On appeal from the Superior Court, Law Division, Essex County.
Pressler, Baime and Ashbey. The opinion of the court was delivered by Pressler, P.J.A.D.
The dramatic developments in the law of defamation which have taken place during the past two decades have, in large measure and certainly in this jurisdiction, focused primarily upon the competing demands of constitutionally guaranteed free speech and personal reputational interests in the context of public debate and comment on issues of public concern. This defamation action requires us to reexamine, in the light of the principles which have evolved in that context, the predicates and operational parameters of the so-called conditional occasional or special-interest privilege involving limited publication by, to and about essentially private persons bound together by a specific, identifiable transactional relationship.
The questions we must here address arise out of a defamation and malicious interference action brought by an anesthesiologist, plaintiff Frederick Bainhauer, against a general surgeon, defendant Hratch Manoukian, both of whom were on the medical staff of St. Mary's Hospital in Orange in 1982 when the events here took place. The gravamen of the complaint was Bainhauer's claim that he was falsely, maliciously and improperly blamed by Manoukian for the recovery room death of a surgical patient of Manoukian to whom Bainhauer had administered anesthesia. It was Bainhauer's further claim that Manoukian's publication of this defamatory accusation within the immediate hospital community was the substantial contributing cause of his loss of that employment and his ultimate inability to find further employment in his professional specialty.
Following a trial, the jury returned a verdict in Bainhauer's favor awarding him compensatory damages in the amount of $400,000 and punitive damages in the amount of $200,000. We are satisfied that the verdict rests upon substantial legal error. Accordingly, we reverse and remand for a new trial.
Because of the number and complexity of the issues here involved, a detailed exposition of the facts is necessary. Dr. Manoukian, a board-certified general surgeon, had been an attending physician at St. Mary's Hospital since 1972 and, in early 1982, was in his third year as chief of surgery. At that time, there was no separate department of anesthesiology at the hospital but rather a three-member anesthesia service within the department of surgery, which consisted of Dr. Joseph Lutz, chief of the service since 1976, Dr. Shan Nagendra, and plaintiff Bainhauer, all of whom were board-certified anesthesiologists. Bainhauer had come to St. Mary's from Wyoming in September 1981 at Lutz's invitation.
In January 1982 Manoukian, so he testified, had two disquieting experiences with Bainhauer. The first involved a patient, J.P., upon whom Manoukian operated to drain an infected, abscessed pilonidal cyst. Bainhauer, despite Manoukian's objections, chose to anesthetize the patient with epidural anesthesia, a procedure requiring injection in the area of the abscess and the consequent risk that the infection would penetrate to the spinal canal. Although the patient suffered no ill effects, Manoukian was of the view that Bainhauer had employed an improper and, in the circumstances, unnecessarily dangerous anesthesia mode.*fn1 The second case involved a cholecystectomy,
that is, a gallbladder removal, performed on Dr. M. While preparing the patient's abdomen for incision, Manoukian noticed it becoming distended and asked Bainhauer if he was sure the tube Bainhauer had inserted in the patient to carry oxygen to his lungs had been properly placed. Bainhauer assured him several times that that was so. The patient's abdomen, as Manoukian described it, nevertheless "was still getting bigger." Concerned, indeed "panicky," because of the probability that the patient was not receiving oxygen because of the erroneous insertion of the tube into the esophagus instead of the trachea, Manoukian instructed the circulating nurse to call Lutz. Lutz arrived, removed the tube and reinserted it properly. The operation continued without untoward consequences. The troubling fact to Manoukian was not the improper insertion itself -- that apparently is not an extraordinary occurrence -- but rather Bainhauer's continued assurances that all was well. As Manoukian explained it, Bainhauer
didn't give me the benefit of the doubt of checking the tube to see whether it's in the right place or not. Now, I don't care how difficult the insertion of the tube is. If there's a question, the simplest thing to do is check and make sure there is nothing unusual or abnormal in the position of the tube, and that benefit I didn't even get. That was very disturbing. I had to get somebody else to help me because I didn't want to have -- this is a patient.
The events giving rise to this complaint commenced on the morning of February 17, 1982, when Manoukian performed a cholecystectomy on H.W., a diabetic with both coronary and pulmonary problems who had been admitted to the hospital by her internist several days earlier with severe abdominal distress and generalized infection. Manoukian diagnosed her problem as acute gallbladder disease and scheduled the cholecystectomy after stabilizing her general condition and localizing the infection by means of intravenously administered antibiotics. Based on the anesthesia service's rotation system, Lutz assigned
Bainhauer as the anesthesiologist. Shortly after making his incision into the abdominal cavity, Manoukian noticed the darkening color of H.W.'s blood, a phenomenon indicating that she was receiving insufficient oxygen. He immediately brought this fact to Bainhauer's attention, telling Bainhauer that if there were a problem, he would stop the operation immediately. Manoukian's special concern, as he testified at trial, was H.W.'s diabetic condition "because diabetics are known to have significant amount of disease of the vessels that any kind of compromise of blood supply with oxygen would initiate those irregularities of the heart and eventually cardiac arrest." In any event, Bainhauer assured Manoukian that everything was all right, that H.W. had had an episode of bronchospasm under anesthesia but that he was reversing it with an appropriate drug, Isuprel. Manoukian therefore continued with the surgery, removing what he found to be a badly infected, gangrenous, "dead" gallbladder.*fn2
The patient was taken to the recovery room at 9:05 a.m. in, as reported by Bainhauer, fair condition. Within the next five or ten minutes, Manoukian dictated his operative report and at 9:20 a.m. started his second operation of the day, again with Bainhauer as the anesthesiologist. During the course of that operation, he was told that H.W. had suffered a cardiac arrest in the recovery room. He and Bainhauer completed their
surgery and then went to the recovery room, where Dr. Nagendra, assisted by nurses, was still attempting to resuscitate H.W.*fn3 These efforts failed and she died shortly before 10:00 a.m. Manoukian, thinking that H.W. would recover when she was taken from the operating room, was extremely upset by her death, which he believed to have been caused by the manner in which the anesthesia had been administered, a belief supported by his two previous unhappy experiences with Bainhauer.
The first of the alleged defamatory statements was made within minutes after H.W.'s death. Manoukian went to Lutz's office, which was next to the recovery room. Lutz described him as "very, very upset." According to Lutz, Manoukian said, "I don't want Dr. Bainhauer to administer anesthesia to any of my patients anymore because he just killed my patient" or words constituting "a variation on that theme." According to Manoukian, he used a different form of language, telling Lutz that he, Manoukian, believed a lack of oxygen had precipitated H.W.'s fatal cardiac arrest and, in view of the two earlier cases, which he testified that he then described to Lutz, he could no longer feel comfortable with Bainhauer. As he recalled the conversation, what he said to Lutz was that after these three cases, "I'm going to let him give anesthesia? I must be crazy to take the risk and expose my patients to these kinds of problems. I don't need it." Although Lutz did not recall Manoukian's reference to the first two cases at that time, both recalled that Lutz told Manoukian that the matter would be looked into. Manoukian then left Lutz's office to tell H.W.'s family of her death and make postmortem arrangements.
The second alleged defamation, also a slander, was not pleaded and was submitted to the jury as part of the cause of action as a result of the trial judge's grant, over Manoukian's objection, of Bainhauer's motion, made at the close of the proofs, for amendment of the complaint pursuant to R. 4:9-2 to conform to the evidence. Although Lutz, during the course of the extensive pretrial discovery, had never made any such statement, he testified at trial that when Manoukian left his office on that fateful morning, he heard him talking to two other surgeons in the hallway, Dr. O'Connor and his partner, Dr. Cuomo, telling them in some form of language that Bainhauer was responsible for the death of his patient. O'Connor, who testified on defendant's case, denied that Manoukian had ever talked to him about Bainhauer but was not specifically asked about the alleged hallway conversation. Cuomo was not called to testify at all.
The third alleged defamation, this time a libel, took place on the following day. It consisted of a letter written by Manoukian on February 18, 1982 to Dr. James J. Coyne, Chairman of the Executive Committee of St. Mary's and President of the Medical and Dental Staff. The full text of the letter reads as follows: "As per my conversation with Doctor Lutz, I would refuse to have Doctor Bainhauer give anesthesia to any of my patients in the future."
Dr. Coyne responded to the letter by initiating procedures consistent with the hospital's constitution and by-laws for the purpose of investigating what he understood to be a complaint by one physician against another. Apparently, the first of these procedures was the early March meeting of the Executive Committee, which considered the anesthesia service in general and Bainhauer in particular. In respect of the former, it appears undisputed that there was a long history of friction between the anesthesiologists and the some 25 to 30 surgeons comprising the attending surgical staff of the hospital. At least part of the problem was attributed by Lutz to the hospital's refusal to make the anesthesia service a separate department. In respect of Bainhauer individually, it appears that the
Executive Committee was concerned not only with Manoukian's letter but with other problems, including Bainhauer's use of a tape recorder to record inter-staff conversations, a charge he denied; his use of a personal portable anesthesia tray, which he had been asked to stop using; and his use of a preprinted form for making his anesthesia administration records. He was asked to submit the form to the Committee for approval before using it again. In any event, among the steps taken by the Executive Committee at that meeting was the authorization to Coyne to appoint an ad hoc anesthesia committee to "gather the grievances against this service" and the decision to retain an outside consultant in anesthesia to "review every aspect of this service, grievances, personnel and the administration of the service." The Executive Committee also instructed Coyne to ask Manoukian for a further letter documenting his grievances against Bainhauer. Finally, the Committee agreed to table Dr. Lutz's request to form a separate anesthesia department.
The fourth and final alleged defamation was Manoukian's letter responding to Coyne's documentation request. That letter, dated March 25, 1982, reads in full as follows:
In response to your letter inquiring about the reasons why I refuse to have Doctor Bainhauer give Anesthesia to my patients I had the following unfortunate experiences which made me decide.
On January 22, 1982, [J.P.]: Pilonidal abscess with cellulitis had an epidural in spite of my insistence against it, due to the inflammatory process locally which could have affected the spinal cord.
On January 26, 1982, [Dr. M.]: He was being intubated for cholecystectomy. While prepping patient I repeatedly questioned him about the placement of the tube because of abdominal distention. My comments were disregarded and he continued to pump oxygen into the tube. I had to ask the nurse to call Doctor Lutz to check the situation.
On February 17, 1982, [H.W.]: She had a cholecystectomy. During the procedure I remarked repeatedly that the blood was very dark. I was told that this was due to a bronchial spasm and to continue with the operation. In the Recovery Room, less than one-half hour after the procedure was over, the patient had cardiac arrest.
In view of all this above, I would feel very uncomfortable to have the anesthetic responsibility while doing surgery.
The events which followed culminated in Bainhauer's resignation from St. Mary's in November 1982. On the day following Manoukian's March response to Coyne, the ad hoc anesthesia committee met, its minutes suggesting that its agenda consisted primarily of affording an opportunity for the venting of grievances which the surgeons and anesthesiologists had against each other and which focused on Bainhauer, who was defended by Lutz. Lutz expressed his own grievances, including the reduction in the salary the hospital had agreed to pay him for administering the service and the continued refusal to create a separate anesthesia department. During the next several months there was obviously considerable turmoil in the surgery department. Various standing and ad hoc committees met to consider the anesthesia service problems. The New Jersey State Society of Anesthesiologists had been asked to and did evaluate the service. Lutz resigned at the end of April 1982, and his offer to withdraw his resignation after the hospital decided to establish a separate anesthesia department was rejected. Nagendra was named as acting chief of the anesthesia service and then chief of the new department, and Nagendra and Bainhauer formed a partnership by oral agreement.
In the early fall of 1982, Bainhauer's status was again focused on. All staff physicians at St. Mary's are reappointed annually, the process consisting of a recommendation by the department chief to the Credentials Committee, a recommendation by the Credentials Committee to the Executive Committee, and a recommendation by the Executive Committee to the Board of Trustees, with an opportunity provided for a so-called "due process hearing" by the Executive Committee in the case of an unfavorable recommendation. In October 1982 Nagendra dissolved his partnership with Bainhauer and wrote to the hospital president, Sister Mary Fidelise, to advise her that he would not be recommending Bainhauer for reappointment because the
situation has become a major problem in this department. Unfortunately many surgeons do not want him to administer anesthesia to their patients. This number has increased and reached a point that his stay in the department is not possible.
I have discussed this problem on several occasions since May 28, 1982 the time I became in charge. He made attempts to correct the ...