Goldmann, Kilkenny and Collester.
[95 NJSuper Page 420] Plaintiffs, neurosurgeons of admittedly high professional competency and with offices in Westfield, New Jersey, applied for staff privileges at Overlook Hospital in Summit, whose services include the Westfield area. The hospital's board of trustees, upon the recommendation of the credentials committee, rejected their applications and so notified them without giving any reasons therefor. It denied their request for a hearing. It did, however, through its attorneys, subsequently advise plaintiffs' attorneys that "some of the reasons" for the rejection were that the applicants already
had staff appointments at Muhlenberg Hospital in Plainfield and Perth Amboy Hospital, so that the hospital "is not depriving him [Dr. Sussman] of a place in which to practice"; that Westfield "is also served by Muhlenberg and Rahway"; and "Overlook has sufficient neurosurgeons on its staff for patients served by Overlook."
Plaintiffs sued in the Chancery Division to compel defendant hospital association to accord them staff privileges. After a plenary trial, Judge Mintz entered a judgment on September 12, 1966 directing defendant to admit plaintiffs to medical staff privileges at Overlook Hospital unless within 90 days of the date of the judgment defendant formulated "the necessary procedures in order to insure a fair and thorough determination of plaintiffs' applications for medical staff privileges, all in accordance with the opinion of this court dated July 28, 1966." Defendant appeals from that judgment.
Plaintiffs cross-appeal from so much of the judgment as dismissed the counts against Town of Westfield and from the provision that the hearing before the hospital's board of trustees need not be a "formal judicial or quasi -judicial hearing" and that "it is not essential that plaintiffs be afforded the right to confront and cross-examine witnesses or to be represented by counsel in the presentation of their case before the hospital authorities." It was directed, however, that there should be "a complete record which may be the subject of judicial review."
We affirm essentially for the reasons expressed by Judge Mintz in his opinion, adding only the further comments hereinafter set forth as to some of the arguments advanced on this appeal.
Defendant takes the position that it is a private hospital and its board of trustees has the absolute discretion to reject the application of any doctor for staff privileges. Under that view the courts would be powerless to grant any relief under the circumstances herein. Overlook Hospital is a private hospital in the sense that its operation is nongovernmental. But it is, in substance and effect, public in character
and scope. Its services are available to the general public. It appeals to the public for financial assistance in its annual drives for money. It receives appropriated public moneys from the municipalities it services, including Westfield. The concept that a hospital, such as Overlook, may arbitrarily deny staff privileges to a qualified doctor was rejected by our Supreme Court in Greisman v. Newcomb Hospital, 40 N.J. 389, 401 (1963). It held that the hospital's power to pass on staff membership applications was "a fiduciary power to be exercised reasonably and for the public good." That rule of law is binding upon us and upon defendant hospital association herein.
Plaintiffs qualify for staff privileges under the hospital's own by-laws. They provide that an applicant for staff privileges must be legally licensed to practice medicine in this State, a member in good standing of the medical society of the county in which he is practicing, and shall have established an office in the geographical area served by Overlook Hospital as designated by the board of trustees. The by-laws make no provision for a hearing at the request of an applicant who has been denied staff privileges.
However, compliance with the minimum requirements of the by-laws does not make the grant of staff privileges automatic. The board of trustees does have the right to reject an application so long as it acts in a fair manner and for valid reasons. It is charged with the responsibility of administering the affairs of the hospital in an orderly and efficient manner and for the purposes for which the hospital has been established. We would not deny it all discretion in weighing the general good of the hospital, the public and the other members of the medical staff and the hospital personnel, against the claim of a doctor for staff privileges. On the other hand, hospital officials may not preclude staff membership in a hospital such as Overlook "for a reason unrelated to sound hospital standards and not in furtherance of the common good." Greisman, supra, 40 N.J., at p. 404.
Dr. Steinberg, administrator of Mt. Sinai Hospital in New York City, summed up the proper rules of guidance which ought to control the evaluation of applications for medical staff privileges, when he testified that three qualifications are necessary, viz., (1) professional competency; (2) compliance with the code of ethics, and (3) the right character. Elaborating upon the third factor, he explained that it meant that the applicant must have a "capacity ...