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Camden-Clark Memorial Hospital Corp. v. Nguyen

Supreme Court of West Virginia

November 13, 2017

CAMDEN-CLARK MEMORIAL HOSPITAL CORPORATION, Third-Party Defendant Below, Petitioner
v.
TUAN NGUYEN, M.D., Defendant and Third-Party Plaintiff Below, Respondent

          Submitted: October 11, 2017

         Appeal from the Circuit Court of Wood County The Honorable Jeffrey B. Reed, Judge Case No. 14-C-2787

          Thomas J. Hurney, Esq. Laurie K. Miller, Esq. Jackson Kelly PLLC Charleston, West Virginia and David R. Stone, Esq. Jackson Kelly, PLLC Morgantown, West Virginia Attorneys for Petitioner

          Thomas E. Scarr, Esq. Steven L. Snyder, Esq. Sarah A. Walling, Esq. Jenkins Fenstermaker PLLC Huntington, West Virginia Attorneys for Respondent

          JUSTICE WALKER, deeming herself disqualified, did not participate in the decision of this case.

          JUDGE HUTCHISON sitting by temporary assignment.

         SYLLABUS BY THE COURT

         1. "The trial court, in appraising the sufficiency of a complaint on a Rule 12(b)(6) motion, should not dismiss the complaint unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed. 80 (1957)." Syl. Pt. 3, Chapman v. Kane Transfer Co., 160 W.Va. 530, 236 S.E.2d 207 (1977).

         2. Although courts have limited jurisdiction to review purely administrative decisions of private hospitals, the courts of this state do have jurisdiction to hear cases alleging torts, breach of contract, violation of hospital bylaws or other actions that contravene public policy.

          OPINION

          WORKMAN, JUSTICE

         Respondent Dr. Tuan Nguyen ("Physician") filed a third-party complaint against Petitioner Camden-Clark Memorial Hospital Corporation (the "Hospital") and alleged it discriminated and retaliated against him for reporting patient safety concerns; he alleged violations of the West Virginia Patient Safety Act (the "Act"), [1] retaliatory discharge, and intentional infliction of emotional distress. The Hospital filed a motion to dismiss Physician's claims under Rule 12(b)(6) of the West Virginia Rules of Civil Procedure. The Hospital contended that because Physician's claims are linked to its decision to not reappoint him to its medical staff, it enjoyed qualified immunity as afforded by this Court in Mahmoodian v. United Hospital Center, Inc., 185 W.Va. 59, 404 S.E.2d 750 (1991). The circuit court denied the Hospital's motion, and it appealed.

         This Court finds that Physician's claims are distinguishable from Mahmoodian, and sufficient to survive the Hospital's Rule 12(b)(6) motion. We therefore affirm the order of the circuit court.

         I. FACTS AND PROCEDURAL HISTORY

         In 2008, Physician completed his residency and earned his license to practice medicine in West Virginia. Physician was employed by Camden-Clark Physician Corporation (the "Corporation") as a general surgeon from 2008 until he was terminated in 2013. The Corporation operates a physicians' group wholly owned by Camden-Clark Health Services, Inc. ("CCHS"). Physician practiced medicine at the Hospital, which does business as Camden Clark Medical Center in Parkersburg, West Virginia. These corporate entities are closely related and governed by the same individuals.[2]

         For much of his employment, Physician was the only general surgeon at the Hospital. He maintained a demanding schedule with his own patients, and was also on call for other physicians, including a vascular surgeon. Physician alleges that this arrangement troubled him because he did not have deep-rooted expertise in vascular surgery and that he repeatedly expressed patient safety concerns about this situation to administrators. Physician also alleges that in addition to raising his own concerns, he supported Dr. Roman Petrov, a thoracic surgeon, who clashed with administrators over patient safety concerns including allegations of inadequate staffing, contaminated instruments, and insufficient equipment and supplies.

         Pursuant to his employment agreement with the Corporation, Physician had to maintain appointment to the medical staff of the Hospital.[3] It is undisputed that one of the eligibility criteria for Physician's appointment to the medical staff was that he become board certified in his primary area of practice within five years from the date of completion of his residency.[4] Thus, Physician faced a June 30, 2013, deadline to become board certified, although the Hospital's Credentials Policy also provided a procedure whereby the Hospital could waive this requirement.

         Board certification is a two-part process; Physician passed the Qualifying Examination (the written portion) but had not yet taken the Certifying Examination (the oral portion) when he and the Corporation were negotiating his most recent employment agreement in 2013. Administrators with the Corporation told Physician that another general surgeon would be added to the Hospital's staff. With this understanding, Physician planned to take some time off to complete his board certification. Under the new agreement, effective July 1, 2013, Physician received a pay raise, and was permitted to practice on the weekends at Marietta Memorial Hospital in Ohio. The new employment agreement became effective one day after the fifth anniversary deadline for Physician to become board certified.

         In spite of his new employment agreement with the Corporation, the Hospital declined to review Physician's application for reappointment to its medical staff in the fall of 2013, purportedly because he failed to obtain board certification. On October 22, 2013, Physician sent a letter to the Hospital's Medical Executive Committee requesting "temporary privilege" at the Hospital. Physician indicated that he was scheduled to take the certification exam in March of 2014.

         Then, just months after it renewed his employment agreement, the Corporation terminated Physician in November 2013, purportedly for his failure to maintain membership on the medical staff of the Hospital. Physician alleges that when the Corporation's administrator terminated him, he told Physician that the Corporation would not seek to enforce the non-competition portion of their employment agreement or seek reimbursement for his "tail coverage, " a policy of medical professional liability insurance.

         Following his termination, Physician began working with a physicians' group at Marietta Memorial Hospital. In March of 2014, the American Board of Surgery certified Physician in surgery; this board certification was less than 180 days after the Corporation gave notice of its intent to terminate his employment contract.

         The Corporation initiated the instant action in October 2014 when it filed a claim against Physician the year after his termination. The Corporation alleged Physician breached the employment agreement when he failed to purchase a tail policy of medical professional liability insurance. The Corporation sought $67, 022 in damages, the cost it incurred by purchasing this policy.

         Physician answered the Corporation's complaint and asserted that it was estopped from pursuing its breach of contract claim because administrators told him the Corporation would not seek any payments from Physician, including the payment of the tail coverage. Physician stated that by entering into the 2013 employment agreement with full awareness of his board certification status, the Corporation waived any requirement that he achieve board certification within five years of his initial hire date. Physician also filed five counterclaims including breach of contract, breach of the covenant of good faith, violations of the Act, and retaliatory discharge, as well as a claim for intentional infliction of emotional distress. Physician alleged that the Corporation's stated reason for his termination was a pretext for retaliation; soon after entering into this employment agreement, he "incurred the wrath" of the Corporation and the Hospital administrators "due to his expressions of concern regarding patient safety and his friendship with and support of Dr. Roman Petrov."[5]

         Physician amended his counterclaim against the Corporation to include a third-party complaint against the Hospital, and its parent corporation CCHS, which is the subject of this appeal.[6] He filed claims against the Hospital for violations of the Act, retaliatory discharge, and intentional infliction of emotional distress. In his pleadings, Physician referred to the Corporation, the Hospital, and CCHS collectively as "Camden-Clark" "[b]ecause of their shared administration, facilities, support staff and inextricably intertwined operations[.]"

         Physician alleged that he did not avail himself of appropriate administrative remedies because the Camden-Clark entities represented that he would not be required to pay for tail coverage and would be relieved of any obligation under a noncompetition clause. He also alleged the Corporation, the Hospital and/or CCHS breached the employment agreement when it deprived him of the peer review process described in the employment agreement.

         In May of 2016, Physician filed a motion to compel discovery after the Corporation, the Hospital, and CCHS refused to permit any depositions of their employees on the basis of qualified privilege.

         In response, the Hospital filed a Rule 12(b)(6) motion to dismiss Physician's claims and/or for summary judgment. The Hospital argued that because Physician's claims touch on the issue of its criteria for eligibility for appointment to its medical staff, it must be afforded qualified immunity pursuant to Mahmoodian.[7] As such, the Hospital maintained that the circuit court should only review: 1) whether the Hospital's medical staff bylaws and credentials policy provided for a fair procedure; and 2) whether that procedure was followed. The Hospital claimed it never reviewed Physician's application because it was undisputed that he failed to meet the threshold eligibility criteria.

         In June of 2016, the circuit court held a hearing on the parties' motions. It denied the Hospital's motion to dismiss and found that Physician's claims were not prohibited by Mahmoodian. The court further held that Physician had "the right to propound discovery, to obtain full responses to his discovery requests, and to depose witnesses who may have relevant knowledge, subject to limitations set out by law." Moreover, it held that "[r]egarding the issue of interrelatedness of the Camden-Clark parties, this Court has already ruled that the doctor is to be given an opportunity to explore the possibility that those are not separate entities, but are all interrelated." The circuit court deferred ruling on the Hospital's motion for summary judgment.[8]

         II. STANDARD OF REVIEW

         It is important to emphasize that this is not an administrative appeal following an evidentiary hearing where a physician is claiming that violations of fair procedure or lack of substantial evidence requires a court to set aside the hospital's decision to deny reappointment of staffing privileges. If it were such a case, our standard of review would be highly favorable to the Hospital.[9] But Physician, a doctor who performed surgeries at the hospital for five years and was never the subject of disciplinary action, did not receive a hearing before the Hospital denied his application for reappointment to its medical staff.

         This appeal arrives here by way of an order denying the Hospital's Rule 12(b)(6) motion to dismiss Physician's lawsuit. In reviewing such motions, our inquiry is limited to whether Physician has put forth claims that, if proven, are factually and legally sufficient to sustain a favorable judgment.[10] As no real discovery has taken place, we look to Physician's pleadings and resolve conflicts and inferences in the record in favor of him.

         We examine de novo the denial of a motion to dismiss under Rule 12(b)(6) of the West Virginia Rules of Civil Procedure. Citibank, N.A. v. Perry, 238 W.Va. 662, 664, 797 S.E.2d 803, 805 (2016).

         In order to defeat a motion to dismiss, a plaintiff must allege facts that, if accepted as true, are sufficient to state a claim. This Court has previously stated that "[t]he purpose of a motion under Rule 12(b)(6) of the West Virginia Rules of Civil Procedure is to test the sufficiency of the complaint. A trial court considering a motion to dismiss under Rule 12(b)(6) must liberally construe the complaint so as to do substantial justice." Cantley v. Lincoln Cty. Comm'n, 221 W.Va. 468, 470, 655 S.E.2d 490, 492 (2007). "Since the preference is to decide cases on their merits, courts presented with a motion to dismiss for failure to state a claim construe the complaint in the light most favorable to the plaintiff, taking all allegations as true." Sedlock v. Moyle, 222 W.Va. 547, 550, 668 S.E.2d 176, 179 (2008). Thus, in syllabus point three of Chapman v. Kane Transfer Co., 160 W.Va. 530, 236 S.E.2d 207 (1977), this Court held that "[t]he trial court, in appraising the sufficiency of a complaint on a Rule 12(b)(6) motion, should not dismiss the complaint unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed. 80 (1957)."

         III. DISCUSSION

         The Hospital contends that the circuit court erred in denying its motion to dismiss, or in the alternative, in not granting it summary judgment, because under Mahmoodian, it is immune from review of its medical staff appointment decisions beyond a review of whether the Hospital was in compliance with its bylaws. Physician counters that the limited immunity afforded by Mahmoodian does not extend to shield the Hospital from illegal actions, such as retaliatory discharge in violation of the Act. In order to put these arguments in context, we begin by summarizing Physician's claims.

         A. Physician's Claims

         Physician alleges three causes of action against the Hospital. He first alleges that the Hospital violated the Act. See W.Va. Code §§ 16-39-1 to -7. The Legislative purpose of the Act is to "protect patients by providing protections for those health care workers with whom the patient has the most direct contact." W.Va. Code § 16-39-2(b).[11] The Act provides that:

(a) No person may retaliate or discriminate in any manner against any health care worker because the worker, or any person acting on behalf of the worker:
(1) Makes a good faith report, or is about to report, verbally or in writing, to the health care entity or appropriate authority an ...

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