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Kellerman v. Virtua West Jersey Hospital

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


August 4, 2009

ALAN KELLERMAN, M.D., PLAINTIFF-APPELLANT,
v.
VIRTUA WEST JERSEY HOSPITAL, A MEMBER OF THE VIRTUA WEST JERSEY HEALTH SYSTEM, INC.; VIRTUA WEST JERSEY HEALTH SYSTEM, INC.; VIRTUA HEALTH, INC.; PHILIP ARONOW, M.D.; GREG BUSH, V.P. OF MEDICAL AFFAIRS/MEDICAL DIRECTOR; CHRIS CHEKOURAS, C.E.O.; ROBERT DIRENZO, M.D.; JAMES P. DWYER, M.D.; STEPHEN GADOMSKI, M.D.; WILLIAM MOROWITZ, M.D.; RICHARD MILLER, C.E.O.; DONALD ORTH, M.D.; BRADFORD J. PORTER, D.D.S.; JOSEPH REICHMAN, M.D.; ALLEN SALAM, M.D.; HOWARD WINTER, M.D.; HELEN ORTIZ, R.N.; CATHY HUGHES, R.N.; AND CATHY SALVATI, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-1252-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 30, 2009

Before Judges Lisa, Sapp-Peterson and Alvarez.

In this appeal, plaintiff, Alan Kellerman, M.D., appeals from the June 23, 2008 order granting summary judgment in favor of defendants: Virtua West Jersey Hospital, a member of the Virtua West Jersey Health System, Inc.; Virtua West Jersey Health System, Inc.; Virtua Health, Inc.; Philip Aronow, M.D.; Greg Bush, Vice President of Medical Affairs/Medical Director; Chris Chekouras, C.E.O.; Robert DiRenzo, M.D.; James P. Dwyer, M.D.; Stephen Gadomski, M.D.; William Morowitz, M.D.; Richard Miller, C.E.O.; Donald Orth, M.D.; Bradford J. Porter, D.D.S.; Joseph Reichman, M.D.; Allen Salam, M.D.; Howard Winter, M.D.; Helen Ortiz, R.N.; Cathy Hughes, R.N.; and Cathy Salvati. We affirm.

Plaintiff, a board-certified internist and a fellow of the American College of Physicians, has been practicing medicine for more than thirty-seven years. Until December 18, 2007, he held a medical staff membership and clinical privileges at Virtua West Jersey Hospital. On June 2, 2000, the Vice President of Medical Affairs at the hospital, defendant Joseph H. Reichman, M.D., informed plaintiff that "a pattern of disruptive behavior [had] been identified" and that plaintiff would be suspended if he did not "behave in a professional and cooperative manner." Plaintiff was summarily suspended on November 11, 2002, for thirteen days due to unprofessional conduct. Over the next four years, Dr. Reichman continued to receive complaints related to plaintiff's clinical practice and behavior at the clinic. Because of the number of complaints Dr. Reichman received from both staff and patients, on July 17, 2006, he informed plaintiff by letter that plaintiff must enroll in and be evaluated by the Professional Assistance Program of New Jersey by August 1, 2006, and that his failure to enroll in the program would result in summary suspension. Plaintiff did not enroll in the program but offered to explain his practices before the Medical Executive Committee (MEC), which declined plaintiff's offer.

On September 22, 2006, Dr. Reichman requested the MEC's permission to conduct a formal investigation regarding plaintiff's "clinical practice and behavior at the hospital." The MEC authorized Dr. Reichman and defendant, Bradford Porter, D.D.S., to conduct an investigation, which they completed on October 25. They recommended that plaintiff's medical staff membership and clinical privileges be terminated. The MEC unanimously approved the recommendation on October 26.

By letter dated October 30, 2006, Dr. Reichman notified plaintiff of the MEC's decision and informed him that pursuant to Article IV of the Policy on Appointment, Reappointment and Clinical Privileges of the Virtua - West Jersey Health System, Inc. (the Bylaws), he had thirty days to request a hearing. On November 22, 2006, through counsel, plaintiff requested a hearing, which was adjourned a number of times at the request of both plaintiff's and defendants' counsel.

The hearing was ultimately rescheduled for November 29, 2007, because plaintiff's counsel could not appear on October 25, 2007. On November 28, however, plaintiff's counsel informed defendants' counsel that because the hearing was being held more than forty-five days after the date of plaintiff's request for a hearing, in violation of the Bylaws, plaintiff would not attend the hearing. Plaintiff's counsel concluded, "[I]t is apparent that [plaintiff] is being railroaded."

The following day, defendants' counsel responded that pursuant to Article IV, Section B.3 of the Bylaws, a hearing need not be scheduled within forty-five days of the practitioner's request and that the Bylaws merely require that a hearing be scheduled no earlier than thirty days after notice of the hearing is sent. Counsel warned that under the Bylaws, plaintiff's failure to attend the hearing would be deemed to constitute voluntary acceptance of the MEC's recommendation. Plaintiff did not attend the hearing, and on December 18, 2007, the Board of Trustees unanimously approved the MEC's recommendation that plaintiff's medical staff membership and clinical privileges be terminated, effective immediately.

On January 9, 2008, plaintiff sent a letter to Gregory Busch, D.O., the Vice President of Medical Affairs at Virtua West Jersey Hospital, and James Dwyer, D.O., Virtua's Executive Vice President, intending that it serve as notice of his appeal from the Board of Trustees' decision. He claimed that he had "good cause" not to attend the hearing, which, pursuant to the Bylaws, would negate the proposition that he had voluntarily accepted the MEC's recommendation. The purported good cause was that he had been "continuously denied due process of law beginning on July 5, 2006[,] when the [EMC] ignored the requirements of the By[]laws and recommended that he be evaluated by the Professional Assistance Program."

In the letter, plaintiff referred specifically to several actions by the hospital that had violated his due process rights. He claimed that when notifying plaintiff that he would be summarily suspended if he did not enroll in the Professional Assistance Program, Dr. Reichman did not follow the process outlined in the Bylaws, including documentation of the complaint, an initial review, and an investigation. He asserted that Dr. Reichman also failed to follow the eight-step process delineated in the Policy Regarding Disruptive Conduct when he informed plaintiff that the MEC had recommended his termination due to "disruptive behavior." He then claimed that the MEC attempted to circumvent the eight-step process by re-labeling his conduct as "inappropriate patient care" and "unprofessional conduct" in the hearing notice and statement of reasons.

In a January 15, 2008 letter from Virtua Vice President and General Counsel Mary P. Hugues, plaintiff was advised that he did not have a right to appeal and reiterated that plaintiff's failure to attend the hearing constituted voluntary acceptance of the MEC's recommendation. Additionally, Hugues advised that the Bylaws only provide for an appeal of a hearing panel's recommendation, and that the recommendation of the MEC, as implemented by the Board of Trustees, is final.

On February 28, 2008, plaintiff filed a verified complaint and order to show cause in the Chancery Division, alleging breach of contract, breach of the covenant of good faith and fair dealing, tortious interference with prospective economic advantage, violation of due process, defamation and conspiracy. Plaintiff sought reinstatement and damages. The matter was transferred to the Law Division where defendants moved for summary judgment, urging that plaintiff had failed to exhaust administrative remedies. In an oral decision rendered from the bench, the court rejected plaintiff's contention that his appearance at a hearing would have been futile, noting that the hearing would have afforded plaintiff the opportunity: to have been heard and to have made arguments concerning what he perceived to be procedural defects. In other words, he would have had the opportunity at such a hearing to argue that to the extent that his behavior, based on these detailed allegations, really represented disruptive behavior or alternatively to the extent that he would have argued that I was misled and I believed that the only issue that I needed to confront was disruptive behavior, the subject of the original notice back on October 30th, 2006, he would have had the ability to present all of those arguments.

And the [c]court is confident that there would have been an ability to present all of those arguments because in the Bylaws that detail hearings, conclusions, deliberations and recommendations, there is a section that follows, Section 4E - - Appeal Procedure, Time for Appeal.

Looking at those grounds for appeal, there was an opportunity accorded by the hospital through the hospital process to confront both the substantive charges that were made and to confront procedural issues and to confront, moreover, the overall concept that there was, if you will, a railroading, a pushing of an agenda that was not truly reflected in the charges that were made. And those grounds for appeal certainly therefore set forth the parameters of what a hearing itself might encompass and moreover, set forth certainly the scope of review and critically the establishment of a record in an appeal process internal to the Hospital of all of the issues that are the subject matter of a complaint procedurally.

I find that, as I've noted, on the date scheduled for the hearing, where the hearing was convened, where Dr. Kellerman was asked to appear, where there had been[,] up until the day before[,] a belief that there would be an appearance, there was simply a non-appearance and then subsequent to that non-appearance, Dr. Kellerman, in accordance with the original recommendation[,] lost his privileges and then filed the instant action.

The court also found that no constitutional issues were implicated by plaintiff's termination. Specifically, the court was not persuaded that the initial labeling of plaintiff's conduct as disruptive "create[d] such a single constitutional issue of a deprivation of rights that that issue ought to be decided alone . . . ." The court expressed the view that this issue was "well-accommodated" within Virtua's procedures.

The court concluded that plaintiff had "aborted" his request for a fairness hearing by not appearing and that his non-appearance, under the Bylaws, constituted an acceptance of his termination. The present appeal followed.

On appeal plaintiff contends:

[POINT] B*fn1

THE TRIAL COURT SHOULD NOT HAVE APPLIED THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES TO DISMISS DR. KELLERMAN'S SUIT WHERE HIS CHALLENGE WAS TO THE ENTIRE PROCEDURE WHICH SHOULD HAVE BEEN CONDUCTED THROUGH AN INDEPENDENT ARBITRAL FORUM AS AUTHORIZED BY THE BYLAWS.

[POINT] C

THE TRIAL COURT SHOULD HAVE NOT APPLIED THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES TO DISMISS DR. KELLERMAN'S SUIT WHERE THE HOSPITAL PROCESS WAS FUTILE AND WHERE DR. KELLERMAN'S CHALLENGE IS TO THE UNFAIRNESS OF THE PROCESS AND PROCEDURES THEMSELVES.

[POINT] D

THE TRIAL COURT MISAPPLIED THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES TO DISMISS DR. KELLERMAN'S SUIT WHERE THE HOSPITAL'S BOARD OF TRUSTEES DECLARED THEIR ACTION FINAL AND THERE WERE NO FURTHER ACTIONS DR. KELLERMAN COULD TAKE AT THE HOSPITAL.

[POINT] E

THE TRIAL COURT MISAPPLIED THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES WHERE THE HOSPITAL DENIED ANY INTERNAL APPEAL TO THE BOARD OF TRUSTEES DESPITE THE RIGHT DR. KELLERMAN HAD UNDER THE BYLAWS 1) TO CHALLENGE PROCEDURAL DEFECTS OCCURRING PRIOR TO THE FAIRNESS HEARING AND 2) TO CHALLENGE THE ACTION AS ARBITRARY AND CAPRICIOUS OR THE RESULT OF PREJUDICE MERELY BECAUSE HE DID NOT ATTEND THE FAIRNESS HEARING.

[POINT] F

THE TRIAL COURT ERRED BY FAILING TO CONSIDER DR. KELLERMAN HAD "GOOD CAUSE" UNDER THE BYLAWS NOT TO ATTEND THE FAIRNESS HEARING.

[POINT] G

THE TRIAL COURT ERRED BY DISMISSING THE ENTIRE ACTION DESPITE ADDITIONAL CLAIMS FOR DEFAMATION, CIVIL CONSPIRACY, TORTIOUS INTERFERENCE AND OTHER CLAIMS WHERE THE COURT DID NOT CONSIDER ANY FAILURE TO STATE A CLAIM ON EACH SUCH COUNT (NOT RAISED BELOW).

[POINT] H

THIS COURT SHOULD ORDER DR. KELLERMAN'S REINSTATEMENT AT VIRTUA HOSPITAL AND REMAND TO THE TRIAL COURT WITH DIRECTIONS TO COMPEL ARBITRATION AND, ALTERNATIVELY, REMAND FOR A PLENARY HEARING BEFORE THE TRIAL COURT ON THE PROCEDURAL AND SUBSTANTIVE DEFECTS ASSERTED BY PLAINTIFF.

We reject all of plaintiff's arguments and affirm substantially for the reasons set forth in Judge Robert G. Millenky's well-reasoned, oral opinion of June 20, 2008. We add the following.

In reviewing a trial court's grant of summary judgment, we will apply the same standards applicable in the trial court. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536-37 (1995); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Here, the sole issue before the court is whether the trial court properly dismissed the complaint for failure to exhaust administrative remedies, primarily a legal issue. Although the court considered the facts surrounding the procedural posture of the case in reaching its decision, those facts were largely undisputed. Hence, in directing our review to the legal issue of exhaustion of administrative remedies, we owe no special deference to the trial court's analysis and ultimate legal conclusions. State v. Harris, 181 N.J. 391, 419 (2004), cert. denied, 545 U.S. 1145, 125 S.Ct. 2973, 162 L.Ed. 2d 898 (2005).

Plaintiff contends the motion judge misapplied the doctrine of exhaustion of administrative remedies. We disagree. "Exhaustion of administrative remedies before resort to the courts is a firmly embedded judicial principle." Garrow v. Elizabeth General Hospital Dispensary, 79 N.J. 549, 558-59 (1979). The doctrine applies with equal force to hospital proceedings:

If the complaining party prevails before the administrative agency or the hospital board, judicial proceedings would have been unnecessary and the court would have intervened needlessly. . . . [T]he expertise of an administrative agency may not be exercised or known until it renders its final decision, and usually upon judicial review due deference is accorded that expertise. A hospital board presumably has expertise in certain areas, particularly in determining a physician's qualifications in relation to a hospital's facilities, needs and personnel. The medical staff is in a position to review credentials and evaluate competency and effectiveness. This special knowledge is available to the board of trustees whose decisions could have a substantial impact on the quality of care to be provided. In this respect it must be remembered that a hospital board is vested with a broad managerial discretion to seek improvement in medical care. [Id. at 559 (citations omitted).]

It is, however, well-settled that the doctrine is not absolute. Id. at 561. "Exceptions" to application of the doctrine may occur "when only a question of law need be resolved, when administrative remedies would be futile, when irreparable harm would result, when jurisdiction of the agency is doubtful, or when an overriding public interest calls for a prompt judicial decision." Ibid. (citations omitted). None of those factors were present here.

Judge Millenky specifically found that the issues before the court were not purely legal but were instead "absolutely intertwined with factual issues . . . ." He reviewed the administrative process Virtua extended to plaintiff and concluded that there was nothing to suggest that pursuing the issues administratively would be futile. Additionally, the judge found there was no evidence of irreparable harm. Although noting the obvious irreparable harm plaintiff would suffer as a result of the loss of his hospital privileges, the judge found that such a loss is not the harm contemplated. Rather, he found that irreparable harm, in the context of avoiding the administrative process, speaks to the process itself, not the "very subject matter of a termination of privilege that our

[c]courts had regularly left to administrative procedures that are administered by hospitals." Lastly, Judge Millenky found no constitutional issue implicated by the termination.

We are in complete accord with Judge Millenky's legal conclusions and find no basis to intervene to correct error. The remaining arguments advanced by plaintiff are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.


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