YATCO v. NANTICOKE MEMORIAL HOSP, 08C-12-038 JRS (Del.Super. 6-10-2010)

C.A. No. 08C-12-038 JRS.Superior Court of Delaware, New Castle County.Date Submitted: March 18, 2010.
Date Decided: June 10, 2010.

Upon Consideration of Defendant Nanticoke Hospital, Inc.’s Motion for Summary Judgment. GRANTED.

Robert D. Goldberg, Esquire, BIGGS BATTAGLIA, Wilmington, Delaware. Attorney for Plaintiff.

David R. Hackett, Esquire, GRIFFIN HACKETT, P.A., Georgetown, Delaware. Attorney for Defendant.

MEMORANDUM OPINION.
SLIGHTS, J

I.
This case arises out of a decision by the Board of Directors (“the Board”) of Nanticoke Memorial Hospital, Inc. (“Nanticoke” or “the hospital”) to suspend the performance of a surgical procedure (carotid endarterectomy (“CEA”)) within the hospital. A surgeon at the hospital, Dr. Eduardo Yatco (“Dr. Yatco” or “Plaintiff”), has initiated this action against the hospital in which he alleges that the Board suspended his surgical privileges to perform CEAs without the due process required by the hospital’s by-laws and related documents. He also alleges that the Board’s explanation of a hospital-wide suspension of CEAs (rather than a targeted suspension of his privileges) was intended as a pretext to mask its intent to limit his right to perform surgeries at the hospital.

The complaint contains two counts, one for breach of contract and one for breach of the covenant of good faith and fair dealing.[1]
Nanticoke has moved for summary judgment on both counts alleging that the undisputed facts reveal that its decision to discontinue the performance of CEAs within the hospital was a valid business decision made in the exercise of the Board’s business judgment. Because the Court agrees that Dr. Yatco has failed to present any facts that would allow a

Page 2

reasonable fact-finder to conclude that Dr. Yatco’s surgical privileges were improperly restricted, or that the Board’s stated purpose for its decision was not its true purpose, Nanticoke’s Motion must beGRANTED.

II. A. The Hospital’s Corporate Structure and Governing Documents

Nanticoke is a not-for-profit corporation with a single shareholder, Naticoke Health Services, Inc., which acts through the Board. The Board has the same rights and duties as the board of directors of any other corporation, and operates under the hospital’s corporate by-laws.[2]
These by-laws give the Board the power, right and duty, inter alia, “[t]o determine what operations and services the Hospital will provide or discontinue. . . .”[3] Separate from the Board, the hospital’s physicians are organized as a formal Medical Staff, comprised of all physicians with privileges at the hospital. The Medical Staff is governed by its own separate by-laws.[4]

The Medical Staff follows a written “Credentials Policy,” which establishes the procedure for granting or denying privileges to physicians seeking appointment and

Page 3

reappointment to the Medical Staff.[5] The Credentials Policy, administered by the Credentials Committee, provides for certain safeguards before a physician can be denied appointment or reappointment to the Medical Staff, including the right to request a hearing.[6] If a hearing is conducted, the Credentials Committee makes findings and recommendations at the conclusion of the hearing and submits them to the Medical Executive Committee (“the MEC”), which either adopts the Credentials Committee’s findings and recommendations or takes other action.[7] The MEC ultimately sends its findings and recommendations to the Board, which either adopts them, sends them back to the MEC for additional review, or rejects or modifies them.[8]
B. Plaintiff’s Application for Reappointment to the Hospital’sMedical Staff and Request for Privileges to Perform CarotidEndarterectomies

On August 22, 2006, Dr. Yatco applied for reappointment to the Medical Staff and renewal of clinical privileges for a two-year term beginning January 1, 2007.[9] The Credentials Committee first reviewed Dr. Yatco’s application and accompanying documentation at its October 9, 2006, meeting. CEA was among the procedures for

Page 4

which Dr. Yatco sought surgical privileges.[10] The minutes of the Credentials Committee’s October 9 meeting reflect that members were concerned about the low volume of CEA procedures performed at the hospital.[11] Apparently in response to these concerns, the Credentials Committee tabled further discussion of Dr. Yatco’s application until its November, 2006 meeting.[12]

On October 18, 2006, the MEC met and discussed, inter alia, Dr. Yatco’s application to continue performing CEAs at the hospital.[13] Like the Credentials Committee, the MEC reviewed the number of CEA procedures performed at the hospital (including those done by Dr. Yatco) over a two year period and concluded that the number was well below the national average. Because the MEC was concerned, given the low numbers, that its staff (including the surgeon) might not be competent to continue performing CEAs, the MEC asked Dr. Yatco (by letter dated November 7, 2006) to consider voluntarily withdrawing his request for privileges to

Page 5

perform the procedure.[14] When Dr. Yatco did not respond to the MEC’s request, the Credentials Committee decided at its November 13, 2006, meeting to recommend approval of Dr. Yatco’s request for reappointment to the Medical Staff and renewal of all clinical privileges except CEA privileges, which it left open for decision at a later time.[15] The MEC adopted this recommendation at its November 15, 2006, meeting.[16]

On December 7, 2006, the Board adopted the MEC’s recommendation that Dr. Yatco be reappointed to the Medical Staff “with exception of Cerebral angiograms and [CEAs].”[17] Dr. Yatco was informed of this decision in a letter dated December 7, 2006.[18] The issue of whether Dr. Yatco should receive privileges to perform CEAs remained open after December 7, 2006, as evidenced by the further discussion of the issue at the Credentials Committee’s January 8, 2007, meeting.[19]

Page 6

In a letter to the MEC dated January 16, 2007, Dr. Yatco objected to the Board’s failure to renew his privileges to perform CEAs, and requested that the MEC reconsider the issue and recommend restoration of these privileges.[20] The MEC met again on January 17, 2007. After noting that Dr. Yatco had been performing CEAs for years, the MEC determined that it would recommend that the Board approve Dr. Yatco’s CEA privileges.[21] Nevertheless, the MEC reiterated its concern regarding staff competency to perform CEAs given how few had been performed over the past several years and, accordingly, the MEC recommended that the hospital review its ability to support CEA services under the Joint Commission guidelines.[22] This was the first time the MEC made any definitive recommendation to the Board with respect to Dr. Yatco’s request for CEA privileges.

The Board met on January 25, 2007, and ultimately decided: (1) to approve Dr. Yatco’s request for privileges to perform CEAs;[23]
and (2) that the hospital could not “maintain competency in the staff that is needed to support CEA.”[24] Accordingly, Dr. Yatco was advised that the hospital would not support the performance of CEA

Page 7

procedures in the future unless “at some point it appears that there will be a significant increase in the number of [CEAs] performed. . . .”[25] Writing on behalf of the Board, Dr. Douglas Connell, President and CEO of Nanticoke, emphasized to Dr. Yatco that the Board’s decision to discontinue CEA services at the hospital was not intended “as a statement on [his] ability to perform the procedure.”[26]

III.
The gravamen of Nanticoke’s Motion is that the Board made a business decision when it determined to discontinue CEAs at the hospital and that this decision was not controlled by or connected to the Credentials Policy. As such, the decision was not subject to the notice or hearing provisions contained within the Credentials Policy.[27] According to Nanticoke, Dr. Yatco’s competency to perform CEAs did not influence the Board’s ultimate decision, and the MEC never made a recommendation to the Board that Dr. Yatco’s request for privileges to perform CEAs be denied.[28] Indeed, Nanticoke asserts that neither the Credentials Committee, the MEC nor the Board ever once suspended Dr. Yatco’s surgical privileges. Rather, the Board

Page 8

approved Dr. Yatco’s request for CEA privileges, but determined that the hospital would no longer support that procedure. Therefore, Nanticoke argues that the Board made a business decision that is not subject to Dr. Yatco’s challenge or the Court’s review.[29]

Not surprisingly, Dr. Yatco disagrees. He argues that Nanticoke’s characterization of its actions as a “business decision” unrelated to credentialing is misplaced. Rather, he contends that the Board was trying to “backdoor” a credentialing decision without affording him the rights guaranteed under the hospital by-laws and the Credentials Policy.[30] He further argues that the Board’s December 7, 2006, letter was, in effect, a denial of his CEA privileges that triggered his right to a hearing under the Credentials Policy and other relevant guidelines.[31]

IV.
In deciding a motion for summary judgment, the Court must determine whether genuine issues of material fact remain for trial.[32] Summary judgment will be granted only if no genuine issue of material fact exists and the moving party is entitled to

Page 9

judgment as a matter of law.[33] If the record reveals that material facts are in dispute, however, or if the factual record has not been developed thoroughly enough to allow the Court to apply the law to the factual record sub judice, then summary judgment must be denied.[34]

The moving party bears the initial burden of demonstrating that the undisputed facts support his claim for dispositive relief.[35] If the motion is properly supported, then the burden shifts to the non-moving party to demonstrate that material issues of fact remain for resolution by the ultimate fact-finder and/or that the movant’s legal arguments are unfounded.[36] In this regard, “Rule 56(c) mandates the entry of summary judgment against a party who fails to establish the existence of an element essential to that party’s case.”[37]

The Court “will accept as established all undisputed factual assertions, made by either party, and accept the non-movant’s version of any disputed facts. From those accepted facts the court will draw all rational inferences in favor of the

Page 10

non-moving party.”[38] The presumption afforded the non-moving party in the summary judgment analysis, however, is not absolute. The Court must decline to draw an inference for the non-moving party if the record is devoid of facts upon which the inference reasonably can be based.[39] “A party opposing summary judgment . . . may not merely deny the factual allegations adduced by the movant. If the movant puts in the record facts which, if undenied, entitle him to summary judgment, the burden shifts to the defending party to dispute the facts by affidavit or proof of similar weight.”[40] To determine whether the non-moving party has satisfied its burden, the Court asks “whether a reasonable juror could find by a preponderance of the evidence that the plaintiff is entitled to a verdict — whether there is [evidence] upon which a jury can properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed.”[41] “The mere existence of a scintilla of evidence in support of the [non-moving party’s] position will be insufficient; there

Page 11

must be evidence on which the jury could reasonably find for the [non-moving party].”[42]

V. A. The Court Need Not Address Whether The Hospital’s By-Laws CreateA Contract Between Staff Physicians And The Hospital

Dr. Yatco’s claims for breach of contract and breach of the implied covenant of good faith and fair dealing both presuppose that Naticoke’s by-laws and its Credentials Policy create contract-like obligations on the part of the hospital to physicians on its Medical Staff. Whether a hospital’s by-laws (and related documents) constitute a contract between the hospital and individual members of the medical staff remains an open question under Delaware law.[43] Because the Court finds that the by-laws (and related documents) were not implicated by the hospital’s business decision to discontinue CEA services, the Court will leave the resolution of this open question for another day.

B. Dr. Yatco Lacks Standing To Challenge The Board’s Decision ToDiscontinue CEA

In support of its Motion, Nanticoke offered the detailed sworn affidavit of Harry Anthony, Jr., M.D. (the “Anthony affidavit”), along with supporting

Page 12

documents.[44] Dr. Anthony is an active member of the Medical Staff and was a member of the Credentials Committee and the MEC during the pendency of Dr. Yatco’s application for reappointment to the Medical Staff.[45] The evidence offered by Nanticoke, including the Anthony affidavit, establishes that the Board made a non-reviewable business decision to discontinue all CEA procedures within the hospital because it was not satisfied that its staff had the experience and/or training to continue to perform the procedure. Contrary to Dr. Yatco’s argument, the undisputed record reveals that the Board never denied his application for privileges to perform CEAs. Indeed, the Board ultimately determined to renew his CEA privileges and assured him that it would revisit the issue of whether the hospital would support the procedure if it was presented with evidence that “there will be a significant increase in the number of [CEAs] performed” at the hospital.[46]
Having granted his application for reappointment and his request for surgical privileges, there was no reason to offer or to conduct a hearing with respect to Dr. Yatco’s staff privileges.

To rebut Nanticoke’s argument, Dr. Yatco offered nothing by way of record

Page 13

evidence or sworn testimony (by affidavit or otherwise).[47] Instead, when providing factual cites in his brief, or when his counsel was pressed to provide record support for the fundamental factual assertions in support of his claims, Dr. Yatco pointed only to the unverified allegations in his complaint.[48] While this approach was adequate to defeat Nanticoke’s earlier-filed Motion to Dismiss the complaint, bald references to one’s unverifie d complaint, wit hout more, will not defeat a properly supported motion

Page 14

for summary judgment.[49] When pressed at oral argument to move beyond the complaint to support Dr. Yatco’s claims, counsel relied primarily on Nanticoke’s appendix to its Motion, indicating that he would not reproduce documents that had already been provided.[50] He failed, however, to explain how the letters and other exhibits appended to the Motion — all of which reveal that Dr. Yatco was never denied CEA privileges — support a breach of contract or bad faith claim against the hospital.[51]

Page 15

Even viewing the facts in a light most favorable to Dr. Yatco, the undisputed record reveals that as of December 4, 2006, the Board had not yet made a final decision with respect to Dr. Yatco’s request for CEA privileges.[52] The undisputed record also reveals that subsequent to the December 7, 2006, letter that Dr. Yatco claims evidences the Board’s decision to deny his CEA privileges, the Board, the MEC, and the Credentials Committee all continued their discussions about the future of CEA services at the hospital generall and Dr. Yatco’s request for CEA privileges specifically.[53] When the Board did decide, it decided to renew Dr. Yatco’s surgical privileges but to discontinue supporting CEAs at the hospital until such time as it was satisfied that the number of CEAs to be performed would justify the substantial resources needed properly to train staff and ensure competence.[54] Dr. Yatco’s contention that his privileges were denied on December 7, 2006, finds absolutely no support in the record. As Dr. Yatco has the burden of presenting competent evidence

Page 16

to counter the Anthony affidavit, and the contemporaneously prepared documents of the Credentials Committee, the MEC and the Board, his failure to produce any counter evidence is fatal to his claims. Simply stated, the Court can discern no issues of disputed fact for trial.

VI.
The undisputed record supports Nanticoke’s argument that it did not deny surgical privileges to Dr. Yatco but instead made a decision in the exercise of its Board’s business judgment to discontinue the performance of CEA procedures at the hospital until such time as the number of procedures to be performed would justify the resources necessary to train staff competently to perform the procedure. Dr. Yatco has no legal basis or standing to challenge this business decision, through a breach of contract claim, bad faith claim or otherwise. Consequently, Nanticoke’s Motion for Summary Judgment must be GRANTED.

IT IS SO ORDERED.