Monday, November 19, 2018
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Medical staff prevails in legal battle over medical staff self-governance

By Tina Tedesco

Tulare, California is a small town in the Central Valley best known as the milk producing capital of America. More than half of its 60,000 residents are enrolled in Medi-Cal and served by a small, 108-bed health care district hospital – Tulare Regional Medical Center (TRMC) – with a separate medical staff of about 175 physicians.

Two years ago, this small agricultural community became ground zero in a high-profile battle testing the legal scope of a hospital medical staff’s independence and right to be self-governing. Fundamentally, the question was raised who should be in charge of patient care and safety in a hospital – lay administrators or physician leaders?  

In 2016, hospital administrators at TRMC executed a coup to take unilateral control over patient care at the hospital by terminating the entire medical staff and its duly elected officers. The hospital then adopted new medical staff bylaws in secret and without input from physicians at the hospital. The hospital installed hand-selected individuals to serve as leaders of the new medical staff, dictated standards of medical care, seized control of the disciplinary process without legal or factual justifications, and prohibited members of the terminated medical staff from voting on medical staff matters or holding leadership positions in the replacement staff.

The California Medical Association (CMA) supported the medical staff in its lawsuit against the hospital. CMA and the medical staff sought to enforce California law requiring all hospitals to recognize and honor the self-governance rights of their medical staffs. Had TRMC’s actions been left unchallenged, it would have created a dangerous precedent that could have had a negative effect on patient care across the country.

This July, a favorable settlement of the lawsuit was reached that dissolved the replacement medical staff and fully reinstated the original medical staff, its officers and bylaws. The hospital also consented to a stipulated judgment agreed upon by the parties and issued by the Tulare superior court that, among other things, expressly recognizes that the 2016 actions of the hospital board violated the medical staff’s rights to self-governance under California law.

“The Tulare case was not just about one hospital medical staff that was being wrongly treated by its governance structure,” said Theodore M. Mazer, M.D., CMA president. “It’s about every medical staff.  It’s about autonomy of physicians to make medical decisions and the clear division of power between a governing body, which is administrative, and the medical staff and making sure that that separation of powers and duties and responsibilities stayed in place was important for Tulare and every medical staff in California and frankly, in the nation.”

“Medical staff is there to oversee the quality of care provided to patients in the hospital,” said Damodara Rajasekhar, M.D. CMA Board Trustee, Organized Medical Staff Section.  “That role is not designated to the CEO of the hospital or the board members.”

 “What the hospital was doing was a blatant violation of very clear law in California that requires hospitals to honor a medical staff’s independence and self-governance,” said Long Do, J.D., CMA Director of Litigation.

CMA worked with the medical staff’s attorneys and filed two amicus briefs to support the medical staff and take on the hospital, which had loaded up its defense from three different law firms.

“This was a case involving 125 doctors.  There’s no possible way they could have afforded to prosecute the case themselves,” said John Harwell, J.D., the medical staff’s attorney.  “It’s only by the collective action of organized medicine through the California Medical Association that this was possible.”

“This case moved quickly in large part because we were there to help the medical staff and then to seek outside resources and help in getting this resolved,” said Dr. Mazer.

In collaboration with CMA, the Litigation Center of the American Medical Association (AMA) and State Medical Societies provided significant legal and financial support in the California medical staff’s lawsuit.

“The narrative, when the case started, was that this was a group of troublemaking doctors who were making it impossible for the hospital to run as an efficient hospital,” said Michael Amir, J.D., lead trial attorney.  “We had to dispel that notion.”

TRMC filed for bankruptcy before closing arguments in the medical staff’s trial could take place, closing its doors and significantly challenging the availability of care to the community.

“It was very devastating for the community to have the hospital close,” said Anil Patel, M.D., immediate past chief of staff of Tulare Regional Medical Center.  “But they knew that they had to wipe out all the previous administration, the board.”  Patients seeking care at other hospitals reportedly had to wait 10 to 15 hours for care.

The lawsuit, however, enabled the medical staff to get its story out to the community. In turn, the community changed hospital leadership, which ultimately resulted in the favorable settlement.

As part of the settlement, TRMC has also agreed to:

·       Not recognize the replacement staff, its leaders or bylaws.

·       Reinstate the original medical staff, its duly-elected officers, with all the privileges, rights and status that existed before the Jan. 26, 2016 termination.

·       Reinstate the pre-existing medical staff bylaws, rules and policies.

·       Pay $300,000 for the TRMC medical staff’s attorneys’ fees and costs.

·       Waive all rights to appeal or challenge the settlement’s validity.

Perhaps most importantly, the settlement allows for the hospital to begin the process of reopening its doors and once again serving its community.

 “The importance of this case is it’s an example of what will happen to a hospital and the hospital’s leadership when it tries to trample the rights of the medical staff,” said Amir. “Doctors can take comfort that when their rights get trampled and their autonomy, self-governance is questioned, they have a remedy.” This case sends a message well beyond Tulare; it will likely have ramifications statewide, if not nationwide.

The support of CMA and AMA enabled the medical staff to stand up to a large and well-funded hospital. In fact, AMA’s contributions to the litigation in this case represent the single largest legal contribution in the history of the AMA.

“I learned a lot what CMA means. It’s not only an organization, it is a partner,” said Abraham Betre, D.O., chief of staff of Tulare Regional Medical Center.

“The litigation fund that is housed in the CMA Center for Legal Affairs is the bloodline of our work.  Without the support from medical staffs and individual physicians, CMA would not be able to advocate for doctors,” said Do.

It cannot be understated how grave the consequences could have been on patient care and safety if the hospital’s illegal actions were left to stand. Medical staff self-governance would become meaningless if a hospital can pick for itself a replacement medical staff and eschew the large body of laws and regulations that require a truly independent medical staff that is self-governing and democratic.

If your medical staff is interested in contributing to CMA’s Legal Defense Fund, which is used to litigate cases of critical importance to physicians, please email Nathan Skadsen at NSkadsen@cmadocs.org.

 

Sidebar: The Importance of Medical Staff-Self Governance

Medical staff self-governance is a vital part of a carefully crafted system designed to ensure the delivery of quality patient care. This system recognizes that the hospital’s medical staff is the only body with the medical expertise to conduct quality assurance activities integral to the health and welfare of the public.

Under state law and Medicare regulations, hospitals are required to have an independent, self-governing medical staff charged with the professional work of the hospital. The medical staff works with the hospitals to ensure quality of care and insulate medical decision makers from undue influences driven by profit motives or other reasons unrelated to patient care.

To preserve this autonomy, medical staffs have a variety of rights provided for under California law, including the ability to retain legal counsel, elect leadership, conduct peer review and manage a separate bank account dedicated to medical staff funds. Medical staff associations also have the option to sue a hospital, should they feel their right to self-governance has been violated.

“Many physician members of a hospital’s medical staff often are not fully aware of the California laws that establish medical staff self-governance,” said Long Do, J.D., CMA Director of Litigation. “CMA offers informational materials and makes speakers available to educate medical staffs of the importance of self-governance.”

CMA provides hospital physicians with a variety of resources to help medical staffs maintain and assert self-governance. If you are interested in consulting with representatives from CMA’s Center for Legal Affairs or who would like to schedule a CMA speaker on this topic, contact the CMA Member Service Center, (800) 786-4262 or medstaffhelp@cmadocs.org


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Copyright 2018 by Santa Clara County Medical Association