Lawsuit fights "existential threat" to medical staff independence

September 18, 2017
Area(s) of Interest: Medical Staff Self Governance Hospitals and Health Facilities 

By Andis Robeznieks, AMA Senior Staff Writer (Reprinted with permission from AMA Wire®.)

While “L.A. Law” and other TV courtroom dramas often focused on the rich and glamorous, a lawsuit originating in a rural dairy community in California’s Central Valley has captured the attention of the state’s legal and medical professionals and—given the state’s outsized influence—the case’s impact could be felt far and wide.

“Every once in a while, you get a really important case that’s a flashpoint,” said Long Do, California Medical Association (CMA) legal counsel and director of litigation. “This case serves as an existential threat to independent hospital medical staffs.”

The suits stems from actions taken Jan. 26, 2016, when the Tulare Regional Medical Center (TRMC) board of directors voted to terminate the hospital’s medical staff organization and effectively remove the hospital’s elected medical staff officers, install a slate of appointed officers, and approve new medical staff bylaws and rules drafted without staff input.

Except for the newly appointed officers, the rest of the staff was then terminated, stripped of their rights as active members and then granted “provisional” status as part of the new medical staff which they had not applied or consented to membership with, according to a post-trial brief filed by the TRMC Medical Staff.

The replacement bylaws also contained a provision, since amended, that physicians could achieve and maintain “active” status by proving their economic value to the hospital, according to the brief—which described that provision as “basically, an illegal kickback scheme.”

Frightening prospect: Cooperate, or else

“If you could imagine hospital medical staff bylaws written by hospital lawyers, this is what they would look like,” Do said. “Doctors shouldn’t be making decisions on patient care based on hospital profitability.”

The case went to trial in April and post-trial briefs are being filed. Closing arguments are scheduled for Oct. 2 and Do said the judge is expected to issue a ruling 45 to 60 days after that.

“We’re hoping to get resolution by the end of the year,” he said.

CMA filed pre- and post-trial amicus briefs. It has also provided financial support—as has the Litigation Center of the American Medical Association and State Medical Societies—and has organized fundraising for the case.

Do, the CMA’s litigation director, said the medical staff’s legal team presented strong arguments during the trial, but the potential impact of a negative outcome leaves him concerned.

“If the hospital is allowed to do what they did, it basically ends medical staff independence in the state of California,” he said. “Our biggest concern is that some sort of legal precedent would be set if they were allowed to get away with it. Another hospital could say to its staff, ‘If you don’t cooperate, that’s what we’re going to do to you.’”

CMA brief argues that the TRMC board’s actions were direct violations of legislation passed in 2004 establishing the self-governing rights of all medical staffs at the state’s hospitals. These rights include the right to determine and enforce medical staff bylaws and select staff leaders.

“Nothing in the law permits a hospital to simply dissolve an entire medical staff,” the amicus brief states. “Nor does the law condone a select group of individuals undemocratically stealing power from elected medical staff leaders and imposing their will on all the members of the medical staff.”

Interestingly, both sides in the suit sought to bolster their arguments by citing a 2013 California Supreme Court case, El-Attar v. Hollywood Presbyterian Medical Center. In that case, a physician supported by CMA and the Litigation Center did not prevail, but the court’s ruling upheld many of the principles of medical staff governance that organized medicine was fighting for.

“Their argument, which they haven’t changed since day one, is that hospitals have the ultimate authority to do whatever they must in defense of hospital operations and patient care,” Do said. “What we’ve proven is that that defense is both factually and legally incorrect.”

In the El-Attar case, the court ruled that if the medical staff is failing to fulfill a specific duty, the hospital has the authority to step in and fulfill that specific duty, Do said. TRMC has argued its actions were necessary because of a negative survey of the hospital conducted by the Centers for Medicare and Medicaid Services (CMS).

The medical staff’s post-trial brief states that the CMS audit blamed the hospital’s governing body for problems with quality control, infection control, and lack of fire and safety control. CMS found the medical staff deficient in credentialing and peer review, according to the brief, but the defendants had not presented any evidence that the governing board had any complaints regarding staff performance in these two functions.

Reinstatement of bylaws, officers sought

Actions the medical staff is seeking include: reinstatement of original medical staff with prior privileges and status, reinstatement of original bylaws, and reinstatement of all department and committee chairs or other leadership posts previously held by medical staff unless they voluntarily resign.

While typically cases such as these can drag on through a long cycle of appeals, Do said that this may not happen with this suit.

Though TRMC is now managed by a private entity and a defendant in the lawsuit—Healthcare Conglomerate Associates—the 108-bed hospital is owned by the taxpayer-funded Tulare Local Healthcare District, which is governed by a publicly elected five-person board.

Publicity surrounding the lawsuit has spurred citizen activism that resulted in two incumbent board members being defeated last year and a recall election defeat of another incumbent in July, Do said. A fourth incumbent resigned Aug. 23, so the chances of reaching a settlement have increased, he added.

“If there is a settlement, it would have to be structured in a way that sets a precedent,” Do said. “We don’t want other hospitals to get any ideas about trying something like this.”

The opening paragraph of medical staff plaintiffs’ post-trial brief can be seen as a legal clarion call to hospitals contemplating similar action.

“In this case,” the brief begins, “defendants are asking this court to bless an act that not only defies statutory law, public policy, and their own bylaws, but is also unprecedented in the history of the state, and this country, and which no expert in this case—despite more than 150 years of combined industry experience—has ever seen or even heard of before.”

CMA Legal Defense Fund and Political Education Fund campaign continue to reach new levels

The CMA Legal Defense Fund supports litigation to protect or establish important legal rights of physicians to practice their profession and assure high quality medical care.

The fund is used to support physicians in cases like that of the Tulare Regional Medical Center, where the medical staff is engaged in an unprecedented legal battle with the hospital administrators. This lawsuit is critically important to all medical staffs and physicians throughout California to protect self-governance rights and the physician-patient relationship.

Thank you to those of you who have already contributed to the Legal Defense Fund. As of September 15, 2017, we have raised $262,750. Our ultimate goal is to reach $400,000. If your medical staff has not yet contributed to the fund, we urge you to do so.

Make checks payable to “California Medical Association” and mail to California Medical Association, Attn: Yna Shimabukuro, 1201 J Street, Suite 200, Sacramento, CA 95814.

If you have any questions, contact Yna Shimabukuro, Senior Director of Political Operations, at (916) 551-2567 or yshimabukuro@cmadocs.org.

The Legal Defense Fund of the California Medical Association is a collection of monies voluntarily contributed by the CMA membership for appropriate litigation costs. These funds shall be administered by the Executive Committee of the CMA Board of Trustees. The purpose of this fund shall be to provide monetary support in cases, generally brought by our members, which seek to protect or establish important legal rights of physicians. CMA will consider providing assistance only in those cases which reflect those principles and policies that CMA has established and that impact our members in their practice of medicine. Contributions to the California Medical Association Legal Defense Fund are not tax deductible as charitable contributions for federal income tax purposes. However, the contribution may be tax deductible as a business expense for federal income tax purpose. Contribution to this fund is not a political contribution.


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