Opinion
Civil Action No. 99-2451-CM
November 8, 1999
MEMORANDUM AND ORDER
Plaintiff Brian Conner sued defendant Salina Regional Health Center, Inc., alleging that he was denied reappointment to the medical staff of defendant hospital in violation of 42 U.S.C. § 1983. Plaintiff also asserts various state law claims. This matter is before the court on defendant's motion to dismiss (Doc. 7).
I. Standard
The court will dismiss a cause of action for failure to state a claim only when it appears beyond a doubt that the plaintiff can prove no set of facts in support of the theory of recovery that would entitle him or her to relief, see Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Maher v. Durango Metals, Inc., 144 F.3d 1302, 1304 (10th Cir. 1998), or when an issue of law is dispositive, see Neitzke v. Williams, 490 U.S. 319, 326 (1989). The court accepts as true all well-pleaded facts, as distinguished from conclusory allegations, see Maher, 144 F.3d at 1304, and all reasonable inferences from those facts are viewed in favor of the plaintiff, see Witt v. Roadway Express, 136 F.3d 1424, 1428 (10th Cir. 1998). The issue in resolving a motion such as this is not whether the plaintiff will ultimately prevail, but whether he or she is entitled to offer evidence to support the claims. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds, Davis v. Scherer, 468 U.S. 183 (1984).
II. Discussion A. Background
Defendant is a privately-owned Kansas corporation. Plaintiff previously was a member of defendant's medical staff. In 1997, the Board of Trustees affirmed the recommendation of defendant's review panel and denied plaintiff's application for reappointment to defendant's medical staff.
Plaintiff filed his complaint against defendant claiming that defendant deprived him of due process and that defendant violated his First Amendment rights in denying his application for reappointment to defendant's medical staff. Plaintiff also asserts state law claims for breach of contract and interference with business relationships, and further seeks an injunction against defendant to force defendant to withdraw a report made to the Kansas Board of Healing Arts and the National Practitioner Data Bank. Defendant moved to dismiss, arguing that plaintiff failed to establish that defendant acted under color of law as required for a claim under § 1983.
Section 1983 provides a remedy for constitutional violations committed by state officials. Accordingly, liability attaches under § 1983 only to conduct occurring "under color of law." The Tenth Circuit takes a flexible approach to the state action doctrine, applying four tests to the facts of each case to determine whether state action occurred under color of law. See Gallagher v. "Neil Young Freedom Concert", 49 F.3d 1442, 1447 (10th Cir. 1995). Thus, the court must determine whether there exists 1) a close nexus, 2) a symbiotic relationship, 3) joint action, or 4) public function. See id. Under any of the tests, the conduct of the private entity must be "fairly attributable to the State" to constitute state action. Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 (1982).
B. Kan. Admin. Reg. § 28-24-6a
Plaintiff argues that defendant acted under color of law by virtue of Kan. Admin. Reg. § 28-24-6a when it denied plaintiff reappointment to its medical staff. Section 28-24-6a provides in pertinent part:
Each hospital shall maintain an organized medical staff. Admission to the staff and clinical privileges associated with membership shall be granted by the governing authority through a mechanism which evaluates each member's qualifications to engage in that member's area of clinical practice.
Kan. Admin. Reg. § 28-24-6a(a). The regulations set forth various factors to be considered in making membership decisions, including certification, fellowship, membership on a specialty board or society, or completion of a general practice residency, but expressly state that "membership decisions shall not be made solely upon any one of these factors." See id. § 28-24-6a(b).
The regulations further provide that the medical staff shall develop and adopt a set of bylaws providing for the following:
(1) The organizational structure of the medical staff;
(2) qualifications for staff membership and procedures for admission, retention, assignment and reduction or withdrawal of privileges;
(3) procedures and standards for the review of staff credentials;
(4) a mechanism for an appeal by a practitioner who receives an unfavorable medical staff recommendation. . . .
Id. § 28-24-6a(e). The regulations state that formal application for reappointment shall follow established procedures set forth in the bylaws, rules, and regulations of the medical staff. See id. § 28-24-6a(d). Specifically, plaintiff argues that these regulations clothe defendant with the authority of state law by authorizing and directing defendant to make decisions regarding whether particular physicians are qualified to engage in their particular area of clinical practice.
1. Close Nexus Test
To establish that a private entity acted under color of law pursuant to the nexus test, plaintiff must establish that "there is a sufficiently close relationship between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself." Jackson v. Metropolitan Edison Co., 419 U.S. 345, 350 (1974). The mere fact that a company is subject to state regulation does not itself convert the business's action into that of the state. See id.
Plaintiff asserts that the required nexus in this case exists because the regulations create a mechanism that evaluates, or takes into account, whether the particular applicant is qualified. However, § 28-34-6a merely provides a framework for a health care provider to utilize its own professional medical judgment in determining whether a particular applicant is qualified for admission to its medical staff. Section 28-34-6a does not dictate what those qualifications are; rather, the regulations leave that responsibility with the individual health care provider. Indeed, the very language of the statute provides that the health care provider exercise its own professional medical judgment in both creating the bylaws and in reviewing a membership application. Thus, the health care provider not only determines the qualifications that it deems necessary for staff membership, but it also applies its own professional medical judgment in making that decision.
The Supreme Court's decision in Blum v. Yaretsky, 457 U.S. 991 (1982), is controlling. In Blum, the defendant nursing home was subject to federal regulations which required all nursing homes to establish a utilization review committee to periodically determine the medical needs of each patient. Further, if a patient was to be transferred, the nursing home was required to notify the state agency administering the Medicaid assistance. Moreover, the nursing homes were subject to penalties under the regulations if they failed to discharge or transfer patients whose continued stay was inappropriate. Despite this extensive regulatory framework, the Supreme Court held that the decision to transfer or discharge patients turned on "medical judgments made by private parties according to professional standards that are not established by the State." Id. at 1008.
In this case, the Kansas Department of Health and Environment promulgated § 28-34-6a, which provides a framework for individual health care providers to establish rules, regulations, and bylaws to determine whether individuals are qualified to obtain medical staff membership. Under the regulations, the health care providers, not the state, establish what those qualifications are and make the ultimate determination as to whom is qualified. As such, there is no "significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State." Id. at 1004; see also Tunca v. Lutheran Gen. Hosp., 844 F.2d 411, 413-14 (7th Cir. 1988) (comprehensive state regulatory scheme for medical staff privilege determinations did not establish state action necessary for a § 1983 claim). Plaintiff cannot establish a nexus between the state and defendant.
2. Symbiotic Relationship
A plaintiff may establish state action where the state has "so far insinuated itself into a position of interdependence" with the private party, Burton v. Wilmington Parking Auth., 365 U.S. 715, 725 (1961), that there is a "symbiotic relationship" between them, Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 175 (1972). Similar to the nexus test, "extensive state regulation, the receipt of substantial state funds, and the performance of important public functions do not necessarily establish the kind of symbiotic relationship between the government and a private entity that is required for state action." Gallagher, 49 F.3d at 1451. In this case, plaintiff has not alleged, nor is there any evidence, that the state through its regulatory scheme has insinuated itself into defendant's operations such that interdependence between the two exists. Plaintiff cannot state a § 1983 claim under the symbiotic relationship test.
3. Joint Action
State action is present if a private party is a "willful participant in joint action with the State or its agents." Dennis v. Sparks, 449 U.S. 24, 27 (1980). The mere acquiescence of a state official in the actions of a private party is not sufficient to establish joint action. See Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 164 (1978). Plaintiff in this case contends that the state has encouraged and directed defendant to engage in decisions regarding medical staff membership such that the two have engaged in joint action.
In support, plaintiff attached a document which, plaintiff claims, indicates the existence of facts demonstrating that the state has been involved in either encouraging or directing hospitals with regard to the manner in which they make medical staff membership decisions. The document is a "risk Management" survey form, or checklist, employed by the Kansas Department of Health in connection with its oversight of hospital risk management plans. The final page of the document, entitled "Credentialing," requires the person answering the survey to ascertain whether "standards of care" are being "fed into the credentialing process" for medical staff. Plaintiff contends that the document demonstrates that the state is encouraging, if not requiring, hospitals to consider "standards of care" determinations when making medical staff decisions. Plaintiff admits that the document does not define what "standards of care" determinations are or how they are to be weighed by hospitals in making their credentialing decisions.
The Supreme Court in Blum rejected an argument similar to the one plaintiff asserts. In Blum, the defendant nursing homes were required to complete patient care assessment forms designed by the state. The Court held that such forms were insufficient to establish state action:
These regulations do not require the nursing homes to rely on the forms in making their discharge or transfer decisions, nor do they demonstrate that the State is responsible for the decision to discharge or transfer particular patients. Those decisions ultimately turn on the medical judgments made by private parties according to professional standards that are not established by the State.
Blum, 457 U.S. at 1008. Further, even though federal law required state officials to review the patient care assessment forms, the court pointed out that "nothing in the regulations authorizes the officials to approve or disapprove decisions either to retain or discharge particular patients." Id. at 1010.
In the present case, the regulations do not require a hospital rely on the survey form in making its medical staff decisions, nor does the existence of the survey forms establish that the state is responsible for or contributes to the making of such decisions. Moreover, the regulations do not authorize officials to approve or disapprove of medical staff decisions based on the survey results. Accepting all of plaintiff's assertions as true, the court nonetheless disagrees with plaintiff's argument that the state and the defendant are joint actors.
4. Public Function
A private party is considered a state actor where the state delegates a function "traditionally exclusively reserved to the State." Jackson, 419 U.S. at 352. The Tenth Circuit has noted that this test is difficult to satisfy. See Gallagher, 49 F.3d at 1456. Plaintiff contends that the regulations delegate to hospitals the power, as well as the duty, to decide whether an individual applicant is qualified. In doing so, plaintiff argues, the state is necessarily delegating to hospitals the power to perform this state function.
In Wong v. Stripling, 881 F.2d 200 (5th Cir. 1989), the Fifth Circuit rejected a similar argument. Wong involved a plaintiff whose staff privileges were revoked by a private hospital in Mississippi. Like Kansas law, Mississippi law authorized a hospital to suspend or revoke the hospital privileges of any physician considered to be unqualified as long as the hospital complied with its bylaws. The plaintiff in Wong argued that this regulatory scheme created a situation where hospitals were performing traditional state functions. In rejecting plaintiff's argument, the Fifth Circuit stated that "private hospitals had at common law a right to revoke the staff privileges of physicians for good cause," and concluded that the Mississippi statute did not delegate any authority previously held exclusively by the state. Id. at 202.
In this case, the Kansas regulatory scheme does not delegate any authority previously reserved exclusively to the state, and plaintiff does not allege that the right to revoke staff privileges was previously a state specific task. Accordingly, plaintiff cannot establish state action under the public function analysis. Thus, under any of the tests enumerated above, the actions of defendant cannot be said to be "fairly attributable" to the state.
C. Kan. Stat. Ann. § 65-4929
Plaintiff's second argument that defendant acted under color of law is based on Kan. Stat. Ann. § 65-4929. Section 65-4929 is part of the Kansas Risk Management Act (KRMA), which was enacted as part of comprehensive medical malpractice legislation in 1986. See Anglemyer v. Hamilton County Hosp., 58 F.3d 533, 540 (10th Cir. 1995). KRMA requires Kansas health care providers to create internal risk management review systems of their operations with reporting requirements to a state agency. Specifically, § 65-4929 protects health care providers from retaliatory litigation which stemmed from decisions made by providers in accordance with KRMA. The express language of the statute underscores its purpose:
65-4929 Purpose of risk management programs; status of entities conducting programs; antitrust immunity.
(a) The legislature of the state of Kansas recognizes the importance and necessity of providing and regulating certain aspects of health care delivery in order to protect the public's general health, safety and welfare. Implementation of risk management plans and reporting systems . . . effectuate this policy.
(b) Health care providers and review, executive or impaired provider committees performing their duties . . . and peer review . . . shall be considered to be state officials engaged in a discretionary function and all immunity of the state shall be extended to such health care providers and committees, including that from the federal and state antitrust laws.
(c) Nothing in this section shall be construed to require health care providers or review, executive or impaired provider committees to be subject to or comply with any other law relating to or regulating state agencies, officers or employees.
Plaintiff relies on the language of § 65-4929(b), which states that health care providers are considered to be "state officials" engaged in a discretionary function while engaging in peer review. In essence, plaintiff argues that the statute makes defendant a state official, and, therefore, a state actor.
The Supreme Court has recognized that the "analysis of the existence of state action justifying immunity from antitrust liability is somewhat similar to the state action inquiry conducted pursuant to § 1983." National Collegiate Athletic Ass'n v. Tarkanian, 488 U.S. 179, 195 n. 14 (1988). Analysis of the two doctrines is, however, "by no means identical." Id. Indeed, in the circumstances presented in this case, the court finds the rationale espoused in Ezpeleta v. Sisters of Mercy Health Corp., 800 F.2d 119 (7th Cir. 1986), implicitly overruled on other grounds, Patrick v. Burget, 486 U.S. 94, 99-101 (1988), to be persuasive.
In Ezpeleta, the defendant was a private hospital who had terminated the staff privileges of the plaintiff, a physician. The plaintiff filed suit, claiming that the defendant had violated federal antitrust laws and § 1983. The Seventh Circuit held that the antitrust claims were barred under the state action doctrine. See id. at 122. The plaintiff argued that, because her antitrust claims were barred by the state action immunity doctrine, the defendant acted under color of law for purposes of § 1983. The Seventh Circuit rejected this argument:
In Patrick v. Burget, 486 U.S. 94, 99-101 (1988), the Supreme Court effectively overruled this portion of Ezpeleta by holding that a hospital peer review process comprises insufficient state action to be immune from antitrust claims unless the state actively supervises and reviews the procedure.
Appellant contends that since her antitrust claim is barred by the state action immunity doctrine, it is clear that the necessary state action is present in this case. The appellant is wrong. Similar sounding phrases often have different meanings when applied in different legal contexts. This is such a case. . . . The test for determining whether state action is present for purposes of section 1983 has been delineated in a number of cases . . .":
[I]s the alleged infringement of federal rights `fairly attributable to the State?'"
Id. (citations omitted). In contrast, to establish state action immunity in an antitrust suit, a defendant must show that the restraint is clearly articulated as a state policy and that the policy is actively supervised by the state itself. See California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980).
The Ezpeleta court ultimately held that state action under § 1983 was not present:
The decision to terminate staff privileges at a private hospital, cannot be fairly attributed to the state. . . . It is true that the decision was made within the context of the statutorily mandated Indiana peer medical review process. This fact, however, is not enough to create section 1983 liability. . . .
Ezpeleta, 800 F.2d at 122.
Thus, because the inquiries differ, state action may be present for purposes of antitrust immunity while, at the same time, state action may be lacking for purposes of § 1983. Such a distinction has been recognized by the Tenth Circuit in Tarabishi v. McAlester Reg'l Hosp., wherein the court stated that the determination of whether the defendants were acting under color of law for § 1983 purposes is not dispositive of whether those defendants are a special function governmental unit with antitrust immunity. 951 F.2d 1558, 1565 n. 6 (10th Cir. 1991) (citing Ezpeleta, 800 F.2d at 122).
The court finds that the language in § 65-4929, which deems private health care providers engaging in peer review to be state officials engaged in a discretionary function and extends immunity to those providers, does not in and of itself establish that such health care providers act under color of law for purposes of § 1983. Rather, the issue is whether a private health care provider's actions are fairly attributable to the state. In this case, the court already has concluded that defendant's decision in denying reappointment of plaintiff to its medical staff was not action fairly attributable to the state. Therefore, because there is no state action present, plaintiff cannot maintain a claim under § 1983. Defendant's motion to dismiss is granted.
D. State Law Claims
The court here dismisses plaintiff's federal claims. To the extent that plaintiff's complaint presents valid state law claims, the court declines to exercise supplemental jurisdiction.
III. Order
IT IS THEREFORE ORDERED that defendant's motion to dismiss (Doc. 7) is granted. Plaintiff's federal claims are hereby dismissed with prejudice, and plaintiff's state law claims are hereby dismissed without prejudice.