* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

REVISED JANUARY 18, 2011

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-40246

AJAY GAALLA, Medical Doctor; HARISH CHANDNA, Medical Doctor;

DAKSHESH “KUMAR” PARIKH, Medical Doctor,

Plaintiffs-Appellees

v.

CITIZENS MEDICAL CENTER; DAVID P. BROWN; DONALD DAY; JOE

BLAND; ANDREW CLEMMONS, Medical Doctor; JENNIFER HARTMAN;

PAUL HOLM; LUIS GUERRA,

Defendants-Appellants.

Appeal from the United States District Court

for the Southern District of Texas

No. 06:10-CV-00014

Before REAVLEY, BENAVIDES, and CLEMENT, Circuit Judges.

PER CURIAM:*

Appellee, a county-owned hospital, appeals the district court’s order

enjoining it from preventing Appellants, three cardiologists, from exercising

their clinical privileges at the hospital. We REVERSE.

United States Court of Appeals

Fifth Circuit

F I L E D

January 6, 2011

Lyle W. Cayce

Clerk
No. 10-40246

2

I. FACTS AND PROCEEDINGS

A. Facts

Dr. Harish Chandna, Dr. Dakshesh Parikh, and Dr. Ajay Gaalla

(collectively, “Cardiologists”) are cardiologists who hold staff privileges at two

hospitals in Victoria, Texas: DeTar Hospital (“DeTar”) and Citizens Medical

Center (“CMC”). CMC is a county-owned, nonprofit hospital run by a countyappointed board of managers (“Board”). TEX. HEALTH & SAFETY CODE ANN. §

263.041. DeTar Hospital is a private, for-profit hospital. Because the

Cardiologists have clinical privileges at both hospitals, they can practice

cardiology and see patients at either hospital. Although the Cardiologists have

staff privileges at CMC, they are not CMC staff because they have not signed a

contract with CMC. The Cardiologists are the only cardiologists with privileges

to practice at DeTar; they started the cardiology program at DeTar and own an

interest in the equipment at the hospital. 

CMC has five cardiologists and one cardiovascular surgeon, Dr. Yusuke

Yahagi, who have clinical privileges and have also signed contracts with CMC.

Yahagi joined the CMC staff in 2007 and has been CMC’s only cardiovascular

surgeon since 2009. The relationship between the Cardiologists and Yahagi

deteriorated quickly after Yahagi began working at CMC in 2007. CMC

presented testimony that the interpersonal friction between the Cardiologists

and CMC staff boiled over into shouting matches and name-calling on at least

one occasion. 

The Cardiologists eventually declined to refer their patients to Yahagi,

stating that he had a high mortality rate and that he was performing

inappropriate surgeries. They also testified that they were under intense

pressure from CMC to refer their patients to Yahagi. Chandna attested that

CMC’s Administrator and Yahagi confronted the Cardiologists about their lack

of referrals for forty-five minutes at a cardiology department meeting. On
No. 10-40246

3

December 16, 2009, CMC sentletters to the Cardiologists asking them to explain

their failure to refer patients to Yahagi and informing them that their answers

would be taken into accountin deciding whether their clinical privileges at CMC

would be renewed. After the Cardiologists filed this lawsuit, CMC sent the

Cardiologists a letter retracting the request for information and stating that

referrals would not be a consideration in renewing their privileges.

Yahagi testified that, prior to his arrival at CMC, the Cardiologists

threatened to “run him out of town” if he did not sign a contract with DeTar,

which he did not. Yahagi also alleged that the Cardiologists engaged in what

amounted to a smear campaign against him by telling other physicians and

patients that he was performing unnecessary surgeries, that he was not a good

doctor, and that he had a high mortality rate. Yahagi testified that he told

members of CMC staff, including the chief of staff, that if his problems with the

Cardiologists were not resolved, he would leave. 

On January 13, 2010, in response to Yahagi’s complaint, CMC’s chief of

staff sent a letter to the chairman of the Board noting that “[t]hrough the years

. . . there have been many differences, disparities, and complaints originating

from Citizens Medical Center staff, nursing staff, Medical Staff toward [the

Cardiologists] and vice-versa.” The letter advised the Board that Yahagi had

been the victim of harassment to the point that the “the community is in

jeopardy of losing its cardiovascular surgical care.” The chief of staff referred

Yahagi’s complaints to the Board for resolution.

In response to the letter, CMC negotiated a contract with Yahagi whereby

Yahagi became the exclusive provider of cardiovascular surgery at CMC. His

contract was for one year, renewable annually, and terminable on ninety-days

notice. The Board also considered closing the cardiology department so that only

cardiologists contracted with CMC could see patients at the hospital. In

preparation for a February 17, 2010 board meeting, the Board prepared a draft
No. 10-40246

4

resolution closing the department. The draft resolution listed the Cardiologists

by name.

On February 3, 2010, CMC hired an outside consultant, Michael

Williamson, to consult on how the hospital should deal with the dispute between

Yahagi and the Cardiologists. Williamson, a former executive at CMC, reviewed

documents and interviewed CMC staff but did not interview the Cardiologists.

At the February 17 meeting, Williamson presented the results of his research

and agreed with the Board that closing the cardiology department was a

reasonable solution to the problem. After Williamson made his presentation, the

Board amended the resolution to remove the Cardiologists’ names and

subsequently approved it. The final resolution (“Resolution”) stated that the

hospital was “experiencing operational problems” that were “disruptive” to the

“operations ofthe heart program,” and that the problems “materially threate[ed]

the continued viability of the heart program.” According to the Resolution,

“[o]nly those physicians who are contractually committed to [CMC] to participate

in [CMC’s] on-call emergency room coverage program shall be permitted to

exercise clinical privileges in the cardiology department or as part of [CMC’s]

heart program.” The Resolution also ratified CMC’s exclusive contract with

Yahagi. Because the Cardiologists were not under contract with CMC, the

Resolution had the effect of preventing them from exercising their clinical

privileges and treating patients at CMC.

B. Proceedings

The Cardiologists filed suit on the day that the Resolution was to take

effect, seeking a temporary restraining order (“TRO”), preliminary and

permanent injunctions, and damages. The suit alleged causes of action for

violations of the Cardiologists’ substantive due process rights under the

Fourteenth Amendment, violations of the Racketeer-Influenced and Corrupt

Organizations (RICO) Act, and civil conspiracy. The district court granted the
No. 10-40246

5

TRO, expressly predicating the grant only on the Cardiologists’ substantive due

process claim.

On March 12, 2010, after a two-day hearing, the district court issued a

preliminary injunction enjoining CMC from implementing the Resolution. The

district court held that the Cardiologists had a property interest in their staff

privileges at CMC. The district court found that the Board undertook this action

“based upon economic considerations rather than ‘grounds that are reasonably

related to the purpose of providing adequate medical care.’” It then found that:

(1)the Cardiologists stood to suffer irreparable harm in the form of lost goodwill,

patient loyalty, and reputation; (2) CMC had not shown any offsetting harm

from the proposed injunction because the possibility that Yahagi would leave

CMC was speculative; and (3) an injunction would serve the public interest by

allowing patients a broader choice of cardiologists at CMC. CMC timely

appealed.

II. DISCUSSION

A. Standard of Review

“A district court’s grant of a preliminary injunction is reviewed for abuse

of discretion.” Women’s Med. Ctr. of N.W. Hous. v. Bell, 248 F.3d 411, 418–19

(5th Cir. 2001). We review findings of fact for clear error and conclusions of law

de novo. Hoover v. Morales, 164 F.3d 221, 224 (5th Cir. 1998). “A trial court

abuses its discretion when its ruling is based on an erroneous view of the law or

a clearly erroneous assessment of the evidence.” United States v. Yanez Sosa,

513 F.3d 194, 200 (5th Cir. 2008).

A “preliminary injunction is an extraordinary remedy that should only

issue if the movant shows: (1) a substantial likelihood of prevailing on the

merits; (2) a substantial threat of irreparable injury if the injunction is not

granted; (3) the threatened injury outweighs any harm that will result to the
No. 10-40246

1 The Resolution is a governmental action because CMC is a county-owned hospital.

See Martin v. Mem. Hosp. at Gulfport, 130 F.3d 1143, 1149 (5th Cir. 1997).

6

non-movant if the injunction is granted; and (4) the injunction will not disserve

the public interest.” Ridgely v. FEMA, 512 F.3d 727, 734 (5th Cir. 2008). 

B. Substantive Due Process

CMC argues that the district court abused its discretion in granting the

preliminary injunction because the Cardiologists did not demonstrate a

substantial likelihood of success on their substantive due process claim. We

assume, arguendo, that the Cardiologists have a property interest in their

clinical privileges at CMC. CMC argues that the Resolution is a legislative act

and that the Resolution does not violate the Cardiologists’ substantive due

process rights by depriving them of their clinical privileges because CMC had a

conceivable rational basis in closing the cardiology department to staff. The

Cardiologists argue that the Resolution is not legislative because CMC’s

December 16 letter and its draft resolution show that the Resolution was, in

effect, “an individualized decision against each of the Physicians based on

allegations of professional misconduct.” 

A governmental action1is legislative if it applies to a large group of

interests. Martin, 130 F.3d at 1149. Even if, as the Cardiologists claim, the

Resolution was effectively an individualized decision targeted at the

Cardiologists, this is irrelevant to determining whether the Resolution was a

legislative act. In Vulcan Materials Co. v. City of Tehuacana, this court

evaluated the legislative nature of a city council ordinance prohibiting

corporations from quarrying within city limits. 238 F.3d 382, 384 (5th Cir.

2001). Vulcan sued, arguing that the ordinance was an adjudicative act

intended to exclude the company. Id. at 388. This court held: 

That the ordinance states as a reason for its enactment the

intention of a rock quarry (undoubtedly Vulcan) to begin blasting
No. 10-40246

7

operations does not call into question its legislative character. The

ordinance applies to any party who would employ the prohibited

means to quarry within the city limits, and that Vulcan’s impending

quarrying may have provided the entire impetus behind the

ordinance does not transform it into an adjudicative decision.

Id.

The Resolution, on its face, prohibits all physicians, not just the

Cardiologists, from practicing in CMC’s cardiology department unless the

physician is contractually committed to CMC. The fact that the Board is not an

elected body does not meaningfully distinguish this case from Vulcan. Decisions

of hospital boards can be legislative acts. See Martin, 130 F.3d at 1149. In

Martin, this court held that a county-owned hospital board’s decision to enter

into an exclusive contract with a doctor was a “quasi-legislative decision not

based on [the appellant’s] individual competency.” Id. It held that the appellant

had no procedural due process rights and applied rational basis review to the

appellant’s substantive due process claim. Id. at 1149–50. Read together,

Martin and Vulcan teach that government-owned hospital decisions that are

generally applicable are legislative decisions, even ifthe decision was motivated

by a few individuals. Thus, even if CMC enacted the Resolution to exclude only

the Cardiologists, the Resolution is a “legislative act” because it excludes any

cardiologist seeking to practice at CMC without a contract with the hospital.

In evaluating whether a legislative act violates substantive due process,

this court applies rational-basis scrutiny. Jackson Court Condo., Inc. v. City of

New Orleans, 874 F.2d 1070, 1078 (5th Cir. 1989). “Under rational-basis

scrutiny, the regulation is accorded a strong presumption of validity and must

be upheld . . . if there is any reasonably conceivable state of facts that could

provide a rational basis for [it].” Cornerstone Christian Sch. v. Univ.

Interscholastic League, 563 F.3d 127, 139 (5th Cir. 2009) (quotations omitted).

“As long as there is a conceivable rational basis for the official action, it is
No. 10-40246

8

immaterial that it was not the or a primary factor in reaching a decision or that

it was not actually relied upon by the decisionmakers or that some other

nonsuspect irrational factors may have been considered.” Reid v. Rolling Fork

Pub. Util. Dist., 854 F.2d 751, 754 (5th Cir. 1998) (citations omitted) (emphasis

in original). In the context of staff privileges at hospitals, this court has held

that “[s]ubstantive due process is satisfied if applicants are judged and

considered on grounds that are reasonably related to the purpose of providing

adequate medical care.” Hyde v. Jefferson Parish Hosp. Dist. No. 2, 764 F.2d

1139, 1141 (5th Cir. 1985) (citation and internal quotation marks omitted). The

Resolution would satisfy substantive due process if there were a conceivable

reason for it that was “reasonably related to the purpose of providing adequate

medical care.” Id. Whether a governmental action passes rational basis muster

is a question of law that this court reviews de novo. Simi Inv. Co. v. Harris

Cnty., Tex., 236 F.3d 240, 249 (5th Cir. 2000).

Preventing Yahagi from leaving CMC was a conceivable rational basis for

closing the cardiology department. Although the district court found that CMC’s

concern that Yahagi would leave was speculative, rational basis review only

requires a “reasonably conceivable state of facts.” Cornerstone Christian Sch.,

563 F.3d at 139. The record provides ample evidence supporting CMC’s claim

that Yahagi’s departure was a reasonably conceivable possibility. Yahagi

testified that he told CMC that he would leave if the disruptions involving the

Cardiologists did not cease. CMC’s chief of staff testified that he was worried

about Yahagi leaving. Although Yahagi was under contract with CMC, his

contract was terminable with ninety-days notice. CMC presented testimony that

it would be difficult to find a suitable replacement for Yahagi and that, without

Yahagi, CMC would not be able to perform cardiac surgeries. Furthermore,

CMC’s heart program would be “at a standstill” because CMC bylaws require
No. 10-40246

9

cardiologists to have a cardiac surgeon on standby in order to treat their

patients.

The district court was understandably concerned about testimony that

Yahagi’s mortality rates were greater than the national average. Even if this

were true, CMC did not actirrationally by attempting to keep a criticized cardiac

surgeon when faced with the alternative of no cardiac surgeon at all. CMC

presented testimony that losing Yahagi and the cardiac program would be

“devastating” for the community. That DeTar also had a cardiac program does

not change this result because it is rational for a public hospital to want to have

its own program to serve the community instead of relying on a private hospital.

We hold that preventing Yahagi from leaving was a rational basis for the

Resolution. Because keeping Yahagi from leaving CMC was a conceivable

rational basis for the Resolution, the Cardiologists’ substantive due process

claim did not have a substantial likelihood of success, and the district court’s

grant of the preliminary injunction was an abuse of discretion.

III. CONCLUSION

For the foregoing reasons, the district court’s order enjoining CMC from

implementing the Resolution is REVERSED.