Court Opinion

ID: 9752138
Source: CourtListenerOpinion
Date Created: 2023-08-28 17:38:42.934404+00
Date Added: 2024-06-11T07:27:08.296643
License: Public Domain

Pashman, J.
(dissenting). The Court today upholds a hospital’s decision to deny staff privileges to two qualified physicians. The hospital based its decision on the allegedly adverse effect which the physicians’ admission to the staff would have had on the ability of the institution to provide quality medical care. Based on its review of the facts, the majority concludes that denial of plaintiffs’ applications comported with both the internal needs of the hospital and the fiduciary duty which this Court has imposed on hospitals. Because the majority employs what I consider to be an incorrect standard of judicial review, I must dissent. The use of this standard inextricably colors the Court’s analysis of the facts and its resolution of the issues. I fear that today’s decision may represent an unfortunate retreat from the Court’s former “advanced position [in] reviewing staff admissions to make certain that hospital officials exercise ‘their powers in trust’ in a lawful manner.” Davis v. Morristown Memorial Hosp., 106 N. J. Super. 33 (Ch. Div. 1969).
In reaching its decision, the majority employs the substantial credible evidence test. Ante at 356. This standard is a transplantation from the field of administrative law. Mayflower Securities Co., Inc. v. Bureau of Sec., 64 N. J. 85, 92-93 (1973); Close v. Kordulak Bros., 44 N. J. 589, 598-99 (1965); 4 Davis, Administrative Law and Treatise, § 29.01, 29.02 (1958). As a polestar for judicial review, it imposes a greater burden of proof on parties wishing to overturn an *361administrative decision than do the comparable standards for parties appealing from the ruling of a judge or jury. 4 Davis, supra, at § 29.02. As such, the substantial credible evidence test recognizes the deference which courts accord the findings and expertise of administrative agencies.
While analogies between the decisions of hospitals and administrative agencies as to the pertinent standards of judicial review are appealing, they are at the same time in-apposite. Unlike questions presented in administrative cases, the determination of the hospital’s ability to accommodate the plaintiffs in this case is in the first instance neither statutorily assigned to, nor dependent upon, the expertise of the defendants. In addition, this case does not implicate a potential conflict between the judiciary and an agency of another branch of government which would warrant deference to that agency’s determination.1 Einally, and most importantly, hospitals, unlike most other public institutions, have been vested with a special public trust or fiduciary duty.
The parameters of this duty were first delineated in Falcone v. Middlesex Cty. Medical Soc’y, 34 N. J. 582 (1961). There, the defendant-medical society had denied admission *362to a doctor who met all prerequisites for societal membership except for an unwritten requirement of attendance at an approved medical school for four years. This Court, in striking down the requirement, not only acknowledged the society’s almost exclusive control of local hospital facilities, but also recognized the inherently public character of the society. Because of the position which it occupied, the medical society wielded considerable influence and power over the furnishing of medical services to the area. For instance, it could promote or impede a physician’s practice by denying him access to hospital facilities. Because an improper exercise of its power against a doctor could effectively deny him the opportunity to practice his profession, this Court held that the admissions power of the society was subject to certain restrictions :
Through its interrelationships, the County Medical Society possesses, in fact, a virtual monopoly over the use of local hospital facilities. As a result it has power, by excluding Dr. Falcone from membership, to preclude him from successfully continuing in his practice of obstetrics and surgery and to restrict patients who wish to engage him as an obstetrician or surgeon in their freedom of choice of physicians. Public policy strongly dictates that this power should not be unbridled but should be viewed judicially as a fiduciary power to be exercised in reasonable and lawful manner for the advancement of the interests of the medical profession and the public generally .... [34 N. J. at 597; emphasis supplied]
An even clearer exposition of this responsibility, one which is particularly relevant to the present ease, appeared in Greisman v. Newcomb Hospital, 40 N. J. 389 (1963). While the plaintiff there was again a physician, the organization which denied him staff privileges was a hospital. Plaintiff, an osteopath, sought admission to the courtesy staff of the hospital but was rejected because of his failure to attend an approved medical school for a requisite number of years. Not only was plaintiff denied admission to the staff, but he was also denied the opportunity to submit an application, even though he had an unrestricted State license to practice medicine. Tran*363seending distinctions which were previously drawn between public and private hospitals, this Court directed the defendant (a “private” hospital) to consider plaintiff’s application. In rendering its decision the Court relied upon the same considerations which supported its decision in Falcone, supra. In addition, the Court discussed the relationship between the principles of the fiduciary responsibility vested in a hospital and the institution’s permissible exercise of discretion:
Hospital officials are properly vested with large measures of managing discretion and to the extent that they exert their efforts toward the elevation of hospital standards and higher medical care, they will receive broad judicial support. But they must never lose sight of the fact that the hospitals are operated not for private ends but for the benefit of the public, and that their existence is for the purpose of faithfully furnishing facilities to the members of the medical profession in aid of their service to the public. They must recognize that their powers, particularly those relating to the selection of staff members, are powers m trust which are always to be dealt with as such. While reasonable and constructive exercises of judgment should be honored, courts would indeed be remiss if they declined to intervene where, as here, the powers were invoked at the threshold to preclude an application for staff membership, not because of any lack of individual merit, but for a reason unrelated to sound hospital standards and not in furtherance of the common good. [40 N. J. at 403-404; emphasis supplied]
In applying these principles to the instant case, it should first be noted that defendants’ hiring process itself was marked by arbitrariness and inconsistency. Plaintiffs submitted their applications for surgical privileges to the Southern Ocean County Hospital (hereinafter SOCH) on July 5, 1972. On September 12, 1972 they were notified that a decision on their applications would be postponed for three months “pending the establishment of the needs and the staffing patterns at the newly opened hospital.” The trial judge found, however, that of all the applications submitted, only plaintiffs’ were deferred for this reason. Other requests for admission were favorably received during the two and one-half months after that date. In fact, 11 other physicians were actually admitted to practice at SOCH be*364tween the time plaintiffs submitted their applications and the trial in this case. On January 5, 1975, plaintiffs were finally notified that their applications for admission had been denied; but, at that time, they were given no reasons for the denial.
The discriminatory treatment to which plaintiffs’ applications were subjected, was exacerbated by the vague and mutable selection criteria utilized by defendants. In his initial rejection of plaintiffs as possible candidates for the position of chief surgeon, Dr. Muir relied heavily on his determination that they were not “dynamic enough.”2 This initial and primary decision as to who was “dynamic” had been solely entrusted to Dr. Muir and was based on the single interview which he conducted with each candidate. Even if one were to accept “dynamism” as a legitimate criterion for selection, it necessarily diminished in importance when, in fall 1972, the hospital reconsidered its needs and decided that coverage by a team of surgeons was preferable. Apparently, this policy was again changed by the time the board of trustees of the hospital rendered its final decision to deny plaintiffs’ applications on Pebruary 28, 1973. Although only two surgeons had been granted staff privileges by that date, the hospital informed plaintiffs that they would be reconsidered for staff appointments only when the SOCH facility had been expanded — an action which was unlikely in the foreseeable future because of insufficient funds. This decision, while possibly justified as a matter of internal policy, was nonetheless a repudiation *365of the surgical team concept which supposedly was to serve as the basis for hiring new staff members. Eurthermore, it permitted the hospital to deny plaintiffs’ applications without appearing to be arbitrary. This overall pattern illustrates both confusion and inconsistency in the staffing policy at the hospital. As Dr. Muir frankly admitted, “When Southern Ocean County was originally opened they had no idea of what the staffing requirements would be.” Thus, in the absence of a clearly-defined staffing program, plaintiffs’ applications were subjected to varying requirements whose relationship to the needs of the hospital was never firmly established. Even if the plaintiffs failed to exhibit the dynamism which was initially required for the position of primary surgeon, their applications warranted reconsideration when the needs of the hospital and, presumably, the requirements for admission to the surgical staff were later reassessed.
Besides the staffing criteria whose application I find to be arbitrary, I am unpersuaded by the other reasons presented by the hospital to justify its denial of plaintiffs’ applications.3 Chief among these reasons was the fear that an extension of staff privileges to plaintiffs would overburden the limited facilities at SOCH and thereby reduce the quality of care afforded by the hospital. Because the record establishes that SOCH has been operating at approximately 80-90% capacity, defendants’ contention, on its face, seems to have merit. However, it should be recalled that SOCH is a “satellite hospital” and, as such, is intended primarily to provide outlying regions with a facility for the treatment of urgent and emergency eases. *366Ante at 350-351. At present, much of the surgery which is performed at the facility is elective in nature and could, if necessary, be reassigned to the sponsor hospital in order to guarantee sufficient space at SOCH for emergency cases. Consequently, with respect to its nonelective surgical cases, SOCH is operating at less than full capacity. Furthermore, there is little danger that the facility would become overburdened if plaintiffs were accorded staff privileges. As the trial court found, the number of physicians in the service area who are admitted to practice at SOCH would not increase the number of patients defined as emergent or urgent cases since the number of such cases is “caused by physiological factors . . . totally unrelated to the number of doctors.” Moreover, the hospital administrator, the admissions director or another hospital officer could oversee admistions and assure that the practice of admitting urgent and emergent cases is not abused. In any event, it is unlikely that the projected 4-5 operations per week which plaintiffs would perform at the hospital will compromise its high quality of medical care or severely tax its facilities. This is consistent with the court’s finding in Davis v. Morristown Memorial Hosp., supra, that “Surgical beds in a hospital may be controlled, except for emergencies, and a surgical department operated at figures in excess of '90% occupancy.” [106 N. J. Super, at 45; emphasis supplied].
In conjunction with these considerations, I also find that the alleged inability of the hospital to control patient admissions is incredible. I find no reasonable basis for defendants’ rejection of the suggestion that a “gatekeeper” be employed to screen incoming cases in order to assure that urgent or emergent cases receive preference. The force of defendants’ contention is further undermined by the hospital’s continued admission of other physicians to its general staff. The logical result of this action is to increase use of hospital facilities, including those in its surgical department. This would seem to place the hospital well on the road towards the overburdening which it seeks to *367avoid. The apparent arbitrariness of this action is not mitigated by the fact that staff privileges have been limited to nonsurgeons. There is a clear and substantial relationship between a patient’s choice of hospital and the facilities at which his personal physician has staff privileges. The continued appointment of doctors to the staff of SOCH can only exacerbate the alleged problem of overburden. This is particularly so where the hospital is the only medical facility in a relatively isolated area. In light of the privileges which continue to be granted, I remain unconvinced that positions cannot be found somewhere on the staff at the satellite hospital for these plaintiffs.
The failure to grant staff privileges to plaintiffs will, of course, effectively preclude their respective practices in the Long Beach Island area. This result contravenes one of the principal purposes of establishing satellite hospitals —■ to induce physicians to move to areas which lack sufficient medical services. Eurthermore, as the majority readily acknowledges, surgeons are peculiarly dependent upon accessible hospital facilities in order to practice their profession. Ante at 355. Plaintiffs’ need is not diminished by the fact that they have obtained staff privileges at other hospitals. In Davis v. Morristown Memorial Hosp., supra, 106 N. J. Super. 33, the plaintiff-obstetricians sought staff privileges at defendant-hospital after the obstetrical department in a nearby hospital at which they had such privileges was closed. Their applications to the defendant were denied and plaintiffs brought an action to compel their admission. Although the Chancery Division ultimately denied their request, the basis for the court’s decision was defendant’s demonstration of a genuine overcrowding problem and not the fact that plaintiffs had staff privileges at three other hospitals. In this regard, the court stated:
Plaintiffs, I find, are faced with a very real professional problem. They will lose those obstetrical patients who desire to be delivered at Morristown hospital, because they have no obstetrical privileges at defendant hospital, and All Souls’ obstetrical department is *368closed. I find there will he loss of patients, based upon the testimony before me. Nor will they be available at their Morristown office to care for patients looking for a qualified obstetrician in Morristown, but also desiring to be delivered at a Morristown hospital. To this extent, “service to the public” is impaired. [106 N. J. Super, at 47]
As indicated by the court’s statement, the granting of staff privileges is inextricably related to the interests of a physician’s patients and the public at large. Such interests are natural concomitants of the public duty with which hospitals are entrusted. Because a patient’s desire to be treated by his personal physician is affected by a hospital’s staffing decision, it imposes a limitation on the discretion which the hospital may exercise. As this Court observed in Greisman, supra:
It hardly suffices to say that the patient could enter the hospital under the care of a member of the existing staff, for his personal physician would have no opportunity of participating in his treatment; nor does it suffice to say that there are other hospitals outside the metropolitan Yineland area, for they may be too distant or unsuitable to his needs and desires. All this indicates very pointedly that, while the managing officials may have discretionary power's in the selection of the medical staff, those powers are deeply imbedded in public aspects, and are rightly viewed ... as fiduciary powers to be exercised reasonably and for the public good. [40 N. J. at 402]
Somewhere between the shuffle of the cards and the dealing of the hand, today’s majority has lost sight of this essential public interest. It has instead elevated the discretion of the hospital in a manner which I find totally inconsistent with our earlier decisions in this area of the law. I am aware of the extreme demands which are often placed on medical facilities to provide health services commensurate with the needs of the community which they serve. Nonetheless, on the record before us, it is not so clear that defendants cannot accommodate the interests of the plaintiffs and their patients and still satisfy their own *369professional obligations. Therefore, I must respectfully dissent.
For reversal — Chief Justice Hughes, Justices Mountain, Sullivan, Clifford and Schreiber and Judge Conford — 6.
Dissenting — Justice Pashman — 1.

This concern was expressed by the Court in Flanagan v. Civil Service Dep’t, 29 N. J. 1 (1959), in which a determination by an administrative agency was upheld under the substantial credible evidence standard:
It is important to the efficient functioning of the public service employment program that “[c]ourts should let administrative boards and officers work out their problems with as little judicial interference as possible. They may decide a particular question wrong — but it is their decision. [They are] vested with high discretion, and its abuse must appear very clearly before the courts will interfere.” Maxwell v. Civil Service Commission, 169 Cal. 336, 146 P. 869 (Sup. Ct. 1915). If there is any fair argument in support of the course taken or any reasonable ground for difference of opinion among intelligent and conscientious officials, the decision is conclusively legisaltive, and will not be disturbed unless patently corrupt, arbitrary or illegal. Doubts held by the courts as to the wisdom of the administrator’s decision do not alter the case. [29 N. J. at 12; emphasis supplied]

Testimony of Dr. Muir:
ANSWER: ... in my interview, I had disqualified them [the plaintiffs] as being the primary surgeons at Southern Ocean County Hospital or the primary surgeon.
QUESTION: May I ask how you reached that decision?
ANSWER: It was a subjective one based on my experience and based also on the fact that I did not feel that they were dynamic enough to represent the Department of Surgery in a primary role at Southern Ocean County Hospital.

It was not until February 28, 1973 that plaintiffs were informed as to tbe reasons for the hospital’s rejection of their applications. On that date, they were notified that:
Because of the limited bed capacity existing at the satellite hospital, it would not be in the best interest of the general public of the community serviced by Southern Ocean County Hospital, to enlarge the General Surgery staff.