Opinion ID: 1058767
Heading Depth: 3
Heading Rank: 4

Heading: Constitutionality of Closure without a Hearing

Text: The defendants argue that the Hospital Authority Act impairs the contract between themselves and CRMC. This argument is without merit. Both the federal and state constitutions prohibit laws that impair the obligation of a contract. See U.S. Const. art I, § 10, cl. 1; Tenn. Const. art. I, § 20. Because we hold that the defendants are not entitled to a hearing under the medical staff bylaws, the Hospital Authority Act does not impair this contract. Moreover, there can be no impairment of contract in this case because the Hospital Authority Act, which authorizes the hospital to enter into an exclusive provider contract, predated the enactment of the bylaws.
The defendants assert that the loss of clinical privileges that would necessarily follow from CRMC's execution of an exclusive contract for imaging services with another group of physicians would violate their due process rights as guaranteed by the Fourteenth Amendment to the United States Constitution unless they are given a hearing before losing these privileges. This contention is without merit. The Due Process Clause of the Fourteenth Amendment provides: [N]or shall any state deprive any person of life, liberty, or property, without due process of law. U.S. Const. amend. XIV. It is well established that the due process protections of the Fourteenth Amendment do not come into play unless there is some action on the part of the State. See Shelley v. Kraemer, 334 U.S. 1, 13, 68 S.Ct. 836, 92 L.Ed. 1161 (1948); State ex rel. Hawkins v. Luttrell, 221 Tenn. 32, 424 S.W.2d 189, 190 (1968); State ex rel. Johnson v. Heer, 219 Tenn. 604, 412 S.W.2d 218, 219 (1966). Therefore, in order to state a cause of action for a due process violation under the Fourteenth Amendment, state action must be alleged. The Authority in this case is a public hospital authority, which was established pursuant to state statute. Thus, the parties agree that the Authority is a state actor for purposes of Fourteenth Amendment analysis. In order to state a cause of action for a due process violation under the Fourteenth Amendment, deprivation of a liberty or property interest must also be alleged. The defendants argue that their clinical privileges at CRMC constitute a property interest that is protected from unfair deprivation under these circumstances. We disagree. In addressing a claim of an unconstitutional denial of procedural due process, we must determine whether the defendants' interest rises to the level of a protected interest. See Rowe v. Bd. of Educ., 938 S.W.2d 351, 354 (Tenn.1996). The Fourteenth Amendment's procedural protection of property is a safeguard of the security of interests that a person has already acquired in specific benefits. Bd. of Regents v. Roth, 408 U.S. 564, 576, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). The federal constitution does not create property interests. See id. at 577, 92 S.Ct. 2701; Rowe, 938 S.W.2d at 354. Instead, property interests are created and defined by rules or mutually explicit understandings that support [an individual's] claim of entitlement to the benefit and that he may invoke at a hearing. Perry v. Sindermann, 408 U.S. 593, 601, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972). As established above, the medical staff bylaws do not entitle the defendants to a hearing when the hospital enters into an exclusive provider contract. The bylaws, therefore, do not give the defendants a reasonable expectation that they will be given notice and a hearing before their clinical privileges are terminated if the hospital enters into such a contract. See, e.g., Bleeker v. Dukakis, 665 F.2d 401, 403 (1st Cir.1981) (holding that [t]his lack of any reasonable expectation of continued employment suffices to establish the lack of `property' in the constitutional sense, and hence the lack of a viable due process claim). To the contrary, the bylaws clearly contemplate exclusive contracting. Furthermore, due process protections are not triggered when the process would not serve any useful purpose or result in a remedy. See, e.g., Codd v. Velger, 429 U.S. 624, 627, 97 S.Ct. 882, 51 L.Ed.2d 92 (1977). Because the Authority's decision to close the staff of the Imaging Department is a business decision, a due process hearing would be purposeless. See, e.g., Major v. Mem'l Hosp. Ass'n, 71 Cal.App.4th 1380, 84 Cal.Rptr.2d 510, 521 (1999) (stating that the requirement of a proceeding with minimal due process prior to termination of a physician's staff privileges is not applicable if it is the result of a quasi-legislative act by the hospital, such as one to close the staff of a hospital department by means of an exclusive contract); Abrams v. St. John's Hosp. & Health Ctr., 25 Cal.App.4th 628, 30 Cal.Rptr.2d 603, 607 (1994) (stating that when terminations of staff privileges are incidental to a hospital's reorganization of one of its departments . . . the terminations are the result of administrative/quasi-legislative decisions, rather than adjudicatory/quasi-judicial decisions about a doctor, and hence do not require a due process hearing). The parties have stipulated that the defendants' competence is not at issue. Because the defendants' professional competence has not been questioned, they have no property interest entitled to due process protection. See Roth, 408 U.S. at 573, 92 S.Ct. 2701 (observing that if a person's good name, reputation, honor, or integrity is at stake because of what the government is doing to him, then due process requires notice and a hearing). Thus, under the circumstances in this case, we hold that the defendants have no due process right to notice and a hearing if their privileges are terminated due to the closure of the staff of the Imaging Department.