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Davis v. Morristown Memorial Hospital

Decided: June 5, 1969.


Waugh, A.j.s.c.


Plaintiffs Robert E. Davis, M.D., and A. Bruce Munro, M.D., two qualified, Board-certified obstetricians, practice obstetrics and gynecology in two offices, one located in Morristown, the other at Denville, in this County.

It is uncontroverted that Dr. Davis commenced practice in Morristown in 1955, and was joined by Dr. Munro in 1962. Shortly after establishing his practice in Morristown, Dr. Davis opened an office in Denville. Plaintiffs now practice in both locations, limiting their practice to obstetrics and gynecology.

Until the closing of the obstetrical department at All Souls' Hospital, Morristown, in 1968, plaintiffs were on the staffs of three hospitals -- namely, All Souls', Morristown; St. Clare's, Denville; and Riverside, Boonton.

Plaintiffs, impressive in demeanor and attitude on the witness stand, and obviously qualified professionally, have built a highly successful practice, reaching 450 deliveries in 1967, with 80% of these deliveries at St. Clare's Hospital, Denville, and 20% at All Souls' Hospital, Morristown. Actual figures given on Ex. P-52 show 349 at St. Clare's, 80 at All Souls' and, apparently, 20 at Riverside Hospital.

It is established by the testimony that the office practice of plaintiffs in Morristown is more extensive to the extent that they see more obstetrical patients at the Morristown office than they delivered at All Souls' Hospital. Approximately two-thirds of their Morristown office patients were delivered at All Souls', while the other third was delivered at St. Clare's Hospital. The reason for this situation is that some women patients prefer appointments in Morristown for convenience, but it is also a fact that plaintiffs have arranged and urged their patients, where possible, to deliver at St. Clare's Hospital. In fact, one of their arguments for admission

to the staff of defendant is their ability to ease the overcrowding at Morristown Hospital by shifting patients from the Morristown area to the other hospitals at which they practice.

I am not unmindful that this shifting of patients to St. Clare's may have been due, in part, to plaintiffs' preference for St. Clare's. One interesting sidelight of the case is the dwindling number of births at All Souls' (i.e., 474 in 1965, 366 in 1966, 274 in 1967). All Souls' was about to close its obstetrical department, and it is a fair inference in the case that small obstetrical departments present personnel and other problems which doctors prefer to avoid. In fact, some of the evidence gave 2,000 births per year as a satisfactory figure for the operation of an obstetrical department.

The unique situation at All Souls' led to its closing its obstetrical department in 1968. As soon as that closing became imminent, plaintiffs applied to defendant Morristown Memorial Hospital for obstetrical staff privileges, each stating by letter of application:

"I am well aware of the surgical bed problem at Morristown Memorial and therefore wish to take this opportunity to state for the record, that I have no intention of doing any private gynecological procedures anyplace other than at the hospitals where I am presently practicing. I consider D&C's, threatened abortions, incomplete abortions and ectopics to be GYN cases and will take them to All Souls' for surgical care.

These Morristown maternity patients represent approximately 20% of our present practice and I don't intend to change that ratio.

Dr. Munro*fn1 and I delivered 77 patients at All Souls' in 1967 and we do not intend to do any more than that in Morristown this year or in the future."

They were refused admission on the basis of a policy of the defendant Hospital set forth in A.M. No. 550, which states:

"Please make sure that all physicians who express an interest in applying for an appointment to our Medical Staff are apprised of the following policies as revised at recent*fn2 meetings of the Committee of Managers:

Until an adequate number of medical-surgical, OBS-GYN, and psychiatric beds can be provided, doctors who newly apply for appointment to the Medical staff and would be admitting patients to any of these beds will be informed that action on their applications must be deferred, except for such doctors as may qualify under one or more of the following criteria:

1. Is setting up practice in a community that is within the hospital primary service area and urgently needs such a physician.

2. Provides specialized professional skills that will substantially improve a service of the hospital.

3. Requests, and qualifies for, a temporary appointment."

It should be noted that this policy, while it became effective as to OBS-GYN March 27, 1968, was effective as to medical-surgical admissions as of October 15, 1967 and psychiatric as of January 3, 1968. It is this policy -- and the reasonableness of this policy -- that is here in issue.

In an effort to have all the issues decided completely and expeditiously, the court suggested and counsel cooperated by having the issue of the doctors' qualifications reached in advance of trial. They were found to be qualified for appointment to the staff. The only bar to admission is A.M. No. 550. This is set forth in the pretrial order in the following language:

"2. Plaintiffs stipulate in accordance with their application for staff privileges at Morristown Memorial Hospital, that they will agree to limit their deliveries to not more than 20 per cent of their total practice, approximately 100 deliveries per year or such lesser number as the Court may deem reasonable.

The parties stipulate that the application of the two plaintiffs have been acted upon affirmatively by the proper committees of the defendant-hospital in accordance with all procedures, leaving the only bar to their admission the policy statement of March 27, 1968, closing the obstetrical-gynecological staff at defendant-hospital to further appointments."

Morristown Memorial Hospital is a hospital of high reputation, organized in 1892 as a private nonprofit corporation. It has grown from 152 beds in 1952 and has since relocated in a new building containing 382 beds. Its capital funds are derived from individual and corporate gifts; also from bequests. It has received modest sums under the Hill Burton Act, 42 U.S.C.A. ยง 291 et seq., and from Public Health Service. Operating funds derive from patient fees, United Fund contributions and payments by governmental bodies and agencies for indigent and other special categories of patients. Factually, defendant hospital receives funds from the same sources as did Newcomb Hospital.

In Greisman v. Newcomb Hospital, 40 N.J. 389 (1963), affirming 76 N.J. Super. 149 (Law Div. 1962), our Supreme Court declared that hospitals such as Morristown Memorial Hospital here "are private in the sense that they are non-governmental but they are hardly private in other senses." (at p. 396) In that case the court, at pp. 395-399, completely disposes of the public-private argument advanced by defendant here. I find the argument to be without merit.

The administrative powers of the corporation are vested in a board of trustees, who have charge, control and management of the property, affairs and funds of that corporation. The trustees elect a committee of managers which acts as an executive committee for the board of trustees.

After trial, and immediately before final argument, defendant hospital moved to reopen its case to show that plaintiffs, in 1969, had advertised in a newsletter of the American College of Obstetricians and Gynecologists:

"A Board-certified or eligible ob-gyn man, married with military obligations completed is wanted to join an active two-man partnership. Salary leading to partnership. Contact: Robert E. Davis, M.D. or A. Bruce Munro, M.D., 60 Broadway, Denville, New Jersey. Phone 201-627-4222."

It was defendant's contention that the ad showed clearly there was no economic loss to plaintiffs.

I did permit reopening. Plaintiffs frankly concede they desire another associate and future partner. They stress the need to keep current with good medical practice by frequent attendance at medical conventions and the need for vacation and relaxation; as they put it, "in a two man practice if one is out, you again are a lone practitioner." Plaintiffs concede also that their Morristown practice is still alive despite the closing of All Souls'. They had 22 new patients in January, February and March 1969, two-thirds are multiparas and one-third new; while at their Denville office the percentages are two-thirds new patients and one-third multiparas. Plaintiffs' gynecological practice in Morristown is unaffected by this suit, since these patients may be treated by plaintiffs at All Souls'. As stated above, they do not intend to treat gynecological patients at defendant hospital even if admitted to the staff there.

This case should not turn upon the narrow question of economic loss. There is evidence in the case from the doctor experts, and a concession by Mr. Boyd, executive director of defendant, which mandates a finding that eventually plaintiffs' OB practice in Morristown will be curtailed. And while they may build a successful practice in the municipality in gynecology or may successfully transfer their practice totally to Denville, nevertheless, the other questions are "substantial enough," as they affect plaintiffs' professional status, "to warrant at least * * * judicial examination" of the validity of A.M. #550. See Higgins v. American Society of Clinical Pathologists, 51 N.J. 191 (1968), at pp. 201, 202.


The field of law involving hospital staff admissions has been the subject matter of a substantial volume of case law, and of law review articles. New Jersey courts have been in the forefront in the field. They have generally taken an advanced position, reviewing staff admissions to make certain

that hospital officials exercise "their powers in trust" in a lawful manner.

In Falcone v. Middlesex County Medical Society, 34 N.J. 582 (1961), affirming 62 N.J. Super. 184 (Law Div. 1960), Justice Jacobs noted (at pp. 590-596) the reluctance of courts "to interfere with the internal affairs of membership associations * * *,"; but after tracing many New Jersey and out-of-state cases, concludes:

"* * * in a case presenting sufficiently compelling factual and policy considerations, judicial relief will be available to compel admission to membership;" (at p. 596),

and with respect to the power lodged in defendant Medical Society said:

"Public policy strongely dictates that this power should not be unbridled but should be viewed judicially as a fiduciary power to be exercised in reasonable and lawful manner for the advancement of the interests of the medical profession and the public generally; the evidence firmly displays that here it was not so exercised and that Dr. Falcone was ...

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