California court rejects how hospital applied privileges rule

A recent California appeals court ruling may limit the way hospitals impose rule changes on medical staff members.

The 2nd District Court of Appeal found that a hospital board's application of revised medical staff membership requirements was unreasonable because it unfairly singled out one physician without giving him an opportunity to comply.

Los Robles Regional Medical Center gave nephrology privileges to Sohail Nasim, MD, in 2001, and he joined the hospital's provisional staff after he completed specialty training. At the time, Dr. Nasim was not board certified, and hospital rules did not require staff doctors to obtain certification within a specific time.

In March 2003, the hospital notified Dr. Nasim that it had revised the criteria. The new rules required staff applicants to complete their subspecialty board certification within two consecutive exams of finishing their specialty training.

Dr. Nasim faced losing his privileges if he did not comply by the end of 2003. But the earliest nephrology test was in November 2004. Unable to meet the deadline, Dr. Nasim lost his nephrology privileges.

While the hospital "ostensibly gave notice about timely compliance with the new standards ... for [Dr.] Nasim it was a termination notice," the court said in an Aug. 18 opinion. Hospitals have the authority to set certain standards. But "that is the case if [a rule] is one of general application intended to address an administrative problem as a whole and not directed at specific individuals," the court said.

The ruling gives doctors some recourse if they believe that hospitals or medical staffs abused the rule-making process to circumvent physicians' due process rights, said Tom Curtis, Dr. Nasim's attorney.

If a policy is unfairly levied against an individual doctor, "it's not the end of the game. [He or she] can challenge the application of that rule if it is arbitrary, irrational or a denial of due process," he said. "Hospitals and medical staffs have to make sure rules have a legitimate purpose and are evenly applied across the board. If they feel a particular doctor doesn't meet a particular standard, there's a way to address that, but rule making is not the way."

The decision upheld a similar trial court order reinstating Dr. Nasim's nephrology privileges. An attorney for Los Robles Regional Medical Center did not return calls for comment. It is unclear whether the facility will appeal to the state's Supreme Court.

In court documents, the hospital argued that the court could not interfere with hospitals' rule-making authority and that the lower court's decision impeded its ability to remove substandard doctors.

Doctor was "impetus" for rule

But judges said they did not invalidate the rule. Rather, the way the hospital applied the regulation "interfered with Dr. Nasim's vested right to maintain his privileges."

Dr. Nasim did not dispute the hospital's prerogative to set rules. But "this was not your ordinary rule," Curtis said. The appeals court agreed, noting that the policy was not applied uniformly.

The rule was intended to apply to new applicants and exempted active medical staff. But the hospital distinguished Dr. Nasim as a provisional staff member and retroactively subjected him to the regulation. In addition, the hospital acknowledged that Dr. Nasim was the "impetus" for the new rule, the opinion stated.

Dr. Nasim requested a hearing to contest the policy but was denied. After he became an active staff member in the internal medicine department in December 2003 and board certified in nephrology in 2005, the hospital continued to deny Dr. Nasim nephrology privileges, according to court records.

The decision provides a basis for doctors to challenge the effect of a particular rule, but courts generally evaluate such issues on a case-by-case basis, said James M. Stewart, a Dallas-based health care lawyer specializing in medical staff issues.

The ruling does not eviscerate hospitals' rule-making authority, he said. Hospitals can adopt broad regulations -- such as minimum medical staff membership requirements or quality standards -- even if those rules inadvertently impact one physician.

Nevertheless, while courts generally will not interfere with a hospital or medical staff's decision-making authority, they will evaluate if the application of a particular regulation was unreasonable.

"If hospitals and medical staffs are going to pass a regulation that's going to affect doctors with current privileges, they have got to give them an opportunity to meet the obligation," Stewart said. Otherwise, the rule application is unlikely to "pass the muster of peer review laws in most states."