ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, November 21, 2005

Contract Doesn't Require "Pointless" Hearing

Florida_flag_4 A physician had a contractual right to a hearing before his hospital privileges were terminated, but the right didn't apply where the termination was purely a business matter that did not cast doubt on his competence, according to a recent decision by the Florida Court of Appeals.

In the case, the plaintiff physician had enjoyed privileges for pain management services at Naples Community Hospital.  The hospital bylaws provided that physicians are entitled to a hearing before their privileges are terminated.  The hospital subsequently entered into an exclusive contract with another provider, and the physician’s privileges were terminated without a hearing.

Florida had previously held that such bylaws create a contract with the physician.  The district court accordingly ruled for the physician, issuing an injunction restoring his privileges.  The Court of Appeals reversed.  The bylaws did create a contract, the court agreed, but the question was one of interpretation.  Read as a whole, the hearing procedures clearly contemplate a  situation where privileges are being withdrawn for cause, such as incompetence.  Such an action has a potentially serious effect on the physician and his reputation.  Here, a hearing would seem to be pointless:

We cannot imagine how Dr. Hussey's hearing, if he were to get one, would proceed.  There would be no statement of acts or omissions, no patients records, and no testimony casting doubt on his skill -- no accusations against which to defend himself. Ultimately, the decision of reappointment would fall to the Board of Directors of the Hospital, the very body that made the business decision that adversely affected Dr. Hussey's clinical privileges at the Hospital. According to the Policy, the express purpose of a hearing "shall be to recommend a course of action to those acting for the hospital corporation." Here, those acting for the corporation have already entered into an exclusive contract with another provider, thus making the recommendation and hearing process useless. The hearing process described in the Bylaws clearly does not apply when a staff member is denied reappointment because of a business decision to enter into an exclusive contract with another provider.

Naples Community Hospital, Inc. v. Hussey, 2005 Fla. App. LEXIS 17657 (2d Dist. Nov. 9, 2005).

[Frank Snyder]

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