Treister v. American Academy of Orthopaedic Surgeons

Mr. PRESIDING JUSTICE SIMON, dissenting:

Dr. Treister is entitled to more from this court than sympathy.

He seeks admission to a prestigious medical society, not to a social, religious, or fraternal organization like an Elks Club (see Zelenka v. Benevolent & Protective Order of Elks (App. Div. 1974), 129 N.J. Super. 379 , 324 A.2d 35 ) or the Order of the Eastern Star (see Trautwein v. Harbourt (App. Div. 1956), 40 N.J. Super. 247 , 123 A.2d 30 ). He is entitled to be treated as if he were applying for membership in the Pacific Coast Society of Orthodontists (see Pinsker v. Pacific Coast Society of Orthodontists (1969), 1 Cal. 3d 160 , 460 P.2d 495 , 81 Cal. Rptr. 623 , and (1974), 12 Cal. 3d 541 , 526 P.2d 253 , 116 Cal. Rptr. 245 ) or the Middlesex County Medical Society (see Falcone v. Middlesex County Medical Society (1961), 34 N.J. 582 , 170 A.2d 791 ; accord, Blende v. Maricopa County Medical Society (1964), 96 Ariz. 240 , 393 P.2d 926 ).

The majority opinion appears to accept this at least in part when it approves “of the opinions in Falcone and Blende which hold that a medical society cannot arbitrarily deny membership to an applicant when the society controls access to local hospital facilities and thus can deprive the applicant of his ability to practice medicine.” The majority, however, balancing the interests, frames a test of “strict economic necessity.” It holds that because Dr. Treister could not in good faith allege that exclusion from the Academy would preclude him from practicing orthopaedic surgery, the law is unable to assist him. Except perhaps for Pima County Medical Society v. Felland (Ariz. App. 1977), 115 Ariz. 311 , 565 P.2d 188 , I have found no reviewing court opinion which applies Falcone so restrictively. Compare Salter v. New York State Psychological Association (1964), 14 N.Y.2d 100 , 198 N.E.2d 250 .

I believe the majority understates Dr. Treister’s interest. At the same time, it overestimates the Academy’s legitimate interests, and by focusing on the effects of exclusion on Dr. Treister personally, obscures an essential aspect of this case, the nature of the Academy. The public interest at stake is also slighted. As a result, the majority opinion is needlessly reluctant about intervening in the affairs of quasi-public entities.

Part I of this dissent analyzes Illinois law which, contrary to the majority’s view, I believe supports Dr. Treister’s complaint. Part II analyzes the interests of the Academy, Dr. Treister and the public and demonstrates that fairness and public need favor Dr. Treister. In Part III my views on the broader public policy issues which surface in this case are set forth.

I.

Dr. Treister has stated a cause of action under Illinois law which I believe the majority misapplies. In Van Daele v. Vinci (1972), 51 Ill. 2d 389 , 282 N.E.2d 728 , the supreme court considered the plaintiff’s expulsion from a cooperative buying association, and said:

“[T]his strong possibility that an important economic interest of the plaintiffs was affected by an improper administrative proceeding gives the court power and the duty to act. We agree with the view expressed by the Supreme Court of New Jersey that said: ‘We are here concerned with and therefore deal solely with an organization, membership in which may here * ' "be viewed as an economic necessity; in dealing with such an organization, the court must be peculiarly alert to the need for truly protecting the public welfare and advancing the interests of justice by reasonably safeguarding the individual’s opportunity for earning a livelihood while not impairing the proper standards and objective of the organization. [Citation.]’ [Falcone.]

* * * To hold otherwise would be a denial of essential rights. We agree ‘that a private organization, particularly if tinged with public stature or purpose, may not expel or discipline a member adversely affecting substantial property, contract or other economic rights, except as a result of fair proceedings which may be provided for in organization by-laws, carried forward in an atmosphere of good faith and fair play.’ [Citation.] The rationale for this position * ° * results from the character of the organization, i.e. its assumption of a purpose which exceeds merely that of a social organization and its endeavor to benefit from various State and Federal laws.” (Emphasis added.) 51 Ill. 2d 389, 394-95 .

Both the facts and the language of Van Daele show that “economic necessity” is not, in this State, the towering hurdle the majority erects. Membership in Certified Grocers was less vital than membership in the Academy, for, although large, Certified Grocers was not a monopoly. And “an important economic interest” sounds more like the Pinsker court’s “substantial economic advantages” ( 1 Cal. 3d 160, 165 , 460 P.2d 495, 498 , 81 Cal. Rptr. 623, 626 ) than like the majority’s standard. Indeed, Falcone itself might not pass the majority’s test: The Middlesex County Medical Society, after all, could interfere with a physician’s practice only in a limited geographic area. It is not clear to me why membership is any more necessary when its absence bars practice entirely, but only in a small area, than when the effect is less fatal but also continent wide.

The majority dismisses Van Daele as being a case of expulsion as opposed to exclusion. I do not see that that opinion anywhere turns on this distinction; and I do not think an opinion that expressly agrees with the theory of Falcone, an exclusion case, should be read to be limited to expulsion cases, when it neither mentions any such distinction nor is readily susceptible to it. The reasoning of Van Daele, as I read it, applies equally to expulsion and exclusion.

Of course, membership in an organization confers rights not enjoyed by nonmembers; but members and nonmembers also have certain rights in common. The courts will at times review expulsions from organizations from which exclusion would be unreviewable. Partly this may be explainable on a theory of contract rights; and partly it derives from the fact that in the context of many, perhaps most, associations, expulsion is a greater harm than exclusion. Expulsion is often more degrading, since it is only done for grave offenses, while people are rejected for membership every day for all sorts of reasons, many of them not personally shameful. And while someone excluded from one organization can try the next, an expelled member loses what may be a heavy investment in the organization, in time, money, and social effort. In effect, each organization is a little monopoly to its members. But this willingness to review expulsion cases was well established in the law long before Van Daele. The Van Daele court chose to ignore this body of law, and instead to rely upon ideas developed in New Jersey in an exclusion case. Perhaps this was because the special harm caused by expulsion was not prominent on the facts of the case, and the plaintiff was seeking more than compliance with the bylaws, the usual expulsion demand; Van Daele was really more like the typical exclusion than the typical expulsion case. Whatever the court’s reasons for taking this path, to me it is clear that there are now in Illinois two theories upon which courts may review association actions; one is limited to expulsion cases, the other is not; Van Daele dealt with the second strand, and so, although it was itself a case of expulsion, its doctrine applies equally to exclusion.

In large, powerful, not-very-personal organizations such as the Academy, there is not much difference, realistically, between exclusion and expulsion. When every first-class orthopaedic surgeon is expected to join the Academy, and those who are interested in such things not only look for that membership but may expressly ask about rejections, the difference between rejection and expulsion is slight. And Dr. Treister needs no “investment” in membership to make him favor the Academy over its competitors for the Academy, being a full-grown national monopoly has none. Dr. Treister’s “investment” was the study and practice that produce an experienced orthopaedic surgeon. Thus, the nature of the association in Falcone-type cases takes the place of membership. Even on the contractual approach to membership rights, Falcone-type associations have a special character that substitutes for the contract: the Academy is akin to a common carrier, in that it holds itself out as accepting all suitable comers, and so induces reliance upon anticipated acceptance, and discourages the formation of competing associations.

The expulsion cases and the Falcone theory are not entirely separate: they address common concerns in similar situations. The expulsion cases do not rest upon any magic in membership, but upon concerns recognizable in the present case. For example, in Virgin v. American College of Surgeons (1963), 42 Ill. App. 2d 352 , 192 N.E.2d 414 , the court explained:

‘Some associations have a stranglehold upon their members through their control of an occupation * * * which can ill be spared. ° * *’ # # #

“[Wrongful expulsion from a voluntary professional association has * * * a serious effect on the ability of the professional man to successfully pursue his livelihood and * * * it is a judicially protectable interest.” ( 42 Ill. App. 2d 352, 368-69 .)

There may be merit in distinguishing expulsion and exclusion in the routine hospital cases the majority cites. But hospital cases do not justify separating exclusion from expulsion in logic-tight compartments, and contorting supreme court precedent. I believe Van Daele’s standards control this case.

One might argue that Van Daele was special, in that the expulsion there was allegedly in retaliation for the plaintiff’s lawsuit against the directors of the association, i.e., that the court was really concerned about protecting the judicial process. But this case raises the same concern: Dr. Treister has suggested that the real reason for his exclusion is that he has on occasion testified in court against other doctors.

II.

Apart from any established law, I believe that logically the majority’s strict economic necessity test is too stringent, and that count I of the complaint should be sustained. The Academy is not simply a private body, accepting and rejecting applicants according to its private needs and desires. It would no doubt deny indignantly that it exists primarily to fatten its members’ wallets and egos. Rather, it aspires to a more exalted function, as guardian of the profession and of the public generally. It purports to be judicious rather than exclusive. The Academy holds itself out as the sole legitimate organization of its kind in the profession, and is widely recognized as such. It is a monopoly; and it is affiliated with the A.M.A., itself a monopoly, and no doubt with many local groups. No one who chooses (and, unsuspecting, trains, and practices) to become an orthopaedic surgeon in the United States or Canada can escape its jurisdiction. Indirectly, therefore, the public health is at stake. The power of such an association, tinged with a public stature or purpose (Van Daele, 51 Ill. 2d 389, 395 ), almost a private, specialized government, should not be unbridled, but should be viewed judicially as a fiduciary power to be exercised in a reasonable and lawful manner (Pinsker, 1 Cal. 3d 160, 165 , quoting Falcone).

The majority underrates the Academy’s capacity to harm Dr. Treister. It is true that he has so far done quite well without Academy membership; but that is because until recently his inexperience has made him obviously unripe for membership, so that his nonmembership has been perceived as routine, temporary, and insignificant. From now on, things will be different. Count I of the complaint alleges that hospitals and insurance companies rely on Academy membership. Some of these institutions require disclosure of membership status in professional organizations like the Academy, and, in addition, specifically require disclosure of rejections from such organizations. Hospitals, insurance companies, and others know that almost all Board-certified orthopaedic surgeons become members of the Academy two years after Board certification. A questionnaire or application form filled out by an orthopaedic surgeon who has not been admitted to Academy membership two years after this certification raises serious questions and can substantially impair the practitioner’s career.

The revelation that Dr. Treister has been rejected by the Academy is going to “red-flag” every application for staff privileges or insurance that he will ever make, subjecting him to close scrutiny, and making every one of his applications a major event when it would otherwise be approved as a matter of routine. Particularly because Dr. Treister is known to meet every formal requirement for Academy membership, hospitals and insurers can logically conclude that he must have been excluded for incompetence or unethical conduct. It will be difficult for Dr. Treister to rebut this inference with the facts, since the Academy refuses to particularize any accusation.

Also, it is well known that medical malpractice insurance rates have rocketed and are now a large part of the cost of practice. Although Dr. Treister is now considered a prime risk, paying the lowest rate, his premium is almost $20,000 per year. Even a modest percentage surcharge is substantial.

The more subtle effects of rejection could prove even more crippling. The emerging pattern of medical care distinguishes between internists, who have a stable patient pool, and other specialists, who rely on referrals. Because a single patient is likely to see an orthopaedic surgeon only rarely over the course of a lifetime, while he might see an internist many times, the surgeon is peculiarly dependent on referrals. Referring doctors often use Academy membership to verify their impression of specialists, and may even find a doctor for a referral by examining the Academy membership list. New associates, necessary for the growth of a medical practice, also rely on Academy membership in evaluating an orthopaedic surgeon who seeks to employ them. Finally, many attorneys prefer Academy members as expert witnesses.

The fact that Dr. Treister has hospital privileges does not mean that he is not in trouble. Even if these hospitals know him well enough that they will never in the future be influenced by the Academy to deny him those privileges, a lack of hospital facilities is hardly the only peril to a medical career. Also, Dr. Treister may some day desire privileges at new hospitals, which will be influenced by his rejection.

The majority’s fear that there will be no way to draw the line if we allow relief to Dr. Treister is therefore unfounded. Membership in the Academy is distinctly more than “a tangible thing of value” (Salter v. New York State Psychological Association (1964), 14 N.Y.2d 100, 103 , 198 N.E.2d 250, 251 ), and offers more than “educational, professional or financial advantage” (Blatt v. University of Southern California (1970), 5 Cal. App. 3d 935, 939 , 85 Cal. Rptr. 601, 604 ); and the fact that the Blatt court did hold for the Order of the Coif in California under the Pinsker standard shows that distinctions can be made. Of course there will be more cases until the law is firmly settled; but that is a commonplace of the common law method. We have here a spectrum of possible organizations and articulable standards, and the fact that one end of the continuum is unsuitable for judicial review is simply no reason for the courts to take refuge at the extreme other end. The law should defend us from wrongs, without demanding ruin and starvation.

On the other side of the balance, the Academy’s legitimate interest is lighter than the majority supposes. It is important to note how modest is Dr. Treister’s prayer for relief. He does not seek to compel the Academy to admit him to membership. He asks only that it consider his application fairly, in accordance with its own bylaws and the principles of ethics established by the Academy’s affiliate the A.M.A. — a set of principles the Academy requires every member to adhere to. There should be nothing directly offensive to the Academy about doing in fact what it publicly professes to do.

The Academy is neither a social nor an operating body. It does not select members for their ability to carry out the corporate function; the members have little direct effect upon the organization or each other. The Academy is not going to fall apart by accepting someone it should not; certainly it would not be legally liable for his ineptitude, as a hospital may be for its doctors, or an employer for its servants. Rather, the Academy functions largely as an informal accrediting body. It does offer its members some direct benefits, such as the opportunity to present papers on medical topics to the other members (and Dr. Treister has duly alleged harm from his inability to obtain these benefits); but the main advantage of membership appears to be the credential, the Academy’s endorsement, relied on by others. This reliance, and therefore the value of Academy membership, depend on a general perception that the Academy is fair and accurate and follows its published standards, so that people can know and trust what they are getting when they treat membership as an indicator of professional quality. Thus, Dr. Treister is only asking that the Academy perform properly its most prominent function, and thereby maintain honestly the reputation on which its prestige is founded.

The Academy does have an interest in holding itself aloof from judicial supervision. Obviously, it would not like the prospect of having to accept someone it does not really want but cannot justify rejecting. If the Academy’s reservations are vindicated by the unwelcome members’ subsequent behavior, the Academy’s reputation and power will suffer from their scandals. And such a body may believe that it can discriminate among applicants more accurately if no one looks over its shoulder, and it is unrestricted in its methods. Indeed, apart from the Academy’s interests, and purely as a matter of the public good, fallible judges may well hesitate to interfere with a group so successful; its high status might be taken to indicate that its methods and judgment have proven best. This judicial modesty is commendable; but taken too seriously it would naturally lead to refusals to look at the practices even of public entities— which is not the law (Mauer v. Highland Park Hospital Foundation (1967), 90 Ill. App. 2d 409, 413 , 232 N.E.2d 776 ).

I suggest, moreover, that both the inference of excellence and the legitimacy of the organization’s demand for autarchy are impeached where the organization is so strong that membership is a practical necessity for the attainment of eminence in the profession. The reason is that such an association’s rejections become self-fulfilling prophecies, not to be proven wrong by events. The association’s outcast will not return one day in glory to embarrass them, for his rejection itself dooms him to obscurity.

An ordinary organization, a hospital, say, or a university, however prestigious, must learn to appreciate the best people, for its future reputation and success depend on achievement. A hospital that capriciously spurns fine doctors will not only see the excellence demonstrated by some of its rejectees pointed to as glaring evidence of its foolishness, but will endanger the quality of its services. The effects will be visible in comparison with neighboring, fairer hospitals.

The Academy, in contrast, will hardly be blamed if American orthopaedic surgical skills are not as high as they might be. Probably, nobody will even notice a problem, because the Academy’s monopoly prevents comparisons.

The result is that an association, once it attains such influence as the Academy has, can maintain it long after it ceases to deserve its position. The Academy, if left to its own devices, can well afford to reject qualified applicants as it pleases. Its officers can indulge their prejudices and ulterior motives. The Academy has also an incentive to be overly cautious and bland, since while those erroneously rejected will pale into general practice, members who turn out badly, or are merely abrasive, will be noticed, and in quantity could eventually harm the Academy’s reputation.

The Academy can do these things, but only secretly: it cannot afford to be known to behave this way. For if those who rely on Academy membership as a mark of skill and ethicality were to discover that the Academy does not after all give them fair and unbiased evaluations, they might stop depending so heavily on the Academy.

The secrecy in which such associations have historically cloaked themselves is therefore little proof if its value for legitimate purposes, and is open to sustained abuse. By keeping Dr. Treister ignorant of the reasons for his rejection, the Academy prevents him from effectively impugning its decision. In a battle without specifics, Dr. Treister’s credibility against the Academy’s, everyone except Dr. Treister’s intimates will naturally believe the Academy, which can thus do as it will without fear of exposure. Unless the courts intervene to open the process up, such associations may maintain indefinitely a fraud on the public. The public interest in preventing such practices must be weighed in the law’s scale.

I do not by this discussion mean to accuse the Academy, or any such group, of actually engaging in such conduct. Dr. Treister has not alleged it, and judicial review should not turn upon an almost impossible preliminary showing of a pattern of impropriety. I have been discussing possibilities and temptations, not facts. The Academy is mentioned simply because it is before us. My point is that the power of groups like the Academy is so great, so self-perpetuating, so little checked by private forces, and has such potential for abuse, that the balance of interests favors judicial oversight. Every orthopaedic surgeon desperately needs the Academy’s favor; he is at its mercy; yet he has nothing to offer it; the Academy has no use for anyone in particular, though it professes to welcome all who deserve it. The Academy is more like a government than like a truly voluntary combination, and may justly be treated accordingly.

The distinction between groups which do or do not have this character is dramatic enough that it would be possible to hold a firm legal line between them. It would not be too much harder than trying to descry, without any underlying theory, the boundary between expulsion and exclusion. Try, for example, to classify a failure to renew a membership, or a decision to enforce universally a rule from which someone had previously held a special exemption (Fahey v. Holy Family Hospital (1975), 32 Ill. App. 3d 537 , 336 N.E.2d 309 ).

In summary, the balance-the-interests approach easily lends itself, upon scrutiny of the interests, to a “practical necessity” formulation reminiscent of Pinsker.

III.

I myself would not choose to make these distinctions I have been discussing, for I find the theory expounded in Part II too narrow. For me, this is an easy case. I oppose arbitrary or unfair exclusion from any organization; and I would accept cases concerning any group with enough power to influence society in a significant way and to affect seriously an applicant’s career. See my dissent in Davis v. Attic Club (1977), 56 Ill. App. 3d 58 , 371 N.E.2d 903 .

The Academy’s unjust rejection of applicants, resulting from unfair admissions standards and procedures, could have pernicious effects on society. The rejection of qualified applicants injures the public — whom, after all, physicians are licensed to serve — by disabling physicians who might otherwise have been able to perform great public service. Also, applicants who were accepted for membership according to unfair procedures based on arbitrary or biased standards might advance to positions of trust and importance they otherwise would not attain — and for which they were not qualified. Thus, the public has a strong and often-ignored stake in the membership practices of such societies. A professional society that uses its membership policies in the following ways does the public a grave disservice: (i) to enforce a “conspiracy of silence” by excluding doctors who truthfully testify against other members of their professions in instances of malpractice (Ascherman v. St. Francis Memorial Hospital (1975), 45 Cal. App. 3d 507 , 119 Cal. Rptr. 507 ); (ii) to unreasonably exclude physicians who criticize sacred cows of the profession, thereby stifling creative thought and constructive criticism (Sussman v. Overlook Hospital Association (App. Div. 1967), 95 N.J. Super. 418 , 231 A.2d 389 ); or (iii) to deny membership privileges to doctors because of their race, etc. In fact, a professional society using admission and rejection to produce such results betrays the trust of a public it exists to benefit. And it abuses the power it has acquired, advancing some to positions they do not merit, and retarding other, more worthy, orthopaedic surgeons. I find it unconscionable that an association might engage in such conduct, even if it does not thereby succeed in driving the victims entirely out of the profession.

I believe that the proper test is not a showing of “economic impotency,” as the Academy contends and the majority holds, but rather whether exclusion would “effectively impair the physician’s right to fully practice his profession” (Ascherman v. St. Francis Memorial Hospital (1975), 45 Cal. App. 3d 507, 511 , 119 Cal. Rptr. 507, 509 ) and attain the highest eminence and respect in that profession that his talent and character will permit.

As, however, it is apparent that many of my colleagues do not share my views on these broader issues, I have set out in part II an argument for a compromise position more compatible with the majority’s philosophy, and yet adequate to grant relief to Dr. Treister.

I believe Dr. Treister is entitled to a fair hearing on the application, to be judged by standards reasonably related to the Academy’s purposes, and to be informed of the reasons for his rejection. I would affirm the circuit court’s order sustaining count I of the complaint and permit Dr. Treister to have a trial on the merits of that count after proper discovery has taken place.

IV.

So far as count II of the complaint is concerned, I agree with the majority that the allegation regarding the relationship between the Academy, the American Medical Association, the hospitals of the State of Illinois, and the State of Illinois itself is so sparse that the court can do no more than guess at what Dr. Treister’s complaint in this respect actually is. I agree with the majority that this is only a conclusory charge, inadequate to sustain a claim of State action or anything else.

Count III of the complaint is based on a claim of breach of contract. It properly alleges a contract between Dr. Treister and the Academy in connection with the application he was making and how it was to be treated. (See Steinberg v. Chicago Medical School (1977), 69 Ill. 2d 320 , 371 N.E.2d 634 .) In holding, as it does, that circulating names of membership applicants to Academy members was a reasonable means of investigation which the plaintiff himself authorized, the majority reads into the agreement provisions I do not find in it. Whether the dissemination of plaintiff’s name and the fact that he had applied for membership was reasonably necessary to verify his credentials, professional standing, and moral or ethical character, or was inconsistent with the Academy’s promise to treat the contents of Dr. Treister’s application as privileged and confidential, is a matter for evidence and trial.

It would be more sensible to read into the contract a promise by the Academy to consider the application fairly and according to the bylaws. (Steinberg.) This is yet another ground for granting the plaintiff relief.

I would remand this case for full discovery and for trial on counts I and III.