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Hospital Violates Physician's Procedural Rights by Acting, Without Notice or Hearing, to Induce Medical Group not to Schedule Physician For Work

February 7, 2019

Economy v. Sutter East Bay Hospitals
(Feb. 4, 2019, A150211, A150738, A150962) __ Cal.App.5th __
[2019 WL 422346]

The Court of Appeal has held that a hospital violated a staff anesthesiologist’s statutory and common law rights to notice and peer review. After an anesthesiologist repeatedly violated hospital policy for administering medication, the hospital, without notice or a hearing, advised the anesthesiologist’s employer (a medical group) that the hospital would no longer approve coverage schedules that included the anesthesiologist. The medical group then terminated the anesthesiologist’s employment.

The Court of Appeal affirmed a judgment against the hospital, rejecting the hospital’s argument that no peer review was required because it never formally rescinded the physician’s privileges, and the medical group rather than the hospital terminated the physician’s employment. The court explained that, if the hospital’s argument were accepted, the anesthesiologist’s “right to practice medicine would be substantially restricted without due process and, despite the hospital’s concern that plaintiff was endangering patient safety, the state licensing board would never be notified.” Moreover, “the hospital’s decision not to accept any schedule on which [the anesthesiologist] was included effectively prevented the anesthesiologist from exercising clinical privileges at the hospital and engaging in the practice of medicine” and was the functional equivalent of a suspension and revocation of privileges.

The court also affirmed a $4 million damage award for lost income, including an amount to offset the tax consequences of a lump sum award for lost earnings.

More Information

For more information, please contact H. Thomas Watson and Peder K. Batalden .

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