Title: Garibaldi v. Applebaum

State: illinois

Issuer: Illinois Supreme Court

Document:

Docket Nos. 86952, 87120 cons.-Agenda 11-January 2000.
ABEL GARIBALDI, Appellee, v. ROBERT APPLEBAUM et al.,
								Appellants.
Opinion filed October 26, 2000.
	JUSTICE MILLER delivered the opinion of the court:
	This appeal considers what procedural rights, if any, a
physician has under hospital bylaws when a hospital enters into an
exclusive contract with a competing group of physicians for the
performance of the same work as the physician performs. In two
separate appeals from judgments entered in the circuit court of
Cook County, the appellate court concluded that the plaintiff in
this case was entitled to notice and a hearing before the hospital
entered into an exclusive contract with a competing medical group
(Garibaldi v. Applebaum, 273 Ill. App. 3d 536 (1995)), and that
the plaintiff may recover damages for the period preceding the
hearing that he eventually received on the matter (301 Ill. App. 3d
849). We allowed the defendants' separate petitions for leave to
appeal from the appellate court's second decision (177 Ill. 2d R.
315(a)), consolidated the appeals for purposes of oral argument
and disposition, and now reverse the judgment of the appellate
court.
	The plaintiff, Dr. Abel Garibaldi, is a board-certified
cardiovascular surgeon who has had clinical privileges at St.
Francis Hospital and Health Center, in Blue Island, since 1981.
From 1981 to 1992, the plaintiff was a member of Cardiovascular
Renal Consultants (Cardiovascular Renal), a group of physicians
who performed, among other services, open-heart procedures at
several hospitals in the Chicago area, including St. Francis. Dr.
Robert Applebaum, Dr. Tammo Hoeksema, and Dr. Dominic
Allocco were also members of Cardiovascular Renal. After
internal differences arose over matters involving patient selection,
operative procedures, and post-operative care, Cardiovascular
Renal dissolved. A new group, defendant Cardiovascular Medical
Consultants (Cardiovascular Medical), was later formed by Drs.
Applebaum, Hoeksema, Allocco, and others, but it did not include
the plaintiff.
	Dr. Applebaum later entered into an exclusive contract with
St. Francis that allowed only Dr. Applebaum, employees of
Cardiovascular Medical, and those who subcontracted with Dr.
Applebaum to perform open heart surgery at St. Francis.
According to the plaintiff's subsequent complaint, the effect of
this exclusive contract was to revoke his right to perform open-heart procedures at St. Francis without affording him the benefit
of notice and a hearing, in violation of the hospital's then-current
bylaws.
	Article VII, section 3(c), of the hospital bylaws, "Corrective
Action," states in part:
				"Actions which limit, reduce, suspend or revoke
membership or clinical privileges of a practitioner on the
staff of the Hospital or revoke staff membership shall be
deemed to be adverse to the practitioner and shall entitle
the practitioner to notice and the hearing and appeal
procedures as provided in Article VIII. These actions
include:
			***
			(2) Reduction, suspension or revocation of clinical
privileges and/or admitting privileges;
			***
			(4) Suspension or revocation of specific clinical
privileges or Staff membership;
			(5) Other similar actions.
			Such actions constitute a recommendation by the
Executive Committee to the Governing Body."
	Additionally, article VIII of the hospital bylaws, "Hearing and
Appellate Review Procedure," states in part:
			"a. Any practitioner against whom an adverse
recommendation has been made and which involves
corrective action set out in Article VII, Section 3(c) shall
have the right to request a hearing on the adverse
recommendation under the terms and procedures
described in this Article."
	The initial exclusive contract between St. Francis and Dr.
Applebaum took effect on January 1, 1993. The plaintiff
commenced the present action on January 26, 1993, by filing a
three-count complaint in the circuit court of Cook County. Count
I of the complaint was directed against St. Francis, Cardiovascular
Medical, and Drs. Applebaum, Hoeksema, and Allocco and sought
declaratory and injunctive relief. Count I alleged that St. Francis,
by entering into an exclusive contract with Dr. Applebaum,
effectively revoked the plaintiff's clinical privileges without notice
and a hearing, as required by articles VII and VIII of the hospital
bylaws. Count II of the plaintiff's complaint alleged tortious
interference with contractual rights and sought damages from
Cardiovascular Medical and the defendant doctors. Count III of the
complaint alleged breach of contract and sought damages from St.
Francis.
	A judge in the chancery division granted the defendants'
motion for summary judgment on count I and transferred counts
II and III to the law division; the judge found no just reason for
delaying enforcement or appeal of the judgment entered on count
I (155 Ill. 2d R. 304(a)). The plaintiff appealed from the ruling on
count I, and the appellate court reversed the entry of summary
judgment and remanded the cause for further proceedings.
Garibaldi v. Applebaum, 273 Ill. App. 3d 536 (1995). The
appellate court found that the hospital's decision to enter into the
exclusive contract with Cardiovascular Medical effectively
reduced or revoked the plaintiff's privileges at St. Francis, and the
court believed that the plaintiff was therefore entitled to the notice
and hearing procedures contained in articles VII and VIII of the
hospital bylaws. Garibaldi, 273 Ill. App. 3d at 540. This court
denied the defendants' petitions for leave to appeal. Garibaldi v.
Applebaum, 164 Ill. 2d 562 (1995).
	With regard to counts II and III, a circuit judge in the law
division granted the defendants' motions for summary judgment
on those counts. The judge found that the hospital bylaws did not
create a contractual relationship between the hospital and the
plaintiff. The judge also concluded that, even if the bylaws were
applicable, they were not breached when the hospital entered into
an exclusive contract with Cardiovascular Medical without first
providing the plaintiff with notice and a hearing. The plaintiff
appealed from that ruling; the appeal remained lodged in the
appellate court until it was later joined by the plaintiff's further
appeal after the remand of count I.
	During the pendency of the plaintiff's appeal from the entry
of summary judgment on count I, the legislature amended the 
Hospital Licensing Act in a manner relevant to this case. See Pub.
Act 88-654, eff. January 1, 1995 (amending 210 ILCS 85/10.4
(West 1992)). The amendment directed hospitals that contemplate
exclusive contracts with professional groups to adopt bylaws that
specifically provide for notice and hearing procedures for
practitioners whose privileges will be affected by the contracts.
210 ILCS 85/10.4 (West 1996). To comply with the new statutory
provision, St. Francis amended its bylaws; the hospital's
governing body approved article IX of the bylaws, "Hearing
Opportunity Before Implementation of Exclusive Hospital
Contracts," on July 24, 1995. Article IX states in part:
			"Section 1. Notice to Other Practitioners
			When the hospital enters into an exclusive contract with
one or more practitioners, it shall give written notice of
the effect of the exclusive contract to all other
practitioners who hold specific clinical privileges which
will, thereafter, be provided pursuant to the exclusive
contract. Such notice shall be given not less than sixty
(60) days before the exclusive contract takes effect.
			Section 2. Who Is an Affected Practitioner
			An Affected Practitioner is any Practitioner who, at the
date of the notice:
			(a) Holds a clinical privilege which shall become
subject to the exclusive contract;
			(b) Has exercised that clinical privilege at the Hospital
within one (1) year prior to the notice;
			(c) Has not been offered the opportunity to exercise that
clinical privilege at the Hospital either as a party to the
exclusive contract or under an arrangement with the
providers who are themselves parties to the exclusive
contract ***."
	Before the issuance of the appellate court's mandate in the
first appeal, St. Francis notified the plaintiff, on October 12, 1995,
that it had entered into a second exclusive contract with Dr.
Applebaum, effective December 13, 1995, and that the plaintiff
was an affected practitioner under the new provisions of article IX
of the bylaws. The plaintiff timely requested a hearing pursuant to
article IX.
	Following the hearing, a panel of three physicians concluded
that it was "in the best interest of patient care and hospital
administration" for St. Francis to enter into the exclusive contract
with Cardiovascular Medical. The report also recommended that,
whenever an exclusive contract is entered into, the hospital should
exempt from the consequences of the contract practitioners who
have had clinical privileges for at least one year before the
effective date of the contract. After considering the panel's
recommendations, the hospital's governing board decided to adopt
the exclusive contract without modification and rejected the
"grandfather" provision recommended by the hearing panel.
	After the article IX hearing, and while the cause was on
remand from the appellate court's first decision, involving count
I, the trial court allowed the plaintiff to amend his complaint by
adding counts IV and V, which sought injunctive relief prohibiting
enforcement of the 1995 exclusive contract and a judgment
declaring that St. Francis had no right to reject the hearing panel's
recommendation without explanation. St. Francis filed a motion
to dismiss as moot count I, which the appellate court had
remanded for further proceedings. Because St. Francis had
conducted a hearing on the 1995 exclusive contract in compliance
with article IX of the bylaws, the trial court dismissed as moot
what the parties termed "the injunction case." Although the trial
judge commented on several questions concerning the nature of
the hearing, which was at issue in counts IV and V of the amended
complaint, he did not expressly rule on those counts. The plaintiff
then appealed.
	At this point, the plaintiff had two appeals pending in the
appellate court: his appeal from the order entering summary
judgment on counts II and III of the original complaint, and his
appeal from the ruling of the circuit court, on remand from the first
appeal, dismissing "the injunction case" as moot. The appellate
court consolidated the two appeals. 301 Ill. App. 3d 849. The
appellate court affirmed the trial court's dismissal of the portion
of the amended complaint seeking injunctive relief. The appellate
court found that the article IX hearing that had been provided to
the plaintiff made moot his original request for a hearing under
article VIII of the bylaws. 301 Ill. App. 3d at 855. With respect to
the plaintiff's claims for damages in counts II and III of the
original complaint, the appellate court reversed the law division
judge's grant of summary judgment for the defendants. The
appellate court found that the plaintiff was entitled to pursue
claims for damages stemming from the hospital's failure to
provide him with notice and a hearing before the hospital and
Cardiovascular Medical entered into the original exclusive
contract. The appellate court reaffirmed its holding in the first
appeal that the hospital bylaws created a contractual relationship
and that the plaintiff's staff privileges had been effectively
revoked by the hospital's action in entering into the exclusive
contract with Cardiovascular Medical. The appellate court also
rejected the defendants' various contentions that they could not be
liable for damages for the failure to provide the plaintiff with
notice and a hearing. The appellate court therefore remanded
counts II and III of the plaintiff's original complaint to the circuit
court for further proceedings. The appellate court did not consider
the merits of the remaining counts of the plaintiff's amended
complaint, counts IV and V, believing that the circuit court had
failed to rule on those counts. The appellate court remanded the
cause to the trial court with directions to address those counts. 301
Ill. App. 3d at 856. We allowed the defendants' separate petitions
for leave to appeal. 177 Ill. 2d R. 315(a). We later granted leave to
the Illinois State Medical Society and the Illinois Hospital &
HealthSystems Association to submit briefs as amici curiae in
behalf of the parties. 155 Ill. 2d R. 345.
	We need not consider in this case whether the hospital's
bylaws are a contract, for we find a threshold issue to be
dispositive of this appeal. In the first appeal, the appellate court
held that the plaintiff's right to notice and a hearing under articles
VII and VIII of the bylaws was triggered by the hospital's decision
to enter into an exclusive contract with Cardiovascular Medical.
Garibaldi, 273 Ill. App. 3d at 540. The defendants challenge that
conclusion here, arguing that the bylaws, as they then existed, did
not provide the plaintiff with any remedy in these circumstances.
The plaintiff responds that the appellate court's first determination
is the law of the case and that our consideration of the issue is
therefore barred. We do not agree.
	Contrary to the plaintiff's contention, the law of the case
doctrine does not preclude us from reviewing this question, which
was resolved by the appellate court in the first appeal but which
has not previously been considered on its merits by this court in
the course of this litigation. See Sjostrom v. Sproule, 33 Ill. 2d 40,
41 (1965); Zerulla v. Supreme Lodge Order of Mutual Protection,
223 Ill. 518, 520 (1906). This court explained the operation of the
law of the case doctrine in Relph v. Board of Education of DePue
Unit School District No. 103, 84 Ill. 2d 436, 442 (1981):
			"Even if the appellate court were bound by the law of
the case it had announced in the first appeals, that
limitation would not apply to this court. Although this
court denied petitions for leave to appeal in both of the
previous appeals of these cases, such action has no
precedential effect and in no way amounts to a
consideration of the merits of the cases. Nor does it
indicate approval of the appellate court's action. (People
v. Vance (1979), 76 Ill. 2d 171, 183.) Therefore, this is the
first time these cases have been before us on the merits.
Our review may cover all matters properly raised and
passed on in the course of litigation. (Weiland Tool &
Manufacturing Co. v. Whitney (1969), 44 Ill. 2d 105, 113-14.) In Vendo Co. v. Stoner (1974), 58 Ill. 2d 289, 306,
this court held that the law of the case is not applicable to
this court in reviewing the judgment of the appellate
court."
	The present appeal marks this court's first opportunity to
consider, on the merits, whether the hospital's decision to enter
into an exclusive contract with Cardiovascular Medical triggered
the plaintiff's right to notice and a hearing under articles VII and
VIII of the hospital bylaws. For the reasons explained in Relph, we
do not believe that the doctrine of law of the case precludes us
from addressing this issue, even though it was resolved by the
appellate court in the plaintiff's first appeal. We now turn to that
question.
	The plaintiff contends that the hospital's exclusive contract
with Cardiovascular Medical effectively revoked his privileges to
perform open heart surgery at St. Francis and that the hospital's
actions are subject to judicial review to determine whether he was
afforded the necessary notice and hearing procedures in
compliance with the hospital's bylaws. The plaintiff contends
further that he may recover damages for the hospital's failure to
provide him with notice and a hearing.
	In this case, we do not believe that the plaintiff suffered a
revocation, suspension, or reduction of his clinical privileges
within the meaning of the hospital bylaws. By the terms of the
bylaws, clinical privileges are defined as "the permission to
provide medical or other patient care services in the Hospital
within well-defined limits, based on the individual's professional
license, experience, competence, ability and judgment." The
granting of privileges, therefore, signifies that a doctor is qualified
to practice at the hospital. There is no doubt, in this case, that St.
Francis has determined that the plaintiff is qualified, and that
determination is embodied in the privileges the plaintiff has been
granted. The right to exercise those privileges, however, is a
separate matter that may be affected by a host of hospital
administrative decisions that are wholly unrelated to the doctor's
professional competence or ethics. For example, a hospital may
decide, for economic reasons, that it will no longer offer a
particular medical specialty. Although the practical effect of that
decision may be to curtail or even eliminate a practitioner's ability
to exercise his or her privileges at the particular facility, the
hospital's decision does not also signify that it has reduced or
terminated the practitioner's privileges under its bylaws. Indeed,
the hospital's decision would have nothing to do with the
practitioner's competence to practice, which forms the central
inquiry when privileges are reduced or terminated. See Engelstad
v. Virginia Municipal Hospital, 718 F.2d 262, 267 (8th Cir. 1983).
	In this case, the plaintiff fails to distinguish between his
privileges and his ability to exercise those privileges in a "closed"
environment. This distinction was illustrated by the court of
appeals in Collins v. Associated Pathologists, Ltd., 844 F.2d 473,
481 (7th Cir. 1988), which stated:
			"Dr. Collins also asserts that St. John's [Hospital]
wrongfully removed or reduced his staff privileges in
violation of the by-laws of the hospital. However, the
record reflects that St. John's has neither removed nor
reduced Dr. Collins' staff privileges. *** Staff privileges
reflect the hospital's decision that a physician is qualified
to practice in the facility, but do not in and of themselves
confer employment. Employment as a pathologist at St.
John's was determined by the legal contract between St.
John's and APL [the exclusive contractor]. [Citation.] 
Although without concurrent employment by St. John's as
a pathologist these staff privileges may be of little or no
value to Dr. Collins, the fact remains that the privileges
were neither removed nor reduced."
	Articles VII and VIII of the St. Francis bylaws do not pertain
to or control administrative decisions, such as the formation of
exclusive contracts, but concern instead matters of professional
competence and ethical conduct. More specifically, the remedies
afforded by articles VII and VIII are available to a doctor who is
facing "corrective action." Article VII, section 3(c), entitles a
practitioner to notice and to the hearing and appeal procedures of
article VIII when an action limits, reduces, suspends, or revokes
membership or clinical privileges of that practitioner on the
medical staff. Article VII, by its terms, applies only to "corrective
actions." Moreover, article VIII specifically states that "[a]ny
practitioner against whom an adverse recommendation has been
made and which involves corrective action set out in Article VII,
Section 3(c) shall have the right to request a hearing on the
adverse recommendation under the terms and procedures
described in this Article." Thus, in order for a practitioner to
request a hearing under article VIII, both an adverse
recommendation and corrective action must be present. In this
case, however, the record fails to disclose any "corrective action"
initiated by St. Francis against the plaintiff. The hospital's decision
to enter into an exclusive contract cannot be deemed corrective
action; rather, that decision affected not only the plaintiff, but also
any other physician who had privileges at St. Francis and who was
not a member of Cardiovascular Medical or working under
subcontract with Dr. Applebaum. For these reasons, we do not
believe that the plaintiff was entitled to the notice and hearing
procedures provided by articles VII and VIII of the hospital
bylaws.
	Further support for this conclusion may be found in the
subsequent addition of the notice and hearing requirements of
article IX of the bylaws for actions like the one involved here. As
we have found, prior to the legislature's amendment of section
10.4 of the Hospital Licensing Act (210 ILCS 85/10.4 (West
1994)) and the hospital's ensuing adoption of article IX, the
hospital bylaws did not explicitly grant the plaintiff the right to
notice and a hearing in these circumstances. It was only after the
legislature amended section 10.4 of the Hospital Licensing Act
and the hospital amended its bylaws that notice and a hearing
became expressly necessary whenever the hospital entered into an
exclusive contract. An amendment to a statute gives rise to a
presumption that the amendment was intended to change the law.
Illinois v. Mikusch, 138 Ill. 2d 242, 252 (1990). The legislature's
enactment of this particular requirement suggests to us that the
legislation effected a change in the law. Because the hospital
found it necessary to amend its bylaws in response to the new
legislation, one may also infer that the hospital bylaws, prior to
that time, did not already contain a similar requirement.
	Finally, we note that our result in this case is consistent with
the results reached by a number of other courts that have addressed
similar issues involving a medical staff member's procedural
rights prior to a hospital's entry into an exclusive contract with a
competitor. See Engelstad v. Virginia Municipal Hospital, 718 F.2d 262 (8th Cir. 1983); Dutta v. St. Francis Regional Medical
Center, Inc., 254 Kan. 690, 867 P.2d 1057 (1994); Bartley v.
Eastern Maine Medical Center, 617 A.2d 1020 (Me. 1992); Holt
v. Good Samaritan Hospital & Health Center, 69 Ohio App. 3d
439, 590 N.E.2d 1318 (1990).
	As a rule, courts exercise only a limited form of review in
cases involving medical staffing decisions. Barrows v.
Northwestern Memorial Hospital, 123 Ill. 2d 49 (1988); Knapp v.
Palos Community Hospital, 176 Ill. App. 3d 1012 (1988). In
Adkins v. Sarah Bush Lincoln Health Center, 129 Ill. 2d 497, 506-07 (1989), this court explained:
			"[T]here is, in cases involving private hospital staff
privileges, a 'rule of non-review' under which, as a matter
of public policy, internal staffing decisions of private
hospitals are not subject *** to judicial review.
[Citations.] An exception exists when the decision
involves a revocation, suspension or reduction of existing
staff privileges. In such cases, the hospital's action is
subject to a limited judicial review to determine whether
the decision made was in compliance with the hospital's
bylaws. [Citations.] The judicial reluctance to review
these internal staff decisions reflects the unwillingness of
courts to substitute their judgment for the professional
judgment of hospital officials with superior qualifications
to consider and decide such issues. [Citations.]"
	Because we conclude that the plaintiff, in this case, has not
suffered a revocation, suspension, or reduction of his privileges,
we decline to review the internal staffing decision of St. Francis.
See Adkins, 129 Ill. 2d  at 506-07. Applying the rule of limited
judicial review, we conclude the St. Francis substantially followed
its medical staff bylaws in existence when the hospital first entered
into the exclusive contract. In sum, because plaintiff's privileges
were not revoked, reduced, or suspended by St. Francis entering
into the contract, under the rule of nonreview, we decline to
consider further St. Francis' decision to enter into that exclusive
contract. We make no determination regarding counts IV and V of
the plaintiff's amended complaint challenging the fairness of the
article IX hearing and the hospital's refusal to follow the hearing
panel recommendation that plaintiff should be exempted from the
effects of the exclusive contract.
	For the reasons stated, the judgment of the appellate court,
affirming the trial court's dismissal of count I, is affirmed. The
judgment of the appellate court, reversing the grant of summary
judgment on counts II and III, is reversed. The cause is remanded
to the circuit court of Cook County for further proceedings to
address counts IV and V of the plaintiff's amended complaint.
Appellate court judgment
affirmed in part and reversed in part;
cause remanded.
	JUSTICE HEIPLE, specially concurring:
	I agree with the court's disposition of this case. However, I
further believe that its underlying analysis may need clarification.
	Plaintiff argued to this court, inter alia, that St. Francis
Hospital's exclusive contract with his former partners effectively
revoked his privileges to practice at that hospital, giving rise to a
right of notice and hearing on that revocation under St. Francis'
bylaws. The majority rejects this assertion, likening the exclusive
contract to a hospital's decision to discontinue an entire field of
medical practice. Slip op. at 8-10.
	My concern is that this analysis, as written, might be read to
give carte blanche authority to a hospital to avoid obligations
assumed under its bylaws to provide notice and a hearing before
revoking a physician's privileges, simply by entering into
exclusive contracts. It is conceivable that, under a different set of
facts, a plaintiff doctor might show that an exclusive contract was
entered into by the hospital simply to revoke a physician's
privileges, as an end run around the notice and hearing obligations
of its bylaws in order to get rid of him.
	Except for this caveat, I fully join the majority's opinion.
Because the facts in this particular case do not support an
impropriety on the hospital's part, I agree that plaintiff was not
entitled to the notice and hearing procedures provided by the
hospital bylaws.