|RONALD ZIPPER, D.O., et. al.,||)|
|vs.||)||No. WD 51357|
|HEALTH MIDWEST, et. al,||)|
I. Transfer is Necessary due to the Importance and Uniqueness of this Case.
In the words of this Court, this case consists of an issue of first impression in Missouri. Opinion at 29 [hereinafter cited as Op. at __ ]. This case involves strong public policy principles in Missouri. Id. at 32. This Court acknowledged that its holding conflicts with the holdings of other courts. Id. at 31. Moreover, this Court s decision conflicts with the general rule, in Missouri and elsewhere, that organizational bylaws constitute a contract. See infra Part IV. The decision also conflicts with the Missouri public policy implicit in Section 537.035(5), which was recently applied by the Missouri Supreme Court in State of Missouri ex rel. Health Midwest Dev. Group, Inc. v. The Honorable Jay A. Dougherty, No. 80258 (en banc Mar. 24, 1998). The Missouri Lawyers Weekly, recognizing the enormous impact of this Court s decision on hospitals, patients and physicians, upon its issuance immediately published a front page headlined Hospital Bylaws Not a Contract with Doctors Western District Adopts Minority View. 12 M.L.W. 904, 924 (Aug. 10, 1998).
Accordingly, this case plainly qualifies for transfer to the Missouri Supreme Court. See, e.g., State v. Hendricks, No. 69296, 1996 Mo. App. LEXIS 1986, *10 (Mo. App. E.D. Div. 1 Dec. 10, 1996) ( [B]ecause this issue is one of general interest and first impression, we transfer to the Missouri Supreme Court. Rule 83.02. ); Sprung v. Negwer Materials, No. 53911, 1989 Mo. App. LEXIS 162, *16 (Mo. App. E.D. Div. 2 Feb. 7, 1989) ( [B]ecause of the general interest and importance of the legal questions presented in this case, we transfer to the Missouri Supreme Court on our own motion. Rule 83.02. ); McDowell v. Credit Bureaus of Southeast Missouri, Inc., No. 51192, 1987 Mo. App. LEXIS 4254, *1 - *2 (Mo. App. E.D. So. Div. June 23, 1987) ( We reverse the judgment, but because of the importance of the issues and for the purpose of reexamining existing law and the MAI 3d instructions, we transfer the cause to the Supreme Court pursuant to Art. V, 10, Mo. Const. This cause, one of first impression, deals with important and complex social issues relating to the rights and protections of individuals to their reputations and economic standing in the community. ).
II. Transfer is Necessary Because This Court Relied on Erroneous Factual Assertions Outside of the Record.
This Court s decision is expressly based on assertions from outside of the record that are erroneous. Specifically, this Court considered and relied upon on factual assertions presented in a 6-page bar journal article, which was authored by counsel for hospitals. The erroneous factual finding central to this Court s holding was that:
Dr. Zipper did not have input in the bylaws nor did he have the power to change the bylaws. MCI had the right to unilaterally change the procedures set forth in the bylaws without consultation with anyone on the medical staff and to impose those bylaws on its medical staff.
Op. at 32. Based on this factual finding, this Court held in the very next sentence that [b]ecause no consideration existed, the hospital bylaws do not constitute a contract between Dr. Zipper and MCI. Id.
There is no basis in the record for this factual finding, and it is completely false. Appellant Dr. Zipper did have input into the bylaws both personally and through his representatives, as required by Missouri law, and the hospital is prohibited by Missouri law from unilaterally changing the bylaws. See 19 CSR 30- 20.021(2)(A)(14) ( [T]he medical staff develop[s] and adopt[s] medical staff bylaws and rules which shall become effective when approved by the governing body. ). Like most physicians, Appellant regularly influenced and voted upon the bylaws at issue in this case. This Court s finding to the contrary is clearly erroneous, and is in violation of the well-established due process requirement of the exclusiveness of the record. See, e.g., Goldberg v. Kelly, 397 U.S. 254, 271 (1970); Mazza v. Cavicchia, 105 A.2d 545, 554 (N.J. 1954).
This erroneous finding is a nearly verbatim quotation from the bar journal article:
Plaintiff had no input into the bylaws, nor did he have the power to change them. Only the Hospital had the power to change the bylaws.
John Hulston et al., Do Hospital Medical Staff Bylaws Create a Contract?, 51 J. Mo.
B. 352, 353 (Nov./Dec. 1995) (citation and quotations omitted). That article presented factual assertions that are simply untrue in Missouri. It was plain error and a violation of due process for this Court to rely on factual assertions presented in material outside of the record of this case. Of what real worth is the right to present evidence if the one who decides the case may stray at will from the record in reaching his decision? Or consult another s findings of fact, or conclusions of law, or recommendations ? Mazza v. Cavicchia, 105 A.2d at 554. See also First Savings & Loan Ass n v. Vandygriff, 605 S.W.2d 740, 742 (Tex. Civ. App. 1980) ( Recognition of this fundamental rule means that ex parte [evidence] may not be a basis for such order. ); Carstens v. Pillsbury, 158 P. 218, 220 (Cal. 1916) (reliance on evidence outside of the record is contrary to all principles of justice and fairness [and] cannot be entertained for a moment. ).
This Court s decision contains additional factual errors as well. For example, this Court mistakenly treated Appellant Dr. Zipper as though he were an employee of the hospital, thereby implicating employment at-will doctrine, which again is false. If MCI wants to impose duties and incur obligations with its employees, it must do so in a separate document that is not the by-laws. Op. at 33 (emphasis added). But Dr. Zipper was never an employee of Respondents. Much of the Court s reasoning, including a citation to a Missouri employment law case, is based on this mistaken view. Id. at 31.
While this Court s opinion went outside of the record, Appellants themselves were prohibited from discovering many facts due to Respondents improper use of Section 537.035. It was not until March 24, 1998 long after summary judgment was granted to Respondents and after this Court issued its first decision here that the Missouri Supreme Court reversed this Court and held that physicians are entitled to broad discovery concerning the termination of privileges. Health Midwest v. Dougherty, supra. At a minimum, a remand should have been issued here in light of that decision. This Court erred by instead taking factual assertions from outside of the record assertions that are simply false in this case and in Missouri.
III. Transfer is Necessary Because This Court Erroneously Quoted and Misapplied the Missouri Regulation.
This Court relied heavily upon a Missouri regulation as excerpted in the bar journal article, and interpreted this regulation based on the entirely different statutory scheme of Georgia. See Robles v. Humana Hosp. Cartersville, 785 F. Supp. 989, 1001-02 (N.D. Ga. 1992). In Georgia, unlike Missouri, the governing statute required hospitals to unilaterally install procedures for reviewing medical staff privileges, and the statute expressly disclaimed any requirement that a hospital provide privileges to any physicians. O.C.G.A. 31-7-15 (1991). This delegation of unfettered authority to the hospitals in Georgia formed the basis for the Robles decision, which denied contractual force to hospital bylaws with respect to privileges. But in Missouri the applicable regulation is the exact opposite: here a hospital can only agree to bylaws that have already been develop[ed] and adopt[ed] by the medical staff. 19 CSR 30-20.021(2)(A)(14). Unlike Georgia, the Missouri public policy is that physicians have the right to develop and adopt procedures for reviewing medical staff privileges, and a hospital can only accept or reject bylaws already developed and approved by the medical staff.
This Court s opinion erroneously quoted from the Missouri regulation, and never addressed its key difference with the Georgia statute. Specifically, this Court s opinion erroneously recited a passage in the bar journal article by declaring that:
By state regulation, Missouri hospitals are required to adopt bylaws, rules and policies governing their professional activities in the hospital.
Op. at 32 (quoting regulation). In fact, the quoted fragment refers not to the regulation of hospitals, but rather to the regulatory requirement for physicians on medical staffs, such as Appellants. The actual regulation is as follows:
The medical staff [not the hospital] shall adopt bylaws, rules and policies governing their professional activities in the hospital.
19 C.S.R. 30-20.021(2)(C)(1).
Based on its mistaken citation of the regulation, this Court s opinion draws an erroneous legal conclusion:
Because MCI had a preexisting legal duty to the [sic] adopt the bylaws independent of its relationship with Dr. Zipper, consideration is lacking and, therefore, the bylaws cannot constitute a contract between MCI and Dr. Zipper.
Op. at 32. The Missouri regulations actually require the opposite: MCI had a duty only to consider the bylaws developed and adopted by Dr. Zipper and his colleagues, and was expressly prohibited from adopting bylaws on a unilateral basis. The Missouri public policy of mutuality among the hospital and physician is the diametric opposite of the Georgia public policy, upon which this Court based its decision.
IV. Transfer is Necessary Because This Court s Decision Conflicts with Missouri Statutes and Caselaw.
Section 537.035(5), R.S. Mo. 1994, reinforces the Missouri public policy that physicians are entitled to full judicial redress for any infringement of their hospital privileges, as all Missouri courts have assumed until now. See, e.g., State ex rel. Willman v. St. Joseph Hosp., 684 S.W.2d 408, 410 (Mo. App. W.D. 1984) (assuming, without deciding, that hospital bylaws constitute an enforceable contract). Section 537.035(5) provides that limitations on discovery and admissibility of peer review proceedings do not apply when any member of a peer review committee or the entity itself is sued for actions taken by such committee which operate to deny, restrict or revoke the hospital staff privileges or license to practice of a physician. The General Assembly thereby reiterated the Missouri public policy that the interests arising from a physician s practice including the interests of all of the physician s patients -- are too important to justify shielding a hospital s termination of privileges. In Health Midwest v. Dougherty, supra, as here, this Court of Appeals denied discovery to a physician asserting a breach of contract action based on the termination of his privileges. There, as here, this Court of Appeals also apparently denied a motion to transfer. The Missouri Supreme Court nevertheless itself granted transfer and unanimously reversed this Court. Section 537.035(5) and its implementation by the Supreme Court confirms that Missouri public policy is in favor of allowing physicians full judicial relief with respect to administrative restrictions. This statute and the recent Supreme Court decision implicitly rejected this Court s proposition that a judicially-created public policy should somehow immunize a hospital s breach of contract. This Court should not embrace as public policy a rule that neither the General Assembly nor the Missouri Supreme Court has been willing to accept.
This Court s decision here also conflicts with numerous precedents involving issues beyond the hospital-physician relationship. Corpus Juris Secundum Corporations sets forth hundreds of decisions from Missouri and elsewhere confirming the longstanding principle that [c]orporate by-laws constitute a contract between the corporation and its shareholders or members as well as among the shareholders or members themselves. 18 C. J. S. Corporations 111 (citing dozens of cases). Missouri courts, including this Court, have repeatedly confirmed that bylaws of trade-related associations constitute contracts. See, e.g., Robinson v. Nick, 235 Mo. App. 461, 483, 136 S.W.2d 374, 387 (Mo. App. 1940) (holding that the bylaws governing the relationship between a member and an organization like a trade union -- which is akin to a medical staff -- are contractual) (cited approvingly by this Court in State of Missouri ex rel. Bates v. American Polled Hereford Ass n, 863 S.W.2d 350 (Mo. App. W.D. 1993) (Ulrich, J.)); McDaniel v. Frisco Employees Hosp. Ass n, 510 S.W.2d 752, 756 (Mo. App. St. Louis Dist. 1974) (confirming that the traditional contract between the corporation and its members aris[es] by virtue of the charter and bylaws ); Junkins v. Local Union No. 6313, 241 Mo. App. 1029, 1038, 271 S.W.2d 71, 76 (Mo. App. Springfield Dist. 1954) ( The articles of agreement of a labor union, whether called a constitution, charter, bylaws, or any other name, constitute a contract between the members which the courts will enforce . ). These cases involved bylaws required by Missouri statutes and regulations, and the Missouri courts have always held that such bylaws constitute enforceable contracts.
This Court s decision directly conflicts with these well-established precedents. This Court misapplied Missouri law to its finding that:
MCI utilizes contractual language in bylaw 14.2 and, thereby, attempts to grant its medical staff certain rights and privileges .
Op. at 33. As this Court found, bylaw 14.2 sets forth the requisite consideration in the form of benefits and detriments to the hospital and to the physicians practicing there. Id. at 29. The hospital thereby obtained from the physician the benefits of (1) the right to solicit and use information about him and (2) a waiver by the physician of certain claims. The physician obtained from the hospital the benefit of the right to utilize its facilities, which created the likelihood of generating new revenue for the hospital.
Having identified the foregoing consideration, however, this Court then effectively held that there was a failure of consideration even though such failure was never pleaded by defendants as a defense in this action. This holding contradicts dozens of longstanding precedents in Missouri. See, e.g., Thompson v. McCune, 333 Mo. 758, 764, 63 S.W.2d 41, 43 (1933) (failure of consideration was an affirmative defense); Smith v. Ohio Millers' Mut. Fire Ins. Co., 320 Mo. 146, 167, 6 S.W.2d 920, 927 (1928) (failure of consideration must be pleaded specifically and not through a general denial); South Side Bank of Kansas City v. Ozias, Mo. App., 155 S.W.2d 519, 527 (same); Cahn v. Miller, Mo. App., 106 S.W.2d 495, 496, 497; Aetna Investment Corp. v. Chandler Landscape & Floral Co., 227 Mo. App. 17, 22, 50 S.W.2d 195, 198 (same); Franklin Bank v. International Hospital Equipment Co., 217 Mo. App. 131, 145, 273 S.W. 197, 200; Hyde v. Henman, Mo. App., 256 S.W. 1088, 1091; Woodin v. Leach, 186 Mo. App. 275, 281, 172 S.W. 62, 64; George T. Smith Middlings Purifier Co. v. Rembaugh, 21 Mo. App. 390, 393. [D]efendants at no time seeking leave to amend their answer as they might have done [Rule 55.54; 509.500], the evidence bearing upon usury and failure of consideration was not properly before the trial court and is not rightly for review here. Securities Inv. Co. v. Roy A. Hicks, 444 S.W.2d 6, 9 (Mo. App. Springfield Dist. 1969) (citations omitted). Moreover, the hospital plainly exchanged at least partial consideration with Appellants, because the hospital did solicit and use information about Dr. Zipper pursuant to the bylaws and he did utilize the hospital privileges. Such partial consideration is sufficient to establish a contract. See, e.g., Empire Gas Corp. v. Small s LP Gas Co., 637 S.W.2d 239 (Mo. App. 1982).
V. This Court s Decision Conflicts with All Other (Non-Statutory) Jurisdictions.
This Court s decision is in conflict with every other non-statutory jurisdiction. As the leading district court decision in the Eighth Circuit established, a hospital s medical staff bylaws constitute a contract between the hospital and the medical staff. Islami v. Covenant Med. Ctr., Inc., 822 F. Supp. 1361, 1370 (N.D. Iowa 1992). That Court listed a subset of the overwhelming number of decisions holding likewise:
Lewisburg Community Hosp. v. Alfredson, 805 S.W.2d 756, 759 (Tenn. 1991); Pariser v. Christian Health Care Sys., 816 F.2d 1248, 1251 (8th Cir. 1987) (interpreting Illinois law); Posner v. Lankenau Hosp., 645 F. Supp. 1102, 1106 (E.D. Pa. 1986) (Pennsylvania law); Lawler v. Eugene Wuesthoff Mem. Hosp. Ass'n., 497 So. 2d 1261, 1264 (Fla. Dist. Ct. App. 1986); Terre Haute Regional Hosp. v. El-Issa, 470 N.E.2d 1371 (Ind. App. 1984); Anne Arundel General Hosp. v. O'Brien, 49 Md. App. 362, 432 A.2d 483 (1981); St. John's Hosp. Med. Staff v. St. John Regional Med. Center., 90 S.D. 674, 245 N.W.2d 472, 474-75 (S.D. 1976); Joseph v. Passaic Hosp. Ass'n., 26 N.J. 557, 141 A.2d 18 (1958).
Id. at 1370-71. On facts similar to those here, the Eighth Circuit held that hospital bylaws do constitute a contract. Id. at 1371.
Except for Georgia s statutory limitation on the effect of bylaws, supra Part III, all other jurisdictions have held that hospital bylaws can constitute a contract. This Court refers to the Georgia statutory scheme as the minority approach, when in fact no other jurisdiction has followed that approach. Op. at 31. This Court cites cases from the District of Columbia and Ohio with respect to this so-called minority approach, but both of those jurisdictions held that hospital bylaws do constitute a contract unless the bylaws express otherwise. In Balkissoon v. Capitol Hill Hosp., 558 A.2d 304 (D.C. App. 1989), the Court reversed a lower court s granting of summary judgment in favor of the hospital similar to that granted here, and held that [a]s to monetary relief [for breach of contract], this is a question for resolution in the trial court. Id. at 305 & n.1. That court emphasized that the hospital s public obligation to follow its bylaws is in addition to its contractual obligations under the bylaws, not a substitute for its contractual obligations. See id. at 308 ( The Hospital's obligation to follow its bylaws does not arise only from a contractual relationship with appellant. The privilege to admit and treat patients at a hospital can be critical to a doctor's ability to practice his profession and to treat patients. Both doctors and their patients can suffer if otherwise qualified doctors are wrongly denied staff privileges. ). The Ohio decision, Munoz v. Flower Hosp., 30 Ohio App. 3d 162, 507 N.E.2d 360 (1985), likewise held that staff bylaws can form a binding contract between the doctors and hospital . 30 Ohio App. at 166, 507 N.E.2d at 365.
Here, in contrast, the Court expressly found that the hospital utilizes contractual language in bylaw 14.2, but then held that even this intent to be bound by the bylaws is insufficient for contractual formation. Op. at 33. Instead, this Court issued the unprecedented ruling that two sophisticated parties -- a hospital and a physician are legally prohibited in Missouri from binding themselves contractually through a set of mutually-agreed bylaws, and must instead use a separate document that is not the by-laws. Id. There is no justification or support for this unusual requirement. Id.
VI. Transfer is Necessary to Cure an Appearance of a Conflict of Interest.
Finally, transfer is necessary to cure an appearance of conflict of interest resultant from this Court s earlier issuance of a full opinion. Once this Court issued its initial 68-page opinion, this Court itself inherited the appearance of a conflict of interest by the prior panel. Only a transfer of this case to another court can cure that appearance of conflict. The current opinion reworks some of the reasoning of the prior decision, but reaches identical conclusions. Just as no man can fairly judge himself, no court can remove its own appearance of a conflict of interest, which was acknowledged by this Court in footnote 8 on page 68 of its initial opinion.
It is well-established that a latent conflict-of-interest, which is discovered after the publication of a decision, can only be cured by transferring the case to an independent court. The reason is axiomatic: the taint of an appearance of a conflict of interest infects the issuer of the decision here, the Court itself. This Court errs when it treats the initial appearance of a conflict of interest as somehow independent of this Court that issued the decision. Upon publication of the initial decision, this Court became legally indistinguishable from the judges whose names appeared on the opinion, just as a law firm is indistinguishable from its individual partners with respect to potential conflicts of interest. Neither a law firm nor this Court can cure its own appearance of a conflict of interest merely by assigning new individuals to the case. Rather, transfer elsewhere is necessary.
In Johnson Timber Corp. v. Sturdivant, 295 Ark. 663B, 758 S.W.2d 415 (1988), the Arkansas Supreme Court emphasized that, after a tainted decision has been issued, a court can only cure a latent conflict-of-interest by transferring the case elsewhere:
We have considered the reputation of this court and its meaning to those who come to us for final judgment regarding their rights, privileges and liberties. While we are not expected to be a perfect institution, we are expected to always try to do the right thing. It is not easy to sit in judgment of one's self. Frankly, some of us believe we should remain in the case, others do not. Given the unavoidable choice of letting a decision stand under a cloud or removing the cloud entirely, we choose the latter. Considering all the circumstances in this case, we have decided it would be in the best interest of all concerned for each of us to step aside and allow the governor to appoint seven special justices to decide the case. At least that way all the parties are where they started before this unfortunate matter surfaced.
295 Ark. at 663D, 758 S.W.2d at 416 (emphasis added).
The recent opinion in this Court perpetuates the appearance of a conflict of interest that tainted its initial decision. The conflict of interest was not discovered until after the original decision was published and discussed, whereupon the appearance of such conflict attached to the Court that promulgated the decision. For example, there is an inevitable appearance that this Court may feel compelled to reach the same result in its second opinion that it reached in its first opinion, for the sake of consistency. The United States Supreme Court Justice Brennan cautioned against such biases:
The description of an opinion as being "for the court" connotes more than merely that the opinion has been joined by a majority of the participating judges. [W]hile the influence of any single participant in this process can never be measured with precision, experience teaches us that each member's involvement plays a part in shaping the court's ultimate disposition. The participation of a judge who has a substantial interest in the outcome of a case of which he knows at the time he participates necessarily imports a bias into the deliberative process. This deprives litigants of the assurance of impartiality that is the fundamental requirement of due process.
Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 831 (1986) (Brennan, J., concurring). The violation of due process occurred when this Court issued a comprehensive opinion tainted by a conflict of interest, and that violation is not cured merely by the same Court issuing another decision with an identical judgment. Again, the Supreme Court emphasized that:
The violation of the Due Process Clause occurred when Justice Embry sat on this case, for it was then the danger arose that his vote and his views, potentially tainted by his interest in the pending Blue Cross suit, would influence the votes and views of his colleagues. The remaining events -- that another justice switched his vote and that Justice Embry wrote the court's opinion -- illustrate, but do not create, the constitutional infirmity that requires us to vacate the judgment of the Alabama Supreme Court.
Id. at 832-33 (Blackmun, J., concurring). Because the votes and views of this Court itself were formally issued in the initial opinion, this test of judicial integrity requires transfer of this case to the Missouri Supreme Court.
In conclusion, the actual facts of this case and the governing Missouri regulations, statutes, and case law, as well as the overwhelming precedents in all other jurisdictions except Georgia, require confirmation that the bylaws at issue here do constitute a contract. Moreover, Missouri public policy reinforces that these bylaws constitute a contract. To the extent that this Court seeks to make a different public policy determination, then that is a matter to be addressed by the Missouri Supreme Court, and transfer is necessary.
For the reasons set forth above, Appellants respectfully request that this Court transfer this case to the Supreme Court.