These are consolidated actions brought by physicians who seek admission to the medical staff of defendant Pascack Valley Hospital (PVH). Plaintiffs' applications were denied because PVH has in effect a policy, commonly referred to as the moratorium, which prohibits further appointments to its medical staff unless the applicant meets certain conditions which will be described hereafter.
There is little if any dispute as to the essential facts which give rise to this controversy. PVH is located in Westwood, New Jersey, and is a private, nonprofit corporation which operates a general hospital facility serving 20 communities in the northeast quadrant of Bergen County.*fn1 PVH opened its doors in June 1959 with a capacity of 86 beds. A pediatric wing was added in 1964, increasing the bed complement to
110, which was further expanded in 1967 to 199 beds, and to 202 beds shortly thereafter. Following the enactment of the Health Care Facilities Planning Act of 1971, N.J.S.A. 26:2H-1 et seq. , PVH made application for and was granted a certificate of need to increase its bed capacity to 242.*fn2 This most recent expansion was completed and the additional beds were in use by July 1, 1975. As presently organized, the hospital has 191 medical-surgical beds, 18 obstetrical beds, 24 pediatric beds, and 9 beds in the intensive-coronary care unit.
As of 1969, PVH had 151 medical-surgical beds in operation, and for that year and 1970 these beds had a utilization factor in excess of 96%. In 1970 the active medical staff, which then comprised 137 members, "importuned the Board of Trustees to impose a moratorium on new medical staff appointments because of their inability to hospitalize their patients when necessary." The board of trustees received a report from PVH's administrator, Mr. Verrastro, in which he noted that the occupancy rate for medical-surgical beds was substantially in excess of that recommended by the New Jersey Health Care Facilities Council and the United States Public Health Service (85-90%), and that the continued over-utilization of beds "would be dangerous to the safety and welfare of our patients" because of a "tendency to discharge patients earlier than warranted."*fn3 Verrastro recommended
that the board adopt measures restricting new admissions to the medical staff.
On November 24, 1970 the board of trustees adopted the resolution which is the basis of this controversy. The full text of the resolution is as follows:
The Board of Trustees having received a recommendation from the Medical Executive Committee, that it consider a limited moratorium on additional appointments to the staff:
The Board of Trustees has studied the staffing of the several departments and the effect of such moratorium on --
1. The public within the geographical area serviced by the hospital.
2. The quality of hospital care to be rendered to the community within the area served by the hospital.
3. The interest of the medical profession, both those physicians who are presently staff members and those who might wish to become affiliated with the hospital.
4. The patient load that can be serviced, utilizing the beds assignable to the various departments.
5. The economic implications to the hospital and the physicians presently on the Medical Staff, as well as those physicians who would be excluded from staff appointments.
We have concluded there is the necessity for a moratorium, therefore, it is hereby
RESOLVED, that no appointments of new applicants to the Medical Staff shall be made until July 31, 1971, excepting where limited subspecialties are needed in this hospital or where an applicant has no hospital affiliation to take care of his patients. The situation will be re-evaluated from time to time; as to the effect on the public, availability of beds, the percentage of occupancy, or staffing vacancies.
The moratorium resolution was renewed by the Board of Trustees from year to year and has continued in effect to the present date. Each new applicant for admission to the medical staff of PVH is required to sign a statement which must accompany his application acknowledging that he has read and understands the moratorium resolution, and must further agree that "if appointed to the medical staff I * * * will not seek or accept appointment to any other hospital medical staff." While the moratorium resolution, does not, by its terms, contain any restriction on an applicant's seeking admission to the medical staff of a hospital after appointment
to the staff of PVH, the trial testimony established that this has been the practice and procedure of PVH in carrying out the terms of the moratorium.
Following the enactment of the moratorium, PVH continued to experience excessive rates of utilization of its medical-surgical beds. For 1971 the percentage of occupancy of beds in this category was 98.8%; for 1972, 97.6%; for 1973, 99.5%; for 1974, 99.8%, and for 1975, 100%. For the first five months of 1976 the rate was 97.7%. Thus, neither the adoption of the moratorium nor the increase in the number of beds has had any impact on the occupancy problem which the moratorium was designed to alleviate.
As previously noted, in 1972 PVH made application to the Health Care Facilities Council for a certificate of need to expand the hospital bed capacity by the addition of 40 medical-surgical beds. In a statement accompanying that application the hospital made reference to the adoption of the moratorium in 1970 and went on to state as a reason for its desired expansion:
In addition to newly trained physicians attempting to establish in our area, there are a considerable number of Osteopathic Physicians practicing in the hospital service area, many of whom have asked for staff membership. The lack of adequate beds is, therefore, an impediment to the growth of the medical staff, but more important, it is a denial to many of the citizens in the hospital service area [of] the right to be hospitalized in their own community.
Since the adoption of the moratorium 67 physicians have been admitted to the medical staff of PVH, of whom 17 are described as consultants without admitting privileges. PVH asserts that all of these staff appointments have been made pursuant to the exceptions set forth in the moratorium, i.e. , the applicant had a limited sub-specialty needed by the hospital or had no other hospital affiliation to care for his patients. During the same period 17 physicians, including plaintiffs in this action, have been denied ...