Petition — Renforth v. Fayette Memorial Hospital Ass'n

Supreme Court brief1979

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IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1979

Wo GO =344

WILLIAM RENFORTH, MLD. .................... Petitioner

-vV-

FAYETTE MEMORIAL HOSPITAL ASSOCIATION,

INOC., BOARD OF TRUSTEES FAYETTE MEMORIAL

HOSPITAL ASSOCIATION, INC., EXECUTIVE

COMMITTEE OF THE BOARD OF TRUSTEES OF

FAYETTE MEMORIAL HOSPITAL ASSOCIATION,

INO., EXECUTIVE COMMITTEE OF THE MEDICAL

STAFF OF FAYETTE MEMORIAL HOSPITAL, EARL

BRANSON, JOHN D. DARCY, K. DALE FORD,

RUSSELL ARCHIBOLD, CHARLES R. BOTTORFF,

MARTHA F. KENNEDY, LA VERNE L. MARSH,

F. B. MOUNTAIN, J. M. LOCKHART, ALBERT

ROBINSON, WILLIS ROSE, HENRY RUHL, KATHLENE

SHAVER, DALE SLONEKER, EDWARD THIELKING,

WILLIAM THOMAS, BR. HIRSCH, R. TAUBE,

Z. MUFTI, B. W. SANDERS .................... Respondents

PETITION FOR A WRIT OF CERTIORARI

TO THE COURT OF APPEALS OF INDIANA

DAVID W. DENNIS, ESQ.

Dennis, Reinke & Vertesch

707 South A Street

Richmond, Indiana 47374

and

KENT MASTERSON BROWN, ESQ.

201 W. Vine Street

Kentucky 40507

Attorneys for Petitioner

ROBERTS PRINTING CO., FRANKFORT, KY.

Page

I 2

i 2

pe Fy ys | 2-3

CONSTITUTIONAL PROVISIONS INVOLVED .... 3-4

py ee ss yh ie | Ot | 4-18

How Federal Questions Are Presented ............. 4-10

SE eee 10-18

REASONS FOR GRANTING THE WRIT ..........

I. GOVERNMENT, STATE AND FEDERAL, IS A

JOINT PARTICIPANT WITH THE RESPON-

DENT HOSPITAL SO AS TO INVOKE THE

PROSCRIPTIONS OF THE FIFTH AND FOUR-

TEENTH AMENDMENTS TO THE CONSTI-

TUTION OF THE UNITED STATES .......... 19-26

II. THE PETITIONER WAS DENIED PROPERTY

WITHOUT DUE PROCESS OF LAW IN VIO-

LATION OF THE FIFTH AND FOURTEENTH

AMENDMENTS TO THE CONSTITUTION OF

eo eee 26-28

2 Fl i. SE re 29

Meas a soa aesycecscccscccccs 1A-7A

en Dake dake 5 Ss sesecscecees 8A-25A

ree ee hah seb ees eerecccccess 26A

ree Eas su cecsecssesccccecs -. 227A

AUTHORITIES CITED

CASES: Page

Federal:

Aasum v. Good Samaritan Hospital,

395 F. Supp. 363 (D. Ore., 1975), aff’d.,

Bas F. Be FOR COG Cie., FGFS) oc cc sccssccvecsvces 24

Acherman v. Presbyterian Hospital,

BOF ©. Dd 1263 (0th Cit., IGBTS) . on. ec cccncenses 24

Barrett v. Unitel Hospital,

376 F. Supp. 791 (SDN.Y., 1974),

aff'd mem., 506 F. 2d 1395 (2d Cir., 1974) ........ 24

Briscoe v. Bock,

BAD FF. 3d SOS (Oth Cie, TOTS) «nnn ccccvesccvces 24

Burton v. Wilmington Parking Authority,

wee US PULTIMIRY os coo likes cnc cus 21, 22, 25, 28

Chiaffitelli v. Dettmer Hospdal, Inc.,

497 8. Sd 420 (Oth Cir., 1971) ow cc cccavevcnsess 24

Evans v. Newton,

BBS TIS, FOG CIGD) 6 cnc ccs ticvnssees teen ees 23

Christhilf v. Annapolis Emergency Hospital

Association,

406 F. 2d 174 (4th Cir., 1974) ....... ccc ccecees 24

Citta v. Delaware Balley Hospital,

318 F. Supp. 301 (ED Pa., 1974) .......... eee eee 24

Cooper v. Aaron,

. ee ee errr rrr rr Terr rr ree Tre 26

Cypress v. Newport News Gen. and

Non-Sectarian Hospital Association,

251 F. Supp. 667 (ED Va., 1966) .........-seeee- 24

Doe v. Bellin Memorial Hospital,

479 F. 2d 756 (7th Cir., 1973) ....... ec eeeeeeees 24

Don v. Okmulga Memorial Hospital,

443 F. 2d 234 (10th Cir., 1972) ........ecc eee eees 24

ili

AUTHORITIES (Continued)

CASSIS: Page

Federal:

Greco v. Orange Memoria! Hospite! Corporation,

513 F. 2d 873 (5th Cir., 1975), cert. denied,

Sa SN. TD, Bo 5 ou kes creek eke veh eds 24

Harron v. United Hospital Center, Inc.,

384 F. Supp., 194 (ND W Va., 1974),

ceri. denied, 424 U.S. 916 (1976)

Hoberman v. Lock Haven Hospital,

377 F. Supp. 1178 (MD Pa., 1974)

Holton v. Crazer-Chester Medical Center,

419 F. Supp. 334 (ED Pa., 1976),

vacated on other grounds, 560 F. 2d

re Se as PE Pes vo oe oc ov wc nnh 24

Jackson v. Metropolitan Edison Co.,

419 US. 345 (1974) ..........8, 18, 21, 22, 23, 24, 25, 28

Jackson v. Norton-Children’s Hospitals, Ine.

487 F. 2d 502 (6th Cir., 1973), cert. denied,

416 U.S. 1000 (1974)

Johnson v. Mississippi,

ee i, ee ek os Se ees «Bae ee eee 27

Meredith v. Allen County War Memorial

Hospital Commission,

397 F. 2d 33 (6th Cir., 1968)

Moose Lodge No. 107 v. Irvis,

Oe SA Pe CE hk kk becca cbdaasessstite. 21, 25

O’Neill v. Grayson County War Memorial Hospital,

472 F. 2d 1140 (6th Cir., 1973) ............00000. 24

Pollock v. Methodist Hospital,

392 F. Supp. 393 (ED La., 1975) ................ 24

AUTHORITIES (Continued)

CASES: Page

Federal:

Sams v. Ohio Valley General Hospital Association,

413 FB. 9d GG (atin Car, FORD ccc sv scnasse ces 24

Simkins v. Moses H. Cone Memorial Hospital,

323 F. 2d 959 (4th Cir., 1963),

cert. denied, 376 U.S. 988 (1964) .........c cee ee 24

Slavcoff v. Harrisburg Polyclinic Hospital,

375, F. Supp. 999 (MD Pa., 1974), aff'd mem.,

5il F. Dd TSB) (ard Cae... HOG 0 0s ese ees ses z 24

Suffield v. Charleston Area Medical Centea,

508 F. 9d 522 (4th Cie., POPE) coon ceca nweus seven 24

Ward v. St. Anthony Hospital,

476 F. 2a 671 (10th Cir., IOUS) .. 6 2... cece ccanss 24

State:

Silver v. Castle Mem. Hospital,

53 Hawaii 475, 497 P. 2d 564, cert. denied,

400 US. 1068 (CRRRS) oiicicci caw keeanunsyeeneeaes 27

Constitution

Fifth Amondmemt ..... .sisancsnceueceseeuesnses 4,19

Fourteenth Amendment «... i. <cccscs5scenaveses 4,19

STATUTES

Federal:

98 UBC. Bastien SORT GD oa innc conch veneer esess 2

Hill-Burton Act, 42 U.S.C. Sections

Ee fee ey er eee 13, 20

48 U B.C. Bestion BE Oe) cosh won cee hasaeneceee. 15

49 UB.C. Gustion GR © .<.iv0csseneeteee 21

National Health Planning and Resources Development

Act of 1974, 42 U.S.C. Sections 300k et seg. .. 15, 20, 21

AUTHORITIES (Continued)

42 U.S.SC. Section 300k (a) (1) ................ 15

42 U.S.C. Section 300k (a) (3) (A), (B) and (C) 15

42 U.S.C. Section 300k (b) ......... ccc ccc ec ces 15

Se ey MN ee cic as cea vavensaevas ks 15

42 U.S.C. Section 3001-2 (a) .......... cc cc cece 16

42 U.S.C. Section 3001-2 (b) (2) and (3) ........ 16

Te WTA. BOOTIE TOME once cece es ccecces 16

42 U.S.C. Section 300m-2 (a) .................. 16

42 U.S.C. Section 3000-2 (a) (4) (C) ............ 16

STATUTES: Page

Federal:

Social Security Acts, 42 U.S.C. Sections 1320c

UNA Sd dine 2 9 Sede Me dh wok CW oe Uke ri Ree ee 17, 20, 21

1972 Amendment to Social Security Act, 42 U.S.C.

BE, a eee 23

Medicare Act, 42 U.S.C. Sections 1395 et seq...... 16, 20, 21

OP UB. Sestion 190Gq (ie) oo. ccc cmc kwccncs 18

Medicaid Act, 42 U.S.C. Sections 1396 et seq. .... 16, 20, 21

Community Mental Health Centers Act, 42 U.S.C.

I Eg 2b. veo vos eevee ecesa 15

Comprehensive Alcohol Abuse and Alcoholism

Prevention, Treatment and Rehabilitation Act of

1970, 42 U.S.C. Sections 4551 et seg. ............. 15

State:

aoa a De de Noe eK ea Sse e nce eek 14

CGS 6 ra ie ag We ce pr ed 14

Ga i tcerlen.chksnenk dew huee hoes rere 14

AUTHORITIES (Continued)

Re Aree rere ere eee ee 14

Indiana Not-for-Profit Corporation Act, I. C.

2 ee 2 Serr eT ee eee ere ee eee 14

REGULATIONS: Page

42 C.F.R. Sections 405.1011 ef séqg.........cececseues 16, 20

ee fe re ee eee 16

42 C.F.R. Section 405.1021 (g) .........ccecceceees 16

42 C.F.R. Section 405.1021 (j) (2) ......cccceeeeees 17

Se fe SS ee er eee 17

re es Se Ie ork ca 5 5K ORE US cee eeteteee 17

re ee IS os cos ete e ren eesbewewes 17

Ea ge Re |e OR ee ere eee eae 17

ee Or I IE sc ccc cose pc uva veveareutuss 17

yen 3B AES. re eee ree 17

bee fe 8 en ere re ea 17

a, IN I none cack ccd eect bnesccens 17

I: 6a ck is chee vaca teswadenees 17

Phe Oe | 17

ee A og nv vec asus eesbeeceenas 17, 18

SECONDARY SOURCES

Aniteau, C. J., 1 Modern Constitutional Law Section

ia tc rk weak oh aha ewe wk Oe swe 22

Aniteau, 1 Modern Constitutional Law

i rice hueeeebee eens 60008 23

Decker and Bonner, PSRO: Organization for

Regional Per Reiew (Cambridge, 1973) .......... 17

Elkind, “State Action: Theories for Applying

vii

AUTHORITIES (Continued)

Constitutional Restrictions to Private Activity”,

Kimerson, T. Political and Civil Rights 2191, n.3

OE Te ss ho ooo ne eves Che neces 23

SECONDARY SOURCES Page

Hammer, “Hospital Medical Staff Privileges: Recent

Developments in Procedural Due Process

Requirements,” 12 Williamette L. J. 137 (1975).... 27

Henkind, “Shelly v. Kraemer: Notes For a Revised

Opinion”, 110 U. Pa. L. Rev. 473 (1962).......... 26

Muranaka, “Compulsory Medical Malpractice

Insurance Statutes: An Approach in Determining

Constitutionality”, 12 U. of San Francisco L. Rev.

599 (Summer, 1978)

Note, “Due Process in the Allocation of Scarce Life-

saving Medical Resources”, 84 Yale L. J. 1734

f | MPPSST re T m oT ery naa RLER rh Mop. 23, 25

Note “Fourteenth Amendment Due Process in

Termination of Utility Services for Non-Payment”,

OG Mere. &. Bow. 3077 COTS) oss ivccc suk dxcnaas 23

Williams, “The Twilight of State Action,

41 Tonnes &, Mev. SEF CIBER) . soc sce ncecacscsas 26

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1979

ES Se ee

Rate ie SOP SE eee Ee

WILLIAM RENFORTH, MLD. ..................... Petitioner

-y-

FAYETTE MEMORIAL HOSPITAL ASSOCIATION,

INC., BOARD OF TRUSTEES FAYETTE MEMORIAL

HOSPITAL ASSOCIATION, INC., EXECUTIVE

COMMITTEE OF THE BOARD OF TRUSTEES OF

FAYETTE MEMORIAL HOSPITAL ASSOCIATION,

INC., EXECUTIVE COMMITTEE OF THE MEDICAL

STAFF OF FAYETTE MEMORIAL HOSPITAL, EARL

BRANSON, JOHN J. DARCY, K. DALE FORD,

RUSSELL ARCHIBOLD, CHARLES R. BOTTORFF,

MARTHA F. KENNEDY, LA VERNE L. MARSH,

F. B. MOUNTAIN, J. M. LOCKHART, ALBERT

ROBINSON, WILLIS ROSE, HENRY RUHL, KATHLENE

SHAVER, DALE SLONEKER, EDWARD THIELKING,

WILLIAM THOMAS, R. HIRSCH, R. TAUBE,

SB. REGS, B. WH. GRD ccc cdc cccceccnscces Respondents

PETITION FOR A WRIT OF CERTIORARI

TO THE COURT OF APPEALS OF INDIANA

The Petitioner, William Renforth, M.D., respectfully

prays that a Writ of Certiorari issue to review the judgment

and opinion of the Court of Appeals of Indiana, First District,

entered in this matter on December 12, 1978. The Order De-

nying Petition to Transfer said case (discretionary review) by

the Supreme Court of Indiana was entered on June 6, 1979.

This Petition, therefore, is filed within ninety (90) days of

the denial of the discretionary review.

OPINIONS BELOW

The Judgment of the Union Circuit Court of February 2,

1977, the December 12, 1978, Opinion of the Court of Appeals

of Indiana, First District, (of which review is sought), the

Order Denying Rehearing of January 16, 1979, and the June

6, 1979, Order Denying Petition to Transfer of the Supreme

Court of Indiana, are reprinted in the separate Appendix of

this Petition, pages 1-A through 27-A. The Opinion of the

Court of Appeals of Indiana, dated December 12, 1978, is re-

ported at 383 N.E. 2d 368. The Orler Denying Petition to

Transfer of the Supreme Court of Indiana, dated June 6, 1979,

was reported in the Cumulative Rehearing and Transfer

Table, — N.E. 2d — (July 11, 1979).

JURISDICTION

The Order Denying Petition to Transfer the within-

styled action was entered in the Supreme Court of Indiana

on June 6, 1979. The jurisdiction of this honorable Court is

inoked pursuant to 28 U.S.C. Section 1257 (3).

QUESTIONS PRESENTED

The following questions are presented for review:

1. Is the provision of health care services to the public gen-

erally, to the community, and to the citizens thereof, a public

function?

2. If so, does the performance of that public function through

and by the operation of a hospital corporation constitute that

corporation an agency of the State for the performance of that

public funetion?

3. If such a hospital corporation, in the course of performing

the functions aforesaid, has public officials on its Board of

Directors, is the sole hospital facility in its community, is the

recipient of public funds, both federal and local, accepts Medi-

care and Medicaid reimbursements and complies with all Fed-

eral laws and regulations provided under the “Conditions of

Participation” of Medicare and Medicaid, the National Health

Planning and Resources Development Act of 1974, and the

Professional Standards Review Organization Amendments to

the Social Security Acts, then is action by that hospital cor-

poration action by the State, within the meaning of the Fifth

and Fourteenth Amendments?

4. If so — on the record here presented — was due process

of law extended to this Petitioner, a duly licensed medical

practitioner, in denying him membership on the Hospital

Staff.

5. Whether the decision of this Honorable Court in Jackson

v. Metropolitan Edison Co., 419 U.S. 345 (1974) can reason-

ably be applied to the hospital setting given the pervasive in-

fluence of the government of the United States in the field

of health care, and the fact that the government of the United

States has, by legislation and regulation, “insinuated itself

into a position of interdependence” with institutional health

care providers.

CONSTITUTIONAL PROVISIONS INVOLVED

The Petitioner asserts that, by his exclusion from the

Medical Staff of the Respondent, he has been deprived of

liberty and property without due process of law, contrary to

the following provisions of the Constitution of the United

States.

Fifth Amendment to the Constitution of the

United Statess

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or

indictinent of a Grand Jury, except in cases arising

in the land or naval forees. or in the Militia, when in

actual service in time of War or public danger; nor

shall any person be subject for the same offence to be

twice put in jeopardy of life or limb; nor shall be com-

pelled in any criminal case to be a witness against him-

self, nor be deprived of life, liberty or property, with-

out due process of law; nor shall private property be

taken for public use without just compensation.

Section 1, Fourteenth Amendment to the Constitution

of the United States:

All persons born or natural‘.ed in the United States,

and subject to the jurisdiction thereof, are citizens of

the United States and of the State wherein they re-

side. No State shall make or enforce any law which

shall abridge the privileges or immunities of citizens

of the United States: nor shall any State deprive any

person of life. liberty, or property, without due pro-

cess of law; nor deny to any person within its jurisdic-

tion the equal protection of the laws.

STATEMENT OF THE CASE

HOW FEDERAL QUESTIONS ARE PRESENTED

The Federal questions involved were presented, first of

all, in the Petitioner’s complaint for injunction and for dam-

ages which instituted the action in the trial court. Paragraph

1 of the Complaint contained the following allegations:

7. That the denial of active staff privileges by the said

defendants is an arbitrary denial of the right of the plain-

tiff to practice his profession and to earn a livng, and

deprives him of his liberty and property without due pro-

cess of law; that the plaintiff is a properly qualified

physician, of good moral character, anl that there is no

legal reason why staff privileges heretofore granted

should be denied in an arbitrary cursory fashion without

hearing.

(Tr. 66)

Paragraph II contained the following allegations:

2. That depriving the plaintiff of membership on the

Medical Staff of Fayette Memorial Hospital by the de-

fendants herein is arbitrary and capricious in that a re-

quirement that plaintiff provide proof of coverage of

medical malpractice insurance in the amount of ONE

HUNDRED THOUSAND DOLLARS ($100,000.00) is

unreasonable and bears no relationship to medical skill

or moral qualifications of the plaintiff to be a member

~ ee Staff of FAYETTE MEMORIAL HOS-

(Tr. 67)

Paragraph III, after setting forth provisions of the Med-

ical Staff By-Laws respecting the adoption of Amendments

thereto (in this case an Amendment making the carrying of

malpractice insurance a requirement of membership), alleged:

6. That the said Medical Staff did not comply with

Article XVI of the By-Laws of the Medical Staff in that

the proposed amendment was never referred to a special

committee which reported the same at the next regular

meeting of the Medical Staff, that said Resolution was

not passed by two-thirds (2/3) of the Members of the

Medical Staff present at the meeting.

(Tr. 69)

Paragraph IV set forth the By-Law provisions regarding

notice and hearing if appointment to the Medical Staff of the

Respondent was to be refused, and then alleged:

4. That the plaintiff herein was entitled to all of the

hearing and appeal procedures provided in ARTICLE

VIII of the Medical Staff By-Laws of FAYETTE ME-

MORJAL HOSPITAL, which includes hearing before

an ad hoc committee of the FAYETTE MEMORIAL

HOSPITAL MEDICAL STAFF appointed by the Medi-

cal Staff, a hearing before FAYETTE MEMORIAL

HOSPITAL STAFF EXECUTIVE COMMITTEE, No-

tice of said hearing, with report and recommendation and

‘searing before the entire Medical Staff of FAYETTE

MEMORIAL HOSPITAL, as provided in Article V of

the By-Laws of FAYETTE MEMORIAL HOSPITAL

MEDICAL STAFF.

(Tr. 70)

5. That no proper Notice was given to plaintiff that he

was not being considered for reappointment to the Med-

ical Staff of FAYETTE MEMORIAL HOSPITAL.

(Tr. 70-71)

Paragraph V, after incorporating previous allegations,

alleged:

4. That the defendants herein have maliciously and

wrongfully, and intentionally, prevented the plaintiff

herein from practicing his profession by, without cause,

and wrongfully, depriving him of membership in the Med-

ical Staff of the Fayette Memorial Hospital, and that

the plaintiff is entitled to punitive damages in the total

amount herein set out from the defendants herein, in-

dividually and collectively.

(Tr. 72)

The allegations of Paragraph I, 7, of the Complaint which

are quoted above, were denied, and thus put at issue by the

Respondents’ Answer to the Complaint. (Transcript Page

147)

Also denied by the Answer were the allegations of Para-

graph II, 2; the allegations of Paragraph III, 6; the allega-

tions of Paragraph IV, 4 and 5; and the allegations of Para-

graph V, 4 — all of which are set forth hereinabove.

(Transcript Pages 148-149)

By Agreement and Pre-Trial Order (Transcript Page

157), trial briefs were submittel to the trial court.

In the trial briefs filed by the Petitioner his position is

stated thus:

This question is basically a constitutional question un-

der the Fifth and Fourteenth Amendments of the U.S.

Constitution.

(Tr. 180)

and again, in conclusion:

Fayette Memorial Hospital is subject to Fifth Amend-

ment and Fourteenth Amendment control because of its

connection with the public interest.

(Tr. 184)

In the trial brief filed by the Respondents their position —

is stated:

It is the Defendants’ position that Fayette Memorial

Hospital is a private hospital; and that its action in

terminating Plaintiff’s staff privileges was neither ar-

bitrary nor capricious. Thus, if the court finds in favor

of Fayette Memorial Hospital on the issue of private

versus public status this case should end at that point

with a finding in favor of Defendants. A finding to the

contrary — that the hospital is public or governmental—

would not necessarily mandate a decision for Plaintiff,

but it would permit the court to apply different stand-

ards in reviewing the hospital’s action.

(Tr. 162-163)

Respondents, in this brief, further referred to “the main

issue of whether Fayette Memorial Hospital is a private or

public hospital”. Respondents further said:

As Defendants understand it, Plaintiff admits it is or-

ganized and operated as a private hospital, but he con-

tends that the hospital should be considered to be public

or governmental for purposes of this action. . . .

(Tr. 164)

And they concluded:

As a private hospital the Fayette Memorial Hospital had

the power to adcpt the requirement that its staff phy-

sicians carry at least $100,000.00 of medical malpractice

insurance. This court can not and should not disturb

this decision since it is clearly not arbitrary or capric-

ious.

(Tr. 172-173)

The trial court on February 2, 1977, rendered a written

judgment or opinion against this Petitioner. In this judg-

ment the Court found that the Defendant (here Respondent)

Fayette Memorial Hospital “is a private, not for profit, In-

diana Corporation”, that its acceptance of public funds “is

not sufficient to invoke State action and did not thereby

convert defendant hospital into a public or governmental hos-

pital” and that “The Court further finds that Petitioner’s due

process rights were not violated by any of the defendants”.

(Tr. 563-654) (Appendix A)

Petitioner, in his Motion to Correct Errors, filed with the

trial court on March 31, 1977, and overruled May 19, 1977,

from which ruling appeal was taken to the Indiana Court of

Appeals, addressed himself to the trial court’s decision, as

follows:

This finding of the Court respecting the public or pri-

vate character of the Defendant hospital a finding which

so many well-considered cases reject on similar facts — is

fundamental to the decision arrived at in this case.

It bears directly on the question of procedural due pro-

cess, which we are about to discuss, and on the Court’s

finding that “Plaintiff's due process rights were not vio-

lated’, because if the Defendant hospital is to be treated

as public for present purposes, as we submit it should be,

then due process requirements of the Fourteenth Amend-

ment apply directly to this problem; a problem which

basically involves the right of a qualified physician to

practice his profession.

This same Motion asserts that the Hospital's regulations

must not be arbritrary or capricious, and that procedural due

process must be extended in dismissing a member of the Medi-

eal Staff. Petitioner’s Brief in the Indiana Court of Apneals

stated the issues as follows:

1. Is the Fayette Memorial Hospital a “public” insti-

tution, in the sense that its actions constitute “state

action” and are hence governed by and subiect to the

“due process” clauses of the 5th and 14th Amendments

to the Constitution of the United States?

2. If the Fayette Memorial Hospital is a “public” insti-

tution in the sense stated above. then:

a. The malpractice requirement adopted by the hos-

pital is beyond the “police power” of the State.

b. The malpractice requirement adopted by the hos-

pital is INHERENTLY arbitrary and capricious.

The Brief filed in the Indiana Court of Appeals by the

Respondents argued this issue, relying heavily upon the ma-

jority opinion of this Court in Jackson v. Metropolitan Edison

Co., 419 U.S. 345. (1974).

Petitioner’s Reply Brief, pages 8-20 thereof, sets forth

a detailed argument as to why the Jackson rule does not ap-

ply or govern here.

The decision and opinion of The Indiana Court of Ap-

es Os

a a

peals, 383 N.E. 2d 368, 372-375 (See Appendix to this Petition)

discusses and decides the issue of “state action” contrary to

the position of this Petitioner. The Court's opinion considers

the matter of alleged arbritrary procedure at pages 375-377

of 383 N.E. 2d.

It is thus apparent, Petitioner submits, that the Federal

questions presented, and listed hereinabove, were raised in

this c~ use at its inception, and have continued to be raised and

urged throughout the course of these proceedings.

THE FACTUAL BACKGROUND

The Petitioner, William Renforth, M.D., is a duly licensed

physician in the State of Indiana, having been engaged, since

1969, in the practice of medicine at Connersville, Fayette

County, Indiana. (Tr. 192-194)

The Fayette Memorial Hospital Association, Inc., a Re-

spondent herein, is a corporation organized and existing un-

der and by virtue of the laws of the State of Indiana, and en-

gaged in operating a hospital at Connersville, Fayette County,

Indiana, known as the Fayette Memorial Hospital. (Tr. 647-

648). All other Respondents are members of the Board of

Trustees, the Executive Committee of the Board of Trustees

and the Executive Committee of the Medical Staff of the Fay-

ette Memorial Hospital Association, Inc.

The within controversy arose when the Petitioner, Wil-

liam Renforth, M.D., suffered the termination of his privi-

leges as a member of the Medical Staff of the Respondent hos-

pital on April 1, 1976. It has been understood and agreed, by

all concerned, that the Petitioner is a highly competent med-

ical doctor.

The Respondents stipulated that they “do not contend

and have never contended” that Dr. Renforth lacked the re-

quisite medical competence. (Tr. 37). The termination of

Petitioner’s privileges to practice medicine in the Favette Me-

morial Hospital was based so!cly upon the Petitioner’s refusal

to comply with an alleged amendment to the By-Laws of the

Respondent hospital's medical staff, purportedly enacted on

April 22, 1975, requiring the purchase by each staff member

of one hundred thousand dollars ($100,000.00) of medical mal-

practice insurance.’ (Tr. 479) The dismissal of the Peti-

tioner by the application of the aforementioned By-Law

“amendment” was complicated by the fact that said “amend-

ment” was never properly or lawfully enacted. According to

Article XVI of the By-Laws of the Medical Staff of the Fay-

ette Memorial Hospital, amendments must be referred to a

special committee which shall report on same at the next reg-

ular staff meeting called for such purpose. To be adopted, an

amendment must receive a two-thirds vote of the active Med-

ical Staff present?

1The minutes of the Medical Staff meeting of April 22, 1975 read

as follows:

A motion was made by Dr. Mazdai and seconded by Dr. Rosen

that an addition be made to the Medical Staff By-Laws that every

staff member must show evidence of a minimum of $100,000.00

medical malpractice insurance when seeking appointment or con-

tinued reappointment to the medical staff of the Fayette Memorial

Hospital. (Tr. 479)

*Article XVI of the By-Laws of the Medical Staff of the Fayett

Memorial Hospital reads as follows:

These By-Laws may be amended after submission of the proposed

amendment at any regular or special meeting of the Medical Staff.

A proposed amendment shall be referred to a special committee

which shall report on it at the next regular meeting of the Medical

Staff or at a special meeting called for such purpose. To be

adopted, an amendment shall require a two-thirds vote of the

active Medical Staff present. Amendments so made shall be ef-

fective when approved by the Board of Trustees. (Tr. 564)

On April 22, 1975, the date on which the above-purported

amendment requiring the purchase of medical malpractice in-

surance was allegedly adopted, sixteen (16) voting members

were present at the meeting. According to the minutes of the

Medical Staff, eight (8) members voted in favor of the amend-

ment, four (4) opposed it. (Tr. 5-6, 437, and 479). Simply,

eight (8) is not two-thirds of sixteen (16).

On April 1, 1976, the Petitioner was notified by the Exec-

utive Committee of the Board of Trustees that he was dis-

missed. The record reveals that none of the procedural pro-

tections were afforded the Petitioner. No written notice of

termination of privileges was ever sent to the Petitioner until

the day on which he was to leave the hospital, even though

the resolution of the Board to dismiss him was adopted on

March 18, 1976. The Petitioner was never granted a hearing

or any formal appeals since all of the medical staff committees

were bypassed. The Board of Trustees, itself, issued the no-

tice of termination. Simply, the Petitioner could never have

had a hearing. No one was left to hear his cause, and, there

could be no appeals, as the Board was, under the By-Laws, the

final arbiter of the question. All of the foregoing is particu-

larly troublesome sincé the By-Laws of the Respondent hos-

pital provide for the safeguarding of one’s due process rights

by the establishment of elaborate and technical notice, hear-

ing and appeals procedures. (Tr. 540-544, 550-553 )

The Petitioner was never given an opportunity to defend

himself. No medical staff committee ever heard his plea, as

they were required to do under the By-Laws. Even the most

minimum procedural due process standards were avoided.

The Respondent hospital simply decided to rid itself of

the Petitioner and be done with it! Since April, 1976, the

Petitioner has suffered the destruction of his business, the rui-

nation of his reputation, and the serious financial loss ac-

companying same. There exists no other hospital in which the

Petitioner may apply for privileges, as the Respondent insti-

tution serves Petitioner’s home town and the surrounding

counties of Union and Franklin.

What raises the foregoing facts to federal constitutional

dimensions is the vast “interdependence” of the governments

of the United States and State of Indiana in the administra-

tion of the Respondent hospital. It was stipulated that the

Respondent, Fayette Memorial Hospital, received six hundred

five thousand dollars ($605,000.00) from the United States

Department of Health, Education and Welfare under the Hill-

Purton program (42 U.S.C. Section 291 ef seq.) in 1965. A

1967 audit revealed that the Respondent hospital received

twenty-four thousand dollars ($24,000.00) in tax funds from

the city of Connersville, Indiana, and Fayette County, In-

diana, issued five hundred thirty-eight thousand dollars

($538,000 00) in honds, all for construction for the Fayette Me-

morial Hospital. Since 1962, a tax levy has been in effect in

Fayette County, Indiana. for the purpose of financing the

hospital aid bonds issued by the County. (Tr. 24, 28, 30,

43-45, 46, 48) The bond issue was originally in the principal

amount of five hundred fifty thousand dollars ($550,000.00),

and was known as the Fayette Memorial Hospital Aid Bond

Redemption Fund. /d.

During the years 1959, 1960, 1961 and 1962, the County

Commissioners of Fayette County, Indiana, made monthly

payments or donations of tax monies to the Respondent hos-

pital, ranging from one thousand forty-one dollars and sixty-

six cents ($1,041.66) to two thousand six hundred sixty-six

dollars and seventy-four cents ($2,666.74) per month. (Tr.

51-59, 60-61)

It was stipulated by the parties hereto that three mem-

bers of the Respondent hospital’s Board of Trustees are

elected by City and County officials of Connersville and Fay-

ette County, Indiana. (Tr. 648-49) These three members

are elected by the County Council and the County Commis-

sioners of Fayette County, and the Common Council of the

City of Connersville. (Tr. 585)

While the Fayette Memorial Hospital is organized under

the Indiana Not-for-Profit Corporation Act, I. C. 23-7-1.1-1

et seq., the hospital is eligible for public assistance under I. C.

19-9-5-1 and I. C. 16-12-18-1, and has received same. The

corporate structure of the Respondent is replete with evi-

dence of “intent” to operate as a “public” institution. Para-

graph (6) (f) of the Article of Reorganization mandates par-

ticipation by publie officials or publicly elected persons on the

Board of Trustees. Such persons must be on the board if the

institution is to be capable of receiving county and city funds.

1. C. 16-21-18-1. The Articles of Reorganization require, as

mandated by statute, all trustees to be “non-sectarian” and

“non-political”. I. C. 19-9-5-3. Compliance is required for

any funding.

The State of Indiana, once county and city funds are

used, imposes its own terms for the utilization of the hos-

pital. Under I. C. 19-9-5-4, the Faycite Memorial ilos-

pital is required to be “open to all persons on reasonable terms,

and [is required to] be open to all poor and indigent persons

on reasonable rate to be paid by the proper officers having

charge of the care of such poor and indigent persons.”

Significantly, the citizens of Fayette County and the City

of Connersville, Indiana, regard the Respondent hospital as a

publie institution and an arm of local government. (Tr. 48,

48, 669-70, 673-675)

Beyond local governmental involvement, the government

of the United States has dramatically assumed authority over

the administration and decision-making of health care insti-

ie)

tutions. The Fayette Memoriol Hospital is no exception. In-

deed, the Respondent hospital has received six hundred five

thousand dollars ($605,000.00) under the Hill-Burton pro-

gram. Pursuant to Hill-Burton, 42 U.S.C. Sections 291le(e),

the Respondent hospital was required to be “available to all

persons residing in [its] territorial area .. .”, and be made

“available... to persons unable to pay [for health care ser-

vices |”.

In 1974, Congress extended the Hill-Burton program in

an effort to reach deep into the administration of health care

facilities. As aresult of Congress’ efforts, the National Health

Planning and Resources Development Act of 1974, 42 U.S.C.

Sections 300k e¢ seq., was enacted. Under the Act, “equal

access to quality health care at reasonable cost” was declared

a “priority of the federal government.” 42 U.S.C. Section

300k(a)(1). In addition, Congress asserted that a ‘“compre-

hensive, rational approach” was required to correct the “lack

of uniformly effective methods of delivering health care, the

maldistribution of health care facilities and manpower, and

the inereasing cost of health care.” 42 U.S.C. Section 300k

a)(3)(A), (B) and (C). The Act established a systein for

the development of a “national health planning policy.” 42

U.S.C. Section 300k (b).

For the States to receive any funds under Hill-Burton

(42 U.S.C. Sections 291 et seg.), the Community Mental

Health Centers Act (42 U.S.C. Sections 2681 et seq.), or the

Comprehensive Aleohol Abuse and Alcoholism Prevention,

Treatinent and Rehabilitation Act of 1970 (42 U.S.C. Sections

4551 et seq.), participation in the National Health Planning

Act is required.

The National Health Planning Act established “Health

Systems Agencies” (42 U.S.C. Section 3001), which have the

“primary responsibility” of providing “effective health plan-

AS RSE = RS

x a <i

ning for its health area, and the promotion of the develop-

ment within the area of health services, manpower, and fa-

cilities which meet identified needs; reduce documented in-

efficiencies, and implements the health plans of the agency.”

42 U.S.C. Section 3001-2(a).

National guidelines are established, and each H.S.A. pre-

pares a ‘Health System Plan”, the same which is earried out

by means of an “Annual Implementation Plan”. 42 U.S.C.

Section 3001-2(b) (2) and (3). The Act, in addition, estab-

lished “State Health Planning and Development Agencies”

through 42 U.S.C. Section 300m. Such agencies are empower-

ed to administer the “certificate of need’? program under

which “health facilities may not be built, expanded or mod-

ernized without a certificate; approve all contracts and grants

for the planning for the development of health resources on

the basis of approved priorities; and review all institutional

health services in the state.” 42 U.S.C. Section 300m-2 (a)

Such agencies possess sufficient authority to determine

whether a “private” facility should be “modernized” or “con-

verted to new uses”. 42 U.S.C. Section 3000-2 (a) (4) (C).

According to the testimony in the instant case, the Respon-

dent hospital receives approximately sixty-thousand dollars

($60,000.00) per month in payments from Medicare (42

U.S.C. Sections 1395 et seq.) and Medicail (42 U.S.C. Sections

1396 et seq.). (Tr. 638.)

In order to receive payments from Medicare or Medicaid,

each hospital must be a “participating” provider, and thereby

must comply with the “conditions of participation” set forth

in 42 C.F.R. Sections 405.1011 et seq. Such “conditions of

participation”. govern the most minute and technical aspects

of hospital administration. They regulate the formulation of

By-Laws (42 C.F.R. Section 405.1021), the duties of the hos-

pital administrator (42 C.F.R. 405.1021(g)) capital expend-

iture plan (42 C.F.R. Section 405.1021 (j) (2)); the construc-

tion, maintenance and arrangeinent of the physical plant (42

C.F.R. Section 405.1022) ; the formulation, standards, respon-

sibilities, and governing of the Medical Staff (42 C.F.R. Sec-

tion 405.1023), the formulation and standards of the nursing

department (42 C.F.R. Section 405.1025), the maintenance

of the medical record department (42 C.F.R. Section

405.1026); the maintenance of the pharmacy department (42

C.F.R. Section 405.1027) the laboratories (42 C.F.R. Section

405.1028) the radiology department (42 C.F.R. Section

405.1029) complementary departments (42 C.F.R. Section

405.1031) outpatient department (42 C.F.R. Section 405.1032)

social work department (42 C.F.R. Section 405.1034) utiliza-

tion review plan (42 C.F.R. Section 405.1035) and many

others.

The Fayette Memorial Hospital is governed by the “con-

ditions of participation”, and, further, is governed by the pro-

fessional standards review organization amendments to said

Social Security Acts, 42 U.S.C. Sections 1320¢ et seg. P.S.R.O

is the federally-mandated review mechanism, charged with

the responsibility to (1) precertify hospital services; (2) re-

view, on a sample basis, by diagnosis or condition; (3) review

and develop patient and provider profiles; (4) monitoy Soe-

ial Security Administration certifieation requirements; (5)

educate physicians; and (6) report violations and any discp-

line. The P.S.R.O. in each hospital is, thus, a “cost control”

device as well as a form of “non-price rationing, limiting the

use of scarce medical resources...” Decker & Bonner, PSRO:

Organization for Regional Peer Review (Cambridge, 1973)

6-7.

As a substantial recipient of Medicare and Medicaid pay-

ments, the Respondent, Fayette Memorial Hospital, must

comply with the provisions of the PSRO amendments. The

By-Laws ,of the Respondent reveal that it has instituted

“utilization review”, the forerunner of Professional Standards

Review, established under the Medicare Act, 42 U.S.C. Sec-

tion 1395x(k) and the “conditions of participation”, 42 C.F.R.

Section 405.1035. (Tr. 561)

The Fayette Memorial Hospital, as all hospitals in the

nation. simply can not: be realistically termed “private”. Its

financial resources are almost totally dependent upon govern-

ment. Its internal organization and administration are dic-

tated by government. Its medical staff is organized by gov-

ernment. Health care services are monitored, reviewed, ra-

tioned and certified by government. The institution’s budget

and financial outlays are dictated by government. Any ex-

pansion of beds, equipment, or physical plant is regulated by

government.

REASONS FOR GRANTING THE WRIT

1. This Court has never determined whether the provision

of health care services to the public generally is a public

function, or whether the rule and rationale of Jackson v.

Metropolitan Edison Co., 419 U.S. 345 (1974) is properly

applicable to the performance of that function.

2. The issue presented is important to the medical profes-

sion, to the providers of public health care, and to the

general public; and it is one as to which State Appellate

Courts, and United States Courts of Appeal, are divided

in opinion.

3. This cause presents a vehicle whereby the doctrine of

“state action”, as applied to the provision of public health

care services, can be authoritatively delimited and de-

fined.

This is a case where a physician, duly licensed by the

State of Indiana, to practice his profession in that state, and

against whom no charges of professional incompetence have

ever been made, has been denied the right to practice his pro-

fession as a member of the Medical Staff of the Respondent

hospital, on the sole ground that he has refused to purchase

malpractice insurance, as required by an amendment to By-

Laws purportedly enacted by the Medical Staff, and there-

after adopted and approved by the Hospital’s Board of Trus-

tees.

Such a requirement is clearly a serious infringement upon

personal liberty and freedom of choice; and it is one which

could, in practice and in practical effect, take from the licens-

ing State, and deliver into the hands of private insurance com-

panies, the power to determine who shall engage in the pro-

fessional practice of medicine.

Before such a thing is done, the affected physician ought

to be accorded Constitutional due process of law.

It is the position of this Petitioner that, today, the pro-

vision of health care services to the general public is, indeed,

a public function; that a hospital corporation, organized, regu-

lated, and funded as is the Respondent Fayette Memorial Hos-

pital, becomes, in performing this public function, an agency

of the State; and, consequently, that, in the course of per-

forming that function, including the adoption and enforce-

ment of rules and regulations governing membership in its

professional staff, that corporation is bound by and must fol-

low procedures consistent with the requirements of due pro-

cess of law, as laid down and defined by the Fifth and Four-

teenth Amendments to the Constitution of the United States.

GOVERNMENT, STATE AND FEDERAL, IS A

JOINT PARTICIPANT WITH THE RESPONDENT

HOSPITAL SO AS TO INVOKE THE PROSCRIP-

5 a oy eee

TIONS OF THE FIFTH AND FOURTEENTH

AMENDMENTS TO THE CONSTITUTION OF

THE UNITED STATES.

The record in the instant case is replete with evidence of

government financial support and government regulation of

the Respondent hospital. The figures need not be restated

here, however, it is important that the purposes of the gov-

ernmental programs be emphasized. The Respondent hos-

pital has complied with the provisions of the Hill-Burton

Act, 42 U.S.C. Sections 291, et seg.; the Medicare Act, 42

U.S.C. Sections 1395 et seg.; the Medicaid Act, 42 U.S.C. Sec-

tion 1396 et seq.; the “conditions of participation” under

Medicare and Medicaid, 42 C.F.R. Sections 405.1011 et seq.;

the National Health Planning and Resources Development

Act, 42 U.S.C. Section 300k et seqg.; and the Social Security

Amendments of 1972 (establishing PSRO’s), 42 U.S.C. Sec-

tions 1320¢ et seq.

Each of the foregoing federal statutes affect the most

minute administrative decision-making processes in hospital

management. The financial resources of the hospital are,

largely, from government sources. In fact, seventy-four per

cent (74%) of the Respondent’s construction cost were paid

for by some form of government money, largely Hill-Burton

resources. The internal organization of the Respondent in-

stitution is totally dependent upon government regulation.

The Medical Staff, nursing department, pharmacy and labora-

tories are organized and regulated by government. All health

care services are monitored, reviewed, rationed, certified and

recertified by government. Hospital costs are, for the most

part, controlled by government agencies. The institution’s

financial outlays and budget are developed according to gov-

ernment guidelines. Any expansion of beds, equipment or

physical plant is regulated by government. In fact, govern-

ment can, if it so desires, convert the Respondent to other

uses.

Petitioner asserts that when one sifts through the facts

and weighs the circumstances to determine whether the state,

in the generic sense, has “so far insinuated itself into a posi-

tion of interdependence (with the Respondent hospital) that

it must be recognized as a joint participant in the challenged

activity .. .”, no question can remain here. c.f. Burton v.

Wilmington Parking Authority, 365 U.S. 715, 722, 725 (1961)

cited in Jackson v. Metropolitan Edison Co., 419 U.S. 345,

350 (1974); and Moose Lodge No. 107 v. Irvis, 407 U.S. 163,

172 (1972).

The Respondent hospital does, indeed, perform a “pub-

lic’ function. The purpose clauses of each of the statutory

provisions aforementioned evidence the intent of Congress

and the extent Congress has sought to dominate the field of

health care. The purpose clauses in all of the above acts evi-

dence the public-private relationship. In each of them,

that relationship is boldly “symbiotic”; the aim of Congress

being to provide money if the institution fulfills a broad-

reaching public role. The aim of Hill-Burton construction

money, professional standards review organizations, health

systems agencies, statewide health coordinating councils, state

health planning and development agencies (all federally

created and funded, and designed to review and plan within

the hospital environment) and Medicare and Medicaid money

(expended through the hospital) is to ensure that there are

8Hill-Burton Act, 42 U.S.C. Section 291 (a); Professional Stand-

ards Review Organization Amendiments to the Social Security Act,

42 U.S.C. Section 1320c-1; National Health Planning and Resources

Development Act of 1974, 42 U.S.C. Section 300k; Medicare, 42 U.S.C.

Section 1395; Medicaid, 42 U.S.C. Section 1396.

enough medical facilities and services for everyone.

The government’s scheme, simply, relies upon “private”

efforts to carry out the administrative tasks, without which

construction funds or reimbursements could not serve their

purpose. See: Burton v. Wilmington Parking Authority, 365

U.S. 715, 717, 723-724 (1961). More importantly, hospitals

and health care providers are viewed, through the statutory

law, as performing a special public function. C. J. Aniteau,

1 Modern Constitutional Law, Section 8:6, at 568.

In Jackson v. Metropolitan Edison Co., 419 U.S. 345

(1974), on which the Court of Appeals of Indiana herein re-

lied in refusing to find “state action,” this Honorable Court

declined to find that the function of supplying electricity

arose to the level of state action because the service was one

the government never obligated itself to supply. 419 U.S. 353.

“Differences in circumstances beget differences in the

’

law.” 419 U.S. 358. In health care, the circumstances are,

indeed, different, and that difference must be recognized here.

The providing of health care services to all American

people is precisely the purpose of those acts which regulate

health care. The very purpose clauses thereof announce this.

The government, federal and state, supply public medical fa-

cilities independent of or complimentary to existing “private”

facilities. Unlike the case of public utilites, there exists no

independent regulatory agency between the government and

the hospital, physician or recipient of services which oversees

the implementation of government health policies. Regula-

tory authority has, in most instances, been “delegated” to hos-

pitals which, thereby, are considered agents of the govern-

ment. See generally, Note, “Fourteenth Amendment Due

Process in Termination of Utility Services for Non-Payment,”

86 Harv. L. Rev. 1477 (1973). See: Evans v. Newton, 382

U.S. 296 (1966).

Government, city, county, state and federal, through the

funds which have been given to the Respondent, Fayette Me-

morial Hospital, use that facility, as they do all hospitals, to

carry out a public function, i.e., ensuring that all citizens are

provided health care; that there is immediate availability of

health care entities with quality assurance.

The importance of careful judicial scrutiny in the health

care field is magnified by the fact that decisions often involve

life as well as property.* “A decision to deny a scarce medical

resource calls for procedural safeguards.” Note, “Due Pro-

cass in the Allocation of Scarce Lifesaving Medical Resources’’,

84 Yale L. J. 1734 (1975)

«.-

Many courts and commentators have asserted the pres-

ence of “state action” in private hospitals having like facts.

C. J. Aniteau, 1 Modern Constitutional Law Section 8:50, at

607, T. Emerson, Political and Civil Rights 2191, n. 3 (3d ed.,

1967). However, many lower courts have, subsequent to the

decision in Jackson v. Metropolitan Edison Co., 419 U.S. 345

(1974), weakened those assumptions. The law, nevertheless,

“Many scarce life-saving devices are financed by government.

For instance, the hemadialysis (or kidney) machine has been sub-

sidized under the 1972 Amendments to the Social Security Act, 42

U.S.C. Section 426(e)-(g).

ee tet.

remains econfused.®

Yet. the reasoning in Jackson should never preclude a

finding of state action in an arguably “private” hospital such

as the Respondent. Unlike the public utility in Jackson, the

Respondent here is funded as well as regulated by govern-

ment. c.f. Jackson v. Metropolitan Edison Co., 419 U.S. 345,

357 (1974). The public-private relationship is “symbiotic” ;

the aim of the government programs being to ensure there

are enough medical facilities, of proper quality, and which of-

fer services of acceptable costs. The government’s scheme

5STATE ACTION FOUND:

Christhilf v. Annapolis Emergency Hospital Association, 496 F. 2d 174

(4th Cir., 1974); Suffield v. Charleston Area Medical Center, 503, F.

2d 512 (4th Cir., 1974); O’Neill v. Grayson County War Memorial

Hospital, 472 F. 2d 1140 (6th Cir., 1973); Don v. Okmulga Memorial

Hospital, 443 F. 2d 234 (10th Cir., 1972); Chiaffitelli v. Dettmer Hos-

pital, Inc., 437 F. 2d 429 (6th Cir., 1971); Sams v. Ohio Valley General

Hospital Association, 413 F. 2d 826 (4th Cir., 1969); Meredith v. Al-

len County War Memorial Hospital Comm’n. 397 F. 2d 33 (6th Cir.,

1968); Simkins v. Moses H. Cone Memorial Hospital, 323 F. 2d 959

(4th Cir., 1963), cert. denied, 376 U.S. 938 (1964); Pollock v. Metho-

dist Hospital, 392 F. Supp. 393 (ED LA., 1975); Harron v, United

Hospital Center, Inc. 384 F. Supp. 194 (ND W. Va., 1974), cert. denied,

424 U.S. 916 (1976); Citta v. Delaware Valley Hospital, 318 F. Supp-

301 (ED Pa., 1970); Cypress v. Newport News Gen. and Non-Sectar-

ian Hospital Ass’n., 251 F. Supp. 667 (ED Va., 1966)

STATE ACTION NOT FOUND:

Briscoe v. Bock, 540 F. 2d 392 (8th Cir., 1976); Greco v. Orange Me-

morial Hospital Corporation, 513 F. 2d 873 (5th Cir., 1975), cert. de-

nied, 423 U.S. 1000 (1975);Acherman v. Presbyterian Hospital, 507

F. 2d 1103 (9th Cir., 1974); Doe v. Bellin Memorial Hospital, 479 F.

2d 756 (7th Cir., 1973); Jackson v. Norton-Children’s Hospital, Inc.,

487 F. 2d 502 (6th Cir., 1973), cert. denied, 416 U.S. 1000 (1974);

Ward v. St. Antohny Hospital, 476 F. 2d 671 (10th Cir., 1973); Hol-

ton v. Crozer-Chester Medical Center, 419 F. Supp. 334 (ED Pa., 1976),

vacated on other grounds, 560 F. 2d 575 (3rd Cir., 1977); Aasum v.

Good Samaritan Hospital, 395 F. Supp. 363 (D. Ore., 1975), aff’d. 542

F. 2d 792 (9th Cir., 1976); Slavcoff v. Harrisburg Polyclinic Hospital,

375 F. Supp. 999 (MD Pa., 1974), aff'd mem., 511 F. 2d 1391 (3rd Cir.,

1975); Barrett v. United Hospital, 376 F. Supp. 7791 (SD N.Y., 1974),

aff'd mem., 506 F. 2d 1395 (2d Cir., 1975) ;Hoberman v. Lock Haven

Hospital, 377 F. Supp. 1178 (MD PA., 1974)

relies on private efforts to carry out administrative tasks,

without which all the government funding could not serve

its purpose. Burton v. Wilmington Parking Authority,

365 U.S. 714, 717, 723-724 (1961).

The relevant consideration, here, given the momentous

importance in the application of principles of “due process”

embodied in the Fifth and Fourteenth Amendments to the

Constitution of the United States, is whether the providing of

medical services can be considered a state function today.

Note, “Due Process in the Allocation of Scarce Lifesaving

Medical Resources,” 84 Yale L. J. 1734, 1738-1739 n. 21 (1975)

The government control over health care is massive. Un-

der today’s circumstances, with government so intertwined

with private sources in the providing of health care services,

the “aggregate of all relevant factors” must compel a finding

of state (in the generic sense) responsibility. e.f. Burton v.

Wilmington Parking Authority, 365 U.S. 715, 722-726 (1961) ;

Jackson v. Metropolitan Edison Co., 419 U.S. 345, 360 (1974)

(Douglas, dissenting.) See generally, Moose Lodge No. 107

v. Irvis, 407 U.S. 163 (1972)

The instant case is not one which revolves around the

question of federal jurisdiction, for the action arose and was

ushered through the state courts of Indiana. The instant

case raises the very essence of those fears expressed by the

authors of the Bill of Rights and the Fourteenth Amend-

ment to the United States Constitution. Elkind, “State Ac-

tion: Theories For Applying Constitutional Restrictions to

Private Activity”, 7 Col. L. Rev. 656 (1974). Here, there is

no question which forum is more desirable.

When the realities of health care, today, are examined,

the instant case, if allowed to stand, would serve to defeat

constitutional purposes In the modern hospital setting,

there is a need to maintain the constitutional integrity of gov-

ernment resources, to protect against misuses by private per-

sons or institutions of power or aid received from government,

and to protect against use by government of private individ-

uals to accomplish government objectives without constitu-

tional restraint. Henkind, “Shelly v. Kraemer: Notes for a

Revised Opinion”, 110 U. Pa. L. Rev. 473 (1962); Williams,

“The Twilight of State Action,” 41 Texas L. Rev. 378 (1963).

See: Cooper v. Aaron, 358 U.S. 1 (1958).

The relationship between the Respondent hospital and

government is “symbiotic”. The law must reflect that rela-

tionship.

THE PETITIONER WAS DENIED PROPERTY

WITHOUT DUE PROCESS OF LAW IN VIOLA-

TION OF THE FIFTH AND FOURTEENTH

AMENDMENTS TO THE CONSTITUTION OF THE

UNITED STATES

The petitioner was removed from the Medical Staff of

the Respondent hospital. He was removed by the Respon-

dents through the application of an “amendment” to the By-

Laws requiring the purchase of medical malpractice insurance.

Never was that “amendment” properly or lawfully adopted.

The minutes of the Medical Staff reveal that sixteen (16)

members of the medical staff were present when the afore-

mentioned “amendment” to the By-Laws was voted upon.

Fight (8) voted in favor of the amendment, four (4) voted

against it. (Tr. 5-6, 437, and 479). Article XVI of the By-

Laws requires a two-thirds vote of the active medical staff

members present to enact such an amendment. (Tr. 564 and

Note 2, supra)

Though the By-Law was never enacted, it was utilized

as the vehicle to remove the Petitioner from the medical staff,

—

aud thereby deny him his property.

Never was the Petitioner given adequate notice of his dis-

missal, for it was delivered to him on the very day he was to

be barred from. re-entering the hospital. The notifying party

was not a committee of the medical staff as is required in the

By-Laws (Tr. 540-544 and 550-553), but the Board of Trus-

tees. Accordingly, the Petitioner was denied those rights to

a hearing and appeals altogether. Never was the Petitioner

given the right to defend his livelihood. Never was he per-

mitted to exercise those procedural rights to a hearing, cross-

examination, reasonably impartial judges, and the process of

appeals.

Courts have uniformly required not only strict compli-

ance with hospital By-Laws, but “fairness” in any removal of

a physician from a medical staff as well. Hammer, “Hospital

Medical Staff Privileges: Recent Developments in Procedural

Due Process Requirements, “12 Williamette L. J. 137, 139

(1975).

Wrote this Honorable Court, “Due process requires a fair

hearing before a reasonably impartial tribunal.” Johnson v.

Mississippi, 403 U.S. 212, 216 (1971). For a physician in-

volved in a situation wherein his privileges have been denied,

courts have required notice of the charges levelled to be given

sufficiently in advance of the hearing to give the physician an

adequate opportunity to prepare a defense. Silver v. Castle

Memorial Hospital, 538 Hawaii 475, 497 P. 2d 564, cert den.

409 U.S. 1048 (1972).

No procedural rights were afforded Petitioner at all.

The By-Law requiring the purchase of medical malprac-

tice insurance, though never lawfully enacted, was, itself sus-

pect. In the absence of any question of competence, such a

requirement is arbitrary. See: Muranaka, Compulsory Medi-

cal Malpractice Insurance Statutes: An Approach In Deter-

mining Constitutionality, 12 U. of San Francisco L. Rev. 599

(Summer, 1978).

The Petitioner was, without cause, and with no rights

accorded him to defend himself, thrown out of the Respondent

hospital. As a result, his livelihood was destroyed.

Fayette Memorial Hospital, to paraphrase the words of

Mr. Justice Marshall, dissenting, in Jackson v. Metropolitan

Elison Co., 419 U.S. 345 (1974) is “the only hospital in town”.

To quote Mr. Justice Douglas, dissenting in the same case,

the Respondent hospital is “a monopolist providing essential

public services . . . . within a framework of extensive state

supervision and control”, and, paraphrasing his language in

the same dissent, the furnishing of health services and of med-

ical services by the physician of one’s choice, “is an entitle-

ment which under our decisions may not be taken without the

requirements of procedural due process”.

Whatever may be the case with respect to mere private

utility companies (see Jackson), it is Petitioner’s submission

that when we deal with the personal and professional relation-

ship of patient and physician, with the requirements for pri-

vate medical practice, and with the furnishing of medical and

hospital care and services to the general public, with matters,

indeed, of life or death, it becomes, again in the words of Mr.

Justice Marshall, “hard to imagine any INTERESTS — that

are furthered by protecting [this hospital] from meeting the

Constitutional standards that would apply if [it] were state

owned.”

In this case, we submit, there does in truth exist between

the Respondent hospital and the State that “syinbiotic rela-

ship” found to be present in Burton v. Wilmington Parking

Authority, 365 U.S. 715 (1961), and which is recognized as a

determining factor in the majority opinion in Jackson.

CONCLUSION

For the reasons stated hereinabove, a Writ of Certiorari

should issue to review the judgment and opinion of the Court

of Appeals of Indiana.

Respectfully submitted,

DAVID W. DENNIS, Esq.

Dennis, Reinke & Vertesch

707 South A Street

Richmond, Indiana 47374

and

KENT MASTERSON BROWN. Bsq.

201 W. Vine Street

Lexington, Kentucky 40507

Attorneys for Petitioner

a b

RANE aa PN RNR ne DIENER LTTE

1-A

APPENDIX ‘‘A’’

1977 TERM

FILED FEB. 2, 1977

Sandra W. Richards, Clerk of Union Circuit Court

Liberty, Ind.

CAUSE NO. 8838

WILLIAM RENFORTH - - - - _ Plaintiff

Vs:

FAYETTE MEMORIAL HOSPITAL

ASSOCIATION, INC., BOARD OF

TRUSTEES OF FAYETTE MEMORIAL

HOSPITAL ASSOCIATION, INC.,

EXECUTIVE COMMITTEE OF THE

BOARD OF TRUSTEES OF FAYETTE

MEMORIAL HOSPITAL ASSOCIATION,

INC., EXECUTIVE COMMITTEE OF

THE MEDICAL STAFF OF FAYETTE

MEMORIAL HOSPITAL, EARL

BRANSON, JOHN J. DARCY, K. DALE

FORD, RUSSELL ARCHIBOLD,

CHARLES R. BOTTORFF, MARTHA F.

KENNEDY, LA VERNE L. MARSH,

F. B. MOUNTAIN, J. M. LOCKHART,

ALBERT ROBINSON, WILLIS ROSE,

HENRY RUHL, KATHLENE SHAVER,

DALE SLONEKER, EDWARD

THIELKING, WILLIAM THOMAS,

R. HIRSCH, R. TAUBE, Z. MUFTI,

B.W.SANDERS - - - - - - Defendants

sri ei ial lems

ne ore

JUDGMENT

BE IT REMEMBERED that on the 19th day of Jan-

uary, 1977 the trial of this cause to the Court, without the in-

tervention of a jury, was concluded, and the Court took the

same under advisement.

The Court, having heard and considered all of the evi-

dence in this cause, as well as the law applicable to the issues

herein, now finds that judgment should be rendered against

plaintiff and for all defendants herein, jointly and severally,

on all paragraphs of plaintiff’s complaint, numbered I through

V, inclusive.

The Court further finds that defendant, Fayette Memor-

ial Hospital Association, Inc., is a private, not for profit In

diana Corporation; that defendant hospital’s acceptance of

Hill-Burton Act funds in the amount of $605,000.00 to assist

in paying for a new wing addition to the hospital, costing

$1,542,000.00, is not sufficient to invoke “state action”, and

did not thereby convert defendant hospital into a public or

governmental hospital; that defendant hospital’s acceptance

of funds in 1965 for the new hospital wing from a Fayette

County bond issue, and $24,000.00 in 1967 from City of Con-

nersville tax funds did not thereby cause it to abdicate its

private status. The fact that defendant hospital accepted the

funds above set out did not mean that it was unwillingly sur-

rendering any rights it otherwise possessed to enforce reason-

able rules to protect its own solvency, the well-being and sol-

vency of its patients, who might be damaged by a non-insured

malpracticing doctor on the hospital staff, and also protect

those members of its medical staff who were complying with its

reasonable rules and regulations, but could be damaged by a

non-complying, malpractice staff doctor. (See Hull vs.

North Valley Hospital, 489 Pac. 2nd 136, where defendant

hospital was sued for damages by a patient, Hull, who sought

i Bal PED rls Ae in ENE nen EBT Sd site Ay heb chee es

PL A 9 SEED LA da A Ese 6 TRB A OR Cae Se

3-A

to establish that the hospital was negligent in failing to re-

move a doctor from its medical staff). Concerning this “pri-

vate vs. public” hospital issue, the Court finds that no evi-

dence was introduced by plaintiff that any condition relating

to the purchase or refusal to purchase malpractice insurance

by the medical staff of defendant hospital was imposed on the

hospital by the federal government when it accepted Hill-Bur-

ton funds nor was any such condition imposed by Fayette

County, the City of Connersville, or the State of Indiana,

when the hospital received funds from the County and City

as set out above. (See Doe vs. Bellin Memorial Hospital, 479

Fed. 2nd 756, 7th Circuit 1973).

The Court further finds that plaintiff’s due process rizhts

were not violated by any of the defendants. The privilege to

practice one’s profession is a liberty protected by the law, but

plaintiff was not precluded from exercising that privilege by

any by-laws of the hospital medical staff. (See defendants’

Exhibit #5 and #29), or any by-laws of the hospital corpora-

tion. (See Defendants’ Exhibit #30). He need only have

complied with the malpractice insurance requirement of the

Board of Trustees of the hospital to have continued his mem-

bership on the hospital’s medical staff. This consideration

and finding is sufficient to dispose of plaintiff's possible prop-

erty interest as well; also, plaintiff testified that he was fi-

nancially able to purchase the required malpractice insurance,

but he was against this requirement as a matter of principle.

The Court further finds that plaintiff and his legal coun-

sel were heard at various hearings held by the Medical Staff.

Joint Conference and Professional Committees (See defend-

ants’ Exhibit #13), comprised of Board of Trustee and Medi-

cal Staf- representatives, concerning his non-compliance with

the malpractice insurance requirement. At the Joint Confer-

ence and Professional Committee hearing which was attended

by plaintiff and his lawyer, plaintiff stated that if he had a

chance to work the hospital’s emergency room, he would get

the malpractice insurance (See minutes of that Committee’s

hearing on August 21, 1975, defendant’s Exhibit #13). The

minutes of the March 8, 1976 meeting of the Executive Com-

mittee of the Board of Trustees of the haspital (defendant’s

Exhibit #20) show that plaintiff was subsequently given

emergency room employment and the Executive Committee

directed that he be paid for same, although Dr. Taube, a mem-

ber of the Medical Staff felt plaintiff should not be paid be-

cause he still had not purchased malpractice insurance. It

should be noted, and the Court now finds, that the hospital’s

malpractice insurance policy covered plaintiff when he was an

employee of the hospital and working in the emergency room.

The Court further finds that plaintiff wrote the Medical

Staff By-Laws which were in effect on April 22, 1975, when

the Medical Staff held a regular meeting. The official min-

utes of that meeting (defendant’s Exhibit #5) shows that

seventeen doctors, including plaintiff, who were then members

of the medical staff, were present when the meeting con-

vened, and three doctors were absent. The minutes of that

meeting show that a motion was made, seconded and carried

by a vote of 8 to 4, “that an addition be made to the Medical

Staff By-laws that every staff member must show evidence

of a minimum of $100,000.00 medical malpractice insurance

when seeking appointment and continued re-appointment to

the medical staff of Fayette Memorial Hospital.”

Plaintiff now contends that the above cited by-law mo-

tion did not carry because the by-laws, which he wrote for the

medical staff, provided that a proposed by-law must be passed

by a two-thirds favorable vote of the members “present” when

the vote was taken. Plaintiff did not object to the minutes

of that medical staff meeting, although he was present when

the vote was taken. No minutes of any subsequent medical

staff meetings held between April 22, 1975 and April 1, 1976

ee ere ee ee

he hens on wet

5-A

(when plaintiff’s staff privileges were revoked by the Board

of Trustees of defendant hospital) show that plaintiff ever

objected to the above mentioned 8 to 4 vote. The Court now

finds that the plaintiff has waived, by his long silence and in-

action, any, objection he might have otherwise had to the

proceedings of the medical staff meeting on April 22, 1975.

Equity rewards the vigilant, not the indolent,

The Court further finds that the unchallenged evidence

introduced at the trial of this cause revealed that frequently

members of the medical staff in attendance at a staff meeting

would be called from said meeting for various reasons and

would not be present when motions were voted upon. The

defendants contend herein that plaintiff has not carried his

burden of proof and has not showed that more than 12 mem-

bers of the medical staff were present when said motion “car-

ried” 8 to 4, as indicated by the official minutes of the April

22, 1975 meeting. The Court now finds that the plaintiff did

not carry his burden of proving said motion failed for want

of a two-thirds favorable vote of those present when the vote

was taken.

The plaintiff herein attaches a great deal of importance

to said 8 to 4 vote which he, at this late date, contends was

not sufficient to carry the said malpractice insurance motion.

The Court now finds that said motion was advisory only and

was merely the medical staffs’ recommendation to the hos-

pital Board of Trustees that all medical staff members be re-

quired to carry malpractice insurance. The medical staff can-

not usurp the powers, duties and responsibilities of said Board

of Trustees as the same are spelled out in the defendant hos-

pital corporation’s Articles, By-Laws and the laws of the State

of Indiana, nor can said Board of Trustees abrogate or dele-

gate its powers, duties and responsibilities which have been

put squarely upon its shoulders.

6-A

Section VII, Paragraph B (3), of he By-laws of said de-

fendant hospital Corporation reads as follows:

“On all Medical Staff matters the Board of Trustees

shall give due consideration to the recommendations

of the Medical Staff but shall not be bound by such

recommendations if they conflict with the best inter-

ests of the hospital and patient.”

Section VII, Paragraph B (4) of said By-laws reads as

follows:

“The Board of Trustees, by a majority vote, may ex-

clude any physician, surgeon, or other medical practi-

tioner from the premises of the hospital after delibera-

tion of his case by the Medical Staff and a written

recommendation submitted by the Joint Conference.

and Professional Committee for action.” (See defen-

dants’ Exhibit #38)

The Court further finds that said Board of Trustees is not

in any way bound to accept any recommendation of the Medi-

cal Staff or the Joint Conference and Professional Committee.

If said Board of Trustees was subservient to the dictates of the

Medical Staff and the Joint Conference and Professional Com-

mittee, all kinds of chaos could result in the operation and

management of defendant hospital.

The Court further finds that all members of the medical

staff of defendant hospital were reappointed to the staff by

the Board of Trustees for the year 1976, excepting plaintiff.

All members of said medical staff purchased malpractice in-

surance as required by said Board, excepting plaintiff. Plain-

tiff had a choice, and he was given many months to make that

choice by the Board of Trustees, as to whether or not he would

purchase $100,000.00 of malpractice insurance. (In Pollock

vs. Methodist Hospital 392 F. Supp. 393, the defendant hos-

pital required members of its staff to purchase $100,000.00 of

malpractice insurance, and the Federal District Court held

A Fae. ea

nn eed

a eR tre sd 4 Sa ie Bi eaten ee

i ai ate ies slat

a owe

Ale «ntti ld Ds ae Bair a Pe $ leet Re a an AEP. eee SG D0 OR

1-A

that this requirement was not unreasonable and found for

the hospital.) Solely on grounds of principle, plaintiff de-

cided he would not abide by the rules of the game. Whatever

may be this principle that plaintiff espouses, it is not con-

cerned with the well-being of his patients, the security of de-

fendant hospital that opened its doors to him and welcomed

him as a staff member in 1969, nor is plaintiff’s principle con-

cerned with the security and well-being of his insured fellow

doctors, who could be joined with the uninsured plaintiff as

defendants in a malpractic suit and could be liable for the

entire judgment that conceivably could exceed their malprac-

tice insurance coverage. The other members of the medical

staff and defendant hospital do not owe plaintiff this sort of

venerosity.

IT IS, THEREFORE, ORDERED, ADJUDGED AND

DECREED BY THI COURT that plaintiff shall take noth-

ing by his complaint filed herein, consisting of Paragraph I

through V, inclusive; that said defendants, jointly and sever-

ally, be, and they hereby are, given judgment against said

plaintiff for their costs laid out and expended.

ALL OF WHICH IS ORDERED, ADJUDGED AND

DECREED BY THE COURT this 2nd day of February,

1977.

JUDGE OF THE UNION CIRCUIT COURT

ec: Ralph A. Cohen

Loren Marsh

Frank Messer

Ronald E. Williams

8-A

APPENDIX ‘‘B”’

FOR PUBLICATION

ATTORNEYS FOR APPELLANT:

DAVID W. DENNIS

DENNIS, REINKE & VERTESCH

707 South A Street

Richmond, Indiana 47374

KENT MASTERSON BROWN

201 West Vine Street

Lexington, Kentucky 40507

ATTORNEYS FOR APPELLEE:

RALPH A. COHEN

JOAN GODLOVE

ICE MILLER DONADIO & RYAN

111 Monument Circle, 18th Floor

Indianapolis, Indiana 46204

(Attorneys for Amicus Curiae

Indiana Hospital Association, Inc.)

WILLIAM S. HALL

HALL, RENDER & HELBERT

3921 N. Meridian Street

Suite 200

Indianapolis, Indiana 46208

Pee aE Te eee “

9-A

IN THE

COURT OF APPEALS OF INDIANA

FIRST DISTRICT

NO. 1-877 A 165

WILLIAM RENFORTH, M.D. Plaintiff-Appellant

Vs:

THE FAYETTE MEMORIAL HOSPITAL

ASSOCIATION, INC., BOARD OF

TRUSTEES OF FAYETTE MEMORIAL

HOSPITAL ASSOCIATION, INC.,

EXECUTIVE COMMITTEE OF THE

BOARD OF TRUSTEES OF FAYETTE

MEMORIAL HOSPITAL ASSOCIATION,

INC., EXECUTIVE COMMITTEE OF THE

MEDICAL STAFF OF FAYETTE MEMORIAL

HOSPITAL, EARL BRANSON, JOHN J.

DARCY, K. DALE FORD, RUSSELL

ARCHIBOLD, CHARLES R. BOTTORFF,

MARTHA F. KENNEDY, LA VERNE L.

MARSH, F. B. MOUNTAIN, J. M.

LOCKHART, ALBERT ROBINSON,

WILLIS ROSE, HENRY RUHL, KATHLENE

SHAVER, DALE SLONEKER, EDWARD

THIELKING, WILLIAM THOMAS, R.

HIRSCH, R. TAUBE, Z. MUFTI,

R. W.SANDERS .-_ =- Defendants-Appellees

APPEAL FROM THE UNION CIRCUIT COURT

The Honorable James S. Shepard, Judge

STATEMENT OF THE CASE

Plaintiffs-appellants William Renforth appeals after the

| ees

“*

10-A

Union Circuit Court entered judgment in favor of defendant-

appellee Fayette Memorial Hospital Association (Hospital),

et al., in a lawsuit challenging Hospital’s by-law which re-

quires all members of Hospital’s medical staff to carry pro-

fessional liability insurance coverage.

FACTS

Dr. Renforth was terminated as a member of Hospital’s

medical staff on April 1, 1976, because he failed to acquire

professional liability insurance coverage, as required by Hos-

pital’s by-laws. He filed suit in Fayette Circuit Court

against Hospital, its Board of Trustees, the Executive Com-

mittee of its Board of Trustees, and the Executive Committee

of its medical staff, seeking a restraining order, preliminary

and permanent injunctions, and damages. The suit was trans-

ferred to Union Circuit Court on change of venue, where the

trial court ultimately entered judgment in favor of all de-

fendants.

We affirm.

ISSUES

1. Did the trial court lose jurisdiction when it violated

Ind. Rule of Procedure, Trial Rule 79?

2. Is Hospital a public institution, in the sense that its

actions constitute state action and are governed by and sub-

ject to the Due Process Clause of the Fifth and Fourteenth

Amendments to the Constitution of the United States?

3. Did Hospital act unlawfully, arbitrarily, and capric-

iously in imposing the insurance requirement?

Issue One

Dr. Renforth contends that the Union Circuit Court lost

jurisdiction of this cause of action when Judge James S. Shep-

ard violated TR 79(1)(b).

11-A

Dr. Renforth’s lawsuit against Hospital was transferred

on change of vanue to the Union Circuit Court on May 12,

1976. On January 1, 1977, TR 79 became effective to pro-

vide as follows:

“(1) Whenever the regular judge or presiding

judge of any court or his spouse, or a person within the

third degree of relationship to either of them, or the

spouse of such person

5 * e

(b) Is acting as a lawyer in the proceeding, .. .

& * o

The venue of which is before such judge, he shall dis-

qualify himself immediately and cause such fact to be

certified to the Supreme Court which shall thereupon

appoint a special judge.”

e ee a

The cause came on for trial, without intervention of a

jury, on January 18, 1977. The trial court rendered judgment

in favor of all defendants on February 2, 1977. Dr. Renforth

filed his motion to correct errors on March 31, 1977, which

the trial court overruled on May 19, 1977.

On May 20, 1977, Dr. Renforth filed his motion for

change of judge, based upon TR 79(1) (b). The judge of

the Union Circuit Court is the father-in-law of one of the

attorneys who represented Hospital in the trial court proceed-

ing, The trial court did not rule on the motion. Dr. Ren-

forth instituted an original action in the Supreme Court on

May 31, 1977, claiming that the trial court had no jurisdic-

tion in the cause of action because of the violation of TR 79.

The Supreme Court held that Dr. Renforth should have

brought his jurisdictional claim to that court prior to final

judgment. Justice DeBruler wrote, at 369 N.E. 2d 1078:

“As relator did not avail himself of this opportunity, his

remedy is by way of appeal.”

pio a int at agit dian maith leant cave

12.A

Dr. Renforth, accordingly, presented the following issue

on appeal: Is TR 79(1) (b) mandatory and will violation

thereof divest the trial court of jurisdiction?

If a court has jurisdiction of the class of actions to which

a particular case belongs, the court has jurisdiction of the sub-

ject matter of the action. When a court does not have sub-

ject matter jurisdiction, the parties cannot confer such juris-

diction by consent. Farley v. Farley (1973), 157 Ind. App.

385, 300 N.E. 2d 375.

If a court does have jurisdiction of the subject matter of

the action, the parties may give consent, express or implied,

to jurisdiction of the particular case. Farley v. Farley, supra.

Dr. Renforth does not challenge the jurisdiction of the

Union Circuit Court to entertain the class of actions to which

his particular case belongs. He contends that the Union Cir-

cuit Court, by violating TR 79(1) (b), lost jurisdiction of his

particular case.

An affidavit signed by the attorney who represented Dr.

Renforth in the trial court proceeding reveals that Dr. Ren-

forth’s attorney became aware of the relationship existing

between the judge and one of Hospital’s attorneys in August

or September 1976. The effective date of TR 79 was January

1, 1977, yet Dr. Renforth made no effort to challenge the jur-

isdiction of the trial court until more than three months after

the trial court entered judgment adverse to him on February

2, 1977. Certainly these facts warrant a holding that Dr.

Renforth gave implied consent to jurisdiction of his particu-

lar case, unless the wording of TR 79 dictates a contrary con-

clusion.

TR 79 does provide that the trial court judge shall dis-

qualify himself when he is closely related to one of the at-

torneys participating in the action. Obviously, Judge Shepard

13-A

was in a far better position to know of the relationship than

was Dr. Renforth. We cannot ignore the fact, however, that

Dr. Renforth’s attorney did in fact know of the relationship

and did permit the matter to go to trial without objection.

A complete reading of TR 79 reveals that its primary

purpose is to set forth a procedure for selecting special judges

rather than to define who shall and who shall not be eligible

to sit as judge in a particular case. The rule should be en-

forced in a manner that does not emasculate the unambiguous

wording contained therein, but it should also be enforced in

a manner which prevents a party with knowledge of the re-

lationship from remaining silent until he suffers an adverse

judgment.

With these considerations in mind, along with due regard

for the rule that consent to jurisdiction of a particular case

can be given impliedly, we deem it to be appropriate to en-

force TR 79 (1) (b) as follows: A judge has a duty to dis-

qualify himself when he or his spouse, or a person within the

third degree of relationship to either of them, or the spouse

of such person is acting as a lawyer in the proceeding. Fail-

ure of the judge to disqualify himself will not result in loss

of jurisdiction, however, if the party who raises the issue on

appeal knew, or had reason to know, of the relationship prior

to the time final judgment was entered.’

We hold that Dr. Renforth impliedly consented to the

jurisdiction of the Union Circuit Court.

Issue Two

Fayette Memorial Hospital is organized as a private, not-

for-profit hospital. Dr. Renforth contends that Hospital, for

1If, for example, the judge and one of the attorneys shared the

same name, that fact would be sufficient cause for a person to make

inquiry; failure to make inquiry would amount to waiver of the issue.

14-A

a number of reasons, has become a public institution in the

sense that its actions constitute state action and are governed

by and subject to the Due Process Clause of the Fifth and

Fourteenth Amendments to the Constitution of the United

States.

The Due Process Clause of the Fourteenth Amendment

provides: [N] or shall any State deprive any person of life,

liberty, or property, without due process of law; ...” The

Due Process Clause applies to state action, but it offers no

shield against private conduct regardless of how wrongful such

private conduct may be. Jackson v. Metropolitan Edison Co.

(1974), 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed. 2d 477; Shelley v.

Kraemer (1948), 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161. As

the Supreme Court noted in Jackson v. Metropolitan Edison

Co., supra, at 95 S.Ct. 449, 453:

‘. .. While the principle that private action is immune

from the restrictions of the Fourteenth Amendment is

well established and easily stated, the question whether

particular conduct is ‘private,’ on the one hand, or ‘state

action,’ on the other, frequently admits of no easy an-

swer....”

Dr. Renforth first argues that Hospital’s action is state

action because Hospital has accepted governmental funds and

thereby subjected itself to government regulation.

The impetus for the chalienged activity need not originate

with the state. State action may be found if the state simply

enforces the activity which originates privately. Moose Lodge

No. 107 v. Irvis (1972), 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.

2d 627. However, a nexus must exist between the govern-

mental involvement and the particular activity being chal-

lenged. Doe v. Bellin Memorial Hospital (7th Cir. 1973), 479

15-A

F. 2d 756..2. Or the evidence must show that the state “has

so far insinuated itself into a position of interdependence”

with the private institution that the state has become “a joint

participant” in the challenged activity. Burton v. Wilming-

ton Parking Authoruy (1Y61), 365 U.S. 715, 381 5.Ct. 806,

862, 6 L.bd. 2d 48.

In Doe v. Bellin Memorial Hospital, supra, Jane Doe

and her physician brought an act:~a seeking an injunction to

prevent a hospital and its officials from denying use of the

facilities for an abortion. She argued that the hospital acted

“under color of” state law within the meaning of the civil

rights statutes because it accepted financial support provided

through state and federal programs and thereby subjected

itself to detailed regulation.

The Honorable John Paul Stevens, who was then Judge

for the Seventh Circuit Court of Appeals, penned the opinion

in the case. First he noted that no nexus existed vetween

receipt of guveruinental funding and the houspitais rule pro-

hibiting the performance of abortions:

+e * *

No doubt the the defendant hospital agreed to abide

by a variety of regulatory terms related both to its

operations and to the use of the Hill-Burton funds in

connection with its acceptance of benefits under that

Act. There is no evidence, however, that any condition

2In Jackson v. Metropolitan Edison Co. (1974), 419 U.S. 345, 95

S.Ct. 449, 457, 42 L.Ed. 2d 477, petitioner alleged that she had been

denied due process of law when the respondent, a privately owned

utility company, terminated the electrical service to her home for

nonpayment of bills without giving her prior notice of its proposed

action. The Supreme Court held:

“ .. the State of Pennsylvania is not sufficiently connected

with respondent’s action in terminating petitioner’s service so

as to make respondent’s conduct in so doing attributable to the

State for purposes of the Fourteenth Amendment... .”

}

16-A

related to the performance or non-performance of abor-

tions was imposed upon the hospital. Unlike the fact

situation in Simkins v. Moves H. Cone Memorial Hos-

pital, 323 F. 2d 959 (4th Cir. 1963), on which plaintiffs

place heavy reliance, this record does not reflect any

governmental involvement in the very activity which is

being challenged. We find no basis for concluding that

by accepting Hill-Burton funds the hospital unwittingly

surrendered the right it otherwise possessed to deter-

mine whether it would accept abortion patients.

(Our emphasis)

(Footnote omitted )

Next he emphasized that the state had received no benefit as

a result of the hospital’s policy opposing abortions:

ce * &

Nor do we believe that the implementation of de-

fendant’s own rules relating to abortions is action ‘under

color of’ state law within the meaning of § 1983. The

State of Wisconsin is not a beneficiary of those rules and

cannot be characterized as a ‘joint participant’ in their

adoption or enforcement. Cf. Burton v. Wilmington

Parking Authority, 365 U.S. 715, 724-725, 81 S.Ct. 856,

6 L.Ed. 2d 45... .”

Judge Stevens then summarized the reasoning of the court:

“. .. There is no claim that the state has sought to in-

fluence hospital policy respecting abortions, either by

direct regulation or by discriminatory application of its

powers or its benefits. Insofar as action of the State of

Wisconsin or its agents is disclosed by the record, the

State has exercised no influence whatsoever on the de-

cision of the defendants which plaintiffs challenge in

this litigation.

The facts that defendants have accepted ffmancial

support, as alleged, from both the federal and state gov-

ernments, and that the hospital is subject to detailed

17-A

regulation by the State, do not jusify the conclusion that

its conduct, which is unaffected by such support of such

regulation, is governed by § 1983." .. .”

Dr. Renforth has painstakingly set forth summaries of the

governmental programs in which Hospital pariictr:ted. Dr.

Renforth has totally faiied, liwwever, to show any nexus be-

tween the governmental funds and programs, and the posi-

tion taken by Hospital regardiug professional liability insur-

ance. ilospital’s adininistrator specifically testitied that no

governmental entity influenced Hospital’s decision to require

insurance coverage for the members of its medical staff. Fur-

thermore, the evidence reveals no interdependence between

Hospital and the governmental bodies, as proved to be de-

cisive in the case of Burton v. Wilmington Park Authority,

supra.

Dr. Renforth contends that the composition of Hospital’s

Board of Trustees converts the private hospital into a public

institution.

Paragraph (6) 6 (f) of the Articles of Reorganization of

Fayette Memorial Hospital Association provides:

“The Board of Trustees shall consist of seventeen (17)

members. One (1) member shall be elected by the

County Council of Fayette County; and one (1) mem-

ber shall be elected by the Board of Commissions (sic)

of Fayette County; one (1) member shall be elected by

the Common Council of the City of Connersville, In-

diana; two (2) members shall be medical doctors elected

by the active medical staff of the Fayette Memorial

Hospital; and twelve members shall be elected by the

”

Council of the Association. .. .

Hospital emphasizes that the first three members referred

8All quotations from Doe v. Bellin Memorial Hospital, supra,

appear at 479 F. 2d 761.

‘

;

18-A

to in the paragraph set forth above are required to be elected

by, not necessarily from, the governmental bodies. The trial

court heard testimony that the three members elected by the

County Council, the Board of Commissioners, and the Com-

mon Council acted independently and did not report to the

governmental bodies which elected them.

Dr. Renforth has failed to prove state action based upon

the composition of Hospital’s seventeen-member Board of

Trustees.

Dr. Renforth also argues that state action must be found

because Hospital enjoys a monopoly position while perform-

ing a public function.

In Barrett v. United Hospital (S.D.N.Y. 1974)), 376 F.

Supp. 791, 799, aff'd, (2d Cir. 1974), 506 F. 2d 1395, the court

acknowledged that the acts of a private institution may be

denominated state action when a private institution performs,

pursuant to a right accorded by statute, a function performed

traditionally by the state. Judge Bauman concluded, how-

ever, that private hospitals do not perform a function tradi-

tionally performed by the government:

“. . . Unlike fire departments and police departments

mentioned by Justice Douglas in Evans v. Newton,

supra [ (1966), 382 U.S. 296, 86 S.Ct. 486, 15 L.Ed. 2d

373] at 302, hospitals are not traditionally governmental.

Private hospitals are the rule rather than the exception.

It is only relatively recently that federal, state and local

governments have recognized the need for widespread

public health care. Traditionally, however, the provision

of medical services has been a matter largely in the pri-

vate domain... .” (Our insertion)

The court then considered the particular argument com-

parable to the one which Dr. Renforth presents in the case

at bar:

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Wee A Neamt Sa ee At RN tre ti AMA Sn

BBR ore Nee ie

Nt oe LSet as Se ry Be ine wee tent seen eens

19-A

Plaintiff . . . [stresses] that United Hospital is the

only general hospital serving the area. As such, he arg-

ues, it operates in a quasi-public capacity, . . . Even as-

suming this to be so, I cannot conclude that it makes

the ‘public function’ theory applicable to the case at

bar. That doctrine has heretofore been limited in its

application to situations where the constitutional viola-

tion alleged occurred in the very activity in which the

private institution performed its ‘traditionally govern-

mental function’.

This is not the case here. Even if it may be suc-

cessfully argued that a private hospital is performing a

public function it is clear that the function involved is

the admission and treatment of patients, not the hiring

and firing of doctors, nurses and other staff personnel.

I find no compelling authority for extending the ‘pub-

lic function’ argument to a private hospital in the ab-

sence of a nexus between the governmental function per-

formed and the violative activity alleged.” (Original

emphasis) (Footnotes omitted) (Our insertion)

We do not rely solely upon Barrett v. United Hospital,

supra, in resolving this issue.. The United States Supreme

Court, in Jackson v. Metropolitan Edison Co., supra, held that

there must be evidence of a relationship between the chal-

lenged action and the monopoly status before State action

will be found.

Dr. Renforth has not shown a nexus between any pur-

ported governmental function performed by Hospital and the

insurance requirement which he challenges. His argument

must fail.

Dr. Renforth refers to tax funds, bond proceeds, and

Medicare and Medicaid payments which were paid to or other-

wise benefitted Hospital. In each instance, however, Dr.

Renforth has shown no nexus between those benefits and the

insurance requirement.

20-A

Dr. Renforth and Hospital have cited a multitude of

cases in support of their arguments. Having carefully con-

sidered the arguments presented, the authorities cited, and

the evidence adduced during trial and by subsequent affida-

vits, we must hold that Dr. Renforth failed to present evidence

proving that state action was involved in Hospital’s decision

and action to require members of its medical staff to carry

professional liability insurance.‘

Issue Three

Dr. Renforth contends that Hospital acted in an unlaw-

ful, arbitrary, and capricious manner when it imposed the in-

surance requirement.

In Holmes v. Hoemako Hospital (1977), 117 Ariz. 403,

573 P. 2d 477, Dr. Holmes, the only doctor in Elroy, Arizona,

brought suit against the only hospital serving the community

and sought to have the hospital enjoined from enforcing

against him its requirement that each member of its medical

staff must show proof of professional liability insurance. After

recognizing the right of the Arizona courts to engage in a

narrow review of the procedural and substantive issues in-

volved in the activities of the private, nonprofit hospital, the

Arizona Supreme Court explained its test for determining

whether the hospital’s rule was reasonable or arbitrary: “did

it pertain to the ‘orderly management of the hospital and in

most instances . . . [was it] . . . made for the protection of

patients’?”® That court held that the hospital’s requirement

was not, per se, unlawful, arbitrary, or capricious:

4In his brief Dr. Renforth attempts to provide evidence of a

nexus. We remind Dr. Renforth that he must try his case and make

his record in the trial court. The Court of Appeals is a court of re-

view.

5573 P. 2d 477, 479.

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21-A

“We cannot ignore the realities of modern proced-

ural practice. If a patient is injured while in a hospital,

regardless of who is at fault, the hospital will almost al-

ways be joined as a codefendant. Despite the outcome

of such an action, the hospital must expend valuable

financial resources in its own defense, and will, if inno-

cent of wrong-doing, be more likely to recover its ex-

penses from the tort-feasor physician if that physician

is insured. If, indeed, some conscientious lawyer de-

cides not to include the hospital in an action where the

finger of negligence points directly and solely to the

doctor, we can be certain it will be only because the

physician does indeed have malpractice insurance.

Nor can we ignore the realities of the situation

where the doctor and hospital are found to be joint tort-

feasors. We agree that there is no right to contribution

between or among joint tort-feasors in Arizona. Blakely

Oil v. Crowder, 80 Ariz. 72, 292 P. 2d 842 (1956); Chrys-

ler Corp. v. McCarthy, 14 Ariz. App. 536, 484 P. 2d 1065

(1971). Practically speaking, however, it is not an un-

common solution to such joint liability for the insurers

of both or all joint tort-feasors to contribute, in settle-

ment or after verdict, to the fund which compensates the

victim.

The hospital has the right to take reasonable meas-

ures to protect itself and the patients it serves. We can-

not say, as a matter of law, that the hospital board’s

attention to its medical staff’s malpractice insurance is

unlawful, arbitrary or capricious. As a practical mat-

ter, we cannot say it is irrational or unreasonable. .. .’”*

The Arizona court recognized, however, that such a re-

quirement might be proved unreasonable in a particular case:

“ee & a

This is not to say that in this matter an exception

to the requirement might not be in order. We are well

6573 P. 2d 477, 479.

otis «ats SD eed

22-A

aware of the fact that the right to follow any lawful vo-

cation or profession is constitutionally protected. City

of Tucson v. Stewart, 45 Ariz. 36, 40 P. 2d 72 (1935);

Meyer v. State of Nebraska, 262 U.S. 390, 43 S.Ct. 625,

67 L.Ed. 1042 (1923). We believe there is a con-comi-

tant right of individuals to a choice of physicians. See

Findlay, supra. We also realize that in this particular

situation the people of Elroy have only one choice of

physicians: Dr. Holmes. Unless and until, however, Vr.

Holmes provides the hospital and its Board with evi-

dence of good reason why he should not be required to

carry professional liability insurance, the courts of this

state eannot help him or his patients. We failed. on

appeal, to present any facts that show he is unable to

afford the insurance or that insurance is unavailable to

him. He is, therefore, apparently being prevented from

exercising staf? privileges bv his own choice.

* _ *#))

In the case at bar the trial court heard evidence concern-

ing the reasons Hospital adopted the by-law requiring phy-

sicians to obtain professional liability insurance: (1) if both

Hospital and a physician were named defendan‘s in a lawsuit,

Hosptal desired assurance that the physician could contribute

toward costs of defending against such an action; (2) Hos-

pital felt it was showing due regard for the patients it serves

by requiring insurance coverage for the doctors who might

become liable to the patients; (3) by imposing the require-

ment on the physicians who used Hospital’s facilities, Hospital

was in a better position to assure insurance coverage for itself,

and at a lower premium; and (4) Hospital feared that it might

suffer the financial burden for negligence committed in its

emergency room by a member of the medical staff if that

physician had no insurance.

Dr. Renforth testified that he objected to the insurance

1573 P, 2d 477, 479-80.

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23-A

requirement solely as a matter of principle. He did not sug-

gest that he could not obtain insurance or that he could not

afford to pay the premiums for the insurance.

Although Dr. Renforth presents forceful argument and

cites authority in support thereof, we are persuaded to follow

the reasoning of the Arizona Supreme Court. Accordingly,

we hold that the requirement is substantively valid. Dr.

Renforth raises two final procedural issues, however.

Dr. Renforth contends that the amendment to the by-

laws was not duly adopted.

Article XVI of the by-laws describes the procedure for

amendment: (1) the proposed amendment is submitted at a

meeting of the medical staff; (2) the medical staff refers the

proposed amendment to a special committee; (3) the special

committee reports at the next meeting of the medical staff;

(4) adoption requires a two-thirds vote of the active medical

staff present; and (5) amendments are effective when ap-

proved by the Board of Trustees.

The minutes of the meeting held February 18, 1975, by

the medical staff show that the medical staff considered a

letter received from the Indiana State Medical Association

and the Indiana Hospital Association “urging that our by-

laws be changed” to require evidence of medical malpractice

insurance before appointment or reappointment to the staff.

The medical staff referred the letters to the by-laws commit-

tee. The by-laws committee reported back to the medical

staff with a recommendation that each physician be left to

make his own decision as to whether or not he would acquire

insurance.

The minutes of the meeting held by the medical staff on

April 22, 1975, include the following entry:

“A motion was made by Dr. Mazdai and seconded by

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24-A

Dr. Rosen that an addition be made to the medical staff

by-laws that every staff member must show evidence

of a minimum of $100,000 medical malpractice insurance

when seeking appointment and continued reappointment

to the medical staff of Fayette Memorial Hospital.

MOTION CARRIED, 8 in favor, 4 against. This will

be added to the by-laws.”

Mr. Bottorff testified that on May 27, 1975, the Board of

Trustees affirmed the Executive Committee’s approval of the

amendment to the bylaws.

The prescribed procedure does not demand a favorable

report from the special committee. We find sufficient com-

pliance with Article XVI.

Dr. Renforth insists that the amendment did not receive

adequate votes at the meeting of the medical staff. The min-

uees show that the motion carried, “8 in favor, 4 against.”

The minutes also list sixteen voting members as present at the

meeting. The bylaws require that proposed amendments

must receive a two-thirds vote of the members present.

Mrs. Weisheit, who recorded all of the minutes of the

meetings, testified that she always listed as present all those

persons who were present at some time during the meeting,

regardless of their time of arrival, time of departure, and dura-

tion of stay. She stated that doctors were frequently called

from the meetings; some did return and some did not return.

Other doctors arrived late for meetings. She could not recall

whether anyone abstained from voting at the time of the vote

on the insurance amendment. Other persons testified similar-

ly concerning the doctors’ arriving and departing as meetings

progressed.

Dr. Renforth testified that some doctors did abstain from

voting and that he did realize immediately that the number

of votes was not sufficient for amending the bylaws. The

ew ane ced

25-A

trial court also heard evidence, however, that Dr. Renforth

made absolutely no protest when it was announced that the

amendment had been adopted. The minutes of the next

meeting of the medical staff show that Dr. Renforth was pres-

ent and the minutes of the prior meeting were approved as

read.

This court must look to the evidence which supports the

judgment of the trial court. We cannot say, as a matter of

law, that the trial court erred when it found that the amend-

ment was duly adopted by the medical staff.

Lastly, Dr. Renforth contends that he was not provided

hearings, as required by the bylaws.

The record reveals that Dr. Renforth was granted hear-

ings and opportunities to make his position known. Further-

more, -\rticle VIII of the bylaws provides that failure to re-

quest a hearing shall be deemed waiver of any right to a hear-

ing. Dr. Renforth has not directed our attention to any evi-

dence that he ever requested any hearing which was not pro-

vided. Although Dr. Renforth alleges that his termination

was not accomplished with precise compliance with prescribed

procedure, that is an issue which Dr. Renforth should have

raised by seeking a hearing when he received his notice of

termination.

Because Dr. Renforth has failed to show that the trial

court committed reversible error, we affirm the judgment en-

tered by the Union Circuit Court.

LYBROOK, P. J. and ROBERTSON, J. CONCUR.

60 FRM AR

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ODE A =

26-A

APPENDIX ‘‘O’’

CLERK OF THE SUPREME COURT

AND COURT OF APPEALS

STATE OF INDIANA

No. 1-877A165

WILLIAM RENFORTH, M.D.

FAYETTE MEMORIAL HOSPITAL

ASSOCIATION, INC.

You are hereby notified that the Court of Appeal has on

this lay DENIED Appellant’s Application for Rehearing and

Motion for Oral Argument. Buchanan, C.J.

Please acknowledge receipt of this notice in order that

our records may show that you have been notified of this

action.

WITNESS my name and the seal of said Court, this 16th

day of January, 1979.

MAJORIE H. O’LAUGHLIN

Clerk Supreme Court and

Court of Appeals

ee er

27-A,

APPENDIX ‘'D’”’

IN THE

SUPREME COURT OF INDIANA

CAUSE NO. 1-877 A 165

WILLIAM RENFORTH, M.D. Plaintiff-Appellant

Vs:

FAYETTE MEMORIAL HOSPITAL

ASSOCIATION, INGC., et.al. Defendants-Appellees

ORDER

DENYING PETITION TO TRANSFER

“Appellant’s Petition to Transfer to the Supreme Court

of Indiana” is hereby DENIED this 6th day of June, 1979.

RICHARD M. GIVAN

Chief Justice of Indiana

ALL JUSTICES CONCUR.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.