's review focused on precisely the question identified in the medical staff bylaws for its consideration: the quality of care issues related to the award of an exclusive contract in a previously open department. Logic does not support plaintiffs' argument that the quality of care review contemplated by the medical staff bylaws was not prospective, but rather retrospective in nature. This argument confuses the identification of existing quality of care issues which spurred the MEC to consider closure, and the quality of care issues related to the actual award of an exclusive contract to provide anesthesia services. Having once determined there were quality of care issues warranting closure of the department, it would not make sense to require the MEC to reconsider those same issues. Thus, the reasonable interpretation of the review requirement in the bylaws is that it related to whether the closure decision would address or remedy the problems that had previously been identified. That was precisely the focus of the MEC's discussion at the May 26th meeting.
Further, plaintiffs' claim that the quality review was not completed until after the decision to close the department was made is not supported by the evidence. As plaintiffs concede, the decision by the board of directors to award the exclusive contract to Gould was made on June 1, 1992. The board made the decision after being informed of the recommendation of the MEC and the Professional Practices Committee and after Dr. Major was given an opportunity to present his alternate proposal. Although, the minutes of that meeting do not reflect the board specifically voted to close the department, the decision to award an exclusive contract to Gould to provide anesthesia services to Memorial Hospitals was tantamount to that decision. Thus, plaintiffs' claim that the quality review by the MEC did not precede the decision to close the department is without merit.
VI. Memorial Hospitals' legal obligation to ensure plaintiffs received a subcontract*
Plaintiffs' claim that Memorial Hospitals was legally obligated to ensure they received a subcontract when the anesthesiology department was closed is based on their interpretation of our decision in Mateo-Woodburn. As explained in Part III, this interpretation of our holding in Mateo-Woodburn is contrary to California law. Therefore, we find Memorial Hospitals had no legal obligation to ensure plaintiffs received a subcontract from Gould after it made a legitimate, quasi-judicial decision to close the anesthesiology department.
VII. Entitlement to attorney fees*
Memorial Hospitals claims the trial court erred when it denied its motion for attorney fees pursuant to Code of Civil Procedure section 1021.5.11 Memorial Hospitals contends the defense of the suit filed by plaintiffs resulted in a significant benefit to a large class of persons, namely those individuals who sought treatment at its facilities. Memorial Hospitals argues this significant benefit involved the important public interest in receiving adequate anesthesia services. It also asserts the attorney fees it incurred in defending this interest was disproportionate to the stake it had in the outcome of the litigation, thereby warranting award of attorney fees under section 1021.5. Memorial Hospitals asserts it had "little choice" but to defend the lawsuit in order to vindicate not only its rights, but also those of the public to receive high quality anesthesia services. We reject Memorial Hospitals' arguments.
[END OF PART NOT CERTIFIED FOR PUBLICATION]
A. Standard of review
A trial court's decision on whether attorney fees should be awarded under Code of Civil Procedure, section 1021.5, is reviewed for an abuse of discretion. (Ciani v. San Diego Trust & Savings Bank (1994) 25 Cal.App.4th 563, 571; accord Satrap v. Pacific Gas & Electric Co. (1996) 42 Cal.App.4th 72, 77.)
"The pertinent question is whether the grounds given by the court for its denial of an award are consistent with the substantive law of section 1021.5 and, if so, whether their application to the facts of this case is within the range of discretion conferred upon the trial courts under section 1021.5, read in light of the purposes and policy of the statute." (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1298.)
B. Analysis
In denying the motion for attorney fees the trial court made extensive findings, including: 1) defendants asserted their privilege to close a department in the hospital and contract with an outside provider as a defense to plaintiffs' suit; 2) any enforcement of a right or policy affecting the public only resulted secondarily or tangentially from the defense of the suit by defendants; 3) the record contained no evidence that a substantial part of the public benefited from defendant's successful defense of the litigation; 4) the record contained no evidence the operation of Memorial Hospitals' facilities improved since the anesthesia department was closed; 4) only the defendants, and not the general public benefited from having the right to exercise managerial discretion in closing departments; and 5) therefore, defendants were in the same position as any other private entity which prevailed in litigation which affected only its interests. The court further found the attorney fees incurred by defendants were not disproportionate to its stake in the outcome of the litigation, which expert testimony indicated was $2.7 million. The court also found this sum could have been trebled if it had found defendants had violated the Unruh Act.
Code of Civil Procedure section 1021.5 is a codification of the "private attorney general" doctrine which allows private individuals to recover attorney fees in lawsuits which enforce important public policies. (California Licensed Foresters Assn. v. State Bd. of Forestry (1994) 30 Cal.App.4th 562, 568-569.) The determination of whether attorney fees are recoverable under Code of Civil Procedure section 1021.5 is based on consideration of three criteria:
Memorial Hospitals' argument that its defense of plaintiffs' lawsuit affected a substantial public interest, i.e., high quality anesthesia care, is not persuasive. As the trial court recognized, Memorial Hospitals defended the closure of the anesthesiology department on the basis it was the result of a legitimate, quasi-legislative decision. It was on this basis that it argued revocation of plaintiffs' vested property right in medical staff membership was justified. Memorial Hospitals did not defend the action in order to vindicate any constitutional rights of the public in general. (See City of Fresno v. Press Communications (1994) 31 Cal.App.4th 32, 43-44; Planned Parenthood v. Aakhus (1993) 14 Cal.App.4th 162.) Rather, the interest which Memorial Hospitals sought to vindicate was its right to make a quasi-legislative, management decision concerning the operation of its facilities regardless of its impact on the practicing physicians.
Although Memorial Hospitals' motivation for exercising its discretion to close the anesthesiology department was to improve the quality of anesthesia services to its patients, that is not necessarily the reason it defended the lawsuit. As the trial court found, the outcome of the litigation underscored the right of Memorial Hospitals to make quasi-legislative decisions in an attempt to improve the quality of care it provided. It did not signify that Memorial Hospitals was successful in that endeavor.
There was no evidence presented that closure of the department did result in an improvement in anesthesia services or that closure was the only way this goal could be realized. The gravamen of the suit revolved around Memorial Hospitals' prerogative to decide how it would attempt to improve the quality of care it provided. This was a private interest on the part of Memorial Hospitals. Any improvement of the quality health care that may be realized as a result of the litigation is collateral to that private interest.
Additionally, there was ample evidence to support the trial court's finding that Memorial Hospitals had a significant interest in defending the suit. Its potential exposure to damages if the plaintiffs were successful in proving the closure process was defective was substantial. Its exposure was even greater if plaintiffs had been successful in proving Memorial Hospitals had unlawfully discriminated in violation of the Unruh Act. Therefore, we conclude the trial court did not abuse its discretion in denying Memorial Hospitals' request for attorney fees.
DISPOSITION The judgment is affirmed. Costs are awarded to Gould, and to Memorial Hospitals on the appeal. Costs are awarded to plaintiffs on the cross-appeal as against Memorial Hospitals only.
WE CONCUR:
DIBIASO, Acting P.J.
HARRIS, J.
* Pursuant to California Rules of Court, rule 976.1, this opinion is certified for publication with the exception of Parts I, II, IV-A, IV-B(1) and (2), V, VI, and VII.
1 Gould Medical Foundation and Gould Medical Corp., Inc. will be referred to collectively as "Gould."
2 "... In an 'open staff' system, all 'qualified' physicians with medical staff privileges are permitted to work at the Hospital in their respective medical departments. Under a 'closed system,' the hospital contracts with an 'exclusive provider' or particular physician group for certain medical services, thereby 'closing' the medical practice to other physicians who are not members or employees of the contracted physician group." (Janda v. Madera Community Hosp. (E.D. Cal. 1998) 16 F.Supp.2d 1181,1183; see Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1175.)
3 "[A] practitioner who temporarily takes the place of another." (Dorland's Illus. Medical Dict. (26th ed. 1990) p. 756.)
* See footnote *, ante.
* See footnote *, ante.
4 Dr. Barnette testified he talked to Dr. Major about a position as an independent anesthesiologist at Memorial Hospitals in March 1989. However, his interest ended when Dr. Freeman said he would not share any cases with him. On the other hand, Dr. Major testified one of the reasons he did not bring more independent anesthesiologists into the hospital was because the Gould anesthesiologists said they wanted to pick up the extra cases.
* See footnote *, ante.
* See footnote *, ante.
* See footnote *, ante.
5 In its amicus curiae brief on behalf of plaintiffs, the American Society of Anesthesiologists and the California Society of Anesthesiologists assert that Memorial Hospitals' closure decision implicated public policy because it involved the dominance of a large medical group, Gould, over a hospital because of its financial influence. They claim that protecting plaintiffs' individual rights would uphold the basic public policy of ensuring that quality of patient care overrides any financial considerations. We found ensuring the quality of patient care was the primary focus of Memorial Hospitals' decision to close the anesthesiology department in the first place. The fact plaintiffs and their amici believe the same interest could be served in a different manner does not render Memorial Hospitals' solution contrary to public policy.
* See footnote *, ante.
6 "The various steps involved in the process of moving from an open to a closed system cannot be segmented but are to be considered as an integrated whole." (Mateo-Woodburn, supra, 211 Cal.App.3d at p. 1187.)
7 The final contract did provide that anesthesia services would initially be provided by six Gould anesthesiologists and four independent anesthesiologists. However, this provision was not mandated by the RFP, but rather as the result of Gould's proposal.
8 The final contract did provide that any anesthesiologist or nurse anesthetist who was to provide anesthesia services had to be approved in writing by Memorial Hospitals. However, this provision was not limited to anesthesiologists with whom Gould entered subcontracts, but to anyone who would provide anesthesia services under the contract. Thus, this provision cannot reasonably be interpreted as an attempt by Memorial Hospitals to control the procedure or criteria by which Gould selected the independent anesthesiologists. Rather, considering the contract as whole, the provision is reasonably construed to be a means by which Memorial Hospitals ensured that anyone who was to provide anesthesia services under the contract met the general requirements set forth in other provisions of the contract, e.g., medical staff membership, licensure, and board certification or eligibility.
* See footnote *, ante.
9 In its amicus curiae brief in support of Memorial Hospitals and Gould, the California Healthcare Association also argues that medical staff bylaws do not create a contract between a hospital and its medical staff.
10 The express language of Section 13.10 states that the "Medical Staff" must review any proposal to close the department. However, the trial court found the MEC properly conducted the review and made a recommendation to the board of directors. Plaintiffs have not asserted this was error. In any case, the medical staff bylaws expressly provide for the MEC to represent and act on behalf of the medical staff in the intervals between medical staff meetings.
* See footnote *, ante.
* See footnote *, ante.
11 Code of Civil Procedure, section 1021.5 provides, in pertinent part:
"Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any...."
Strauss, Neibauer, Anderson & Ramirez and Mina L. Ramirez for Mitchell A. Major, Plaintiff and Appellant; Robert N. Meals for George Maurice Turner and Douglas E. Freeman, Plaintiffs and Appellants.
Sagaser, Hansen, Franson & Jamison, Daniel O. Jamison and Kristi R. Culver for Memorial Hospitals Association, William K. Piche and Marcus Shouse, Defendants and Appellants; and Trimbur, Davis & Clark and Gary S. Davis for Marcus Shouse, Defendant and Appellant.
Schuering, Zimmerman & Scully, Leo H. Schuering, Jr. and Lawrence S. Giardina for Gould Medical Foundation and The Gould Medical Group, Inc., Defendants and Respondents.
Hassard Bonnington and David E. Willett for Amicus Curiae on behalf of Plaintiffs and Appellants; California Medical Association, Catherine I. Hanson and Kimberly S. Davenport for Amicus Curiae on behalf of Plaintiffs and Appellants.
McDonough, Holland & Allen, Ann O'Connell and Mary Powers Antoine for Amicus Curiae on behalf of Memorial Hospital Association, Defendant and Appellant and Gould Medical Foundation and The Gould Medical Group, Inc., Defendant and Respondent.
When considering quality hospital care, three main interest groups generally come to mind: patients, physicians, and hospital administration. No one could seriously question that the primary goal of physicians and hospital administration is to provide quality medical care. Even so, that does not prevent disputes from arising between these groups, and even within an individual group. Such was the case here where various problems ultimately led to Memorial Hospitals' decision to change its anesthesiology department from an open staff system to a closed system with an exclusive provider.
The rub occurred when the new exclusive provider did not offer subcontracts to the three plaintiff physicians, all former members of the anesthesiology department's open staff. Plaintiffs sued based on multiple theories, including alleged violations of the Unruh Civil Rights Act, breach of contract, civil conspiracy, and tortious interference with plaintiffs' professional business relationships. Plaintiffs lost on all counts during a lengthy court trial, and this appeal followed. We affirm.
In the published portions of this opinion, we clarify our holding in Mateo-Woodburn v. Fresno Community Hospital & Medical Center (1990) 221 Cal.App.3d 1169 (Mateo-Woodburn). In doing so, we reject any inference that a hospital has a legal obligation to offer an incumbent physician a position in a closed department as a precondition to finding a closure decision is quasi-legislative rather than adjudicative. We also reject plaintiffs' claim challenging the exclusive provider's selection of subcontractors.
In the unpublished portions, we address plaintiffs' remaining claims, including the alleged violation of the Unruh Act, and find there was substantial evidence of compliance with the medical staff bylaws.
PROCEDURAL HISTORY On July 31, 1992, Dr. George M. Turner filed suit against Memorial Hospitals Association, dba Memorial Hospital/Medical Center Modesto and Memorial Hospital Ceres (collectively Memorial Hospitals), William K. Piche, Gould Medical Foundation, Drs. Kenneth Imanaka, Daniel E. Sucha, Douglas Diehl, Larry Todd, Bruce Gesson, and Does 1 through 30 (defendants). The complaint alleged seven causes of action: (1) violation of the Unruh Civil Rights Act; (2) injunctive relief to prevent interference with the right to practice a profession; (3) restraint of trade; (4) tortious interference with plaintiff's professional business relationships; (5) breach of contract; (6) defamation; and (7) civil conspiracy. On the same date, Drs. Douglas Freeman and Mitchell Major filed an identical complaint against the same defendants. Both complaints were subsequently amended to add Dr. Marcus Shouse and Gould Medical Group, Inc. 1 as defendants.
On September 30, 1992, the trial court denied plaintiff's request for a preliminary injunction, and on October 22, 1992, the two actions were consolidated for all purposes. On September 28, 1993, the court granted defendants' motion for summary adjudication with respect to the third cause of action, restraint of trade. Trial began on November 11, 1993, and the parties waived trial by jury. On the third day of trial, Dr. Gesson was dismissed as a defendant. On February 7, 1994, the trial court granted the defendants' motion for judgment under Code of Civil Procedure section 631.8 in favor of Drs. Diehl, Todd, and Sucha.
After posttrial briefing and argument, the court entered judgment in favor of defendants on all remaining causes of action. The court subsequently denied defendants' motion for attorney fees. Plaintiffs filed a timely appeal raising seven contentions: (1) the trial court erred when it found there was no violation of the Unruh Civil Rights Act; (2) the trial court erred in concluding the plaintiffs waived any objection to the procedure used by Memorial Hospitals to close the anesthesiology department; (3) the trial court erred when it found the decision to close the anesthesiology department was not directed at a particular physician or group of physicians; (4) the trial court erred in holding the process of closing the anesthesiology department was not arbitrary, capricious, contrary to established public policy or procedurally unfair; (5) the trial court erred in not considering the closure of the anesthesiology department as an "integrated whole"; (6) the process used to close the anesthesiology department did not comply with the provisions of the medical staff bylaws; and (7) Memorial Hospitals had a legal obligation to ensure plaintiffs were offered a subcontract to work in the closed department. Memorial Hospitals filed a cross-appeal claiming the trial court abused its discretion in denying its motion for attorney fees.
FACTUAL HISTORY During all relevant times, Memorial Hospitals was a nonprofit, private organization. It operated two hospitals in Stanislaus County, with its main facility in Modesto, and a smaller hospital in Ceres. The active medical staff of Memorial Hospitals consisted of 32 different subspecialties and was very involved in trauma, cardiac, orthopedic and general surgery. Memorial Hospitals had a chief executive officer as well as a board of directors made up primarily of lay people. The active medical staff was divided into 11 clinical departments, one of which was anesthesiology. Each department had a chairperson who served a two-year term and whose responsibilities included administration of the department, enforcement of the medical staff bylaws, and monitoring the quality of patient care.
The medical staff of Memorial Hospitals was governed by the provisions of the medical staff bylaws which provided "the professional and legal structure for Medical Staff operations, organized Medical Staff relations with the Board of Directors, and relations with applicants to and members of the Medical Staff." These bylaws provided for the creation of a number of committees, one of which was the medical executive committee (MEC). The MEC was composed of the officers of the medical staff and the department chairpersons. The MEC's responsibilities included making recommendations to Memorial Hospitals' board of directors, evaluating the medical care rendered to patients, as well as reviewing the qualifications, credentials and professional competence of medical staff members. The MEC was authorized to represent and act on behalf of the medical staff in the intervals between medical staff meetings. Another committee of the Memorial Hospitals' medical staff was the quality assessment committee (QAC). The QAC was responsible for identifying potential problems in patient care, referring the problems to the appropriate department for assessment and corrective action, and monitoring the results of quality assessment throughout the hospitals.
As a general rule, a physician was not entitled to exercise clinical privileges at the hospitals operated by Memorial Hospitals unless he or she had received appointment to the medical staff. Initial appointment was for no more than two years and was subject to a biennial review on the date of the physician's medical license renewal date. Once appointed to the medical staff, a physician was entitled to a hearing before his or her appointment or clinical privileges could be revoked, terminated or suspended. Article VII of the medical staff bylaws established the procedures required for such a hearing, including a mechanism for appealing any adverse decision. However, section 7.6-1(b) of the medical bylaws specifically exempted from the hearing requirements of Article VII: "[T]he termination of privileges following the decision determined to be appropriate by the Medical Staff to close a department/service pursuant to an exclusive contract ...."
Section 7.6-1 of the medical staff bylaws also provides for participation of the MEC in any decision to close a department in the hospitals:
"A decision by the Board of Directors to close or continue closure of a department/service pursuant to an exclusive contract shall not be made until a review by the Medical Executive Committee of the related quality of care issues pursuant to Section 13.10 and a recommendation of appropriateness of the closure, or continued closure as set forth below. The Board of Directors shall ratify the Medical Executive Committee's recommendation unless the Board of Directors makes specific written findings that the Medical Executive Committee's recommendation is arbitrary, capricious, anti-competitive, an abuse of discretion, not compatible with the Association's mission, goals and objectives, or otherwise not in accordance with the law."Section 13.10 specifically provides for involvement of the medical staff in any decision to close a department:
"The Medical Staff shall review and make recommendations to the Board of Directors regarding quality of care issues related to exclusive arrangements for Physician and/or professional services, prior to any decision being made, in the following situations: a) the decision to execute an exclusive contract in a previously open department or service; b) the decision to renew or modify an exclusive contract in a particular department or service; c) the decision to terminate an exclusive contract in a particular department or service."Memorial Hospitals' medical staff of approximately 500 physicians included approximately 100 who were affiliated with Gould. Gould was a California corporation which provided professional medical services and accounted for approximately 50 percent of the patient load and dollar volume at Memorial Hospitals. The physicians on the medical staff of Memorial Hospitals who were not affiliated with Gould were referred to as "independent." In September 1985, Gould formed its own anesthesiology department, and thus the anesthesiology department of Memorial Hospitals included both Gould and independent anesthesiologists. As a general rule, the independent anesthesiologists provided services for the independent surgeons and the Gould anesthesiologists provided services for the Gould surgeons, each group making their own schedule and functioning autonomously. However, occasionally the independent anesthesiologists would cover for their Gould counterparts and vice versa. This is commonly referred to as an "open" staff. 2
Drs. Major and Turner joined the medical staff of Memorial Hospitals as independent anesthesiologists in 1986, and Dr. Freeman joined as an independent in 1988. When Dr. Freeman became a member of the medical staff, there were five Gould anesthesiologists in the department: Drs. Imanaka, Sucha, Gesson, Todd, and Vanderwalker.
As early as May 1986, there were documented problems with the operation of the anesthesiology department of Memorial Hospitals. At a meeting of the department on May 12, 1986, an incident involving the failure of an anesthesiologist to respond appropriately to a scheduled emergency surgery was discussed. Over the next five years, there were numerous other documented incidents of anesthesiologists not responding in a timely manner. These included one time when an anesthesiologist failed to appear for a scheduled Cesarean section; a delay in obtaining an anesthesiologist for a patient with severe head trauma; and delays in scheduled surgery at the Ceres hospital due to lack of an anesthesiologist. Additionally, there were numerous incidents of difficulty in locating anesthesiologists who were on call. The delays in obtaining an anesthesiologist for Cesarean sections resulted in Memorial Hospitals not meeting the national standards for those deliveries.
There were also numerous documented incidents of problems with scheduling anesthesiologists. There were allegations made by both Gould and independent anesthesiologists that other anesthesiologists were manipulating the schedule for financial reasons. There were incidents of conflict between anesthesiologists' schedules, and miscommunication of scheduled vacations that resulted in gaps in coverage of scheduled surgeries. Drs. Major and Freeman were upset about often having to cover for Dr. Turner because he lived in Oakland.
Contributing to the scheduling problem was an insufficient number of independent anesthesiologists to cover all the surgery scheduled at both Memorial Hospitals' facilities. For example, at one point Dr. Major said he could not continue surgery because he was beginning to hallucinate due to fatigue. The shortage of anesthesiologists also resulted in the inability of the department to fill the OB/GYN department's request for epidural anesthesia services except on a case by case basis. The independent anesthesiologists claimed to have made efforts to recruit additional physicians beginning in January 1990. However, although on one or two occasions a new anesthesiologist would work for a short period of time, none of them stayed on a permanent basis. Additionally, some temporary anesthesiologists did not have acceptable credentials. One "locum tenens" 3 recruited by an independent anesthesiologist did not have his drug license because of prior incidents of drug abuse. The problems resulting from a shortage of anesthesiologists were also exacerbated because some of those who were available, including Drs. Major, Turner, and at least two Gould anesthesiologists, declined to provide anesthesia services for cardiac surgery.
The conflicts in scheduling often resulted in anesthesiologists being late for scheduled surgery, and one time Dr. Freeman did not show for a scheduled case because he was too tired to continue. Between 1986 and 1991, the problems of obtaining anesthesia services at Memorial Hospitals' facilities was discussed not only in meetings of the anesthesiology department, but also in meetings of the OB/GYN department, the orthopedic department, the QAC, and MEC.
Beginning in 1988, there was a long history of problems with narcotics accountability and documentation in the anesthesiology department. These problems were discussed at various staff meetings between August 1989 and March 1990. A new narcotics documentation procedure was implemented in April 1990, but problems with accountability and documentation of controlled drugs persisted into September 1990.
The minutes of the MEC meeting on October 23, 1990, indicate the narcotic documentation problem had been resolved. However, on June 28, 1991, the anesthesiology department was informed that some anesthesiologists were still not filling out the narcotics documentation correctly. Michael Spencer, the pharmacy director at Memorial Hospitals, stated that it took Dr. Freeman four to six months to comply with the new procedures, and Dr. Turner never did fully comply. In addition, a survey of the anesthesia carts conducted on November 6, 1991, found many of them unlocked and medication vials and/or syringes on the carts or in open drawers. A similar survey on January 24, 1992, revealed continuing problems with security and cleanliness of the anesthesia carts.
The failure to adequately document and account for narcotics was a serious problem for Memorial Hospitals. Failure to adequately account for narcotics posed a danger that they could be diverted and misused. In fact, there was an operating room (OR) nurse at Memorial Hospitals who was taking unused narcotics from the anesthesia carts and using them. In addition, failure to adequately account for controlled substances could result in the hospital losing its accreditation.
There was considerable evidence of other problems in the anesthesiology department. At a meeting of the orthopedic department in October 1986, concern was voiced about an anesthesiologist entering the OR in street clothes. Dr. Turner's clinical privileges were suspended in 1989 and 1991, when he allowed his Drug Enforcement Agency (DEA) drug certificate to lapse. In 1989, there were problems with anesthesia administered to two patients, ages 69 and 10.
The anesthesiology department was also dilatory in responding to requests to review issues referred by the QAC. On June 16, 1990, the QAC sent a letter to the anesthesiology department requesting that it respond with a plan to address six reviews in Dr. Turner's file regarding delays in providing anesthesia, and personality conflicts. The department did not respond until October 2, 1990. It stated Dr. Turner had been counseled on the incident where he responded to a call with alcohol on his breath, and the personality conflicts he was having with other staff members. In March 1991, the QAC discussed the fact the anesthesiology department was delinquent in reviewing charts referred to it. On April 7, 1992, the QAC sent a letter to the anesthesiology department requesting a response to a March 5th inquiry concerning action taken by the department on three case reviews in Dr. Turner's file regarding quality of care and physician misconduct. The department responded on April 13th, stating Dr. Turner was counseled on personality conflicts and indicating the department would continue to monitor his behavior for any further episodes.
There were numerous other claims of misfeasance and malfeasance on the part of anesthesiologists, including one incident where poor communication between an anesthesiologist and a surgeon resulted in surgery being performed on the wrong hip of a patient. Dr. Imanaka was critical of Dr. Major's behavior, which included playing guitar in OR and inattention to patients. It was alleged by both physicians and nurses that Dr. Major spent an inordinate amount of time on the telephone in OR tending to his commodities trading. Dr. Major allegedly installed a coffeemaker on his anesthesia cart and brought it into the OR, in violation of health and safety regulations. He was also observed in the OR to mix liquid diet drinks on his cart. David Benn, Chief Operating Officer of Memorial Hospitals, received complaints about the anesthesia department from Orthopedics, Emergency Medicine, OB/GYN, the trauma committee, and the QAC.
In addition to the other problems in the anesthesiology department, there were persistent difficulties with communication and personality conflicts within the department and with other medical staff members. As early as September 1989, Dr. Turner stated at a meeting of the anesthesiology department that he would discontinue giving anesthetic care for a particular surgeon with whom he had a conflict. There were requests by surgeons to not be assigned particular anesthesiologists--both independent and Gould. Due to the severity of the problem, on December 11, 1990, Dr. Salahuddin Bibi, the chief of staff, sent a letter to the anesthesiology department advising them of the need to resolve the conflicts they were having with surgeons at Memorial Hospitals. However, the problems continued, with Dr. Turner reporting to the department on July 26, 1991, of two incidents of personality conflicts with a surgeon.
The personality conflicts were not confined to the anesthesiologists' relationship with the surgeons at Memorial Hospitals. They also had serious personality conflicts among themselves. For a long period while Dr. Major was chairman of the department, he and Dr. Turner would not speak to each other. Dr. Major complained repeatedly to Benn about Dr. Turner, stating he believed Dr. Turner abused drugs and came to work with alcohol on his breath. There was one incident reported where Dr. Turner argued with Dr. Major over helping a child who had just come out of surgery, was having trouble breathing, and was turning blue. Dr. Turner reportedly elbowed Dr. Major out of the way, claiming the child was his patient. As a result, Dr. Major refused to ever cover any of Dr. Turner's patients. Dr. Turner told a nurse he believed Dr. Major was making crank calls to him and on one occasion had placed a gasoline soaked rag under the hood of Dr. Turner's car.
There was also an incident when Dr. Turner and Dr. Freeman were arguing in the presence of a patient who was awake, lying on a gurney. As a result, Dr. Bibi sent another letter to the anesthesiology department warning that any similar situations in the future would be dealt with by the MEC and board of directors. In October 1991, Dr. Freeman had a conflict with Dr. Imanaka over a patient, which resulted in a discussion at an anesthesiology department meeting of the need for cooperation between the independent and Gould anesthesiologists. Dr. Turner often had conflicts with nurses, would shout at them, and at least one time in March 1992, physically struck a nurse.
On May 14, 1990, the anesthesiology department was notified the MEC had formed an ad hoc committee to address complaints by surgeons about the department, including quality, personality conflicts and the availability of anesthesia services. The members of the department were also informed the MEC had recommended an outside anesthesiologist be commissioned to review their charts. The members of the ad hoc committee were Dr. Marcus Shouse, medical director of the emergency department, Dr. Mary Ann Piskun, a Gould surgeon, and Dr. Phillip Deos, a pathologist. After the ad hoc committee was formed, Dr. Bibi contacted Dr. Maher Abadir, an anesthesiologist, and asked him to review the delivery of anesthesia at Memorial Hospitals.
Dr. Abadir was asked to conduct a review of the entire department. He was also told Memorial Hospitals wanted a neutral opinion on the quality of anesthesia services at its facilities. When he first arrived to conduct the review, Dr. Abadir was only given three charts: two pertained to cases of Dr. Major; and one to a case of Dr. Turner. Dr. Abadir requested 50 charts selected randomly for each physician. After reviewing them, Dr. Abadir prepared a report which he addressed to Dr. Bibi. However, the only person who recalled ever seeing Dr. Abadir's written report was Dr. Shouse. Dr. Abadir did not keep a copy, Dr. Shouse could not find his, and at the time of trial a copy could not be located in Memorial Hospitals' files.
Dr. Abadir testified he recalled his report stated the rate of complications in the charts he reviewed was acceptable, and he did not remember saying anything about a high complication rate in young, healthy patients. Dr. Abadir recalled his report did indicate he identified two complications in cases involving young people. However, he testified he found these complications were acceptable. At one time Dr. Abadir had been a member of the California Society of Anesthesiologists (CSA), but was not sure if he was still a member when he conducted the review at Memorial Hospitals.
Dr. Shouse testified he recalled Dr. Abadir's report stated he had found a high complication rate in young, healthy patients. However, the report did not specifically identify Drs. Major and Turner as the anesthesiologists whose charts were reviewed, and did not single out either doctor for criticism. At a meeting of the ad hoc committee, it was reported that Dr. Abadir's review had found a higher than expected rate of complications in young, healthy patients, and that one of the doctors to whom this finding applied was Dr. Major. On July 24, 1990, Dr. Shouse reported to the MEC that an outside consultant performed a retrospective chart review and concluded there was a possible quality problem, particularly a high complication rate in young, healthy patients. It was noted that two unidentified anesthesiologists were found to have higher than acceptable rates of complication.
On August 8, 1990, Dr. Major requested all anesthesiologists in the department attend a meeting to discuss the potential impact of closure of the department. No one attended the meeting except him. On December 3, 1990, Dr. Bibi reported to the board of directors that the MEC had discussed whether the anesthesiology department should be open or closed. On March 20, 1991, Dr. Major sent a letter to William Piche, the CEO of Memorial Hospital. He acknowledged the problems in the anesthesiology department, expressing frustration with his inability to solve them, and recommending closure of the department on a trial basis as a possible solution. Dr. Major felt the problems applied to both independent and Gould anesthesiologists. Although he was chairman of the department, Dr. Major had no authority to enforce any standards or rules. In fact, on one occasion when Dr. Major attempted to counsel an anesthesiologist, the doctor said to him: "What are you going to do? Fire me?"
On March 21, 1991, at an MEC meeting, Dr. Bibi voiced concern over problems in the anesthesiology department, including quality issues and inappropriate behavior. He reported that several attempts had been made to resolve disagreements within the department without success, and stated that a long-term resolution was needed. At this same meeting Carolyn Quick, vice president of nursing at Memorial Hospitals, presented a summary of problems in the anesthesia department of which she was aware. These included: Dr. Turner's problems with an OR nurse; his conflict and shouting match with a surgeon; Dr. Turner's argument with Dr. Freeman in the presence of an awake patient; Dr. Turner's failure to respond to a call for an immediate Cesarean section because he was in Oakland; Dr. Major's failure to respond to a call; Dr. Freeman's failure to show for a scheduled surgery because of a misunderstanding in the vacation schedule; Dr. Turner's failure to comply with the requirements of narcotics documentation; and the practice of the independent anesthesiologists to disparage each other in the presence of staff and patients creating tension in the OR staff to the point that some were considering resignation.
After the statements by Dr. Bibi and Carolyn Quick, Dr. Charles Stitt, an independent physician, stated he believed closure of the anesthesiology department would be beneficial. The minutes of this meeting indicate Dr. Edward Kody, another independent physician, recommended the administration of Memorial Hospitals look into closing the anesthesiology department and develop a mechanism for the procedure. The motion was passed. At trial, Dr. Kody testified he did not believe his comment was a recommendation to close the department, only a suggestion that it be considered as one alternative to solving the problems that were being experienced. Dr. Joseph Skokan, a Gould physician and chief of staff-elect in March 1991, testified it was his impression that on March 21, 1991, the MEC voted to recommend closure of the anesthesiology department.
On March 22, 1991, at a staff meeting attended by Drs. Major, Freeman, and Turner, the anesthesiologists were informed the MEC had recommended Memorial Hospitals investigate the possibility of closing the department. On April 23, 1991, Benn briefed the new members of the MEC on events leading up to the closure recommendation. Benn informed the members of the MEC that the process would begin with a solicitation of requests for proposal (RFP). The minutes of this meeting reflect the MEC supported the proposal which would be referred to the board of directors. Dr. Skokan testified that although the MEC did not specifically recommend closure of the anesthesiology department on April 23d, the recommendation to begin the RFP process was tantamount to such a recommendation.
On April 25, 1991, at a meeting attended by Drs. Major and Freeman, Dr. Eugene Sucha, a Gould anesthesiologist and new chairman of the anesthesiology department, informed the anesthesiologists that the MEC had been discussing closure of the department and that RFPs would be available to interested doctors. On May 6, 1991, Benn reported to the board of directors that the MEC had requested the administration develop a mechanism for closure of the anesthesiology department. There was no formal action by the Board to approve issuance of an RFP and the Board did not instruct the administration to prepare and distribute one. On June 20, 1991, copies of the RFP were mailed to numerous individuals and entities including all the anesthesiologists in Stanislaus County.
On June 25, 1991, Benn reported to the MEC that RFPs had been mailed to interested parties. Benn stated that closure would apply to all anesthesiologists, without exception. On June 28, 1991, at a staff meeting attended by Drs. Major, Freeman, and Turner, the anesthesiologists were informed that RFPs had been mailed out. On September 9, 1991, the MEC appointed a subcommittee to evaluate the seven responses to the RFP that had been received. Among the members of the subcommittee were Drs. Skokan, Shouse, Piskun, and Stitt. One response was from Dr. Major. On September 27, 1991, at a staff meeting attended by Drs. Freeman and Turner, the anesthesiologists were informed that an RFP subcommittee had been appointed. On October 25, 1991, at a staff meeting attended by Drs. Major, Freeman, and Turner, the anesthesiologists were advised that seven responses to the RFP had been received by the subcommittee. They were also told the names of the subcommittee members.
On February 2, 1992, Benn informed the board of directors that the RFP subcommittee had met with three finalists, including Gould, Dr. Major and Premier Anesthesia. Benn reported the RFP subcommittee had been unable to resolve some problems and recommended the board establish another subcommittee to help conclude the process.
After interviewing all three candidates, the RFP subcommittee considered Gould the best candidate and entered into negotiations with it on the exact terms of the contract to provide anesthesia services to Memorial Hospitals. Gould's response to the RFP called for six Gould anesthesiologists and four independent anesthesiologists who would subcontract with Gould, but would be selected by Memorial Hospitals. Memorial Hospitals rejected this provision, insisting that Gould be responsible for selecting the independent anesthesiologists who would be offered subcontracts. The subcommittee kept the negotiations with Gould confidential and did not inform the medical staff of their progress.
On May 26, 1992, Dr. Shouse informed the MEC that the RFP subcommittee had determined Gould's proposal was in the best interest of the patients and the hospital. The minutes of this meeting indicate the MEC discussed that medical staff bylaws required input from the MEC regarding quality of care issues prior to a decision to close the department. Questions were raised regarding whether the proposed contract adequately addressed quality of care. The MEC was informed the contract included a quality assessment process and that reports would be made to the MEC on a quarterly basis. However, a copy of the proposed contract was not presented to the MEC and the committee was not aware of its specific terms. The MEC unanimously approved a recommendation to award the contract to Gould. On May 29, 1992, the professional practices committee was informed of the MEC's recommendation to award an exclusive contract to Gould to provide anesthesia services to Memorial Hospitals. This committee unanimously endorsed awarding this contract.
On June 1, 1992, Benn informed the board of directors that the RFP subcommittee recommended award of the exclusive contract to provide anesthesia services to Gould. At this same meeting, Dr. Major made an alternative presentation to the board. He also presented a letter signed by approximately 50 surgeons supporting his proposal. Dr. Major was excused and the board discussed the contract, with Quick voicing her concern that Dr. Major's proposal would not resolve the problems in the anesthesiology department. The board unanimously approved the motion to award the contract to Gould.
On June 1, 1992, Dr. Imanaka was advised Memorial Hospitals had accepted Gould's proposal. Dr. Imanaka, identified in the Gould proposal as director of the anesthesiology department, then began putting together a subcommittee to select the independent anesthesiologists who would provide services under the contract. He sought not only anesthesiologists, but also surgeons to serve on his selection committee. Among those who agreed to serve were Dr. Shouse, Dr. Donn Fassero, a Gould surgeon, and Dr. Louis Cimino, an independent surgeon. The other members of the committee were all Gould anesthesiologists.
On July 1, 1992, Piche sent letters to Drs. Major, Freeman, and Turner advising them that Gould had been awarded the contract to provide anesthesia services for Memorial Hospitals, and effective August 1, 1992, the anesthesiology department would be operated on a closed staff basis. The letter further stated that Gould had formed a committee to select the independent anesthesiologists with whom it would subcontract and identified the members of that committee. Piche's letter advised plaintiffs to contact Dr. Imanaka for further information regarding the application process.
Also, on July 1, 1992, Memorial Hospitals signed a contract with Gould as the exclusive provider of anesthesia services for both its facilities. The contract provided that Gould could provide the required anesthesia services through its own members or through independent physicians with whom it subcontracted. The contract designated Dr. Imanaka as the director of the department. It required that any person who was to provide anesthesia services meet the requirements for membership in the medical staff of Memorial Hospitals and actually be admitted as a member. The contract established an initial requirement of ten anesthesiologists, six of whom were to be Gould providers, and four to be subcontracted providers. Gould was given the responsibility of providing the services required "by employment, contractual relationship, or other arrangement ...." However, the physicians or certified nurse anesthetists (CRNA) selected by Gould were subject to approval by Memorial Hospitals.
Plaintiffs submitted applications to Gould for positions as independent anesthesiologists who would provide services to Memorial Hospitals. On July 8, 1992, Dr. Imanaka sent letters to all three plaintiffs informing them they had not been selected for one of the subcontracted positions. The committee did select five individuals, three of whom were coming directly out of residency in anesthesiology. One of the five selected, Dr. James Barnette, ultimately declined the offer. Subsequently, Gould allowed the final position to be shared by three anesthesiologists who provided anesthesia service to a group of surgeons specializing in cardiac surgery. On July 13, 1992, Piche informed the executive committee of the board of directors that the anesthesia contract had been executed, and Gould's selection committee had chosen six anesthesiologists as subcontractors, not including Drs. Freeman, Turner and Major. On July 17, 1992, Piche sent letters to each of the plaintiffs informing them that if they were not under contract with Gould to provide anesthesia services for Memorial Hospitals, their anesthesia privileges would be terminated effective at midnight on July 31, 1992.
DISCUSSION Any discussion of the issues raised by plaintiffs must be prefaced by a discussion of the general principles of law applicable to this case. The most important is the nature of plaintiffs' rights as physicians with staff privileges at Memorial Hospitals. In Anton v. San Antonio Community Hosp. (1977) 19 Cal.3d 802, our Supreme Court held that a physician's hospital privileges constitute a property right.
"'Although the term "hospital privileges" connotes personal activity and personal rights may be incidentally involved in the exercise of these privileges, the essential nature of a qualified physician's right to use the facilities of a hospital is a property interest which directly relates to the pursuit of his livelihood.'" (Id. at p. 823.)The court then held: "[T]he full rights of staff membership vest upon appointment, subject to divestment upon periodic review only after a showing of adequate cause for such divestment in a proceeding consistent with minimal due process requirements." (Id. at pp. 824-825.)
However, a key consideration in Anton's holding that a physician was entitled to minimal due process before termination of staff privileges was its determination that the action taken was adjudicative in nature. "The decision in question is clearly final and is adjudicatory rather than legislative in character." (Anton v. San Antonio Community Hosp., supra, 19 Cal.3d at p. 815.)
The distinction between an adjudicative decision and a legislative or quasi-legislative decision is critical in resolving plaintiffs' claim for two reasons. First, the requirement of a proceeding with minimal due process prior to termination of a physician's staff privileges is not applicable if it is the result of a quasi-legislative act by the hospital.
"If the action is legislative or quasi-legislative in nature, '" ... a hearing of a judicial type is not required; a hearing allowed by legislative grace is not circumscribed by the restrictions applicable to judicial or quasi judicial adversary proceedings."' [Citation.] In a quasi-legislative proceeding there is no constitutional right to any hearing. [Citation.]" (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1183; accord Centeno v. Roseville Community Hospital (1979) 107 Cal.App.3d 62, 71; City of Santa Cruz v. Local Agency Formation Com. (1978) 76 Cal.App.3d 381, 388 .)
A decision is considered quasi-legislative if it is one of general application intended to address an administrative problem as a whole and not directed at specific individuals. "Generally speaking, a legislative action is the formulation of a rule to be applied to all future cases, while an adjudicatory act involves the actual application of such a rule to a specific set of existing facts." (Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 35, fn. 2; accord Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1184; Redding v. St. Francis Medical Center (1989) 208 Cal.App.3d 98, 103-105.)Second, characterization of a decision as adjudicative or quasi-judicial has a significant impact on the applicable standard of review. If the decision resulting in the deprivation of a physician's staff privileges is adjudicative, we review whether the physician was afforded due process. A claim that due process rights have been violated is reviewed de novo. (U.S. v. Hamilton (6th Cir. 1997) 128 F.3d 996; U.S. v. Lloyd (6th Cir. 1993) 10 F.3d 1197, 1216, cert. den. 513 U.S. 883; U.S. v. Hernandez (9th Cir. 1991) 937 F.2d 1490, 1493; see State of Ohio v. Barron (1997) 52 Cal.App.4th 62, 67 [constitutional issues are generally reviewed de novo].) On the other hand, if the decision is quasi-legislative, we apply a much more deferential standard of review.
"As to the quasi-legislative acts of administrative agencies, 'judicial review is limited to an examination of the proceedings before the officer to determine whether his action has been arbitrary, capricious, or entirely lacking in evidentiary support, or whether he has failed to follow the procedure and give the notices required by law.' [Citations.]" (Pitts v. Perluss (1962) 58 Cal.2d 824, 833.)This standard only requires that there be some reasonable basis for a decision in order to pass muster on review. "'If reasonable minds may well be divided as to the wisdom of an administrative board's action, its action is conclusive. Or, stated another way, if there appears to be some reasonable basis for the classification, a court will not substitute its judgment for that of the administrative body ....'" (Pitts v. Perluss, supra, 58 Cal.2d at p. 835, fn. 4.) This standard is also applicable "to judicial review of rule-making or policy-making actions of a nonprofit hospital corporation." (Lewin v. St. Joseph Hospital of Orange (1978) 82 Cal.App.3d 368, 384.)
Reduced to its essence, plaintiffs' argument is two-fold. First, they claim the hospital's decision to close the anesthesiology department was directed specifically at them. Therefore, the decision was adjudicative and they were entitled to due process in accordance with the medical staff bylaws prior to termination of their medical staff privileges. Second, even if the decision to close the department was quasi-legislative, it was arbitrary, capricious, and did not comply with the procedures set forth in the medical staff bylaws.
It is with the above concepts firmly in mind that we evaluate plaintiffs' contentions.
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I. Violation of the Unruh Act*
The first step in untangling the Gordian Knot of issues presented here, is to address plaintiffs' claim that the trial court erred in finding Memorial Hospitals did not violate the Unruh Civil Rights Act (Unruh Act) which provides:
"All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, or disability are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever." (Civ. Code, § 51.)
Plaintiffs contend the evidence established Memorial Hospitals discriminated against Dr. Turner, who is Black, because of his race. They argue Dr. Turner's race was a motivating factor in the decision to close the department, which ultimately resulted in his loss of staff privileges. Additionally, plaintiffs claim Memorial Hospitals violated the Unruh Act because it chose the administrative process of closing the anesthesiology department rather than going through the adjudicative process of revoking Dr. Turner's staff privileges. They claim this procedure was chosen because of a fear that Dr. Turner would file a claim of racial discrimination if it attempted to revoke his staff privileges by any other means.
Although both Drs. Major and Freeman are White, they contend they were affected by the discrimination against Dr. Turner because Memorial Hospitals sought to insulate itself from charges of racial discrimination by revoking their privileges through closure of the anesthesiology department as well. In other words, they argue Memorial Hospitals attempted to mask its actual discriminatory action against Dr. Turner by revoking the privileges of all the independent anesthesiologists in the department.
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A. Standard of review
Plaintiffs' claim goes to the sufficiency of the evidence to support the trial court's finding that there was no violation of the Unruh Act. Therefore, on appeal we "must review the whole record in the light most favorable to the judgment below to determine whether it discloses substantial evidence-that is, evidence which is reasonable, credible, and of solid value ...." (People v. Johnson (1980) 26 Cal.3d 557, 578; Estate of Teed (1952) 112 Cal.App.2d 638, 644.) Substantial evidence includes circumstantial evidence and its reasonable inferences. (In re James D. (1981) 116 Cal.App.3d 810, 813.)
B. Analysis
The trial court found Dr. Turner was a member of a protected class, but that plaintiffs had failed to show "any discrimination against him on the basis of his protected class status." It further found Drs. Major and Freeman were not members of a protected class within the meaning of the Unruh Act, but if they were, "there was no discrimination against them on the basis of their status as a member of a protected class." The court found the decision to not award subcontracts to Drs. Major and Freeman was not based on a fear that Dr. Turner would file a lawsuit for racial discrimination if he was the only one excluded from the department. Further, the court determined the initial decision to close the anesthesiology department was not based on a fear that Dr. Turner would bring a racial discrimination lawsuit if he was subjected to disciplinary proceedings in accordance with the medical staff bylaws. The court stated "[t]he possibility that Dr. Turner might assert a claim for racial discrimination was not a motivating factor in the decisions to close the Department of Anesthesia or any independent subcontractor selection process." Finally, the court found that if racially derogatory remarks were made as claimed by Dr. Major, they were insufficient to establish discrimination against Dr. Turner.
If the revocation of Dr. Turner's medical staff privileges was based on his race in violation of the Unruh Act, regardless of whether the decision was adjudicatory or quasi-legislative, it was unlawful. However, the same cannot be said with respect to Drs. Major and Freeman. They have not alleged they were discriminated against because of their race. Neither have they alleged, as did the plaintiff in Winchell v. English (1976) 62 Cal.App.3d 125, that they were discriminated against because of the race of a person with whom they associated. Therefore, a finding that the revocation of Dr. Turner's staff privileges was based on his race, does not mandate a similar finding as to Drs. Major and Freeman. However, the decision regarding whether Memorial Hospitals violated the Unruh Act with respect to Dr. Turner is not without significance to Drs. Major and Freeman. A determination that Dr. Turner's staff privileges were revoked based on his race would be substantial evidence the decision was targeted at a specific individual, indicating the decision was adjudicatory rather than quasi-legislative.
In the same vein, evidence that Memorial Hospitals feared a racial discrimination suit by Dr. Turner if he were disciplined is irrelevant to whether Drs. Major and Freeman were discriminated against. However, it may be relevant to determine whether closure of the anesthesiology department was truly the result of a quasi-legislative decision, or merely a sham to mask the actual purpose of eliminating Dr. Turner.
Both Memorial Hospitals and Gould argue that as a matter of law, plaintiffs have no cause of action under the Unruh Act because it does not apply to employment-related discrimination. They claim their relationship with plaintiffs was that of employer-employee, which is not covered by the Unruh Act.
Memorial Hospitals and Gould are correct that courts have consistently held the Unruh Act does not apply to employment actions. "[T]he Unruh Civil Rights Act has no application to employment discrimination. [Citations.]" (Rojo v. Kliger (1990) 52 Cal.3d 65, 77; accord Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 500; Ibister v. Boys' Club of Santa Cruz, Inc. (1985) 40 Cal.3d 72, 83, fn. 12.) However, whether the relationship between a physician and the hospital at which he or she has medical staff privileges is that of employer and employee is not so easily resolved.
Neither parties' briefs nor independent research have disclosed any California decision which addressed this issue. Further, review of the federal cases which have addressed it reveals a split of authority. Although interesting, we decline to resolve this issue since there is ample evidence to support the trial court's finding that the Unruh Act was not violated. Thus, plaintiffs' employment status is irrelevant.
Dr. Turner claims the testimony of several witnesses proves he was discriminated against because of his race. First, he cites the testimony of Piche that he feared Dr. Turner would file a claim of racial discrimination against Memorial Hospitals if his medical staff privileges were terminated as a result of the closure process. However, Piche denied this fear played any part in the decisions not to take disciplinary action against Dr. Turner in accordance with the medical staff bylaws.
Dr. Turner points to the testimony of Dr. Louis Cimino, an independent surgeon at Memorial Hospitals, as evidence of discriminatory intent in the action taken against him. Dr. Cimino testified he had a discussion with Dr. Shouse in the spring of 1992, when Dr. Shouse stated the administration of Memorial Hospitals wanted to let Dr. Turner go, but was afraid of a lawsuit and, therefore, may also have to let go one or two of the other independent anesthesiologists. Dr. Cimino also testified he was asked by Dr. Imanaka to be a member of the committee that would select the independent anesthesiologists to receive subcontracts from Gould. He stated that just prior to one of the committee meetings in July 1992, he called Piche to ask him what would be the best thing to come out of the committee. Piche told him the hospital had been having trouble with Dr. Turner and would like to see him go. Dr. Cimino stated he never heard Dr. Shouse, any Memorial Hospitals' employee, or anyone from Gould make any racial comments about Dr. Turner.
Dr. Shouse and Piche denied making the statements that Dr. Cimino attributed to them. Piche testified that during the telephone conversation referred to by Dr. Cimino, he said the committee should pick the best anesthesiologists available. Piche did bring up Dr. Turner during the conversation with Dr. Cimino, but only to state that he did not think the selection process should be directed personally at him, or Drs. Major and Freeman. Piche testified he told Dr. Cimino the selection committee should use the criteria it developed to select the anesthesiologists without any interference from Memorial Hospitals.
Dr. Turner also claims the testimony of Ronald McDaniel, the vice-president of marketing for Premier Anesthesia, supports his claim of racial discrimination. McDaniel testified he met with Benn in July 1991, to discuss the RFP for anesthesia services to which Premier Anesthesia was responding. The purpose of the visit was for McDaniel to find out what problems existed in the anesthesiology department. McDaniel testified Benn said Memorial Hospitals had some quality concerns about one specific physician, who Benn described as a "black physician." However, Benn also told McDaniel of other problems including a lack of cooperation and organization, scheduling problems and overall quality concerns. McDaniel claimed Benn stated he did not feel the "black physician" would be welcome in a newly formed anesthesia group because of quality problems related to his work. However, Benn did not tell McDaniel to not include him in its group if awarded the contract. Additionally, McDaniel did not believe race was a factor in any of the concerns voiced to him. He perceived Benn's use of the term "black physician" as a means of identifying the physician about whom he was speaking.
Benn testified he did discuss the state of the anesthesiology department with McDaniel in the summer of 1991. He explained to McDaniel the problems Memorial Hospitals was experiencing in the anesthesiology department, including the personal conflict between Drs. Major and Turner. During this explanation, Benn described Dr. Turner in the manner in which Dr. Major described him, including the fact he was Black. Benn stated he did not tell McDaniel the "black physician" would not be accepted by the medical staff in the new anesthesiology group.
Finally, Dr. Turner points to the racial epithets used in reference to him as evidence of the discriminatory intent in the revocation of his staff privileges. Dr. Major testified that during one conversation prior to initiation of the action to close the anesthesiology department, Dr. Shouse was complaining about Dr. Turner and said "That dumb f----ing nigger doesn't know what he's doing." Dr. Major also claims on at least two other occasions Dr. Shouse said to him, "When are you going to get rid of that black bastard." However, he also stated he did not believe Dr. Shouse's comments were motivated by racial animus. Dr. Major testified that another time he was discussing his problems with Manny Gonzales, the OR supervisor at Memorial Hospitals, when Gonzales stated: "You know Mitchell, the problem you have, we have a nigger with a chip on his shoulder."
Dr. Shouse denied making any racially derogatory statements about Dr. Turner or telling Dr. Major he had to get rid of Dr. Turner. Dr. Shouse testified that when he was a freshman in college at Tulane, his roommate was Black. This caused other White students in the dormitory to put a cross on the door to his room and set it on fire. Further, after he graduated from college, Dr. Shouse moved to Chattanooga, Tennessee, where he attended a number of NAACP meetings to show his support. After one meeting of a White citizens group at which he appeared along with six members of the NAACP, Dr. Shouse was beaten by police.
Dr. William Bell, Jr., a Black physician, testified Dr. Shouse hired him as a staff doctor at a hospital in Nashville. Dr. Bell testified he and Dr. Shouse not only worked together, but also socialized on a regular basis and he often stayed at Dr. Shouse's home. Dr. Bell said Dr. Shouse was assisting a Black female physician in obtaining her board certification in emergency medicine so she could continue to work at a hospital in Nashville. Dr. Bell stated Dr. Shouse retained this physician after the company for which Dr. Shouse worked obtained the contract to provide emergency services at the hospital. Dr. Bell never heard Dr. Shouse refer to Black people in a racially derogatory manner.
The burden of proof in an action under the Unruh Act is much the same as that applicable to an action under the FEHA. (See Green v. Rancho Santa Margarita Mortgage Co. (1994) 28 Cal.App.4th 686, 694-695.)
"First, the plaintiff has the burden of proving by a preponderance of the evidence a prima facie case of discrimination. Second, if the plaintiff succeeds in proving the prima facie case, the burden shifts to the defendant 'to articulate some legitimate, nondiscriminatory reason for the employee's [termination].' [Citation.] Third, should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reasons but a pretext for discrimination."' (University of Southern California v. Superior Court (1990) 222 Cal.App.3d 1028, 1035.)Under the FEHA:
"The prima facie case for discriminatory discharge can therefore be stated thusly: (1) complainant belongs to a protected class; (2) his job performance was satisfactory; (3) he was discharged; and (4) others not in the protected class were retained in similar jobs, and/or his job was filled by an individual of comparable qualifications not in the protected class." (Mixon v. Fair Employment & Housing Com. (1987) 192 Cal.App.3d 1306,1318.)Applying these elements to the Unruh Act, in order to establish a prima facie case of discrimination, a plaintiff must prove: (1) he or she is a member of a protected class; (2) he or she has been denied full and complete access to the facilities, privileges, or services of a business establishment; and (3) others not in the protected class were granted such access. Once a plaintiff establishes a prima facie case: "The burden that shifts to the defendant, ... is to rebut the presumption of discrimination by producing evidence that the plaintiff was rejected, or someone else was preferred, for a legitimate, nondiscriminatory reason." (Texas Dept. of Community Affairs v. Burdine (1981) 450 U.S. 248, 254.)
If a defendant does present evidence of a legitimate nondiscriminatory basis for the disparate treatment, the plaintiff must then prove the proffered reason was not the true reason, but merely a pretext. (Texas Dept. of Community Affairs v. Burdine, supra, 450 U.S. at pp. 255-256.) Proving pretext involves more than proving the asserted basis for disparate treatment is false-the plaintiff must show the reason was actually illegal discrimination.
"But a reason cannot be proved to be 'a pretext for discrimination' unless it is shown both that the reason was false, and that discrimination was the real reason. Burdine's later allusions to proving or demonstrating simply 'pretext,' [citation], are reasonably understood to refer to the previously described pretext, i.e., 'pretext for discrimination.'" (St. Mary's Honor Center v. Hicks (1993) 509 U.S. 502, 515-516 [113 S.Ct. 2742, 2752] fn. omitted.)In addition, remarks that are potentially racial in nature, standing alone, are not sufficient to establish a plaintiff has suffered discrimination. There must be evidence of a nexus between the remarks and the alleged discriminatory action.
"Crediting as we must the statements offered by the plaintiff to be inferential evidence of racial prejudice, such statements are not, however, sufficient to demonstrate that the defendant relied on both legitimate and illegitimate criteria, or mixed motives.... Such remarks, as offered by the plaintiff, when unrelated to the decisional process, are insufficient to demonstrate that the employer relied on illegitimate criteria, even when such statements are made by the decision-maker in issue." (Smith v. Firestone Tire and Rubber Co. (7th Cir. 1989) 875 F.2d 1325, 1330; see Geier v. Medtronic, Inc. (7th Cir. 1996) 99 F.3d 238, 242 ["To be probative of discrimination, isolated comments must be contemporaneous with the discharge or causally related to the discharge decision making process."]. )
There is sufficient evidence to support the trial court's finding that Dr. Turner failed to prove he was discriminated against based on his race. Assuming he established the elements of a prima facie case, evidence was presented of a legitimate, nondiscriminatory basis for the action: to solve the systemic problems in the anesthesiology department that had been in existence for years. Dr. Turner failed to present any evidence that the decision to close the anesthesiology department and award contracts to other individuals was merely a pretext for revoking Dr. Turner's staff privileges because of his race. No witness testified the closure process was motivated by a racial animus against Dr. Turner. Nor does the evidence circumstantially support such a conclusion.
There was evidence presented that members of the administration of Memorial Hospitals did fear Dr. Turner would bring a racial discrimination lawsuit if his staff privileges were revoked. However, as the trial court found, there was no evidence the decision to close the department or to not take disciplinary action against Dr. Turner was motivated by fear that he would make a claim of racial discrimination. The mere fact Memorial Hospitals was concerned about Dr. Turner's reaction to losing his hospital privileges, by whatever means, does not equate to a finding that its action was motivated by that fear.
As previously stated, a finding that the closure decision was motivated by fear that Dr. Turner would claim racial discrimination, may be relevant to determine if the decision was directed at a specific individual. However, it has no bearing on whether the Unruh Act was violated. In order for there to be a violation of the Unruh Act, there must be evidence of disparate treatment based on one of the personal characteristics listed in the statute, i.e., sex, race, color, religion. (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1160-1161.) The statute is not violated by actions which are allegedly motivated by fear of how a person will react unless the evidence also establishes the action was based on one of the enumerated personal characteristics.
Finally, assuming as the trial court did that Dr. Shouse and Gonzales made the racially derogatory remarks ascribed to them, there is no nexus between the statements and the decision to close the anesthesiology department or to not award Dr. Turner a contract. Dr. Shouse was a member of the MEC, the ad hoc committee charged with looking into the problems in the anesthesiology department, and the subcontractor selection committee. However, there is no evidence he uttered any racial epithets concerning Dr. Turner to any of the other members of these committees. There is no evidence they knew Dr. Shouse had previously made these statements or that they played any part in the decisions of any committee involved in the closure of the department. Almost every committee decision leading to the closure of the anesthesiology department was unanimous. Thus, there is sufficient evidence to support the trial court's finding that the uttering of the racially derogatory statements did not establish a violation of the Unruh Act.
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II. Waiver*
The trial court found "[e]ach plaintiff waived objections to closure by participating and not objecting to the process that led to the closed department." The court found plaintiffs were on notice at least as early as the time they received copies of the RFP that the only way they could retain their anesthesia privileges at Memorial Hospitals was to either have the exclusive contract for anesthesia services or receive a subcontract from the contractor that did. The court found the decision to close the department was a long and open process that resulted in fair notice of the decision process to plaintiffs and other members of the medical staff. The court also found plaintiffs consented to and waived any objection to consideration of their competence, character or qualifications by their agreement to section 7.6-1 of the medical staff bylaws.
Defendants urge us to adopt the trial court's position and find plaintiffs waived any objection to the process by which the anesthesiology department was closed. They argue plaintiffs' failure to object during the closure process, and their agreement to be bound by the medical staff bylaws when they applied and reapplied for staff privileges at Memorial Hospitals, waived any objection to the procedure used to effect closure of the department. Logic dictates the claim of waiver be addressed prior to consideration of the other issues involving the closure of the anesthesiology department. If plaintiffs did waive any objection to the process by which the department was closed and their staff privileges were revoked, all their allegations of error are moot.
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A. Standard of review
"Whether there has been a waiver here is a question of fact to be determined in light of all the evidence. [Citations.]" (Brookview Condominium Owners' Assn. v. Heltzer Enterprises-Brookview (1990) 218 Cal.App.3d 502, 513.) Therefore, a trial court's determination that there has been a waiver is reviewed for substantial evidence. (In re Marriage of Paboojian (1987) 189 Cal.App.3d 1434, 1438.)
B. Analysis
The court based its conclusion that plaintiffs waived any objection to the closure of the anesthesiology department in part upon its determination that plaintiffs received copies of the RFP. "On June 20, 1991, requests for proposals were sent to interested parties including the plaintiffs." The court found the terms of the RFP put defendants on notice that they were in jeopardy of having their staff privileges in the anesthesiology department revoked by the award of the exclusive contract. There is a problem with the court's finding.
Even if we assume all plaintiffs received copies of the RFP (there was no evidence it was actually sent to Drs. Freeman and Turner), the RFP does not specifically state that they would lose their clinical privileges if they were not awarded the contract. Nor does it state that the physicians who were presently providing anesthesia services would not be retained. Under the section entitled: "HOSPITAL'S OBJECTIVES TO BE ACHIEVED THROUGH EXCLUSIVE CONTRACT," the RFP states:
"The Hospital's anesthesiology services are currently provided by three independent anesthesiologists and one group of five anesthesiologists, the latter of which, provide services primarily to physicians of the multi-specialty group with which they are affiliated. By entering into an exclusive agreement, the Hospital hopes to assure the provision of consistently high quality anesthesiology services as required to meet the Hospital's operational needs for both in-patient procedures as requested by members of the Medical Staff or otherwise pursuant to Hospital policies. It is the Hospital's intent that the successful bidder assure the availability of such high quality anesthesiology services seven days a week, 24 hours per day at the Hospital, including both facilities."While this statement could be read as implying the staff privileges of the incumbent anesthesiologists were in jeopardy, this conclusion is by no means mandated by the language.
"To support a finding of waiver, there must be an existing right, benefit, or advantage, actual or constructive knowledge of the right's existence, and either an actual intention to relinquish it or conduct so inconsistent with any intent to enforce the right as to induce a reasonable belief that it has been relinquished. [Citations.]" (Brookview Condominium Owners' Assn. v. Heltzer Enterprises-Brookview, supra, 218 Cal.App.3d at p. 513.) The burden to prove waiver lies with the party claiming it has occurred.
"The waiver of a legal right cannot be established without a clear showing of intent to give up such right. [Citation.] The burden is on the party claiming the waiver 'to prove it by evidence that does not leave the matter doubtful or uncertain and the burden must be satisfied by clear and convincing evidence that does not leave the matter to speculation.' [Citation.]" (Ibid.)
Plaintiffs' vested right was in their staff privileges at Memorial Hospitals to provide anesthesia services, not necessarily in the maintenance of an open or closed anesthesiology department. Thus, it was only when they were not granted subcontracts by Gould that their vested property rights were affirmatively and unequivocally affected. Therefore, it was at this time that they had an obligation to object to the procedure employed to revoke their privileges. They did so by filing this lawsuit. Mere suspicion during the course of the closure of the department that their staff privileges may be affected, did not require plaintiffs to object to the process in order to preserve their right to practice at Memorial Hospitals. In other words, it was the end result of the process of closing the department that adversely affected plaintiffs-not the closure procedure in and of itself.
Further, we note that during the closing process, plaintiffs were never offered a formal opportunity to make objections to the procedure. It is true that plaintiffs received notice that the process was ongoing, but the evidence indicates this notice was informational. There is no evidence that any noticed hearing on closing the anesthesiology department was scheduled or that plaintiffs' input was solicited. Further, the evidence indicates the process by which the RFP was awarded was maintained in relative secrecy, and the award of the Gould subcontracts was based on criteria established without any input from plaintiffs. The fact plaintiffs could have expressed their opinion on the procedure does not mean they were required to do so, or that they waived any objection to the process by failing to do so. Thus, we conclude plaintiffs did not waive any objection to closure of the department and revocation of their staff privileges.
III. Adjudicative vs. quasi-legislative decision
We now examine the heart of this legal patient: whether the decision to revoke plaintiffs' staff privileges was adjudicative or quasi-legislative. As previously stated, plaintiffs contend Memorial Hospitals' decision to close the anesthesiology department was adjudicatory because it was directed toward the exclusion of a particular physician or group of physicians. In addition to his claim of discrimination under the Unruh Act, Dr. Turner contends the closing process was directed at him based on allegations of his behavior problems and clinical incompetence. Citing our decision in Mateo-Woodburn v. Fresno Community Hospital & Medical Center, supra, 221 Cal.App.3d 1169, Dr. Turner argues a hospital's action is considered quasi-legislative when the action is "limited to eliminating organizational deficiencies or systemic quality of care concerns ...." However, he contends that if the decision to close a department, "reflects on the character, competency or qualifications of any particular physician ..." it is reviewable as an adjudicatory decision.
Dr. Freeman echoes Dr. Turner's argument. He contends that in order for the closing of a hospital department to be quasi-legislative, not only must the action not be directed at a specific physician or group of physicians, but there must be nothing about the process which adversely reflects on the professional qualifications of the doctors affected. Dr. Freeman argues the circumstances of the closure of the anesthesiology department at Memorial Hospitals related to allegations of his incompetence, and therefore reflected adversely on his professional qualifications. Further, he claims the fact he was not offered one of the available subcontractor positions adversely reflected on his professional qualifications. Thus, he contends the decision to close the anesthesiology department was adjudicative in nature.
Dr. Major adopts the arguments made by Drs. Turner and Freeman.
A. Standard of review
The trial court's findings concerning what factors, if any, were considered and motivated the decision to close the anesthesiology department are issues of fact which we review for substantial evidence. However, the court's conclusion regarding whether the action was adjudicatory or quasi-legislative is an issue of law which is reviewed de novo. (See Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at p. 387.)
B. Analysis
The trial court found the decision to close the anesthesiology department "was motivated by an honest, reasonable, and factually based concern about improving the overall functioning of the entire department and in improving employee morale.... In short, it was made to rid the Hospital of the undesirable effects of an open department and not directed specifically [at] excluding part of the plaintiffs." It then concluded: "The action to close the Department of Anesthesia was quasi-legislative, reasonable, rational, lawful, and in conformity with public policy. It was not arbitrary, capricious, or entirely lacking in evidentiary support."
Any analysis of this issue must begin with a recognition of the right of Memorial Hospitals to make a policy decision to close the anesthesiology department, even if it affects the clinical privileges of one or more physicians.
"Numerous cases recognize that the governing body of a hospital, private or public, may make a rational policy decision or adopt a rule of general application to the effect that a department under its jurisdiction shall be operated by the hospital itself through a contractual arrangement with one or more doctors to the exclusion of all other members of the medical staff except those who may be hired by the contracting doctor or doctors. [Citations.]" (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1183.)
A decision is quasi-legislative in nature when it is not directed toward the exclusion of particular physicians, but "undertaken as a general effort to address an administrative problem-problems within the department of anesthesiology as a whole-affecting other functions within the hospital and the overall quality of medical services." (Id. at p. 1184.)The right of a hospital to take quasi-legislative action regardless of the negative impact it may have on the staff privileges of a physician or group of physicians is justified because of the overriding concern for the quality of patient care.
"A hospital provides essential facilities to members of the medical community so that members of the medical community, in turn, can provide medical services to the community at large. An important public interest exists in preserving a hospital's ability to make managerial and policy determinations and to retain control over the general management of the hospital's business. A hospital is under an obligation to remedy any situation which threatens or jeopardizes patient care. [Citation.]" (Mateo-Woodburn, supra, 221 Cal.App.3d at pp. 1184-1185.)An objective consideration of the evidence leads to the inescapable conclusion that there was ample evidence of systemic problems in the anesthesiology department which affected the quality of medical services at Memorial Hospitals' facilities. For approximately five years prior to closure, the problems in the anesthesiology department had been the topic of discussion and concern at various meetings throughout the hospital. The difficulties in scheduling anesthesiologists, their failure to respond in a timely manner to requests for support, and the problems locating anesthesiologists who were on call were legion. These troubles were caused in part by the shortage of available anesthesiologists. However, despite the chronic nature of this shortage, the department seemed incapable of curing it. The evidence indicated this failure may have been the result of the existing anesthesiologists being unwilling to share their workload, and associated income with additional physicians. 4 This was true even though surgeries were being delayed because anesthesiologists were too fatigued to continue or complained of experiencing hallucinations.
The shortage of anesthesiologists also impacted the department's ability to provide services for other members of the medical staff, such as OB/GYN's longstanding request for epidural services. The delays in obtaining anesthesia services had reached the point that Memorial Hospitals was failing to meet the national standards for timely performance of Cesarean sections. Finally, the shortage was further exacerbated by the refusal of some anesthesiologists, both independent and Gould, to provide anesthesia services in cases of cardiac surgery. As a result, this workload disproportionately fell on the remaining anesthesiologists.
The members of the anesthesiology department had also demonstrated an inability to maintain professional relations between themselves and other members of the medical staff at Memorial Hospitals. They squabbled among themselves, refused to talk to one another, and had numerous personal conflicts with surgeons. Dr. Turner was even involved in physical altercations, including at least one occasion when he punched a nurse. The anesthesiologists' practice of airing their dissatisfaction with each other in the presence of other staff members and patients impacted morale to the extent that some of the OR staff considered resigning. The personality conflicts in the anesthesiology department were not limited to plaintiffs. There was evidence of conflicts between the independent and Gould anesthesiologists as well as between Gould anesthesiologists and other physicians.
The problems in the anesthesiology department were compounded by an absence of anyone with the authority to require the anesthesiologists to resolve their problems. The department was not a cohesive, integrated organization working toward a common goal. Rather, it was a loose association of independent contractors, divided into two separate factions, independents and Gould, who did not recognize any central authority over them. The problem attendant to this organization was obvious in the narcotics documentation problem the department experienced. The fact this problem existed is not as significant as the length of time it took to solve it, even though it jeopardized Memorial Hospitals' accreditation and posed a danger that narcotics would be diverted and misused. The lack of leadership also manifested itself in the department's failure to timely address and resolve quality of care issues involving anesthesiologists.
Considering the evidence, the question that comes to mind is not whether there were systemic problems in the anesthesiology department which would justify closure of the department, but why it took Memorial Hospitals as long as it did to make this decision. The department can most aptly be described as dysfunctional to the extent it jeopardized the overall quality of patient care at Memorial Hospitals.
It was the overall problems associated with the operation of the department that motivated the closure decision rather than an intent to specifically exclude plaintiffs. Undoubtedly, plaintiffs' conduct contributed to the systemic troubles of the department. However, the mere fact the overall problems considered in the closure decision included the individual difficulties plaintiffs created, does not mandate a finding that the decision was directed at them. It is axiomatic that the whole is the sum of its parts. A systemic problem is nothing more than the aggregation of a number of individual ones. Although plaintiffs' conduct accounted for a disproportionate share of the anesthesiology department's problem, they did not account for all of them. Additionally, Memorial Hospitals' decision to close the department was directed not just at solving the existing problems, but also to creating an organization capable of effectively dealing with similar issues in the future.
Moreover, the committees which considered, recommended, and authorized closure of the department were focusing on the systemic and organization problems rather than on the exclusion of any particular physician or group of physicians. Undoubtedly, plaintiffs' names came up in the course of discussing the troubles within the department, but no one testified there was any discussion of excluding them as the objective of the closure. Rather, the evidence indicates the overriding concern was for the overall quality of care provided by the anesthesiology department and the fact the troubles it was experiencing seemed to be getting worse over time. In fact, Dr. Major recommended closure of the department should be considered as a means of solving the organizational and quality issues it was experiencing and which he had been unable to correct. Therefore, the evidence was sufficient to support the trial court's finding that the decision to close the department was not directed at excluding plaintiffs.
Plaintiffs argue that even if Memorial Hospitals' decision to close was not directed at them, it cannot be characterized as quasi-legislative if the hospital's decision is a de facto adverse reflection on their character, competency or qualifications. Plaintiffs contend Memorial Hospitals' decision to close the anesthesiology department, coupled with its failure to require Gould to offer them subcontracts which resulted in their replacement by other anesthesiologists, constituted such a de facto decision. Therefore, it must be adjudicatory in nature. Put simply, plaintiffs contend the fact they were deprived of their staff privileges as a result of Memorial Hospitals' decision to close the anesthesiology department is evidence that eliminating them was the purpose of the action.
Plaintiffs cite several cases which they claim support their argument, the primary one being our decision in Mateo-Woodburn, supra, 221 Cal.App.3d 1169. Although Mateo-Woodburn involved facts very similar to those in plaintiffs' case, it does not stand for the proposition attributed to it by plaintiffs.
In Mateo-Woodburn, the defendant decided to change the system of delivery of anesthesia services at the hospital from an "open staff" to a "closed" system. (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1175) The decision was made because of problems the hospital was having with administration of the open staff system that presented a real risk to patients and affected the morale of the department and support staff. (Id. at pp. 1177-1178.) Prior to making the final decision to go to a closed system, the hospital scheduled a noticed hearing at which physicians, including the plaintiff, were allowed to make comments. (Id. at pp. 1178-1179.) After the hearing, the plaintiff made a counter-proposal to the board of trustees which was rejected. The board then decided the department would be closed upon appointment of a permanent director. (Id. at p. 1179.)
After the director was appointed, all the anesthesiologists with privileges were notified that unless they entered a contract with the director with whom defendant had a contract, they would not be permitted to practice in the hospital. The contract with the director provided that he was the exclusive provider of clinical anesthesiology services at the hospital; provided for the minimum qualifications of any physicians with whom he contracted; and reserved for the defendant the right to review and approve the form of any contract prior to execution. (Mateo-Woodburn, supra, 221 Cal.App.3d at pp. 1180-1181.) Six anesthesiologists did not sign a contract with the new director. Five refused to do so, and one was not offered a contract, although he said he would not have signed the contract even if it had been offered. (Id. at p. 1181.)
We went on to hold the decision of the defendant hospital was quasi-legislative in nature.
"Here, the policy decision by FCH to go from an open to a closed system of delivery of anesthesia services was not irrational, arbitrary, contrary to public policy or procedurally unfair. The chronic problems existing in the department under the rotation system adversely affected the efficient delivery of anesthesia services to patients, lowered the quality of patient care, and created a potential risk to patients which included the risk of paralysis and/or death. The defects, including the lack of leadership, control and discipline in the system, were patent. Contrary to plaintiffs' argument the hospital was not required to wait until serious consequences occurred before taking action." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1184.)
We explained the distinction between an adjudicatory and a quasi-legislative decision on the reputation of a physician.
"[W]here a doctor loses or does not attain staff privileges because of professional inadequacy or misconduct, the professional reputation of that doctor is at stake. In that circumstance, his or her ability to become a member of the staff at other hospitals is severely impaired. On the other hand, a doctor's elimination by reason of a departmental reorganization and his failure to sign a contract does not reflect upon the doctor's professional qualifications and should not affect his opportunities to obtain other employment." (Mateo-Woodburn v. Fresno Community Hospital & Medical Center, supra, 221 Cal.App.3d at p. 1185.)
Plaintiffs claim the phrase "and his failure to sign a contract," in the Mateo-Woodburn decision indicates our holding was "premised upon the assumption that all doctors in the department will have the opportunity to stay on under the closed system, provided that a sufficient number of positions exist." Based on this assumption, plaintiffs conclude that if a hospital does not require the contractor to offer subcontracts to the incumbent physicians when a department is closed, it is a de facto decision which reflects on their character, competency or qualifications. Thus, coming full circle, the initial decision to close the department must be deemed to have been adjudicatory. We reject plaintiffs' exercise in circuitous logic for several reasons.
First, notwithstanding the phrase in Mateo-Woodburn, referring to the fact the plaintiffs' professional qualifications were not called into question when they refused to sign a subcontract offered to them, one of the plaintiffs there was not offered a subcontract. Our decision applied equally to him and to those physicians who were offered but declined a subcontract.
Second, there is nothing in Mateo-Woodburn to suggest that a hospital has a duty to offer a subcontract to incumbent physicians upon closure of a department as a precondition to finding the decision is quasi-legislative. To the contrary, the express language we used undermines plaintiffs' contention.
"Thus, the vested rights of a staff doctor in an adjudicatory one-on-one setting, wherein the doctor's professional or ethical qualifications for staff privileges is in question, take on a different quality and character when considered in light of a rational, justified policy decision by a hospital to reorganize the method of delivery of certain medical services, even though the structural change results in the exclusion of certain doctors from the operating rooms. If the justification is sufficient, the doctor's vested rights must give way to public and patient interest in improving the quality of medical services." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1185, italics added.)
Considering this language, it is difficult to understand how plaintiffs find support for their argument in Mateo-Woodburn. However, to the extent the decision could be read to require that subcontracts be offered to incumbent physicians as a precondition to finding the decision to close a department is quasi-legislative, we expressly reject that interpretation. Further, plaintiffs can find no support for their contention in any of the other cases which have considered the closure of a department in a hospital.
In Blank v. Palo Alto-Stanford (1965) 234 Cal.App.2d 377, the defendant had an exclusive contract with a partnership of radiologists to provide radiological services for the hospital. The plaintiff was a physician and member of the hospital staff who was excluded from the facilities of the radiology department. The plaintiff brought suit seeking damages and injunctive relief. Following trial, the court found against the plaintiff. (Id. at pp. 379-382.) In affirming the trial court, the appellate court focused on the justification for the action and noted that evidence of practice among hospitals is relevant to the issue. (Id. at p. 385.) The court also recognized that a hospital may legitimately exclude some physicians from certain departments:
"Although it may be assumed that a public, and for purposes of this case, a private hospital may not unreasonably or arbitrarily exclude a physician otherwise qualified from membership on its staff ... , it does not necessarily follow that it may not provide by regulation, or otherwise, that certain facilities shall be operated by the hospital itself to the exclusion of all members of the staff except those who may be coincidentally employed in such operation." (Id. at pp. 385-386.)Ultimately, the court concluded the evidence supported the findings of the trial court and that the radiology department was established as a closed staff system in a reasonable manner. "Any exclusion of appellant is not as a matter of law unreasonable or arbitrary, but is justifiable in view of the ends to be accomplished, nor can the contracts be attacked as illegal." (Id. at p. 394.)
Plaintiffs claim Blank is distinguishable because there were not enough positions available in the closed radiology department to retain all the incumbents. Therefore, unlike their case, the closure of the department in Blank did not reflect adversely on the professional qualifications of the plaintiff who was excluded. This argument is specious. By selecting a physician other than the plaintiff, the hospital in Blank made a de facto decision concerning the relative merit of the two candidates just as assuredly as did Gould in selecting anesthesiologists other than plaintiffs. Further, there is nothing in Blank to suggest the court based its finding that closure was warranted on the fact that it did not reflect adversely on the plaintiff. To the contrary, the primary thrust is that closure was justified regardless of the negative impact it had on the physician who was excluded.
Similarly, in Letsch v. Northern San Diego County Hosp. Dist. (1966) 246 Cal.App.2d 673, the defendant hospital had a contract with the plaintiff and another physician to act as the hospital's radiologists. The board of directors made a decision to close its radiology department and terminated its agreement with the plaintiff because it entered into an agreement with the other physician to be the hospital's sole radiologist. (Id. at p. 675.) Relying on the reasoning in Blank v. Palo Alto-Stanford, supra, 234 Cal.App.2d 377, on appeal the court found the defendant was entitled to operate its radiology department as a closed staff even though it excluded the plaintiff. The court summarily rejected the plaintiff's complaint that the closed staff operation unlawfully interfered with his right and that of his patients to select a radiologist of their own choosing. "The interference resulting from the closed staff operation of which [the plaintiff] complains is reasonable." (264 Cal.App.2d at p. 677.)
Plaintiffs claim Letsch is also distinguishable because again there were insufficient positions available after closure of the department to offer positions to all the physicians. However, what is truly significant in Letsch is the fact plaintiff was not offered the option to be the sole radiologist providing services to the hospital when the radiology department was closed. Yet, the court had no trouble finding the closure decision was justified.
In Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d 368, the court considered the rights of a physician to practice in a closed department. In Lewin, the defendant's dialysis unit was operated on a closed staff basis. The plaintiff requested the defendant grant him privileges in the dialysis unit. The defendant declined to do so, and elected to maintain its closed staff system. The plaintiff was afforded a hearing on the issue, and made a presentation to the defendant's executive committee of the medical staff association. The committee recommended maintaining the closed staff system and the defendant's board of trustees approved the recommendation. (Id. at pp. 376-380.)
Plaintiffs correctly note Lewin is distinguishable from their case, since it did not involve a decision by the hospital to close a department, but rather a decision to maintain a closed department. However, the case is relevant for the court's broad statement concerning the right of a hospital to close a department in spite of the impact on the practicing physicians.
"[T]here can be no doubt that, because denial of staff membership may effectively impair a physician's right fully to practice his profession, neither a private nor public hospital may unreasonably or arbitrarily exclude a physician otherwise qualified from membership on its staff. [Citations.] However, it does not necessarily follow that the governing authority of a hospital may not make a policy decision or adopt a rule of general application that certain facilities shall be operated by the hospital itself through an arrangement with one or more physicians to the exclusion of all members of the staff except those who may be coincidentally employed in such operation. [Citation.] Indeed, in every case brought to our attention in which a hospital's operation of a facility on a 'closed-staff' basis was challenged, the decision of the governing authority of the hospital has been upheld. [Citations.]" (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at p. 391.)The court went on to note the decision to continue the closed staff dialysis unit was based on evidence this system would enhance patient care, reduce cost, and facilitate administration of the hospital. These considerations were "worthy objectives advancing important social interests," and in balance were sufficient to justify the interference with the plaintiff's ability to practice medicine resulting from the closed staff system. (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at p. 394.)
The effect of closure of a department on the physicians involved was also considered in Centeno v. Roseville Community Hospital, supra, 107 Cal.App.3d 62. In Centeno, the plaintiff was a partner in a group that was granted an exclusive contract to provide radiology services to defendant's hospital. The plaintiff had a falling out with the other members of the partnership and left. The defendant then refused to permit the plaintiff to use its radiology facilities because it had an exclusive contract with the remaining partners. The plaintiff sued, claiming the hospital could not deny him privileges to use the radiology facilities. (Id. at p. 66.) The trial court and Court of Appeal disagreed.
Plaintiffs contend Centeno is again distinguishable because the plaintiff in Centeno was excluded from the radiology department when he voluntarily left the group that had the exclusive contract with the hospital, rather than as the result of the hospital's decision to close the department. Therefore, plaintiffs argue there was nothing about the circumstances of the case which reflected adversely on the plaintiff's qualifications. However, again there is nothing in Centeno which suggests the outcome would have been different if the hospital's decision had met plaintiff's definition of adverse reflection on the professional qualifications of the excluded physician. To the contrary, the court quoted the broad language of Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d 368, when it discussed the right of a hospital to close or maintain the closure of a department.
Finally, Redding v. St. Francis Medical Center, supra, 208 Cal.App.3d 98, addressed the rights of physicians who lose their staff privileges as the result of the closure of a department in a hospital. In Redding, the defendant hospital was concerned about the quality of heart bypass surgery at its hospital because of an unacceptably high mortality rate and other problems very similar to those present in plaintiffs' case. As a result, the hospital decided to go from an open-staffing system, to a closed program. The plaintiffs were surgeons who had performed bypass surgeries at the hospital with a very low mortality rate. The court noted "[t]he proposed change was openly discussed at St. Francis during early 1988." The decision to close the department was made in June 1988. Both plaintiffs declined to be the surgeon in charge of the new closed department, and were subsequently notified they would no longer be able to perform bypass surgery at defendant's hospital. (Id. at pp. 101-103.)
In upholding the trial court's determination that the defendant could close the heart bypass surgery department, the court first noted the decision in Anton (Anton v. San Antonio Community Hosp., supra, 19 Cal.3d 802) did not preclude a hospital from ever taking any action which could affect a physician's hospital privileges without an adjudicatory hearing.
"The California Courts have protected physicians from unreasonable and arbitrary exclusion from hospital staffs....
"
"There is, however, a definite distinction in the case law between the intentional actions of a hospital directed specifically toward the exclusion of a particular physician or groups of physicians, and the actions of a hospital which may, as a practical matter, result in the exclusion of individual practitioners but were undertaken for less personally directed reasons. Cases in the first category have protected physicians; cases in the latter category have often balanced the equities in favor of the hospitals.
"
"Thus it may be seen that the 'property right' of a physician in hospital staff privileges is subject to protection in some contexts but not in others...." (Redding v. St. Francis Medical Center, supra, 208 Cal.App.3d at pp. 103-105.)
Plaintiffs contend Redding is distinguishable because the two plaintiffs were extended an opportunity to be the surgeon in charge of the new closed department. Thus, there is no evidence the hospital's decision to close the heart surgery program was directed at a particular physician or group of physicians. The facts of Redding belie plaintiffs' argument.
First, it is significant that one of the primary reasons the defendant hospital in Redding considered closing its heart surgery program was a quality of care issue--an unacceptably high mortality rate. Although the plaintiffs' mortality rate was very low, some or all of the other surgeons who performed heart surgery at defendant hospital must have been experiencing problems for the overall program to experience a higher than expected mortality rate. Yet the court had no problem finding the closure was the result of a valid policy decision (quasi-legislative) and not directed at any specific individual.
Second, although the opinion indicates both of the plaintiffs in Redding were offered the opportunity to be in charge of the new heart surgery program, it does not indicate they were to simultaneously occupy the position. The logical inference is that one, and then the other was offered the position. Thus, if one had accepted the position, the other would necessarily have been excluded. This fact undercuts plaintiffs' claim that Redding is inapposite because it involved a situation where the plaintiffs were offered a position and declined. In addition, once the plaintiffs in Redding declined the director position, there is no evidence they were offered a subcontract which would have allowed them to continue to practice at the hospital.
When a hospital department is going through the process of closure, the end result will be to either increase or decrease the number of physicians, or have their numbers remain the same. Regardless of the outcome, it is quite possible that any individual physician will not be offered a subcontract. In these times, when corporate change is so common, the fact an incumbent physician is not offered a subcontract by the incoming corporation does not necessarily reflect on his or her competence. In any job search where there are a limited number of positions, there can only be so many successful applicants. For the unsuccessful ones, their failure to receive an offer may not reflect favorably on them; however, it does not necessarily reflect negatively.
Plaintiffs urge us to draw a line based on how they claim some nebulous public perceives a physician, following his or her failure to be offered a subcontract after closure of a department. They claim the only situation where a hospital may legally close a department without all department members receiving subcontract offers is when the department is downsized. Apparently they believe this scenario somehow softens the impact on a physician's reputation. Simply put: plaintiffs will never be satisfied short of a complete pairing of physicians with newly created positions following closure of a department. However, a judicial pronouncement of a rule requiring a hospital to do as plaintiffs suggest smacks of court meddling in hospital administration, a strongly disfavored practice. (See Lewin v. St. Joseph's Hospital of Orange, supra, 82 Cal.App.3d at p. 385.) Plaintiffs want us to give them insurance not available to the vast majority of the working public-absolute job security. This, we decline to do.
We conclude that Memorial Hospitals' decision to close the anesthesiology department was quasi-legislative, since it was not directed at any specific physician or group of physicians. Rather, it was based on a genuine concern about the overall function of the anesthesiology department and directed at improving the quality of patient care provided by that department. Further, we expressly reject any inference in Mateo-Woodburn that a hospital has a legal obligation to offer an incumbent physician a position in a closed department as a precondition to finding a closure decision is quasi-legislative rather than adjudicative.
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IV. Adequacy of the closure procedures
Having found Memorial Hospitals' decision to close the anesthesiology department was quasi-legislative, we next consider plaintiffs' other assertions of error, which are two-fold. First, they contend the procedure by which Memorial Hospitals closed the anesthesiology department was so fundamentally flawed and unfair that it did not satisfy the requirements of a valid quasi-legislative decision. Second, plaintiffs argue the trial court erred when it failed to consider the closure decision as an "integrated whole."
A. Standard of review*
The appropriate level of judicial review of Memorial Hospitals' decision to close the anesthesiology department is that which is applied to the quasi-legislative decision of any administrative agency. (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at p. 384.) We stated the standard of review for these decisions in Mateo-Woodburn, supra, 221 Cal.App.3d 1169:
"[A] court will not set aside a quasi-legislative or administrative decision of a nonadjudicatory nature 'unless it is substantively irrational, unlawful, contrary to established public policy, or procedurally unfair.' [Citations.]" (Id. at p. 1183.)
There are two assumptions implicit in this standard. First, we apply the same standard of review as does the trial court. Therefore, on appeal we do not give any deference to the trial court's ultimate conclusion.
"[T]he ultimate questions, whether the agency's decision was arbitrary, capricious or entirely lacking in evidentiary support, contrary to established public policy or unlawful or procedurally unfair, are essentially questions of law. With respect to these questions the trial and appellate courts perform essentially the same function, and the conclusions of the trial court are not conclusive on appeal. [Citations.]" (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at p. 387, fn. omitted; accord Mike Moore's 24-Hour Towing v. City of San Diego (1996) 45 Cal.App.4th 1294, 1303.)However, the findings of fact upon which the trial court bases its decision is reviewed for substantial evidence. "There might be foundational matters of fact with respect to which the trial court's findings would be conclusive on appeal if supported by substantial evidence." (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at p. 387.)
Second, although we review de novo a quasi-legislative decision, the standard is one of extreme deference. The reason for this deference is the presumed specialized knowledge and experience of the administrative body making the decision. (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at pp. 384-385.) The need for this deference is especially appropriate to the decisions of a hospital's governing board which may affect the quality of patient care:
"Judges are untrained and courts ill-equipped for hospital administration, and it is neither possible nor desirable for the courts to act as supervening boards of directors for every nonprofit hospital corporation in the state.... [I]n reviewing the rule-making or policy-making decisions of the governing board of a nonprofit hospital corporation, the court must guard against unduly interfering with the board's autonomy by substituting judicial judgment for that of the board in an area where the competence of the court does not equal that of the board. [Citations.]" (82 Cal.App.3d. at p. 385.)
Additionally, the degree of deference we accord a quasi-judicial decision is inherent in the term "substantive irrationality." "Substantive irrationality is equivalent to 'arbitrary, capricious, or entirely lacking in evidentiary support'; procedurally unfair is the same as 'failed to follow the procedure and give the notices required by law.'" (Lewin v. St. Joseph Hospital of Orange, supra, 82 Cal.App.3d at pp. 385-386, italics added.) Thus, the standard of review of a quasi-legislative decision is even more deferential than the substantial evidence standard. "It follows that review is not under Code of Civil Procedure section 1094.5, nor, on judicial review, is either the substantial evidence test or independent judgment test applied." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1183; see 2 Childress & Davis, Federal Standards of Review (2d ed. 1992) § 15.04, pp. 15-21-15-22.)
B. Analysis*
The trial court concluded: "The action to close the Department of Anesthesia was quasi-legislative, reasonable, rational, lawful, and in conformity with public policy. It was not arbitrary, capricious, or entirely lacking in evidentiary support." As a factual predicate to this conclusion the court found, notwithstanding his testimony to the contrary, that: "Dr. Abadir did make the statement in his report regarding 'high complication rate in young healthy patients.'" Further, the court found that if Dr. Shouse did make a misstatement concerning Dr. Abadir's findings, it was not a material misrepresentation and not significant. The court also found the decision to close the anesthesiology department was the result of "an extremely long and open process," with fair notice having been given to plaintiffs.
1. Public policy*
Beginning with the public policy aspect of the standard of review first, it is clear there was no violation of public policy in the procedure by which the anesthesiology department was closed. As described earlier at length, courts have consistently held there is no violation of public policy when a hospital makes a quasi-legislative decision to close a department. This is true even if the decision has an adverse impact on an individual physician or group of physicians. To the contrary, the courts have recognized the need to uphold the right of a hospital to close a department when it is deemed to be in the best interests of the patients served by the hospital.
"It is important, we believe, to remember that [the hospital] is attempting to redress a problem area in its medical care, and that it may in the future, after experience, refine the new program or completely redefine the new program. Public policy compels this court to protect [the hospital's] right to do just that in carrying out the purpose for which it has been established, without being 'locked in' to a system which may no longer, at some point in time, meet current patient needs." (Redding v. St. Francis Medical Center, supra, 208 Cal.App.3d at p. 108.)
The trial court dismissed plaintiffs' cause of action for restraint of trade and found against plaintiffs on the cause of action based on tortious interference with professional business relationships. Plaintiffs have not appealed these rulings, and in fact, Dr. Major has conceded these findings, along with the court's finding of no civil conspiracy, are not in issue in this appeal.
Further, plaintiffs have not identified any other public policy violated by Memorial Hospitals in the closure decision. However, Dr. Freeman and the amicus curiae brief of the California Medical Association (CMA) suggest the closure decision is contrary to the public policy that substandard performance by a physician should be addressed through the peer review process. They argue this policy benefits not only the individual physician, but also the public by ensuring the highest standards of practice are maintained in health care.
The argument forwarded by Dr. Freeman and the CMA presupposes the decision to close the anesthesiology department was merely a pretext for eliminating specific physicians--namely plaintiffs. Therefore, their argument is undermined by our determination that the decision was not directed at any specific individual, but rather a valid quasi-legislative decision aimed at ridding the anesthesiology department as a whole of the problems that plagued it. 5
2. Procedural fairness*
This brings us to plaintiffs' claim that the process by which Memorial Hospitals closed the anesthesiology department was procedurally unfair. Although previously stated, it bears repeating that "when the action is quasi-legislative, no particular notice and hearing is required." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1186.) Thus, an administrative agency is not limited to consideration of evidence provided at a particular place and time or in a particular manner.
"'To restrict [a quasi-legislative] agency to evidence produced at the time and place specified in the public notice would generate undesirable inflexibility.' [Citation.] It is commonly accepted practice, not at all incompatible with the concept of a public hearing, for quasi-legislative agencies to receive staff recommendations before the hearing. The complexity of matters before legislative bodies simply does not permit them to act only on input received at the hearing." (City of Santa Cruz v. Local Agency Formation Com., supra, 76 Cal.App.3d at p. 388.)The same rule applies to a quasi-legislative decision by a hospital to close a department:
"If a municipality can grant exclusive common carrier privileges without violating the due process clause, a hospital should be able to grant an exclusive contract of the nature of the contract in question.
"The contention that a hearing is required is untenable. We could not give serious consideration to the demand that before a public contract is awarded, an evidentiary hearing must be held so as to afford all potentially interested persons an opportunity to contest the award. Yet such a contention is exactly what plaintiff advances here." (Centeno v. Roseville Community Hospital, supra, 107 Cal.App.3d at pp. 75-76.)
Despite the clear state of the law on this subject, plaintiffs contend our decision in Mateo-Woodburn, established a "test" for procedural fairness in a closure decision. They claim this test includes a requirement for open meetings, opportunities to comment and public presentation of the various options the hospital is considering. Plaintiffs' argument is based on a misinterpretation of our holding in Mateo-Woodburn.
It is true that we detailed the steps the hospital took to inform the physicians in Mateo-Woodburn that closure of the anesthesiology department was contemplated. However, we did not suggest the procedures employed by the hospital in Mateo-Woodburn were the only ones which would suffice or even that they were required by law. To the contrary, we specifically restated the general rule that no hearing is required. "[The plaintiffs] claim they did not receive proper notice and a hearing. Again they are confusing an adjudicatory proceeding with quasi-legislative action. As stated above, when the action is quasi-legislative, no particular notice and hearing is required. [Citation.]" (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1186.)
In any case, the trial court's finding that the decision to close the anesthesiology department was a long and open process which provided plaintiffs fair notice is supported by substantial evidence. The plaintiffs were informed as early as May 1990, that an ad hoc subcommittee had been formed to look into complaints about the anesthesiology department. In August 1990, Dr. Major requested a meeting of all anesthesiologists to discuss the potential impact of closure of the department-a meeting no one attended except him. The members of the anesthesiology department were informed the MEC had recommended consideration be given to closing the department the day after the recommendation was made. Dr. Major was a member of the MEC and therefore aware of the discussions that occurred in that committee concerning closure. In fact, Dr. Major provided his input to Memorial Hospitals on the subject of department closure prior to the MEC's recommendation. Finally, like the plaintiff in Mateo-Woodburn, Dr. Major was afforded an opportunity to present a counter-proposal to the board of governors prior to its decision to award the anesthesia services contract to Gould.
Additionally, plaintiffs were informed when the RFP was released, when responses were received, and who were the members of the RFP evaluation subcommittee. Dr. Freeman testified that although he was aware closure was being considered and informed of the progress of the RFP, he did not understand what an RFP was or the potential significance of the action to him. In other words, Dr. Freeman claimed no one ever specifically notified him that closure of the anesthesiology department and award of an exclusive contract for anesthesia services could result in loss of his privilege to practice in Memorial Hospitals. However, the fact plaintiffs may not have fully understood what impact the closure decision would have on them does not mean they were denied adequate notice the decision was being contemplated. Nor does it mean they were denied an opportunity to determine what the decision would mean to them. Although plaintiffs' failure to inquire about the ultimate objective of closure of the anesthesiology department does not constitute waiver, it does blunt any claim the procedure was unfair.
Plaintiffs highlight the problems and misrepresentations concerning the exact nature of Dr. Abadir's report as support for their claim that the procedure used to close the anesthesiology department was unfair. Dr. Major claims this report and the characterization given to it by Dr. Shouse when he reported to the ad hoc subcommittee and the MEC served as the "linchpin of the entire closing process." Plaintiffs overstate the significance of this report.
First, the trial court specifically found Dr. Abadir's report did include a statement that his review had detected a high complication rate in young, healthy patients. Thus, the court resolved the credibility issue in favor of Dr. Shouse. In assessing whether there is substantial evidence to support a court's factual finding, the credibility of a witness "is the exclusive province of the trial judge or jury to determine ...." (People v. Jones (1990) 51 Cal.3d 294, 314.) Applying this standard, there was substantial evidence to support the trial court's determination that there was no misrepresentation by Dr. Shouse concerning Dr. Abadir's finding.
In addition, even if Dr. Shouse did misrepresent that the review was conducted by the CSA versus a private physician, there was substantial evidence to support the court's finding that any such misrepresentation was inconsequential. It must be remembered the ad hoc subcommittee had been formed to look into problems experienced with the operation of the anesthesiology department before Dr. Abadir conducted his review. Moreover, although cited as evidence of one of the problems in the department, it was by no means the only or even the most serious problem. Aside from the results of Dr. Abadir's review, the MEC was provided substantial evidence of problems in the anesthesiology department including other quality of care issues, inappropriate behavior, personality conflicts, and scheduling. No evidence was presented that, but for the report of Dr. Abadir's review, the MEC would not have recommended closure of the department or that Memorial Hospitals would not have made the decision to do so. To the contrary, the testimony of those involved in the decision indicated they had concerns about the operation of the anesthesiology department independent of and predating Dr. Abadir's review.
Plaintiffs also claim the procedural unfairness of the closure decision is demonstrated by the statistical report generated by Catherine Martin, the manager of Memorial Hospitals' quality assurance department. In June 1990, at the request of Dr. Deos, Martin, a member of the ad hoc subcommittee appointed to look into problems in the anesthesiology department, prepared a summary of all the cases reviewed within the anesthesiology department in the previous two and one-half years. The report purported to compare each anesthesiologist with the others in the department. The anesthesiologists involved were not identified by name, but rather assigned a letter. However, at the time of trial Martin was unable to identify with any degree of certainty which letter referred to which anesthesiologist because the key she previously prepared had been destroyed.
Plaintiffs contend this summary was seriously flawed and misidentified the anesthesiologists who had a higher than normal rate of complications as Drs. Turner and Major. Therefore, the decision to commission Dr. Abadir to conduct a review of the anesthesiology department which was based on the results of this statistical summary was unfair and unwarranted. However, any flaws in the statistical summary prepared by Martin had an insignificant impact on the decision to close the department.
First, Martin was asked to prepare the statistical summary after the ad hoc committee had been formed because of concerns by the MEC about the operation of the anesthesiology department. Second, regardless of the basis for seeking a quality review by Dr. Abadir, it was completed, and it was the results of his review that were reported to the MEC. Third, the results of Martin's summary were presented to plaintiffs on July 9, 1990, and based on their expressed concern with the validity of the statistics, Martin made further calculations. Fourth, it must again be emphasized that the decision to close the anesthesiology department did not hinge on the results of Dr. Abadir's review, but was based on the overall problems in the department.
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3. Closure process as an "integrated whole"
Quoting our language in Mateo-Woodburn, 6 plaintiffs argue the trial court erred because it failed to consider the steps in the closure of the anesthesiology department as an "integrated whole." Plaintiffs claim that in accordance with Mateo-Woodburn, Memorial Hospitals' legal responsibility extended to the selection of the subcontractors by Gould because the terms of the subcontracts were "'part of the [hospital's] administrative decision.'" (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1187.) Plaintiffs claim the trial court did not consider the closure decision as an integrated whole, but "artificially divided" it into distinct phases. They argue the court considered the closure of the anesthesiology department in three distinct phases: Memorial Hospitals' decision to close the department; the award of the anesthesiology services contract to Gould; and the selection of subcontractors by Gould. Plaintiffs argue this procedure resulted in minimization of the impact of the irregularities in each separate phase, allowing the court to conclude the process as a whole was fair. Additionally, plaintiffs argue that somehow this procedure contributed to the trial court's failure to recognize that Medical Hospitals had a legal duty to ensure subcontracts were offered to plaintiffs, even though Gould did not. Plaintiffs are incorrect on both counts.
Initially, we recognize plaintiffs' argument that the closure process must be considered as an integrated whole, is akin to claiming it must be reviewed for cumulative error. In other words, they argue the court failed to consider the cumulative impact of problems in each phase of the overall process on the fairness of the closure decision. However, implicit in this argument is the assumption that errors occurred in each phase of the process. The only rational way to make this determination is to do exactly what the trial court did: consider each discrete step in the process separately. Having done this, the court found no error in each step of the process. Therefore, it is difficult to understand how the court could have erred in failing to consider the cumulative effect of the absence of error in each phase of the closure process on the overall decision to close the department.
Second, to the extent plaintiffs' claim that the closure decision, including the selection of subcontractors by Gould, implies the existence of a conspiracy or sub rosa agreement between Memorial Hospitals and Gould to exclude plaintiffs, we reject it. The trial court specifically found there was no conspiracy between Memorial Hospitals and Gould to discriminate against plaintiffs or exclude them from the anesthesiology department. Plaintiffs have not appealed this finding, and therefore, are bound by it.
Third, it is important to recognize the context in which we discussed the requirement to consider the closure process as an integrated whole in Mateo-Woodburn. The passage quoted by plaintiffs is from our discussion of the plaintiff's claim in Mateo-Woodburn, that the terms of the subcontracts offered them were unfair and "Draconian." (Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1186.) Based on the fact the defendant hospital had contractually reserved the right to review and approve the form of any subcontract offered, we concluded the terms of the contract were an integral part of the closure decision. (Id. at p. 1187.) It was in this context that we stated the closure process was to be considered as an integrated whole. Thus, we held the terms of the subcontracts would be reviewed according to the same deferential standard as the rest of the closure process and would be upheld unless it was substantially irrational. (Ibid.)
However, the holding in Mateo-Woodburn should not be read to mean a hospital retains responsibility for every part of the subcontracting process by the contractor who receives an exclusive contract. In Mateo-Woodburn, we found the terms of the subcontracts were reviewable as part of the closure process because the hospital contractually retained the right to review them as part of its contract with the contractor. However, the opinion does not state that the procedure by which the contractor decided which physicians it would offer subcontracts was reviewable by the court as an integral part of the closure decision.
Reviewing the facts in plaintiffs' case, it is apparent Memorial Hospitals attempted to extricate itself entirely from the subcontractor selection process. First, the RFP it issued did not dictate the manner in which a bidder would satisfy the requirements of the contract. It did not dictate the number of anesthesiologists, who they would be, or whether they were required to be directly employed by the bidder or independent contractors. 7 It only required the anesthesiologists who were to provide services under the contract be licensed in California, be certified or eligible for certification by the American Board of Anesthesiology, and obtain medical staff membership at Memorial Hospitals. The RFP required any bidder to list the names of proposed staff, including anyone who had agreed to enter a subcontract with the bidder in the event it was awarded the contract. However, the only specified criteria which Memorial Hospitals stated was required was board certification or board eligibility.
There is nothing in the RFP or final contract which dictates what criteria Gould had to use in selecting subcontractors or direct employees, or the manner in which they should be selected. 8 Further, Memorial Hospitals rejected Gould's initial proposal which would have required Memorial Hospitals to select the independent anesthesiologists who would be offered subcontracts under its proposal. Gould was specifically required to take responsibility for selecting the independent anesthesiologists with whom it would subcontract. Moreover, the evidence supports the trial court's finding that after award of the contract to Gould, Memorial Hospitals did not direct to whom Gould should or should not offer a subcontract.
Neither did Memorial Hospitals play any part in the development of criteria used by Gould in selecting subcontractors or suggest who the members of the subcontractor selection committee should be. When Gould sought advice on how to select subcontractors, Memorial Hospitals suggested the selection process should be objective and open to all current members of the anesthesiology department. The criteria for selection of the subcontractors was developed by Dr. Imanaka after discussion with members of the selection committee. After the members of the selection committee scored each candidate individually, it was Dr. Imanaka who compiled the total scores and decided how to rank the applicants. Memorial Hospitals played no part in this process and there is no evidence it ever saw the completed score sheets. The only apparent connection between the subcontractor selection committee and Memorial Hospitals was that it allowed the committee to meet in its facility. Thus, there was sufficient evidence to support the trial court's finding that the subcontractor selection committee did not act on behalf of Memorial Hospitals.
Based on the express terms of the RFP and the evidence presented at trial, we conclude that review of Memorial Hospitals' quasi-legislative decision to close the anesthesiology department does not include the process by which Gould selected the subcontractors. That does not mean this process is immune from review. However, this review is much more circumscribed. The court's role in reviewing an employment decision is limited to determining whether it was based on unlawful criteria:
"[T]he employer has discretion to choose among equally qualified candidates, provided the decision is not based upon unlawful criteria. The fact that a court may think that the employer misjudged the qualifications of the applicants does not in itself expose him to ... liability, although this may be probative of whether the employer's reasons are pretexts for discrimination." (Texas Dept. of Community Affairs v. Burdine, supra, 450 U.S. at p. 259.)The trial court's characterization of the scoring process used by Gould to select the subcontractors as "a very erratic process," is accurate. There were wide variations in the scores plaintiffs received from the members of the selection committee on criteria which appear to be subject to very objective assessment, i.e., board certification or eligibility. The scores received by plaintiffs in the area of experience were little different from the scores received by applicants who had just completed their residency in anesthesiology. Dr. Imanaka filled out the score sheet of one member of the committee who was absent without his knowledge and contrary to his wishes. Also, one member gave plaintiffs maximum scores and all other applicants minimum scores as a protest to how the selection process was conducted.
In addition to the discrepancies in the selection process, plaintiffs highlight the personal animosity of Dr. Imanaka and other members of the selection committee toward them, and Dr. Imanaka's incorrect statement to the selection committee that a CSA review had found plaintiffs' work to be substandard. There is no question the selection process was not a model of consistency and could have been done better or differently. However, it is not the role of a reviewing court to question the wisdom of an employment decision. "[T]he factual dispute at issue is whether discriminatory animus motivated the employer, not whether the employer is wise, shrewd, prudent or competent. [Citations.]" (Fuentes v. Perskie (3d Cir. 1994) 32 F.3d 759, 765.)
The evidence does not support a conclusion that plaintiffs were not selected as subcontractors based on consideration of unlawful criteria. As explained earlier, plaintiffs have failed to establish that any action taken by either Memorial Hospitals or Gould was motivated by racial animus against Dr. Turner. Neither have they identified any other unlawful criteria used by Gould in its decision to not offer them subcontracts. Therefore, plaintiffs' claim that the subcontractor selection process improperly excluded them is without merit.
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V. Medical staff bylaws*
1. Medical staff bylaws as a binding contract
Plaintiffs claim the trial court erred when it found Memorial Hospitals did not violate the terms of the medical staff bylaws when it closed the anesthesiology department. Although not explicitly stated, it is apparent plaintiffs' contention goes to two of their causes of action. First, whether Memorial Hospitals' failure to comply with the terms of the medical staff bylaws constituted a breach of contract. Second, even if the medical staff bylaws did not constitute a binding contract, Memorial Hospitals' failure to comply with them renders the closure of the anesthesiology department to be procedurally unfair.
Memorial Hospitals' counter-argument is that any failure to comply with the terms of the medical staff bylaws could not be the basis for a claim of breach of contract because they did not constitute a binding contract between it and plaintiffs.9 However, Memorial Hospitals claim that regardless of whether the bylaws constitute a binding contract, the procedure by which it closed the anesthesiology department complied with their provisions.
The issue of whether medical staff bylaws constitute a binding contract is one of first impression in California. Neither parties' briefs nor independent research have identified any case in which a California court has determined whether medical staff bylaws constitute an enforceable contract between the hospital and the physicians on its medical staff.
Again, although interesting, we decline to resolve this issue. Regardless of whether the medical staff bylaws constitute an enforceable contract, Memorial Hospitals was obligated to comply with them in closing the anesthesiology department. (See Janda v. Madera Community Hosp., supra, 16 F.Supp.2d at p. 1186; Gianetti v. Norwalk Hosp. (Conn. 1989) 557 A.2d 1249, 1254-55; Robles v. Humana Hospital Cartersville (N.D.Ga. 1992) 785 F.Supp. 989, 1002.) The failure of Memorial Hospitals to follow the procedures for closure set forth in the medical staff bylaws is part of the determination of whether the procedures were unfair, or not in compliance with that required by law. As discussed earlier, this is an integral part of the judicial review of a quasi-legislative decision. And, as we discuss below, there is ample evidence to support the trial court's finding that the medical staff bylaws were followed. Thus, their status as a binding contract is irrelevant.
Compliance with the medical staff bylaws
In a related argument, plaintiffs contend Memorial Hospitals failed to comply with the medical staff bylaws in making the decision to close the anesthesiology department. As previously explained, regardless of whether the medical staff bylaws constituted a binding contract between Memorial Hospitals and plaintiffs, Memorial Hospitals was required by law to comply with the medical staff bylaws adopted by it. Consequently, if it failed to comply with the provisions of the bylaws concerning the closure of a department, the decision to close could be considered both illegal and procedurally unfair.
The court found with respect to the provisions of the medical staff bylaws, that sections 7.6-1 and 13.10 did require the MEC, not the medical staff as a whole, to review related quality of care issues before a decision was made by the board of directors to close a department. The court found the bylaws did not specify any particular format or method of conducting the required review and, therefore, it only need be reasonable and adequate. The court found the MEC did discuss related quality of care issues at its May 26, 1992 meeting in sufficient detail and was reasonable and adequate. Therefore, the court concluded the requirements of the medical staff bylaws had been met.
Plaintiffs argue the "review" required by sections 7.6-1 and 13.10 of the bylaws prior to a decision to close a department contemplates more than the mere "discussion" engaged in by the MEC. They claim the MEC's review was also deficient because it focused on prospective quality of care issues that may arise if an exclusive contract was awarded, rather than on existing quality of care issues that gave rise to consideration of department closure. Plaintiffs contend that if the MEC had undertaken a "comprehensive" review of the quality of care provided by the anesthesiology department, it would have determined the plaintiffs were performing their jobs capably. Further, the review would have resulted in "informed recommendations for improvements." Additionally, plaintiffs contend the review did not take place prior to the date the decision was made to close the department. Rather, it was not undertaken by the MEC until the decision had already been made by the board of directors. Plaintiffs' argument is not supported by the law or the facts.
Plaintiffs' argument concerning the adequacy of the review conducted by the MEC is in reality a claim that it could have been done better. As the trial court correctly found, the bylaws do not define precisely what the review of related quality of care issues must entail. Neither do they specify a procedure or format for the review. The bylaws only require the MEC10 undertake a review and "make recommendations to the Board of Directors regarding quality of care issues related to exclusive arrangements for Physician and/or professional services, prior to any decision being made ...." (§ 13.10.) The MEC clearly understood this requirement. The minutes of its meeting on May 26, 1992, indicate it performed this review and did provide input to the board of directors.
"The Medical Staff Bylaws requires that input from the Medical Executive Committee regarding quality of care issues be received when a change in exclusive contracts is contemplated. Questions arose as to how to evaluate if closing the Department improved quality of care. Were the issues of concern adequately resolved by the contract? It was explained that a quality assessment process was included in the contract and that reports would be made to the Medical Executive Committee on a quarterly basis.
"Recommendation was made and approved unanimously for support of the anesthesia contract as proposed."
Thus, there was substantial evidence to support the trial court's finding that the MEC did conduct a review as required by the medical staff bylaws. The fact the review was in the form of an informal discussion, does not mean it was not conducted. It bears emphasis that our role in reviewing a quasi-legislative decision is not to determine if it could have been done better, or more comprehensively, but whether it was so unreasonable as to be deemed arbitrary or capricious.
"It is not our role to pick and choose among various alternatives and to determine exactly what factors the hospital administrators must consider. Even if alternative solutions would equally satisfy the need for radiology services, we must find that unless the action complained of can be seen to be violative of the previously mentioned standard as being unreasonable, arbitrary or capricious, it is valid. [Citation.]" (Centeno v. Roseville Community Hospital, supra, 107 Cal.App.3d at p. 73; accord Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1185.)
Moreover, the MEC's review focused on precisely the question identified in the medical staff bylaws for its consideration: the quality of care issues related to the award of an exclusive contract in a previously open department. Logic does not support plaintiffs' argument that the quality of care review contemplated by the medical staff bylaws was not prospective, but rather retrospective in nature. This argument confuses the identification of existing quality of care issues which spurred the MEC to consider closure, and the quality of care issues related to the actual award of an exclusive contract to provide anesthesia services. Having once determined there were quality of care issues warranting closure of the department, it would not make sense to require the MEC to reconsider those same issues. Thus, the reasonable interpretation of the review requirement in the bylaws is that it related to whether the closure decision would address or remedy the problems that had previously been identified. That was precisely the focus of the MEC's discussion at the May 26th meeting.
Further, plaintiffs' claim that the quality review was not completed until after the decision to close the department was made is not supported by the evidence. As plaintiffs concede, the decision by the board of directors to award the exclusive contract to Gould was made on June 1, 1992. The board made the decision after being informed of the recommendation of the MEC and the Professional Practices Committee and after Dr. Major was given an opportunity to present his alternate proposal. Although, the minutes of that meeting do not reflect the board specifically voted to close the department, the decision to award an exclusive contract to Gould to provide anesthesia services to Memorial Hospitals was tantamount to that decision. Thus, plaintiffs' claim that the quality review by the MEC did not precede the decision to close the department is without merit.
VI. Memorial Hospitals' legal obligation to ensure plaintiffs received a subcontract*
Plaintiffs' claim that Memorial Hospitals was legally obligated to ensure they received a subcontract when the anesthesiology department was closed is based on their interpretation of our decision in Mateo-Woodburn. As explained in Part III, this interpretation of our holding in Mateo-Woodburn is contrary to California law. Therefore, we find Memorial Hospitals had no legal obligation to ensure plaintiffs received a subcontract from Gould after it made a legitimate, quasi-judicial decision to close the anesthesiology department.
VII. Entitlement to attorney fees*
Memorial Hospitals claims the trial court erred when it denied its motion for attorney fees pursuant to Code of Civil Procedure section 1021.5.11 Memorial Hospitals contends the defense of the suit filed by plaintiffs resulted in a significant benefit to a large class of persons, namely those individuals who sought treatment at its facilities. Memorial Hospitals argues this significant benefit involved the important public interest in receiving adequate anesthesia services. It also asserts the attorney fees it incurred in defending this interest was disproportionate to the stake it had in the outcome of the litigation, thereby warranting award of attorney fees under section 1021.5. Memorial Hospitals asserts it had "little choice" but to defend the lawsuit in order to vindicate not only its rights, but also those of the public to receive high quality anesthesia services. We reject Memorial Hospitals' arguments.
[END OF PART NOT CERTIFIED FOR PUBLICATION]
A. Standard of review
A trial court's decision on whether attorney fees should be awarded under Code of Civil Procedure, section 1021.5, is reviewed for an abuse of discretion. (Ciani v. San Diego Trust & Savings Bank (1994) 25 Cal.App.4th 563, 571; accord Satrap v. Pacific Gas & Electric Co. (1996) 42 Cal.App.4th 72, 77.)
"The pertinent question is whether the grounds given by the court for its denial of an award are consistent with the substantive law of section 1021.5 and, if so, whether their application to the facts of this case is within the range of discretion conferred upon the trial courts under section 1021.5, read in light of the purposes and policy of the statute." (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1298.)
B. Analysis
In denying the motion for attorney fees the trial court made extensive findings, including: 1) defendants asserted their privilege to close a department in the hospital and contract with an outside provider as a defense to plaintiffs' suit; 2) any enforcement of a right or policy affecting the public only resulted secondarily or tangentially from the defense of the suit by defendants; 3) the record contained no evidence that a substantial part of the public benefited from defendant's successful defense of the litigation; 4) the record contained no evidence the operation of Memorial Hospitals' facilities improved since the anesthesia department was closed; 4) only the defendants, and not the general public benefited from having the right to exercise managerial discretion in closing departments; and 5) therefore, defendants were in the same position as any other private entity which prevailed in litigation which affected only its interests. The court further found the attorney fees incurred by defendants were not disproportionate to its stake in the outcome of the litigation, which expert testimony indicated was $2.7 million. The court also found this sum could have been trebled if it had found defendants had violated the Unruh Act.
Code of Civil Procedure section 1021.5 is a codification of the "private attorney general" doctrine which allows private individuals to recover attorney fees in lawsuits which enforce important public policies. (California Licensed Foresters Assn. v. State Bd. of Forestry (1994) 30 Cal.App.4th 562, 568-569.) The determination of whether attorney fees are recoverable under Code of Civil Procedure section 1021.5 is based on consideration of three criteria:
"(1) the action resulted in the enforcement of an important right affecting the public interest; (2) a significant pecuniary or nonpecuniary benefit was conferred on a large class of persons; and (3) the necessity of private enforcement and the attendant financial burden thereof make the award appropriate." (Ciani v. San Diego Trust & Savings Bank, supra, 25 Cal.App.4th at p. 571.)In applying this test, however, it must be remembered that "[s]ection 1021.5 is intended as a 'bounty' for pursuing public interest litigation, not a reward for litigants motivated by their own interests who coincidentally serve the public. [Citations.]" (California Licensed Foresters Assn. v. State Bd. of Forestry, supra, 30 Cal.App.4th at p. 570.)
Memorial Hospitals' argument that its defense of plaintiffs' lawsuit affected a substantial public interest, i.e., high quality anesthesia care, is not persuasive. As the trial court recognized, Memorial Hospitals defended the closure of the anesthesiology department on the basis it was the result of a legitimate, quasi-legislative decision. It was on this basis that it argued revocation of plaintiffs' vested property right in medical staff membership was justified. Memorial Hospitals did not defend the action in order to vindicate any constitutional rights of the public in general. (See City of Fresno v. Press Communications (1994) 31 Cal.App.4th 32, 43-44; Planned Parenthood v. Aakhus (1993) 14 Cal.App.4th 162.) Rather, the interest which Memorial Hospitals sought to vindicate was its right to make a quasi-legislative, management decision concerning the operation of its facilities regardless of its impact on the practicing physicians.
Although Memorial Hospitals' motivation for exercising its discretion to close the anesthesiology department was to improve the quality of anesthesia services to its patients, that is not necessarily the reason it defended the lawsuit. As the trial court found, the outcome of the litigation underscored the right of Memorial Hospitals to make quasi-legislative decisions in an attempt to improve the quality of care it provided. It did not signify that Memorial Hospitals was successful in that endeavor.
There was no evidence presented that closure of the department did result in an improvement in anesthesia services or that closure was the only way this goal could be realized. The gravamen of the suit revolved around Memorial Hospitals' prerogative to decide how it would attempt to improve the quality of care it provided. This was a private interest on the part of Memorial Hospitals. Any improvement of the quality health care that may be realized as a result of the litigation is collateral to that private interest.
Additionally, there was ample evidence to support the trial court's finding that Memorial Hospitals had a significant interest in defending the suit. Its potential exposure to damages if the plaintiffs were successful in proving the closure process was defective was substantial. Its exposure was even greater if plaintiffs had been successful in proving Memorial Hospitals had unlawfully discriminated in violation of the Unruh Act. Therefore, we conclude the trial court did not abuse its discretion in denying Memorial Hospitals' request for attorney fees.
DISPOSITION The judgment is affirmed. Costs are awarded to Gould, and to Memorial Hospitals on the appeal. Costs are awarded to plaintiffs on the cross-appeal as against Memorial Hospitals only.
WISEMAN, J.
WE CONCUR:
DIBIASO, Acting P.J.
HARRIS, J.
* Pursuant to California Rules of Court, rule 976.1, this opinion is certified for publication with the exception of Parts I, II, IV-A, IV-B(1) and (2), V, VI, and VII.
1 Gould Medical Foundation and Gould Medical Corp., Inc. will be referred to collectively as "Gould."
2 "... In an 'open staff' system, all 'qualified' physicians with medical staff privileges are permitted to work at the Hospital in their respective medical departments. Under a 'closed system,' the hospital contracts with an 'exclusive provider' or particular physician group for certain medical services, thereby 'closing' the medical practice to other physicians who are not members or employees of the contracted physician group." (Janda v. Madera Community Hosp. (E.D. Cal. 1998) 16 F.Supp.2d 1181,1183; see Mateo-Woodburn, supra, 221 Cal.App.3d at p. 1175.)
3 "[A] practitioner who temporarily takes the place of another." (Dorland's Illus. Medical Dict. (26th ed. 1990) p. 756.)
* See footnote *, ante.
* See footnote *, ante.
4 Dr. Barnette testified he talked to Dr. Major about a position as an independent anesthesiologist at Memorial Hospitals in March 1989. However, his interest ended when Dr. Freeman said he would not share any cases with him. On the other hand, Dr. Major testified one of the reasons he did not bring more independent anesthesiologists into the hospital was because the Gould anesthesiologists said they wanted to pick up the extra cases.
* See footnote *, ante.
* See footnote *, ante.
* See footnote *, ante.
5 In its amicus curiae brief on behalf of plaintiffs, the American Society of Anesthesiologists and the California Society of Anesthesiologists assert that Memorial Hospitals' closure decision implicated public policy because it involved the dominance of a large medical group, Gould, over a hospital because of its financial influence. They claim that protecting plaintiffs' individual rights would uphold the basic public policy of ensuring that quality of patient care overrides any financial considerations. We found ensuring the quality of patient care was the primary focus of Memorial Hospitals' decision to close the anesthesiology department in the first place. The fact plaintiffs and their amici believe the same interest could be served in a different manner does not render Memorial Hospitals' solution contrary to public policy.
* See footnote *, ante.
6 "The various steps involved in the process of moving from an open to a closed system cannot be segmented but are to be considered as an integrated whole." (Mateo-Woodburn, supra, 211 Cal.App.3d at p. 1187.)
7 The final contract did provide that anesthesia services would initially be provided by six Gould anesthesiologists and four independent anesthesiologists. However, this provision was not mandated by the RFP, but rather as the result of Gould's proposal.
8 The final contract did provide that any anesthesiologist or nurse anesthetist who was to provide anesthesia services had to be approved in writing by Memorial Hospitals. However, this provision was not limited to anesthesiologists with whom Gould entered subcontracts, but to anyone who would provide anesthesia services under the contract. Thus, this provision cannot reasonably be interpreted as an attempt by Memorial Hospitals to control the procedure or criteria by which Gould selected the independent anesthesiologists. Rather, considering the contract as whole, the provision is reasonably construed to be a means by which Memorial Hospitals ensured that anyone who was to provide anesthesia services under the contract met the general requirements set forth in other provisions of the contract, e.g., medical staff membership, licensure, and board certification or eligibility.
* See footnote *, ante.
9 In its amicus curiae brief in support of Memorial Hospitals and Gould, the California Healthcare Association also argues that medical staff bylaws do not create a contract between a hospital and its medical staff.
10 The express language of Section 13.10 states that the "Medical Staff" must review any proposal to close the department. However, the trial court found the MEC properly conducted the review and made a recommendation to the board of directors. Plaintiffs have not asserted this was error. In any case, the medical staff bylaws expressly provide for the MEC to represent and act on behalf of the medical staff in the intervals between medical staff meetings.
* See footnote *, ante.
* See footnote *, ante.
11 Code of Civil Procedure, section 1021.5 provides, in pertinent part:
"Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any...."
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