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Guerrero v. Burlington County Memorial Hospital

Decided: June 10, 1976.


For reversal -- Chief Justice Hughes, Justices Mountain, Sullivan, Clifford and Schreiber and Judge Conford. Dissenting -- Justice Pashman. The opinion of the Court was delivered by Mountain, J. Pashman, J. (dissenting).


[70 NJ Page 348] Plaintiffs, Dr. Floro G. Guerrero and Dr. Amado V. Vives, applied for admission to the medical staff of Burlington County Memorial Hospital for the purpose of practicing general surgery at Southern Ocean County Hospital (SOCH), a satellite*fn1 facility operating under the sponsorship

of Burlington County Memorial Hospital. The applications of both doctors, whose qualifications have never been questioned, were denied by the Board of Trustees of Burlington County Memorial Hospital on December 19, 1972. Motivating the denial of staff privileges was the Trustees' belief that it would be in the best interest neither of the satellite hospital nor of the community served by SOCH to enlarge its general surgery staff, given its limited bed capacity. After being notified of the denial of their applications, both doctors requested a hearing before the Joint Conference and Credentials Committees. The hearing was conducted on February 12, 1973 and on February 27, 1973 the Board of Trustees again voted to deny plaintiffs' applications.

Thereafter plaintiffs instituted the present action seeking to compel their admission to the medical staff of Burlington County Memorial Hospital, with full surgical privileges at SOCH. The trial court, concluding that the decision to deny surgical privileges was arbitrary, that it would not foster the well being of the community served by the hospital, and that it did not have a reasonable relationship to the criteria promulgated by the State for satellite hospitals, granted the relief sought by plaintiffs. The Appellate Division affirmed in an unreported per curiam opinion, determining that the evidence presented at trial "more than adequately supports the findings and conclusions of the trial court." We granted defendants' petition for certification, 68 N.J. 168 (1975), and now reverse.

It is our conclusion that the decision of the Board of Trustees should not have been disturbed upon judicial review. The determination was supported by substantial credible evidence and was neither arbitrary nor capricious.

A brief review of the events leading up to the Trustees' decision is essential to an understanding of the result we reach. In the mid-fifties, the Southern Ocean County Hospital Association was formed to establish a hospital intended to serve Long Beach Island and surrounding communities.

The Association was unable to raise sufficient funds to finance a facility of 100 beds, the minimum required by the state for an independent hospital. Accordingly it sought the sponsorship of an existing general hospital for the creation of an affiliated satellite facility. To this end, the Department of Institutions and Agencies*fn2 sent a letter on July 19, 1968 to all licensed hospitals describing the Association's interest in establishing a new hospital and in securing an affiliation with an existing general hospital which would sponsor and administer the subordinate facility. Only one hospital responded to the announcement, and negotiations with that institution were unproductive. In 1969 Burlington County Memorial Hospital was approached for sponsorship. After preliminary negotiations, a Statement of Intent was executed by Burlington County Memorial Hospital and the Southern Ocean Community Hospital Association. Thereafter Southern Ocean County Hospital was incorporated and on June 27, 1972 a formal written agreement was entered into between the two institutions.

Meanwhile criteria for satellite hospitals were developed by the State. These criteria, promulgated by the New Jersey State Department of Health, were incorporated in the Manual of Standards for Hospital Facilities. It is there made clear that the purpose of a satellite facility is distinct from that of a general hospital. The former is neither designed nor intended to provide the full range of services available at a general hospital. Rather, it is designed primarily to provide a particular community or region with a facility for the treatment of urgent and emergency cases.*fn3 As explained both by

the Administrator of Burlington County Memorial Hospital and by plaintiffs' expert, an urgent case is one which, in the judgment of the treating physician, must be admitted to a hospital within 48 hours for treatment. An emergency case is one where, because of the seriousness of the patient's condition, immediate treatment is required. All other cases are designated as elective.

The procedure for staffing a satellite facility is also set forth among the criteria. It is there stated that:

a. There shall be but one medical staff for both facilities. The physicians serving the "satellite" shall be given staff appointments in accordance with the procedures and requirements of the sponsoring institution as described in its constitution, by-laws, rules and regulations. [ New Jersey State Department of Health, Manual of Standards for Hospital Facilities, supra, at D-2]

In accordance with this regulation, and pursuant to the agreement

between the sponsoring and satellite hospitals, the task of staffing SOCH was entrusted to Burlington County Memorial Hospital. Specific department heads were given the responsibility of securing adequate and competent personnel for their respective departments. It thus became incumbent upon Dr. William R. Muir, as chief of the department of surgery at Burlington, to staff the surgical department at SOCH. Mindful of the limited primary function of a satellite hospital -- namely, to treat urgent and emergency cases -- Dr. Muir initially confined his efforts to finding -- as he put it -- a "dynamic" individual to become the nucleus of the surgical department at SOCH. It was contemplated that this individual would work full-time at the satellite and that he would be capable of functioning without the aid of supporting surgical personnel. "Back-up" would be provided by the surgical staff practicing at Burlington.

When the plaintiffs' applications for staff privileges were received on July 5, 1972, SOCH was still under construction and the surgical requirements of the facility, beyond its obvious need for a primary surgeon, had not been definitely determined. At that time both plaintiffs were employed as emergency room physicians, Dr. Vives in Paul Kimball Hospital in Lakewood and Dr. Guerrero in Point Pleasant Hospital. Neither had previously practiced as a private surgeon. Anticipating such a practice and mindful of the construction of SOCH as well as the lack of surgeons in the area, they had jointly opened an office in June of 1972 in Forked River. They also applied to Community Memorial Hospital in Toms River for staff privileges.

Plaintiffs were jointly interviewed by Dr. Muir on August 1, 1972. Neither was considered for the position of primary surgeon because Dr. Muir at once concluded that they were not sufficiently dynamic, self-assured or experienced to fill this role. Ultimately, one Dr. Begley was secured to fill the post.

On September 11, 1972, the Joint Conference Committee, acting upon the recommendation of the Medical Executive

Committee, deferred final consideration of plaintiffs' privileges for three months, until the staffing needs of SOCH could be more precisely assessed. The satellite, licensed for 60 beds, had opened in August of 1972 with 52 beds and contained an x-ray department, a laboratory, two operating rooms, an emergency room and a small out-patient area. While the hospital beds were not designated as being either medical or surgical, the occupancy figures for the early months of its operation established an almost 3 to 1 ratio of medical to surgical beds. Additionally, the occupancy figures indicated that the facility was running at a very high capacity, contrary to the expectation that only a 60% occupancy rate would be reached during the winter months. Because of these factors -- the relationship of medical-surgical cases and the high percentage of occupancy -- it became evident to Dr. Muir that an increase in the number of surgeons practicing at SOCH would be disadvantageous. He perceived that an enlargement of the surgical staff at SOCH -- at least at that time -- was likely to effect an immediate increase in the surgery performed at the institution and thereby overtax the facility and diminish the quality of patient care. Fearing this result, it was determined not to expand the surgical staff at that time.*fn4

On December 14, 1972 the Medical Executive Committee met to reconsider plaintiffs' applications which had been deferred; it voted to recommend denial of the appointments. The Board of Trustees, on December 19, 1972, concurred in this recommendation. By letter dated January 5, 1973, it notified the plaintiffs of its decision but gave no reasons for the action taken. Plaintiffs were, nevertheless, informed of a right to have the decision reviewed before it became final,

such review to be in the form of a hearing before the Joint Conference and Credentials Committees. The hearing in fact took place. As a result thereof it was again recommended that plaintiffs' applications be denied for the following reason:

Because of the limited bed capacity existing at this satellite hospital, it would not be in the best interest of the general public of the community serviced by Southern Ocean ...

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