Healthcare entities continue to monitor federal court decisions related to the relationship between hospitals and credentialed physicians to determine whether hospital bylaws are being viewed by the courts as contracts with the doctors.  Recently, however, the 10th U.S. Circuit Court of Appeals side-stepped the “contract” issue while addressing a race discrimination claim brought by a doctor against a hospital.  Instead, it analyzed the case under the typical burden shifting framework generally applicable in federal discrimination cases.  Under that analysis, the physician failed to show that race was a motivating factor in the hospital’s decision to terminate his privileges there, and his case was dismissed.  Vesom v. Atchison Hospital Association, 10th Cir., No. 06-3353, May 15, 2008.

Dr. Pitt Vesom, an American citizen born in Thailand, maintained medical staff privileges at the Atchison Hospital in Kansas. He initially obtained those privileges in 1983.  Although Vesom was rated as a “highly qualified” cardiologist, the majority of Atchison’s staff members refused to refer their cardiac patients to him.  Between 1996 and 1998, Vesom left Atchison to be with his family in Thailand.  When he returned to Kansas in 1998, Vesom requested reappointment at Atchison.  He received a provisional appointment that included proctoring by an independent cardiologist, and written reports of his behavior from specific hospital departments.  At that time, Vesom stipulated to language indicating his recognition that these conditions were based upon a concern that he might engage in future disruptive behavior.  Vesom continued his affiliation with the hospital, seemingly without incident, until 2002.

In December 2002, Vesom submitted information related to his 2003 renewal of privileges.  Shortly before the hospital’s Medical Executive Committee (MEC) met to consider his request, Vesom – along with two other doctors, one Caucasian male and one Palestinian male – made complaints to the hospital about its peer review process related to another physician’s patient treatment.  Shortly after that complaint was submitted, the MEC met and recommended that Vesom’s renewal of privileges be denied, based upon the “disruptive physician” provision of the hospital’s bylaws.  At that same time and for the same reason, the MEC recommended termination of the privileges of the Caucasian physician who had joined in Vesom’s earlier complaints. 

Vesom requested a hearing under the hospital’s process for appeal of the decision.  The Fair Hearing Committee, a panel of five independent doctors, unanimously determined that the evidence reviewed supported the MEC’s decision.  Vesom appealed his case to the hospital’s Governing Board, which affirmed the Committee’s decision.  Vesom then filed a federal lawsuit against the hospital and three of the MEC members.  The lawsuit included a claim under 42 U.S.C. §1981, which prohibits discrimination in the making or enforcement of contracts.  The lower court dismissed his case, finding that the Hospital Bylaws did not create a contract – a necessary element for the assertion of a claim under Section 1981.

Vesom appealed, arguing that the district court wrongly rejected his claim that the Hospital Bylaws created a contractual interest sufficient to support the Section 1981 claim.  While the issue of whether hospital bylaws create contracts has been decided in a number of states, Kansas has not yet addressed that issue.  In a well-reasoned side-step to the issue, the Tenth Circuit instead decided the case under the McDonnell Douglas burden-shifting analysis used regularly in federal discrimination cases, and determined that Vesom had not produced evidence to refute the hospital’s reason for the non-renewal of his privileges. 

Under the McDonnell Douglas analysis, the plaintiff must present a prima facie case of discrimination; the defendant is then required to set forth a “legitimate business reason” for its actions; the final step requires the plaintiff to show that the defendant’s proffered reason for its action is simply a pretext for discrimination.

In this case, the Tenth Circuit determined that Vesom was unable to refute the hospital’s proffered reason for its actions, and could not show any actual evidence or testimony that the refusal to renew his privileges was motivated by his race.  In fact, Vesom’s own evidence – that he was strongly disliked by other members of the medical staff, who felt that he was disruptive – supported the hospital’s assertion that it acted for reasons other than Vesom’s race.  The evidence in the matter indicated an ongoing and escalating animosity between the hospital’s independent physicians (not limited to Vesom) and physicians employed directly by the hospital.

This case is not limited to healthcare entities, and reminds every employer that documentation of the reasons for its actions become critical in the event of a lawsuit.  The burden-shifting analysis generally employed by federal appellate courts in discrimination cases provides an opportunity for the defendant/employer to fully explain its actions.  Without documentation of that rationale, the plaintiff’s assertions of discrimination may stand unrefuted, and liability will ensue.


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