Petition — Laje v. R. E. Thomason General Hospital

Supreme Court of the United States

OCTOBER TERM, 1977

no. 22771527

LUIS J. LAJE,

Petitioner

Vv.

R. E, THOMASON GENERAL HOSPITAL,

Respondent

PETITION FOR WRIT OF CERTIORARI

To The United States Court Of Appeals

For The Fifth Circuit

Broapus A, Spivey

Spivey, HAZEL AND Grice

P, O, Box 2011

Austin, Texas 78768

(512) 474-6061

Attorneys for Petitioner

DAK, IR., CLERK

Opinions Below cocccccccccues TIETTTI TTT iy coccee

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Statement of the Case cccciiciicceeeeeeeeeeennennnns

Reasons the Writ Should Be Granted . 0.0.6.6 66 ccc uns

I, IMPORTANCE OF THE QUESTIONS PRESENTED

A, NO UNIFORM STANDARD EXISTS FOR RE.

VIEWING DENIALS OF HOSPITAL PRIVI-

LEGES TO PHYSICIANS, .........5) TETTTTT YT

B, REMAND OF THE DENIAL OF PRIVILEGES

CLAIM TO THE BOARD OF MANAGERS WAS

IMPROPER, settee eceerereeer eee eee eee eee eet ttt alt

Il, CONFLICT OF DECISIONS

A, THE LAY PERSON COMPOSITION OF THE

BOARD OF MANAGERS AND THEIR PECU-

NIARY INTEREST IN THE OUTCOME OF

THE HEARING DENIED THE PETITIONER A

FAIR AND IMPARTIAL HEARING, ,,........

B. THE FIFTH CIRCUIT IMPROPERLY DISRE-

GARDED A STATISTICAL EVALUATION OF

THE CASES WHICH PURPORTED TO SHOW

THE PETITIONER'S INCOMPETENCE AS A

PSYCHIATRIST, cece cic cccceennnes TITTTTT

C, THE BOARD'S FINDINGS OF INCOMPE.

TENCE AND INSUBORDINATION WERE AR.

BITRARY AND CAPRICIOUS, DENYING THE

PETITIONER SUBSTANTIVE DUE PROCESS,

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LIST OF AUTHORITIES

CASES

7) v, Gardner-Denver Company, 415 US, 36

LL ) TELETELETETETTELL EEE TET cocceees

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CASES

Wood, 426 US, S41 (1976) crccccccrerrrrennns

Seen of Regents v. Roth, 408 US, $64 (1972) cccccces

Hayman v, City of Galveston, 278 US, 414 (1927) opal

Horowits v, Board of Curators of the University of Mis-

sour, 46 USLW, we + ow hen 1, 1978) .a6,

furchison, 349 US, 199 (1955) ccccccrereeeeees

Kilage rm Lutheran Charities Association of Saint Louis,

625 F.2d $6 (Oth Cit, 1978) ccccrcccrrecereeeeennns

McNeese v, Board of Education, 878 US, 668 (1963) ..

Monroe v, Pape, $65 US, 167 (1901) crccrrerreereens

Nebbia v. New York, 291 US, $02 (1984) crcccrrreens

Perry v, Sindermann, 408 US, 593 (1072) ccvceveeeees

Peters v. Ki, 407 US, 498 (1972) carcsecreees ase

Pickering v, Board of Education, 391 U.S, $63 (1968) ..

Risso v, Goode, aera ot h* ht MPYTTTITITiT iit

yy v, Olio, 278 US, S10 (1927) crcccrcerererennes

Wade Village of Monroeville, 409 U.S, 57 (1972) vans

Vick Wo v, Hopkins, 118 US, 356 (LBRO) crcreererees

CONSTITUTION AND STATUTES

Amendment XIV, UNITED STATES CONSTITUTION

42 US.C.,, QU9BD ciccccrrreeeereeeenneeeerennenenees

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1977

NO, .

LUIS J, LAJB,

Petitioner

v.

R, E. THOMASON GENERAL HOSPITAL,

Respondent

Dr, Luis J, Laje, Petitioner, respectfully requests that

a writ of certiorari issue to review the judgment of the

United States Court of Appeals for the Fifth Circuit

which denied staff privileges to the Petitioner and reversed

the determination of the lower court.

OPINIONS BELOW

The order of the District Court for the Western Dis-

trict of Texas is unreported, The opinion of the Court of

Appeals is reported at 564 F.2d 1159, The order denying

rehearing is unreported, All opinions and orders are ap-

pended hereto.

2

JURISDICTION

The order sought to be reviewed was made and entered

on December 9, 1977, An order denying a timely motion

for rehearing was made and entered on February 1,

1978. The statutory provision which confers jurisdiction

on this Court is 28 U.S.C, § 1254(1).

QUESTIONS PRESENTED

1, What standards should be followed to insure due

process to physicians who are denied staff privileges at

public hospitals?

2. Must actions brought under 42 U.S.C, § 1983 be

remanded to administrative bodies who have previously

refused to grant a hearing before the District Court will

consider the claim?

3, What type of decision-maker is required by the

Fourteenth Amendment's dictate of a fair and impartial

tribunal?

4. Can statistical evaluations of evidence be con-

sidered in determining whether a decision is supported by

substantial evidence?

5. How does substantive due process intervene in

these matters to insure that physicians (even those whose

procedural rights have been observed) are not arbitrarily

and capriciously denied liberty and property?

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Amendment XIV, United States Constitution, Section

1, Clause 2; “. . . nor shall any state deprive any person

of life, liberty or property, without due process of law;

3

nor deny to any person within its jurisdicti

tection of the laws.” Jurisdiction equal pro-

42 US.C. § 1983 (1970): “Every person who, under

color of any statute, ordinance, alietien, custom, or

usage, of any State or Territory, subjects, or causes to be

subjected, any citizen of the United States or other

person within the jurisdiction thereof to the deprivation of

any rights, privileges, or immunities secured by the Con-

stitution and laws, shall be liable to the party injured in an

-seagned ll law, suit in equity, or other proper proceeding

STATEMENT OF THE CASE

On June 15, 1971, Luis J. Laje was hired as Clinical

Director of Psychiatry for a term of two years, at R. E.

Thomason General Hospital, a public hospital operated

as a county hospital district in El Paso County, Texas.

A year later, in August of 1972, Dr. Laje was summarily

discharged by the Hospital. The administrator told Dr.

Laje he was dismissed, without giving any reason. No

hearing was held, and Dr. Laje received no notice of any

charges prior to dismissal.

Realizing that the summary discharge from his position

had also taken away his staff privileges, Dr. Laje applied

for the reinstatement of these privileges in September,

1972. In processing his application, the hospital violated

its own bylaws, and no attempt was made to respond to

his numerous requests to be heard.

On April 12, 1973, the Executive Committee made a

tentative decision to deny staff privileges with the under-

standing that further discussion would be entertained.

Dr. Laje was not advised of the decision to deny privi-

leges; he continued to request action on his application.

His requests were ignored, again in contravention of the

bylaws.

4

More than one year after the application for reinstate-

ment of his staff privileges, Dr. Laje filed suit in the

United States District Court for the Western District

of Texas. Two separate causes of action were brought

which alleged denial of constitutional rights in the

(1) summary discharge and (2) denial of staff privileges.

In an unorthodox procedure and upon Respondent's

motion, District Judge Ernest Guinn severed the causes

of action. The staff privileges question was then remanded

to the Board of Managers, in accordance with Respond-

ent’s motion and over the Petitioner’s objection.

An adjudicatory hearing was held before Respondent’s

own Board of Managers. composed of five lay persons.

They denied reinstatement of privileges. Dr. Laje then

filed a motion in the District Court to review the decision

on the basis of due process deficiencies.

On February 6, 1976, the District Court held that the

evidence was insufficient to support the Board’s findings of

incompetence and insubordination. Judge William Ses-

sions, taking the bench after the death of Judge Guinn,

reversed the Board’s decision and ordered the reinstate-

ment of privileges.

After staying the order to reinstate privileges, Respond-

ent appealed the judgment to the United States Court of

Appeals for the Fifth Circuit. On December 9, 1977,

the Fifth Circuit reversed the District Court’s determina-

tion.

5

REASONS THE WRIT SHOULD BE GRANTED

I.

IMPORTANCE OF THE QUESTIONS PRESENTED

A. No Uniform Standard Exists For Reviewing

Denials Of Hospital Privileges To Physicians.

This Petition presents an important question which is

the subject of extensive litigation in the lower courts—

when and by what procedural safeguards must a physi-

cian’s liberty and property interests be protected in a

public hospital’s denial or suspension of staff privileges.

The question acquires paramount importance due to the

interests at stake in its resolution: the state’s indisputable

interest in health care and the physician’s constitutionally

Protected liberty and property interests in the pursuit of

his profession and the retention of employment.

In 1927, this Court determined that there was no

constitutional right to practice medicine at a state-

supported or otherwise public hospital. Hayman v. City

of Galveston, 273 U.S. 414 (1927). The Court also de-

termined that such hospitals could limit their staffs by

reasonable classifications. Jd. at 417. The Court did not

and has not established a uniform standard for determin-

ing the reasonableness of the hospital’s action.

This Court has set forth procedures to be followed in

the application of reasonable grounds of exclusion of stu-

dents, Horowitz v. Board of Curators of the University of

Missouri, 46 U.S.L.W. 4179 (March 1, 1978), and

policemen, Bishop v. Wood, 426 U.S. 341 (1976), in

order to safeguard Fourteenth Amendment due process

rights. Further, the Court has been explicit in determin-

6

ing when the Fourteenth Amendment intervenes in the

dismissal of teachers. Board of Regents v. Roth, 408

U.S. 564 (1972); Perry v. Sindermann, 408 U.S. 593

(1972). Similar standards are needed for physicians.

B. Remand Of The Denial Of Privileges Claim To

The Board Of Managers Was Improper.

Title 42 U.S.C. § 1983 vests original jurisdiction in the

United States District Courts. McNeese v. Board of Edu-

cation, 373 U.S. 668, 671-672 (1963). However, as a

matter of course, cases of this type are remanded to the

administrative body whose conduct is the source and sub-

stance of the claim.’ Because of the unique nature of

§ 1983, administrative and state remedies need not be

exhausted prior to resorting to the federal courts. Monroe

v. Pape, 365 U.S. 167 (1961). Thus, federal courts

should not “automatically” remand cases of this type to

the administrative body. Rather, District Courts should

consider these issues de novo.

That analysis is consistent with the decision in Alex-

ander v. Gardner-Denver Company, 415 U.S. 36 (1974).

The determination of civil rights claims cannot be dele-

gated to other decision-makers, whether the tribunal is

conducting an adjudicatory hearing or labor arbitration.

The place for civil rights claims is in the courts, where

they can be fairly and fully adjudicated.

1. This judicial dilemma was alluded to by the Court in

Pickering v. Board of Education, 391 U.S. 563, 578, fn. 2 (1968).

7

II.

CONFLICT OF DECISIONS

A. The Lay Person Composition Of The Board of

Managers And Their Pecuniary Interest In The

Outcome Of The Hearing Denied The Petitioner

A Fair And Impartial Hearing.

A fundamental requirement of due process j i

tribunal. In Re Murchison, 349 U.S. 133 (1955). a

adjudication of a physician’s competence, the fair tri-

bunal requirement must be satisfied by a decision-maker

who possesses the medical knowledge to determine com-

petence. Beyond this requisite peer review, due process

also demands an impartial decision-maker. The Board of

Managers who determined Dr. Laje’s competence had no

medical knowledge and had a pecuniary interest in the

outcome.

The failure of the Fifth Circuit to hold that the de-

cision-maker must possess medical expertise to deter-

mine a physician’s competenc:: is in direct conflict with

the Eighth Circvit’s holding in Klinge v. Lutheran Chari-

ties Association of Saint Louis, 523 F.2d 56, 60 (8th

Cir. 1975). The Fifth Circuit’s holding that actual bias

must be shown is in conflict with this Court’s holding that

“due Process is denied by circumstances that create the

likelihood or the appearance of bias.” Peters y. Kiff

407 U.S. 493, 502 (1972). |

Evidence at the hearing related both to the failure to

reinstate privileges and the summary discharge. As such

the hospital was given the opportunity to absolve itself

of civil liability. The liability for both causes of action

8

is measured at $380,000.00. This Court has held that

even twelve dollars ($12.00) is a sufficient pecuniary in-

terest in the outcome to disqualify a decision-maker.

Tumey v. Ohio, 273 U.S. 510 (1927). The Court has

recently reiterated its stance on disqualifying a judge on

the grounds of pecuniary interest. Ward v. Viliage of

Monroeville, 409 U.S. 57 (1972).

B. The Fifth Circuit Improperly Rejected A Sta-

tistical Evaluation Of The Cases Which Pur-

ported To Show The Petitioner’s Incompetence

As A Psychiatrist.

The Fifth Circuit rejected the relevance of a statistical

evaluation of the cases considered by the Board of Man-

agers. (Pet. App. B-7). In another 42 U.S.C. § 1983

case, this Court recognized the relevance of a statistical

evaluation of the evidence to determine its weight. Rizzo

v. Goode, 423 U.S. 362, 374 (1976).* In Rizzo, the

validity of the incidents of misconduct was not chal-

lenged. Here, Dr. Laje does not concede, nor did the

lower courts hold, that the patient histories themselves

show incompetence. The proposition is simply that oven

if the patient histories had cast some doubt on Dr. Laje’s

competence, their selection and number was inadequate.

In Rizzo, this Court found a non-random sampling of

cases which showed a small percentage of police miscon-

duct insufficient to prove a pattern of misconduct. In Dr.

Laje’s case, testimony at the hearing centered on nine

i f statistics.

. In other cases this Court has accepted the use o

Village 2 Arlington Heights v. Metropolitan Development Corpora-

tion US. , 97 S.Ct. 555 (1977); International Brother-

hood of Teamsters v. United States, US. , 97 S.Ct. 1843

(1977); Hazelwood School District, et al v. United States,

US. , 97 S.Ct. 2736 (1977).

9

patient histories which the hospital claimed showed Dr.

I aje’s incompetence as a psychiatrist. Special note should

be taken that the cases were not randomly selected. In

point of fact, the nine cases were hand-picked by Dr.

Maurice Marks, Dr. Laje’s chief accuser. Further, the

nine cases account for 0.82% (.0082) of the 1,100+

patients treated by Dr. Laje during his year at the hos-

pital. The District Court properly considered this sta-

tistical evaluation as one factor in determining the insub-

Sstantiality of the evidence purporting to show an overall

finding of incompetence.

Therefore, the Fifth Circuit's express disavowal of the

Statistical evaluation of the evidence presented is in

direct conflict with this Court’s decision in Rizzo.

C. The Board’s Findings Of Incompetence And In-

subordination Were Arbitrary And Capricious,

Denying The Petitioner Substantive Due

Process.

Petitioner does not argue to this Court that the as-

serted grounds for dismissal were arbitrary and capri-

cious. Dr. Laje recognizes that the running of a hospital

is greatly aided by a competent and cooperative staff.

Therefore, the Petitioner acknowledges that the use of

incompetence and insubordination as grounds is entirely

legitimate, having a real and substantial relation to the

goal of running an efficient hospital and to the ultimate

goal of protecting public health. Nebbia v. New York,

291 U.S. 502 (1934).

It is the application of these legitimate grounds to

Dr. Laje that is arbitrary and capricious. The Court has

long accepted the premise that governmental action

may be Constitutional on its face but unconstitutional as

10

applied, Yick Wo v, Hopkins, 118 U.S, 356 (1886).

Petitioner has established two grounds for the un-

constitutional application of the charges to him, First,

the Board's findings are not supported by substantial

evidence and are, therefore, arbitrary and capricious, In

addition, a finding of incompetence on the evidence

presented to the Board would hold him to a different and

higher standard of proficiency than other psychiatrists

practicing at the hospital, This higher standard imposed

against Dr. Laje alone denies the Petitioner equal pro-

tection of the laws, Therefore, the Petitioner is prevented

from pursuing his profession by a state action which can

only be classified as arbitrary and capricious,

CONCLUSION

Certiorari should issue when (1) important federal

questions are unsettled; (2) a conflict exists between

the Court of Appeals’ decision and previous decisions of

the Supreme Court; (3) a conflict on a point of law exists

between the circuits, This Petition presents the Court with

all three situations, For these reasons, a writ of certiorari

should issue to review the judgment and opinions of the

United States Court of Appeals for the Fifth Circuit,

Respectfully submitted,

Broapus A, Spivey

Spivey, HAZEL AND Grice

P, O, Box 2011

Austin, Texas 78768

(512) 474-6061

Attorneys for Petitioner

By: :

ROADUS A, SPivi

CERTIFICATE OF SERVICE

This is to certify that a true and correct copy of the

above and foregoing Petition for Writ of Certiorari has

been to wing attorneys of record on this

the y of 1978: Mr, Larry Anderson,

Attorney at Law, $100 Fidelity Union Tower Building,

Dallas, Texas, 75201; and Mr. James Kirby Read, At-

torney at Law 604 Myrtle Avenue, Bl Paso, Texas,

79901,

y,

ROADUS A, SPIVRY

Order of the U, S8, District Court for the Western

District of Texas at Bl Paso ...... 0660005

Opinion of the United States Court of Appeals,

PHU CHOU cc ccccccccrereccrcccccccece

Order Denying Petitioner's Motion for Rehear-

A-l

In The

UNITED STATES DISTRICT COURT

for the Western District of Texas

El Paso Division

NO. EP-73-CA-264

LUIS J. LAJE, Plaintiff,

v.

R. BE. THOMASON GENERAL HOSPITAL,

Defendant.

MEMORANDUM AND ORDER

On this day came on to be considered the Motion of

the Defendant, R, BE, Thomason General Hospital, to

Dismiss for Failure to State a Claim Upon Which Relief

Can Be Granted and the Motion of the Plaintiff, Luis J.

Laje, to Reverse the Decision by Board of Managers

Denying Plaintiff Staff Privileges,

FACTS

Plaintiff filed his Original Complaint with this Court

on November 19, 1973, alleging jurisdiction of this

Court under 28 U.S.C, 1331(a) and 28 U.S.C, 1343(3)

and (4), and contending the violation of his civil rights

under the due process clause of the Fourteenth Amend-

ment of the United States Constitution, Section 19 of the

Constitution of the State of Texas, and 42 U.S.C, 1983,

Briefly, Plaintiff contends that his employment contract

with Defendant Hospital was breached when he was sum-

marily discharged from his position as a staff psychiatrist

on the staff of R, BE, Thomason General Hospital on

August 17, 1972, discharge effective August 18, 1972,

without a prior hearing or any procedural safeguards in

A-2

violation of 42 U.S.C, 1983, Plaintiff further contends

that he applied for staff privileges on September 10,

1972, which were denied by the Board of General Mana-

gers of the Hospital on December 4, 1972, in violation of

due process guaranteed him by the Fourteenth Amend-

ment of the United States Constitution, 42 U.S.C, 1983,

and Article 3, Section 3, Section 5(b) of the Hospital

By-laws of the Medical Staff, Plaintiff claimed compensa-

tory and exemplary damages in the amount of $360,000,-

00,

Defendant filed a Motion to Dismiss and a Motion to

Sever as to staff privileges on Decemebr 12, 1973, Plain-

tiff filed his response on January 28, 1974, Defendant

then filed his Amended Motion to Dismiss and Amended

Motion to Sever on February 13, 1974, and Brief in

Support Thereof, These motions, including the first part

of the Defendant's Second Amended Motion to Dismiss

and to Sever filed with the Court on February 25, 1974,

requested the Court to remand the proceeding to the

R. EB. Thomason General Hospital for a hearing pursuant

to its administrative procedures, On March 15, 1974,

the late Judge Ernest Guinn entered an order granting

the remand to the R, EB, Thomason General Hospital and

also decreeing that the Motion to Dismiss in connection

with the breach of contract be held in abeyance, On July

10, 1974, the Board of Managers of R, BE, Thomason

General Hospital upheld the recommendation of the Hos-

pital Medical Committee that staff privileges be denied

the Plaintiff on the grounds that Plaintiff was incompetent

to practice psychiatry and had engaged in insubordinate

acts, This hearing was held on April 25 and 26, 1974,

A-3

On August 30, 1974, Plaintiff filed his Amended Orig-

inal Complaint with the Court incorporating his initial

complaint and adding the following:

1. That $27,500.00 of unpaid wages remained on his

contract with the Hospital, that in reliance on said con-

tract Plaintiff incurred the expenses of a move from

Rhode Island and purchased a home in El Paso, that as

a result of his wrongful discharge, Plaintiff has been

forced to attempt to establish an office for the private

practice of psychiatry in El Paso, Texas, and that Plain-

tiff and his immediate family have suffered mental pain

distress and anxiety and claim actual and exemplary dam-

ages and are entitled to compensation therefor;

(2) That the evidence made available to the Plain-

tiff in conjunction with the April 25-26 hearing before

the Board of Managers of the Hospital confirms Plain-

tiff’s allegations that his application for staff privileges

was improperly processed;

(3) That the July 10, 1974, decision by the Board to

deny staff privileges is not supported by substantial evi-

dence, and upon a review of the evidence, this Court

should reverse that decision, grant staff privileges to

Plaintiff, and award damages to Plaintiff.

(4) Plaintiff further contends that he has been dam-

aged by Defendant’s conduct in the following amounts:

(a) wrongful and unconstitutional discharge $8

’ 0,-

000.00 actual damages and $100,000.00 puni-

tive damages due to mental pain and suffering

and harm to Plaintiff's reputation; and

(b) wrongful and unconstitutional denial of

‘Or staff

privileges, $175,000.00 actual damages to

A-4

Plaintiff's private practice of psychiatry, and

$25,000.00 in punitive damages due to mental

pain and suffering and harm to Plaintiff's repu-

tation.

Plaintiff filed his Motion to Reverse Decision of the

Board of Managers Denying Plaintiff Staff Privileges with

this Court on January 27, 1975, in which he alleged that

the allegations of incompetence and insubordination upon

which the Board of Managers of R. E. Thomason Gen-

eral Hospital denied Plaintiff staff privileges are not sup-

ported by substantial evidence, and that there is more

than adequate evidence that Plaintiff is qualified to be on

the staff of Defendant Hospital. Plaintiffs brief in sup-

port of this Motion was filed also on January 27, 1975.

DEFENDANT’S MOTION TO DISMISS FOR

FAILURE TO STATE A CLAIM UPON WHICH

RELIEF CAN BE GRANTED

In his Order authorizing the hearing of April 25 and

26, 1974, the late Judge Ernest Guinn ordered that this

Motion be held in abeyance. It should be considered at

this time. Defendant’s brief in support of Defendant's

Second Amended Motion to Dismiss was filed with this

Court on February 28, 1974. The brief appears to sup-

port a Motion to Dismiss for Failure to State a Claim

upon which Relief Can Be Granted, pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure. De-

fendant claims that its discharge of Plaintiff from em-

ployment at Defendant Hospital was not a violation of

Plaintiff's due process rights within the Fourteenth

Amendment to the Constitution. Defendant cites the case

of Birnbaum v. Trussell, 371 F.2d 672 (2nd Cir. 1966)

for what appears to be the proposition that if there is a

A-5

substantial interest involved in the discharge of a public

employee, other than mere employment by the State, pro-

cedural safeguards must be followed to determine whether

legitimate grounds for his discharge do exist. Defendant

contends that Plaintiff has suffered no economic injury

and, in addition to the Birnbaum case, cites the follow-

ing Cases in support thereof: Grausam v. Murph

F.2d 197 (3rd Cir. 1971), and Tichon y. Harder yo

F.2d 1396 (2nd Cir. 1971). Defendant concludes by say-

ing that an action for breach of contract does not lie

within the purview of 42 U.S.C. 1983, and this Court

does ‘not have jurisdiction because diversity of the par-

ties is lacking. As a caveat, Defendant contends that

pendent jurisdiction does not apply in this case, citing

Hurn v. Oursler, 289 U.S. 238, 77 L.Ed. 1148 (1932)

because Plaintiff presents a federal civil rights violation

and a state violation for breach of contract in the same

cause of action.

. Concerning the lack of harm to Plaintiff caused by his

discharge, the Birnbaum case, supra, does not require

the Plaintiff to prove his case during pretrial discovery.

The Birnbaum court determined that there were two sub-

stantial interests involved: the Plaintiff's reputation and

the Plaintiff's ability to pursue a profession effectively.

371 F.2d at 678 (footnote 13). It has been asserted that

there is no constitutional right to government employ-

ment. However, “[A]s the Supreme Court has recognized

the inquiry does not end with the statement that there

Is no right to work for the government”, because “(T]he

due process clause protects not only against impermissible

grounds of discharge, but also against an improper man-

ner of discharge.” 371 F.2d at 678. Plaintiff complained

that both protections were absent in his discharge by De-

fendant. In Birnbaum, the court went on to Say:

A-6

“Whenever there is a substantial interest, other than

employment by the state, involved in the discharge

of a public employee, he can be removed neither

on arbitrary grounds nor without a procedure calcu-

lated to determine whether legitimate grounds do

exist.” 371 F.2d at 678.

The Second Circuit Court of Appeals held that Dr. Birn-

baum’s complaint “stated a good cause of action under

Section 1983.” 371 F.2d at 675. The critical elements of

the complaint were that Dr. Birnbaum was removed

from his job prior to a hearing; false allegations concern-

ing his conduct were made; he was summarily discharged,

which gave the allegations “a stamp of official authority

and not only deprived him of his employment, but

seriously damaged his professional reputation in the com-

munity as a physician.” 371 F.2d at 677. These very al-

legations are made by the Plaintiff in this case.

Defendant’s reliance on Grausam v. Murphey, supra,

is misplaced. There, the Plaintiff's discharge was upheld

after he had been afforded an opportunity for an adminis-

trative hearing (which he substituted for trial in a dis-

trict court) and a full review of the record by the Third

Circuit Court of Appeals. Plaintiff was not afforded a

hearing prior to his summary discharge in this case.

The Tichon case is distinguished from the case at bar

on the grounds that there the court held that loss of

profits was merely a property right and not connected

with a right of personal liberty and, therefore, the dis-

charge of employment was not a cause of action for

which the court had jurisdiction under 28 U.S.C. 1343

(3). 438 F.2d at 1400. Here, Plaintiffs primary allega-

tion is damage to his reputation and to his ability to

pursue his profession effectively. See 438 F.2d at 1400.

A-7

Plaintiff alleges that the staff privileges at R. E. Thoma-

son General Hospital are important to him in the main-

tenance and furtherance of his private practice of psychi-

atry in El Paso, Texas. See page 3 of Plaintiffs Brief in

Response to Defendant’s Second Amended Motion to

Were the Court to consider the breach of contract

claim a matter of state action, it would be properly be-

fore this Court on the ground of pendent jurisdiction be-

cause both the state claim—breach of contract and the

federal claim—deprivation of constitutional rights “de-

rive from a common nucleus of operative fact” and are

such that the Plaintiff “would ordinarily be expected to

try them ali in one judicial proceeding.” United Mine

Workers v. Gibbs, 383 U.S. 715, 725, 16 L.Ed.2d 218

227, 86 S.Ct. 1130, 1139 (1966); Wright, Laws of Fed-

eral Courts, page 64 (2nd Ed. 1970).

However, the Court need not go this far. The Birn-

baum case is controlling and federal jurisdiction is

founded on the alleged deprivation of Plaintiffs consti-

tutional rights.

As jurisdiction here is based on the alleged violation

of constitutional rights, lack of diversity of the parties is

irrelevant.

PLAINTIFF'S MOTION TO REVERSE DECISION

BY BOARD OF MANAGERS DENYING

PLAINTIFF STAFF PRIVILEGES

Plaintiff's Motion and Brief in Support Thereof were

filed with this Court on January 27, 1975. Therein,

Plaintiff states five allegations:

A-8

(1) Judge Guinn’s remand of the proceedings to the

Defendant Hospital was improper and, therefore, a

thorough review of those proceedings is necessary by the

Court because the establishment of the proceedings them-

selves is unconstitutional.

(2) Plaintiff's application for staff privileges was im-

properly processed by Defendant Hospital.

(3) The allegation of incompetency used by the Board

of Managers to support its denial of staff privileges is

not supported by substantial evidence.

(4) The allegation of insubordination used by the

Board to support its discharge of the Plaintiff is not sup-

ported by substantial evidence.

(5) Plaintiff is competent to be granted staff privi-

leges by the R. E. Thomason General Hospital.

The Court agrees with Plaintiffs contentions Nos. 3

and 4; it is, therefore, unnecessary to consider allegations

Nos. 1, 2 and 5.

Plaintiff alleges that the finding of incompetence is not

supported by a review of the substantial evidence. “Sub-

stantial evidence” may be defined as such evidence as

will convince reasonable men and on which they may not

reasonably differ, that is, competent evidence such as a

reasonable mind might accept as adequate to support a

conclusion. 1 Tex. Jur. 2d Administrative Law, Section

42, p. 683. On a review governed by the substantial evi-

dence rule, the issue is not whether the agency arrived

at the proper conclusion on the basis of conflicting evi-

dence, but whether it acted arbitrarily and without re-

gard to the facts. The Court will inquire, not whether the

A-9

agency actually heard sufficient evidence, but whether

the facts that existed at the time of the agency’s d: vision.

or order were such as to justify its action. No question of

preponderance of evidence is involved. It is for the Court

to determine, upon a consideration of the whole record

whether substantial evidence existed. 1 Tex. Jur. 2d Ad-

ministrative Law, Section 43, p. 684, Live Oak County

v. Lower Nueces Water Supply District, 446 S.W.2d 14,

24 (Tex. Civ. App. Beaumont 1969, Writ reaffirmed,

n.r.e.).

Of the 16 patients named in a list submitted to the

Plaintiff by the Defendant prior to the hearing, there was

testimony on 11 of these patients. Of this number only 9

involved questions of professional incompetence. Plain-

tiff contends that these patients’ cases were selected to

show improper diagnosis by the Plaintiff and that De-

fendant attempted to create the impression that these

patients were far more seriously ill than diagnosed by

Plaintiff. Plaintiff contends that disagreement concerning

diagnosis is common in psychiatry and, therefore, ad-

ditional information is necessary to prove incompetence.

See the discussion of the four psychiatrists’ evaluation of

the review of the charts of Plaintiff's patients contained in

Appendix One to Plaintiff's Brief in Support of Motion to

Reverse Decision by the Board of Managers denying the

Plaintiff staff privileges (hereinafter referred to as

“Brief”). See Brief, pages 8 and 9.

1. There is no evidence that the nine patients re-

ceived improper treatment or suffered in any way under

Plaintiffs care. One patient, in fact, returned to Plain-

tiff for treatment after Plaintiff established his private

practice, and Plaintiff is currently treating the patient

(M.V.) for schizophrenia at the present time (Statement

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of Facts, hereinafter referred to as SF 480), Brief page

10,

2. There is conflicting testimony by Defendant's wit-

nesses concerning Plaintiff's diagnosis, Plaintiff contends

that this is a manifestation of a disagreement over term-

inology and approach in psychiatry among the doctors

who testified, Brief page 10 and 11,

3, Plaintiff contends that the doctors who testified on

behalf of Defendant were trying to hold him to a higher

standard of professional care than they themselves were

held,

4, Plaintiff contends that the allegations of the four

psychiatrists who testified for Defendant cannot be sup-

ported by substantial evidence,

(a) Dr. Huddleston’s statement that Plaintiff

did not exercise the proper degree of care of a

psychiatrist in El Paso County, Texas, is unsup-

ported by the evidence in that Huddleston had not

seen any of the patients—only the charts, See Brief

pages 12 and 13, (SF. 126) He gave no explana.

tion at all to support his opinion, Brief page 12,

(b) Plaintiff contends that Dr, Jones’ testimony

that Plaintiff did not meet the standard of care in

the three cases that Dr, Jones reviewed is also un-

supported by the evidence, Dr, Jones stated that it

is not important that there are differences in diag-

nosis of a patient if that patient is hospitalized,

(S.F, 158), see Brief page 13 and 14, Plaintiff

states that it is tempting for him to accept Dr,

Jones’ statement, as it reduced by more than one-

half the alleged incidences of incompetence.

(c) Plaintiff contends that Dr, Raskins testimony

is unreliable because of the strong inference that he

committed perjury, See Brief pages 14-15,

All

(d) Dr, Hernandez refused to say that Plaintiff

did not meet the ws standard cf care, Briel page

15 (S.F, 252-253),

Plaintiff concludes on the basis of the above facts that

there was no substantial evidence of incompetence, Plain-

tiff also contends that the statements above manifest the

intention of the doctors who testified against him to hold

him to a higher standard of care than they themselves

were held, He cites the case of Giles v. Breaux, 160

Southern 2d 608, at 618 (Court of Appeals of Louisiana

1964). There, the Court held that in attempting to

hold the doctor responsible for a higher standard of

professional behavious than has been required of the

other physicians on the staff of the hospital, the operating

committee and the board acted in an arbitrary, capricious,

and discriminatory manner,

Plaintiff contends that the Board of Managers in deter-

mining whether or not to grant Plaintiff privileges has

the duty to judge present incompetence, As all the testi-

mony above concerns events that transpired prior to

August 1972, the Board must determine whether the

Plaintiff is presently qualified to join the hospital staff,

Plaintiff cites the fact that he was treating patients both

privately and in other hospitals at the time he applied for

staff privileges at R. BE. Thomason General Hospital. Brief

page 15. See Plaintiff's Affidavit attached to Brief, Plain-

tiff cites the case of Wyatt v. Tahoe Forrest Hospital

District, 345 P.2d 93 (California Court of Appeals 1959)

for the proposition that exclusion from the staff of a hos-

pital must be for “existing cause”, not for previous activi-

ties. Plaintiff then contends that the Defendant did not

comply with this test.

A-12

Plaintiff contends that the patient cases presented by

the Defendant at the April 25-26 hearing are not repre.

sentative of the Plaintiff's abilities for the following rea-

sons:

(1) that Plaintiff treated 1100 patients during his asso-

ciation with R, B, Thomason General Hospital and the

samples selected as an evaluation of his work was only

.0082% of all the patients he treated, Also, there was

no evidence that this group was randomly selected, Plain-

tiff contends that the cases were selected by Dr. Marks

solely to discredit the Plaintiff, Brief page 16 and 17,

(S.F, 98) (S.F, 525),

(2) Dr, Alan O. Baylor, Professor of Statistics at the

University of Texas at El Paso, with a Doctor's Degree

in Mathematics and in Economics, deposed as Plaintiff's

expert witness, stated in his Affidavit that the selection

of the patients’ cases was fatally defective because it was

not random and the number of the sample was inadequate

(See Dr. Baylor's Affidavit attached to Brief), Plaintiff

contends, therefore, that there is scarcely any evidence, let

alone any substantial evidence to support the Defendant's

denial of staff privileges to the Plaintiff,

Plaintiff's fourth contention is that the allegation of

insubordination used by the Board on its discharge of

the Plaintiff was not supported by substantial evidence.

There is no evidence that the Plaintiff was discharged

for lack of professional competence, The only reason

was for alleged insubordinatior Brief page 18 (S.F,

235). Plaintiff contends that this raises further doubt

about the allegation of incompetence, since the events oc-

curred before Plaintiff's discharge and would logically

have been brought forth at that time, if they are as

serious as Defendant now claims, See Brief page 18.

A-13

The first peg upon which the claim of insubordination

is hung is the allegation by Dr, Marks that Plaintiff re

fused to remove leg irons of a prisoner who was hospita-

lized without written instructions by Dr, Marks. Plaintiff

contends the following:

(1) There is no evidence that Plaintiff was informed

that the Board had taken a position of any kind on the

matter of shackling of the prisoners,

(2) That Plaintiff was following the Sheriff's authority

which had been established in the hospital over prisoner

security, See Art, 46,01, Texas Code of Criminal Pro-

cedure, concerning the security involved in the transfer

of a prisoner from prison to a mental hospital, Plaintiff

contends that this authority would apply to a prisoner in

R, E, Thomason General Hospital under observation for

a few days,

(3) Plaintiff claims that following the law is not in-

subordination, and the request for written instructions by

Dr, Marks before removal of the shackles was justified,

See Brief pages 19 and 20,

The second peg upon which the decisions of insubordi-

nation rests concerns the Board's determination that the

Plaintiff’ would not cooperate with Dr, Marks in the

administration of certain established drug addiction and

alcoholism programs at Defendant Hospital (S,F, 22-33),

Plaintiff contends the following:

(1) While Dr, Marks continually emphasized that he

was only a “layman” (S,F, 29, 42, 79, 84), most of his

testimony seemed to question Plaintiff's professional opin-

ions or conduct with respect to the particular patient

involved and drug program, Only Dr, Hernandez com-

A-14

mented on the psychiatry and drug addiction and his

testimony was ambiguous at best, (S.F, 266)

(2) This charge of insubordination is weakened by

the fact that at the time it was made the hospital had not

established any treatment procedures for alcoholic or drug

addicted patients, The minutes of the August 1971 Exe-

cutive Committee Meeting of the Hospital contains state-

ments by Dr, Marks that the hospital had never handled

Methadone patients and that such patients are referred to

the Metal Health Retardation Center, (S,F, 465-66) On

November 15, 1971, Dr, Marks wrote a letter indicating

the hospital would not provide long term follow-up treat:

ment for drug addiction, (S.F, 473-74) In November

1972, about three months after Dr, Laje’s discharge, Dr

Gomez stated that the narcotics program was not yet

ready, (S.F, 469-70) See Brief page 22.

(3) Dr. Marks was concerned about Plaintiff's re

fusal to accept him as the medical coordinator and also

concerned about Plaintiff's complaints about Dr, Marks

that were made to the Board of Managers and Executive

Committee which were being pursued in proper admini-

strative forums within the hospital, (S8,F, 54-55)

(4) Plaintiff contends that the evidence surrounding

the controversies between Plaintiff and Dr. Marks indi-

cates that Plaintiff's conduct was legally, ethically and

professionally proper. At the least, the evidence reveals

a great deal of confusion over these matters and a request

for a written clarification was not unreasonable, let alone

“insubordinate”,

Plaintiff then recites his various qualifications to prac-

tice psychiatry at R, EB, Thomason General Hospital:

eee ——

A-15

(1) He is licensed by the State of Texas to practice

medicine in the State, (S.F, 409-410)

(2) He is a member of the American Medical Assocl-

at) and the American Psychiatric Association, (S.F.

(3) The El Paso County Medical Association has

— membership privileges to the Plaintiff, (S.F,

)

(4) Plaintiff has been granted staff privileges in the

other prominent El Paso hospitals to which he has ap-

plied—St, Joseph's Hospital, Providence Hospital, Sun

Towers Hospital, and Hotel Dieu, (S.F, 400-01)

(5) Dr. Hernandez even requested that Plaintiff apply

for privileges at his ov « hospital, El Paso Doctors’ Hospi-

tal, (S.F, 401)

(6) The Credentials Committees at these hospitals

reviewed Plaintiff's qualifications and gave their approval.

(S.F, 500-505)

(7) The standard for the practice of psychiatry is the

same in all hospitals, (S.F, 341); “You are competent

or you are not,” (S.F, 406)

(8) References in the hearing transcript to Plaintiff's

competence and to his responsibilities as a member of

the staffs of the various hospitals are set forth in pages

23-25 of the Brief,

By letter of April 21, 1975, Defendant's attorney,

Mr. L, W. Anderson, referred to the Court the case of

Klinge v, Lutheran Charities Association of St. Louis,

338 F.Supp. 287 (1974), In that case the Court granted

summary judgment for the defendant hospital on the

A-16

grounds that contrary to plaintiff's allegations, due process

of law was afforded to plaintiff at all stages of the pro-

ceeding in which the standard of medical practice was

evaluated, This case is distinguished from the case at

bar on the following grounds:

(1) Defendants there attempted to arrange a hearing

shortly after their finding that defendant was incompetent

to practice surgery, and the hearing was held only upon

ruling of the court;

(2) The hearing was held before an attorney who was

an independent decision maker;

(3) The basis for the allegation was a comprehensive

review of the plaintiff's hospital records for the past five

years; and

(4) The evidence was overwhelming that plaintiff

simply should not practice as a surgeon, 383 F.Supp. at

290,

The Klinge court agrees with the Plaintiff here that the

decision of the Administrative Committee should be re-

versed only if there is no substantial evidence having pro-

bative force to sustain its findings, 383 F.Supp, at 291.

The Court then cites the case of Duffield v. Memorial

Hospital Association, 361 F.Supp. 398, 404 (S.D, W.Va.

1973) in which the Court stated, “The Court is charged

with the narrow responsibility of assuring that qualifica-

tions imposed by the Board are reasonably related to the

operation of the hospital and fairly administered. In

short, so long as staff selections are administered with

fairness, geared by a rationale compatible with hospital

responsibility, and unencumbered with irrelevant consid-

erations, a court should not interfere, 383 F.Supp. at

A-17

292. It is the responsibility of this court to evaluate the

finding of the Board of Managers of R. E. Thoimason

General Hospital on the basis of substantiality of the

evidence.

On April 28, 1975, the Plaintiff filed with this Court a

supplemental brief in support of his motion to reverse

the decision by the Board of Managers denying Plaintiff staff

privileges. Plaintiff cites the case of Rosener v. Eden Town-

ship Hospital District, 375 P.2d 431, (S.Ct. of Cal. 1962)

where a doctor, who had been granted staff privileges at

40 area hospitals but denied privileges at Eden Township

Hospital, was ordered installed at the Eden Hospital.

The California Supreme Court examined the record and

determined that in regard to the disagreements at the

hospitals between the doctor plaintiff and other personnel,

the plaintiff appeared in a more favorable light than they

did. 375 P.2d at 433. The Supreme Court recognized

that disagreement as to proper treatment is natural in

the medical profession, and acknowledged that refusal

of access to a district hospital could, as a practical matter,

have the effect of denying to a licensed doctor qualified to

practice in California the right tc fully exercise his pro-

fession. 375 P.2d at 434-435.

Plaintiff also cites the case of Schlein v. Milford Hospi-

tal, 383 F.Supp. 1263 (D. Conn. 1974) in which the

Court held that Plaintiff's deprivation of staff privileges at

a private hospital constituted an actionable claim under

42 U.S.C. 1983. The Court noted that the nature of the

doctor’s profession “requires that he enjoy staff privileges

at a hospital in order to deliver the full range of services

that he is licensed to perform.” Furthermore, “the denial

of staff privileges may seriously damage a physician’s

standing and associations in his professional community.”

383 F.Supp. at 1264.

A-18

Plaintiff also calls the Court’s attention to the case

of Visalli v. Mary’s Help Hospital, California Superior

Court, San Mateo County, Docket No. 151707 (1974),

in which the jury awarded $200,000.00 to a physician for

the curtailment of his privileges by a hospital and a

judgment was entered on the verdict. There has been

no reported decision on the initiated appellate proceed-

ings. This Court does not believe that the Board’s decision

is supported by substantial evidence. The minutia of cases

selected for examination—.0082% of the cases treated

by Plaintiff during the year—the unscientific and inade-

quate selection of those cases, and the hasty manner in

which those cases were examined upon all of which the

Board’s decision of incompetency was made and the con-

flicting testimony of Defendant’s doctors regarding Plain-

tiffs treatment of these cases does not provide a sub-

stantial evidentiary foundation for the Board’s determina-

tion of incompetence.

Likewise, the charge of insubordination is not sup-

ported by substantial evidence. It appears to relate

purely to personality conflicts between Plaintiff and Dr.

Marks and is not founded on any substantial medical

basis.

ACCORDINGLY, IT IS ORDERED, ADJUDGED

AND DECREED that the decision of the Board of Man-

agers of R. E. Thomason General Hospital denying the

Plaintiff staff privileges be and it is hereby reversed and

Plaintiff is ordered admitted to the staff of R. E. Thoma-

son General Hospital.

IT IS FURTHER ORDERED that this cause proceed

to trial on the following issues:

+ ee

A-19

(1) Plaintiff's claim of wrongful discharge by Defend-

ant Hospital in violation of 42 U.S.C. 1983:

(2) Plaintiff's claim of damages resulting from his

denial of staff privileges by Defendant Hospital.

/s/ WILLIAM S. SESSIONS

William S. Sessions

United States District Judge

February 6, 1976

ee

B-1

Luis J. LAJE, Plaintiff-Appellee,

v.

R. E. THOMASON GENERAL HOSPITAL,

Defendant-Appellant.

No. 76-1496.

UNITED STATES COURT OF APPEALS

Fifth Circuit

Dec. 19, 1977.

Suit was brought by former clinical director of phy-

chiatry seeking compensatory and punitive damages of

$380,000 because of deprivation of procedural due process

in connection with hospital’s termination of his contract

and its subsequent refusal to grant him staff privileges.

The United States District Court for the Western District

of Texas, at El Paso, William S. Sessions, J., directed

county hospital to grant staff privileges, and hospital

appealed. The Court of Appeals, Tuttle, Circuit Judge,

held that: (1) hearing conducted on remand to hospital

board of managers on issue of denial of privileges com-

ported with procedural requisites of due process and

(2) while not every witness agreed that former director’s

performance was unacceptable, hospital board heard suf-

ficient evidence of kind relevant to its decision to support

its denial of staff privileges.

Reversed and remanded.

James K. Read, El Paso, Tex., L. W. Anderson, C. A.

Searcy Miller, Dallas, Tex., for defendant-appellant.

B-2

Broadus A. Spivey, Austin, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the

Western District of Texas.

Before TUTTLE, COLEMAN and RONEY, Circuit

Judges.

TUTTLE, Circuit Judge:

In this appeal, R. E. Thomason General Hospital chal-

lenges the correctness of a district court order which di-

rected the county hospital to grant staff privileges to Dr.

Luis Laje because the hospital’s denial of privileges was

not supported by substantial evidence of incompetence

and insubordination, the asserted grounds for the refusal

of privileges.

[1, 2] The lawsuit originated upon Dr. Laje’s com-

plaint in which he sought compensatory and punitive

damages of $380,000 because of a deprivation of pro-

cedural due process in the hospital’s termination of his

contract as clinical director of phychiatry and its sub-

sequent refusal to grant him staff privileges. J urisdiction

was based upon 28 U.S.C. § 1343(3) and (4), the juris-

dictional companion to 42 U.S.C. § 1983, and upon 28

U.S.C. § 1331(a), the federal question section. Because

the complaint alleges an unconstitutional deprivation of

property without due process of law and the requisite

jurisdictional amount, we find jurisdiction proper under

§ 1331. Therefore, we need not determine whether the

hospital is a person for purposes of section 1983. See

Muzquiz v.—City. of San Antonio, 528 F.2d 499 (Sth

Cir. 1976) (en banc). We further hold that appellate

jurisdiction exists on the basis of 28 U.S.C. § 1292(a) ( 1)

because the interlocutory order challenged here was in

the nature of an injunction.

B-3

The facts upon which this lawsuit is based can be

briefly stated. In 1971 Dr. Laje entered a two-year con-

tract to serve as clinical director of phychiatry at R. E.

Thomason General Hospital. After 13 months he was

summarily discharged on grounds of insubordination.

Shortly thereafter, Dr. Laje applied for staff privileges

at the hospital. His request was referred to the Psychiatric

Committee, which failed to take any action within the

three-month limit specified in the hospital by-laws. When

the three-month period had elapsed, the hospital‘s Execu-

tive Committee initially recommended granting privileges.

Meanwhile, however, the Psychiatric Committee met and

decided to recommend against privileges for Dr. Laje.

The Executive Committee apparently reversed its earlier

decision, but the only notice sent to Dr. Laje was un-

clear on the status of his request. After futile attempts

to obtain a hearing, Dr. Laje filed suit.

Upon a motion by the hospital, the district court

remanded the matter to the hospital’s Board of Managers

for a hearing on the issue of denial of privileges; matters

relating to the discharge issue were held in abeyance."

The court’s remand order directed the hospital to provide

Dr. Laje with a bill of particulars and a list of witnesses.

The hospital also made relevant hospital records avail-

able for Dr. Laje’s inspection. Pursuant to the remand

order, a two-day hearing was held before the hospital

board. Dr. Laje was permitted to cross-examine the hos-

pital’s witnesses and to prevent ew dence of his own;

he was represented by counsel throughuut the proceedings.

1. The contract termination count of Dr. Laje’s complaint has

not yet been considered on its merits by the district court, although

a motion to dismiss the count has been denied. Consequently, that

portion of the case is not part of this appeal.

B-4

At the hearing Dr. Marks, the medical director of the

hospital, and several psychiatrists testified for the hospital.

They discussed 11 patients who had been treated by

Dr. Laje during his tenure as clinical director and testified

that he had misdiagnosed several of these patients. Specific

examples were cited by the doctors, although Dr. Laje

challenges their familiarity with the patients. While the

testimony was not perfectly consistent, several doctors

expressed the opinion that Dr. Laje’s treatment of patients

was below an acceptable measure of competence. On

the issue of insubordination, testimony was elicited to

show that Dr. Laje had refused to cooperate in the

treatment of drug addicts, a point disputed by Dr. Laje,

and that he had breached hospital policy by using leg

irons to restrain a prisoner-patient. Dr. Laje insisted that

the sheriff had ordered the use of shackles and that a

state law gave this authority to the sheriff. Certain evi-

dence showed that Dr. Laje’s relationship with Dr. Marks

was strained; Dr. Laje felt that Dr. Marks was interfering

with his professional judgment and requested that Dr.

Marks put his orders in writing if he wished Dr. Laje

to comply with them. Dr. Laje presented the deposition

of a statistician who criticized the nonrandom selection

of the patients whose cases were scrutinized and the

statistically unreliable size of the sample pocl.

Some time after the hearing, the board decided to

deny privileges by a vote of four to one upon grounds

of incompetence and insubordination. By amended com-

plaint Dr. Laje sought to have the board’s decision ré-

versed. Additionally, he filed a motion requesting the

district court to order the hospital to grant him privileges

because of a lack of substantial evidence to support the

board’s decision. The district court granted this motion

in an opinion dated February 6, 1976, stating:

bane Oh KR rire

SAAT Pea Rad Ow eR ite Cee tO ets mae ed UR i

B-5

This Court does not believe that the Board’s

decision is Supported by substantial evidence. The

minutia of cases selected for examination—.0082

percent of the cases treated by Plaintiff during the

year—the unscientific and inadequate selection of

those cases, and the hasty manner in which those

cases were examined upon all of which the Board’s

decision of incompetency was made and the con-

flicting testimony of Defendant’s doctors regarding

Plaintiff's treatment of these cases does not provide

a substantial evidentiary foundation for the Board’s

determination of incompetency.

Likewise, the charge of insubordination is not

supported by substantial evidence. It appears to

relate purely to personality conflicts between Plain-

‘iff and Dr. Marks and is not founded on any sub-

stantial medical basis.

The court’s order was stayed pending the outcome of this

appeal.

In reaching its decision, the district court verbalized

an accurate definition of the substantial evidence test

when it said: “On a review governed by the substantial

evidence rule, the issue is not whether the agency arrived

at the proper conclusion on the basis of conflicting evi-

dence, but whether it acted arbitrarily and without regard

to the facts.”

However, in overruling the decision of the board, the

court strayed from its own directive and substituted its

own judgment for that of the hospital board. In doing so,

it “misconceive[d] the limited scope of judicial review

in cases of this kind.” Woodbury v. McKinnon, 447 F.2d

839, 846 (Sth Cir. 1971).

[3] The correct approach to the judicial review of the

hospital’s denial of staff privileges is set out in Woodbury

B-6

v. McKinnon, supra, and Sosa v. Board of Managers of

Val Verde Memorial Hospital, 437 F.2d 173 (Sth Cir.

1971). Those cases make clear that the decision of a

hospital’s governing body concerning the granting of

hospital privileges is to be accorded great defer»nce.

This is so because of the court’s obvious lack of medical

expertise. Judicial intervention must be limited to an

assessment of those factors which are within the court's

expertise to review. For this reason, our cases have gone

no further than to require that the procedures employed

by the hospital are fair, that the standards set by the

hospital are reasonable, and that they have been applied

without arbitrariness and capriciousness. Woodbury v.

McKinnon, 447 F.2d at 845. As we stated in Woodbury,

“(t]he decision resulting from the hearing must be un-

tainted by irrelevant considerations and supported by

sufficient evidence to free it from arbitrariness, capricious-

ness or unreasonableness.” Jd. at 842.

[4] In this case, it is clear that the hearing conducted

on remand to the board comported with the procedural

requisites of due process. Dr. Laje received notice of the

charges, and he had an opportunity to present his own

evidence and to cross-examine the hospital’s witnesses.

Moreover, Dr. Laje has failed to convince us that the

hospital board was not an impartial decisionmaker. See

Megill v. Board of Regents of The State of F lorida, 541

F.2d 1073 (5th Cir. 1976); Woodbury v. McKinnon,

supra; Ferguson v. Thomas, 430 F.2d 852 (Sth Cir.

1970). The record does not demonstrate the actual bias

needed for disqualification of an administrative tribunal.

Megill, supra, at 1079.

[5, 6] As for the substantiality of the evidence upon

which the board’s adverse decision was based, we find

DPM | 4 am ie ani aap

Ie, ee hath, ee Ces nl a re

oe

B-7

that the record contains sufficient evidence to support

the denial of privileges. The evidence presented at the

hearing related to the level of Dr. Laje’s professional

competence and his ability to function smoothly in the

hospital setting. Thus, the board complied with this

Court’s guideline in Sosa that “in exercising its broad

discretion the board must refuse staff applicants only

for those matters which are reasonably related to the

operation of the hospital.” 437 F.2d at 176-77. To dis-

count the evidence against Dr. Laje because of statistical

flaws in the nonrandom selection of cases and the small

sample size is improper. The hospital, and not the courts,

must set the level of competence to be required of staff

members. As we recognized in Sosa, “[t]he governing

board of a hospital must therefore be given great latitude

in prescribing the necessary qualifications for potential

applicants.” Jd. at 176.

While not every witness agreed that Dr. Laje’s per-

formance was unacceptable, the board heard sufficient

evidence of the kind relevant to its decision to support

its denial of privileges. As we said in Sosa:

No court should substitute its evaluation of such

matters for that of the Hospital Board. It is the

Board, not the court, which is charged with the

responsibility of providing a competent staff of doc-

tors. The Board has chosen to rely on the advice

of its Medical Staff, and the court cannot surrogate

for the Staff in executing this responsibility. Human

lives are at stake, and the governing board must be

given discretion in its selection so that it can have

confidence in the competence and moral commitment

of its staff. The evaluation of professional proficiency

of doctors is best left to the specialized expertise of

their peers, subject only to limited judicial surveil-

lance. The court is charged with the narrow responsi-

B-8

bility of assuring that the qualifications imposed by

the Board are reasonably related to the operation

of the hospital and fairly administered. In short,

so long as staff selections are administered with

fairness, geared by a rationale compatible with hos-

pital responsibility, and unencumbered with irrele-

vant considerations, a court should not interfere.

437 F.2d at 177.

The judgment is REVERSED and the case is RE-

MANDED for further proceedings not inconsistent with

this opinion.

UNITED STATES COURT OF APPEALS

Fifth Circuit

Office of the Clerk

Tel. 504-589-6514

Edward W. Wadsworth 600 Camp Street

Clerk New Orleans, La. 70130

February 1, 1978

TO ALL PARTIES LISTED BELOW:

NO. 76-1496—LUIS J. LAJE v. R. E.

THOMASON GENERAL

HOSPITAL

Dear Counsel:

This is to advise that an order has this day been entered

denying the petition( ) for rehearing,** and no member

of the panel nor Judge in regular active service on the

Court having requested that the Court be polled on re-

ne BT Res, Bis ot tmnte so EO Ae BEA

ee ee ee pe

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hearing en banc (Rule 35, Federal Rules of Appellate

Procedure; Local Fifth Circuit Rule 12) the oaieadt )

for rehearing en banc has also been denied.

See Rule 41, Federal Rules of Appellate Procedure for

issuance and stay of the mandate.

Very truly yours,

Edward W. Wadsworth, Clerk

By: /s/ BRENDA M. HAUCK

Deputy Clerk

**on behalf of appellee, Luis J. Laj

Ht ppe s J. Laje,

cc: Mr. James K. Read

Messrs. L. W. Anderson

C. A. Searcy Miller

Mr. Broadus A. Spivey

ves ot a? me ———————

C-1

UNITED STATES COURT OF APPEALS

For The Fifth Circuit

NO. 76-1496

D. C. Docket No. EP-73-CA-264

LUIS J. LAJE, Plaintiff-Appellee,

versus

R. E. THOMASON GENERAL HOSPITAL,

Defendant-Appellant.

Appeal from the United States District Court

for the Western District of Texas

Before TUTTLE, COLEMAN and RONEY, Circuit

Judges.

JUDGMENT

This cause came on to be heard on the transcript of

the record from the United States District Court for the

Western District of Texas, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment of

the said District Court in this cause be, and the same is

hereby remanded to the said District Court for further

proceedings not inconsistent with the opinion of this

Court;

It is further ordered that plaintiff-appellee pay to de-

fendant-appellant, the costs on appeal to be taxed by the

Clerk of this Court.

December 19, 1977

ISSUED AS MANDATE: February 9, 1978