Petition for Writ of Certiorari — Summit Health, Ltd. v. Pinhas

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Text

OF THE

United States

OCTOBER T&RM 1989

SumMit Heautu, Lrp., Mipway HosprraL MEDICAL

CENTER, THE MEDICAL STAFF OF Mipway Hospita.L

MEDICAL CENTER, MITCHELL FELDMAN, AUGUST

READER, M.D., ARTHUR N. LurRvEy, M. D.,

JONATHAN I. Macy, M.D., James J. Sauz, M. D.,

GILBERT PERLMAN, M.D., MARK KADZIELSKI

and WEISSBURG and ARONSON, INC.,

Petitioners,

Vs.

SIMON J. PINHAS, M.D.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

NINTH CIRCUIT

J. MARK WAXMAN

Counsel of Record

TAMI S. SMASON

WEISSBURG AND ARONSON, INC.

2049 Century Park East

Suite 3200

Los Angeles, California 90067

(213) 277-2223

Attorneys for Petitioners

Summit Health, Lid., Midway Hospital

Medical Center, the Medical Staff of

Midway Hospital Medical Center,

Mitchell Feldman, August Reader, M. D.

Arthur N. Lurvey, M. D., Jonathan 1.

Macy, M. D., James J. Salz, M. D., Gilbert

Perlman, V. U., Mark Kadzielski and

Wrissburg and Aronson, Inc.

April 24, 1990

Bowne of Los Angeles, Inc., Law Printers. (213) 742-6600 57

QUESTIONS PRESENTED FOR REVIEW

1. Whether a claim under Section 1 of the Sherman

Act which fails to allege any nexus between the

allegedly anticompetitive activity and interstate

commerce nevertheless meets the jurisdictional re-

quirements of the Sherman Act, as interpreted by

this Court in McLain v. Real Estate Board of New

Orleans, 444 U.S. 232 (1980)?

2. Whether allegations that an attorney provided legal

assistance to a client are sufficient to assert that the

attorney and client are co-conspirators under the

Sherman Act?

il iii

LIST OF PARTIES TABLE OF CONTENTS

The parties before the Court of Appeals included Simon Page

J. Pinhas, M.D., Summit Health, Ltd., Midway Hospital

. . a VIEW .....

Medical Center, the Medical Staff of Midway Hospital QUESTIONS PRESENTED FOR REVIEW N

Medical Center, Mitchell Feldman, August Reader, M. D., LIST OF PARTIES 66 %%% „ „„ „ „4% ll

Arthur N. Lurvey, M.D., Richard E. Posell, Jonathan I. TABLE OF AUTHORITIES ...........cccccces, v

Macy, M. D., James J. Salz, M. D., Gilbert Perlman, M. D., r ᷑ . „„ „6 2

Peggy Farber, Mark Kadzielski and Weissburg and Aron- „„ „„ 2

son, Ine. CONSTITUTIONAL PROVISIONS AND STAT-

r ̃ te ccccces 2

STATEMENT OF THE CASE .................. 2

REASONS FOR GRANTING REVIEW 3

I. -

THERE IS A CLEAR CONFLICT AMONG THE

JUDICIAL CIRCUITS, MANIFESTED BY

THIS DECISION, AS TO THE SHERMAN

ACT’S INTERSTATE COMMERCE JURISDIC-

TIONAL REQUIREMENTS.................. 3

es ccc 00 3

EEE EEE 66 4

C. The Split Among The Circuits............... 6

D. The Importance of the Issue ................ 8

II.

THE CIRCUIT COURT HOLDING IMPINGES

ON THE EFFECTIVE ASSISTANCE OF

COUNSEL TO THOSE CONDUCTING PEER

REVIEW, AND WILL CREATE A CHILLING

. EFFECT ON THE PEER REVIEW PROCESS

Summit Health, Ltd. is the parent corporation of Midway Hospi- AND ITS PARTICIPANTS 9

tal Medical Center. There are no parent or non-wholly owned subsidi- ee

aries to be listed for Summit Health, Ltd. or Weissburg and Aronson, A. Introduction. 9

Ine.

—

TABLE OF CONTENTS

Page

B. The Underlying Allegations ................. 10

C. The Importance of the Issue ................ 12

JJC occ cc evecdebteteccoccnceseenes 13

APPENDIX

Opinion of the Court of Appeals and Denial of

Petitions for Rehearing ..............+00055 A-1

District Court Order Dismissing Underlying Ac-

c A-28

Judgment on Petition For Writ of Mandate Filed

By Respondent, Los Angeles Superior Court

na%. A-30

Minute Order in re Petition For Writ of Mandate

Filed By Respondent, Los Angeles Superior

Court Case No. C6990 G. A-32

First Amended Complaint in the Pending Action

LL A-36

TABLE OF AUTHORITIES

Cases

Page

Ashley Meadows Farm v. American Horse Shows Asso-

ciation, 1983-2 Trade Cases § 65,653 (S.D.N.Y.

SS PTT eee er eee rere 11, 12

Bolt v. Halifax, 891 F.2d 810 (11th Cir. 1990) peti-

tion for cert. filed, 58 U.S.L.W. 3598 (U.S. Mar. 9,

R 10

Cardio-Medical Associates v. Croger- Chester Medical

Center, 721 F. 2d 68 (3rd Cir. 1983) ............ 7

Copperweld Corp. v. Independence Tube Corp., 467

L 10, 11

Cordova d Simonpietri Ins. Agency v. Chase Manhat-

tan Bank, 649 F.2d 36 (Ist Cir. 1981777) 6

Crane v. Intermountain Health Care, Inc., 637 F.2d

Va Cee ey EE Ok bec cei nies<ddéccusedaes 6

Doe v. St. Joseph's Hospital of Fort Wayne, 788 F.2d

GEE SH EE Se cede de cewitencediseetess 6

Furlong v. Long Island College Hospital, 710 F.2d

e ⅛ ͤ K: ˙— 11 6

Hayden v. Bracy, 744 F.2d 1338 (8th Cir. 1984) 6

McLain v. Real Estate Board of New Orleans, 444 U.S.

„ i, 3, 5, 6, 13

Mitchell v. Frank R. Howard Memorial Hospital, 853

F.2d 762 (9th Cir. 1988) cert. denied, 109 S.Ct.

eee leek 5, 6

Potters Medical Center v. City Hospital Ass’n, 800

eo . fg |. | rare 11

Sarin v. Samaritan Health Center, 813 F.2d 755 (6th

b W oe 6. 8

TABLE OF AUTHORITIES | No.

CASES

In the Supreme Court

OF THE

United States

Page

Seglin v. Esau, 769 F.2d 1274 (7th Cir. 1985) .. 4, 6, 7. 8

Shahawy v. Harrison, 778 F.2d 636 (11th Cir. 1985)

amended, 790 F.2d 75 (19860))))))) 7 OCTOBER TERM 1989

Stone v. William Beaumont Hospital, 782 F.2d 609 Sumit HEALTH, Ltp., Mipway HosprtaL MEDICAL

(Gis COP. BSG) ccc cece ...... „„ 6,9 CENTER, THE MEDICAL STAFF OF Mipway Hosprral.

Thompson v. Wise General Hospital, 707 F. Supp. 849 MEDICAL CENTER, MITCHELL FELDMAN, AUGUST

(W.D. Va. 1989) aff'd, 896 F.2d 547 (4th Cir. READER, M. D., ARTHUR N. LuRvEy, M. D.,

„...... „ 66 6 0 LTT 6 JONATHAN I. Macy, M. D., JAMES J. SALzZ, M.D.,

Weiss v. York Hospital, 745 F.2d 786 (3rd Cir. 1984) GILBERT PERLMAN, M.D., MARK KADZIELSKI

cert. denied, 470 U.S. 1060 (1985) ............. 11 and WEISSBURG and ARONSON, ING.,

Western Waste Service Systems v. Universal Waste Petitioners,

Control, 616 F.2d 1094 (9th Cir.) cert. denied, 449 vs.

. rrr ere er Tee ere ee 5 SIMON J. PINHAS, M. D.,

Respondent.

Statutes

Cal. Civ. Code PETITION FOR A WRIT OF CERTIORARI TO THE

§ 1714.10 (West Supp. 199õ: 0.0.60 e eee 12 UNITED STATES COURT OF APPEALS FOR THE

r ̃˙ ne 2. 4

eee)

Gere. ..

— to

Summit Health, Ltd., Midway Hospital Medical

Center, the Medical Staff of Midway Hospital Medical

Center, Mitchell Feldman, August Reader, M.D., Arthur

P. Areeda, ANTITRUST LAW § 232.1 (Supp. 1989) 6 N. Lurvey, M.D., Jonathan I. Macy, M.D., James J. Salz,

M.D., Gilbert Perlman, M.D., Mark Kadzielski and

Weissburg and Aronson, Inc., petition for a writ of certio-

rari to review the decision of the United States Court of

Appeals for the Ninth Cireuit in this case.

Treatises

OPINIONS BELOW

The opinion of the court of appeals (Appendix, infra) is

reported at 894 F.2d 1024 (9th Cir. 1989).

JURISDICTION

The opinion of the court of appeals issued on July 26,

1989, and was amended and superseded on January 25,

1990. Petitions for rehearing were filed by all parties, and

were denied on January 25, 1990. (Appendix, infra at

A-1.) The jurisdiction of this Court is invoked under 28

U.S.C. § 1254(1).

CONSTITUTIONAL PROVISIONS AND STATUTES

INVOLVED

Sherman Act § 1, 15 U.S.C. § 1:

Every contract, combination in the form of trust or

otherwise, or conspiracy, in restraint of trade or com-

meree among the several States, or with foreign nations,

is declared to be illegal

STATEMENT OF THE CASE

In this case, a surgeon contends that a peer review

action taken against his medical staff privileges at Mid-

way Hospital Medical Center, an acute care hospital

located in Los Angeles, California, was based on false

charges of deficient quality of care, which were the prod-

uct of an antitrust conspiracy. Although the peer review

action was determined to have been based on substantial

evidence by a Superior Court of the State of California

ruling upon the surgeon's petition for a writ of mandate

(Appendix, infra), the physician contends, inter alia, that

the Hospital, its parent corporation, the physicians in-

volved in the peer review process, and the Hospital's

attorneys “conspired” against him in violation of See-

tion 1 of the Sherman Act. On October 9, 1987, the

District Court entered its order granting defendants’

motion to dismiss the first amended compiaint without

leave to amend (Appendix, infra).

The Ninth Cireuit reversed the antitrust holding of the

district court. The cireuit court held that general allega-

tions that the plaintiff and each of the defendants are

“engaged in interstate commerce” are sufficient to invoke

jurisdiction under Section 1 of the Sherman Act, notwith-

standing the fact that the plaintiff did not allege any

nexus between the alleged conspiracy and interstate com-

mere. The circuit court also held that the first amended

complaint, which does not allege that the Hospital's

attorneys did anything other than provide legal advice

requested of them, was nevertheless sufficient to state a

claim against the Hospital’s counsel, Mr. Kadzielski and

Weissburg and Aronson, Ine, for conspiring with their

clients in violation of Section 1 of the Sherman Act.

REASONS FOR GRANTING REVIEW

THERE IS A CLEAR CONFLICT AMONG THE

JUDICIAL CIRCUITS, MANIFESTED BY THIS

DECISION, AS TO THE SHERMAN ACT'S

INTERSTATE COMMERCE JURISDICTIONAL

REQUIREMENTS.

A. Introduction

At issue in this action is the appropriate interpretation

of this Court’s opinion in McLain v. Real Estate Board of

New Orleans, 444 U.S. 232 (1980), setting the standard

for the interstate commerce requirement for Sherman Act

jurisdiction. The position adopted by the First, Second,

Sixth, Seventh, Eighth, and Tenth Cireuit Courts of

Appeal is that the allegedly anticompetitive activity, if it

is local in nature, must affect interstate commerce. The

minority position, expressed by the Ninth Cireuit Court of

Appeals in this case, is that the allegedly anticompetitive

activity need not affect interstate commerce. instead, the

minority holds that Sherman Act jurisdiction ean be

invoked if the general business activities of the defend-

ants are alleged to have a not insubstantial effect on

interstate commerce.

The Court should resolve this conflict because its im-

portance to hospitals, physicians, and the public, which

benefits from effective medical staff peer review, is grow-

ing as an inereasing number of disciplined physicians who

are the subject of peer review proceedings have been

asserting Sherman Act claims against those involved in

the process. As at least one cireuit has recognized, the

minority position would allow “virtually every physician

who is ever temporarily denied hospital privileges for

whatever reason [to] drag the hospital and members of

its staff into costly antitrust litigation... .” Seglin „.

Esau, 769 F.2d 1274, 1283-1289 (7th Cir. 1985).

B. The Decision Below

Section 1 of the Sherman Act prohibits contracts,

combinations or conspiracies “in restraint of trade or

commerce among the several States....” 15 U.S.C. § 1.

( The Health Care Quality Improvement Act of 1986, 42 U.S.C.

§ 11101 (“The Congress finds... (4) The threat of private money

damage liability under Federal laws, including treble damage liabil-

ity under Federal antitrust law, unreasonably discourages physicians

from participating in effective professional peer review.” )

— —

To invoke Sherman Act jurisdiction, a plaintiff must

allege that “the defendants’ activity is itself in interstate

commereé, or, if it is local in nature, that it has an effect

on some other appreciable activity demonstrably in inter-

state commerce.” McLain v. Real Estate Board of New

Orleans, 444 U.S. 232, 242 (1980). The issue raised by the

opinion below is whether the alleged nexus with interstate

commerce must be with the general business activity of

the defendants or with the alleged conspiracy in restraint

of trade.

In his first amended complaint, the plaintiff asserted

only in the most general terms that he “has” engaged in

interstate commerce and that tae defendants were “en-

gaged in interstate commerce.” (Appendix, infra,

paragraphs 5-17 of the first amended complaint.) He

failed to allege any nexus between the alleged unlawful

conduet itself and interstate commerce.

The cireuit court rejected the contention of petitioners

that a Sherman Act plaintiff is required to allege a nexus

between the alleged conspiracy and interstate commerce.

Recognizing that this Court’s decision in McLain requires

a Sherman Act plaintiff tc show that as a matter of

practical economies the “activities” of Sherman Act de-

fendants have a not insubstantial effect on the interstate

commerce involved,” the cireuit court in this ease held

that the “activities” in question are “the peer review

process in general,” and not the alleged conspiracy. 894

F.2d at 1032. The opinion in this case illustrates the

Ninth Cireuit’s interpretation that the “activities” this

Court referred to in McLain are the defendants’ general

business activities, independent of the alleged violation.

See Western Waste Service Systems v. Universal Waste

Control, 616 F.2d 1094, 1097 (9th Cir.) cert. denied, 449

U.S. 869 (1980); Mitchell v. Frank R. Howard Memorial

—

Hospital, 853 F.2d 762 (9th Cir. 1988) cert. denied, 109

S.Ct. 1123 (1989). This interpretation has been roundly

criticized and rejected by a majority of the Cireuit Courts

of Appeal.”

C. The Split Among The Circuits

The Ninth Cireuit’s interpretation of McLain has been

criticized and rejected by a majority of circuits. The

Tenth Cireuit, en banc, evaluated McLain in detail and

concluded that “we do not believe McLain signals a shift

in analytical focus away from the challenged activity and

towards the defendant's general or overall business. The

analytical focus continues to be on the nexus, assessed in

practical terms, between interstate commerce and the

challenged activity.“ Crane v. Intermountain Health Care,

Inc., 637 F.2d 715, 724 (10th Cir. 1980) (en banc).

The Tenth Cireuit’s analysis of McLain has been ac-

cepted by the First, Second, Sixth, Seventh, and Eighth

eireuits. Cordova d Simonpietri Ins. Agency v. Chase

Manhattan Bank, 649 F.2d 36, 44-45 (Ist Cir. 1981);

Furlong v. Long Island College Hospital, 710 F.2d 922,

925-926 (2nd Cir. 1983); Hayden v. Bracy, 744 F.2d 1338,

1342-1343 (8th Cir. 1984); Seglin v. Esau, 769 F.2d 1274,

1280 (7th Cir. 1985); Stone v. William Beaumont Hospital,

782 F.2d 609, 613-614 (6th Cir. 1986); Doe v. St. Josep =

Hospital of Fort Wayne, 788 F. 2d 411, 417 (7th Cir. 1986);

Sarin v. Samaritan Health Center, 813 F.2d 755, 758 (6th

Cir. 1987); see also Thompson v. Wise General Hospital,

707 F. Supp. 849, 855 (W.D. Va. 1989) (“in the absence

of any Fourth Cireuit ruling on this issue, the court

The minority interpretation has also been eriticized by commenta-

tors. See, ¢.g., P. Areeda, ANTITRUST LAW € 232.1, at 238-239 (Supp.

1989)

adopts the approach of the majority of the circuits”) aff'd,

896 F.2d 547 (4th Cir. 1990).*

Representative of such holdings, and perhaps most

analogous to this case, is the decision of the Seventh

Cireuit in Seglin v. Esau. In Seglin, the Seventh Circuit

found that the allegations of purchase of equipment and

supplies in interstate commerce, the provision of services

to patients who traveled in interstate commerce and the

receipt of payments in interstate commerce coupled with

an allegation of suspension from a medical staff for

approximately sixteen months were insufficient to meet

the interstate commerce pleading requirements of the

Sherman Act. While the Seventh Cireuit did not say that

the suspension or denial of one physician’s hospital privi-

leges could never state an antitrust claim, it was “ineum-

bent” upon the plaintiff to plead additional facts from

which it could be inferred that the alleged unlawful

conduct itself somehow affected interstate commerce.

Notwithstanding the complete lack of sufficient plead-

ing allegations in the present case, the Ninth Circuit

concluded that the plaintiff “need only prove that peer-

review proceedings have an effect on interstate commerce,

a fact that can hardly be disputed. The proceedings affect

the entire staff at Midway and thus affect the hospital's

interstate commerce.” 894 F.2d at 1032.“ No case so

‘Two circuits apparently join the Ninth Cireuit in the minority

opinion. See Cardio-Medical Assocs. H Crozer-Chester Med. Ctr., 721

F.2d 68, 74-75 (3rd Cir. 1983); Shahawy v. Harrison, 778 F.2d 636,

639-640 (11th Cir. 1985) amended, 790 F.2d 75 (1986).

This conclusion is unsupported by any factual record or pleading

allegation, The plaintiff in this case did not allege that the mere

existence of a peer review proceeding, as a matter of “practical

economics,” had a not insubstantial effect on interstate commerce.

The only interstate commerce allegations are that the various parties

holds, and the overwhelming weight of opinion is to the

contrary. See, e.g., Sarin v. Samaritan Health Center, 813

F.2d at 758; Seglin v. Esau, 769 F.2d at 1280. Moreover,

whether or not peer review proceedings have an effect on

interstate commerce, there is no allegation that the spe-

cifie conduct alleged in this case, i. e., the creation of false

charges of deficient quality of care, has any nexus with

interstate commerce. Accordingly, the circuit court’s in-

terstate commerce holding is inconsistent with the hold-

ings of a majority of circuit courts of appeals.

D. The Importance of the Issue

The decision below is the most recent in the minority

line of cases failing to require any nexus between the

alleged anticompetitive conduct and interstate commerce.

The Seventh Cireuit recognized the adverse policy and

practical consequences of applying the minority jurisdic-

tional rule in a medical staff peer review case:

Failure to uphold the dismissal of the instant com-

plaint on the ground of lack of any allegations re-

garding a plausible nexus with interstate commerce

would mean that virtually every physician who is ever

temporarily denied hospital privileges for whatever

reason could drag the hospital and members of its

staff into costly antitrust litigation merely by alleg-

ing that the defendant receives payments, goods, or

equipment in interstate commerce. We decline to

encourage this procedure.

Seglin, 769 F.2d at 1283-1284.

It has been recognized that the minority approach

“would in essence eliminate the interstate commerce test

are or have been engaged in interstate commerce. (Appendix, infra,

€€ 5-17 of the first amended complaint.)

from antitrust law, since the total activities of virtually

any defendant, no matter how local its business, are likely

to have some effects upon interstate commerce. [cita-

tion]” Stone, 782 F.2d at 618, n. 3 (Holschuh, D. J.,

concurring).

The inconsistent jurisdictional findings spawned by the

split among the circuits are contrary to the national

purpose of the Sherman Act, which is to promote uniform

antitrust treatment of interstate commerce. This purpose

will not be promoted if the invocation of Sherman Act

jurisdiction varies according to the precedential bounda-

ries of circuit courts of appeal rather than uniform stan-

dards of enforcement.

THE CIRCUIT COURT HOLDING IMPINGES ON

THE EFFECTIVE ASSISTANCE OF COUNSEL TO

THOSE CONDUCTING PEER REVIEW, AND

WILL CREATE A CHILLING EFFECT ON THE

PEER REVIEW PROCESS AND ITS PAR-

TICIPANTS.

A. Introduction

This Court has not addressed the prerequisites to a

finding of conspiracy between an attorney and his client.

In this ease, there are no allegations that the attorneys

had any independent economic interest in the outcome of

the peer review proceedings, or were themselves in compe-

tition with the plaintiff. The allegations consist of asser-

tions that the lawyers acted as lawyers, providing the

legal advice requested of them. This is a far ery from the

allegations necessary to overcome this Court's holding

that two people or entities which “are not separate eco-

nomie actors pursuing separate economic interests... do

not provide the plurality of actors imperative for a § 1

conspiracy.” Copperweld Corp. v. Independence Tube

Corp., 467 U.S. 752, 769 (1984). K

The cireuit court in this case nevertheless held that the

pleading, which alleged that the lawyers provided legal

advice to their clients, was sufficient to state a claim

against Mr. Kadzielski and Weissburg and Aronson, Inc.,

the Hospital's attorneys. If this decision is allowed to

stand, it will have a devastating effect on the peer review

process. The participants in any peer review process

legitimately will be concerned that antitrust claims will

be created solely by the fact that counsel was retained to

provide assistance, even without an allegation that the

lawyers had a separate economic interest.“ This will ere-

ate a chilling effect on: (a) the retention of legal counsel,

who might provide objective advice regarding the poten-

tial antitrust or tort implications of the conduct at issue;

and (b) reasoned communication with legal counsel, be-

cause such communications may become targets of discov-

ery in subsequent antitrust proceedings.

B. The Underlying Allegations

The salient Sherman Act conspiracy allegations are set

forth in paragraph 124 of the first amended complaint

which alleges:

in late March, 1987 [defendants] Summit Health,

Midway Hospital, Medical Staff, Mr. Feldman, Dr.

Reader, Dr. Lurvey, Dr. Macy, Dr. Salz and Dr.

Perlman entered into a combination and a conspiracy

to retaliate against Dr. Pinhas and to preclude him

from continued competition in the market place...

[ijn furtherance of the conspiracy of defendants

Summit Health, Midway Hospital, Medical Staff, Mr.

Feldman, Dr. Reader, Dr. Lurvey, Dr. Maey, Dr.

Salz and Dr. Perlman, defendants enlisted the assis-

tance and received the assistance of [the hearing of-

ficer], Mr. Kadzielski and [Weissburg and Aronson]

to create unjustified charges, to secure adverse deter-

minations against plaintiff, Dr. Pinhas, to cause a

summary suspension and termination of his privi-

“Cf. Petition For a Writ of Certiorari to the United States Court of

Appeals for the Eleventh Cireuit, in Bolt v. Halifax, 981 F.2d 810

(11th Cir, 1990) petition for cert. filed, 58 U.S. L. W. 3598 (U.S. Mar. 9,

1990) (No. 89-1419), which presents for review the question whether,

in the context of state-mandated peer review, a hospital can be

considered as separate from its own medical staff, for purposes of

antitrust conspiracy analysis.

leges at Midway Hospital and report that summary

suspension and termination to the defendant BMQA,

and causing dissemination of that adverse determi-

nation to hospitals in which Dr. Pinhas is a member,

and to all hospitals to which he may apply so as to

secure similar actions by those hospitals, thus effee-

tuating a boycott of Dr. Pinhas.

First amended complaint, paragraph 124 (Appendix,

infra.)

There is no allegation that the attorneys provided any-

thing other than the legal assistance requested, or had

any economic interest independent of that of their clients.

See Copperweld, 467 U.S. at 769 (Section 1 conspiracy

requires separate economic actors pursuing separate eco-

nomie interests); Potters Medical Center v. City Hospital

Ass M., 800 F.2d 568 (6th Cir. 1986) (agent without

independent personal stake not capable of conspiring

with hospital); see also Weiss v. York Hospital, 745 F.2d

786 (3rd Cir. 1984) cert. denied, 470 U.S. 1060 (1985). In

short, there is no allegation that the role of counsel was

anything other than that of a legal adviser assisting

clients with their statutory obligations in the peer review

process. See Ashley Meadows Farm v. American Horse

Shows Association, 1983-2 Trade Cases J 65,653, at 69353-

69354 (S.D.N.Y. Sep. 29, 1983) (“Zealous” participation

of counsel in disciplinary proceedings insufficient for

antitrust liability.)

"While it is recognized that the generalized allegation is made that

counsel “caused” the commencement and prosecution of peer review

proceedings, that allegation must be read in light of the specific

factual claims asserted in the antitrust claim made by the plaintiff.

Compare first amended complaint, % 18 and 124 (Appendix, im/fra).

C. The Importance of the Issue

If the cireuit eourt's decision is allowed to stand, it will

have a devastating effect on those who would consult with

counsel in the pursuit of an appropriate peer review

process. Plaintiffs will make antitrust defendants of coun-

sel who assist at any stage of the peer review process.

This will create a tremendously chilling effect on the peer

review process and its non-attorney participants because

they will have a legitimate concern that the mere consul-

tation with legal counsel will subject them to Sherman

Act liability, and that any attorney-client communications

will be discoverable in subsequent antitrust proceedings.

Thus, attorneys who might otherwise counsel against

antitrust violations may not even be consulted.

By virtue of the strong public policy favoring the ability

of counsel to provide legal advice to their clients, courts

should require a particularized allegation that counsel

had a separate economic interest, and were separate

economic actors, and find that assertions that counsel

were enlisted to provide assistance are inadequate to

state a viable antitrust claim.”

The particularized pleading requirement has been recognized by

the California Legislature as reflecting an important public policy.

This policy is now embodied in Cal. Civ. Code § 1714.10 (West Supp.

1990) requiring preliminary court review prior to acceptance for

prosecution of a pleading asserting causes of action against attorneys

based on a civil conspiracy with their clients.

CONCLUSION

The circuit court’s opinion will perpetuate the inconsis-

tent interpretation of this Court’s opinion in McLain,

resulting in arbitrary and unpredictable invocation of

Sherman Act jurisdiction. The circuit court’s holding that

an attorney and his client are co-conspirators under the

Sherman Act, based solely on an allegation that an attor-

ney provided requested legal advice, is contrary to the

Sherman Act conspiracy requirements, is contrary to

publie policy and creates a chilling effect on the peer

review process. For these reasons, petitioners request

that the Court accept review and reverse the decision

below.

Respectfully submitted,

J. MARK WAXMAN

TAMI S. SMASON

WEISSBURG AND ARONSON, INC.

2049 Century Park East

Suite 3200

Los Angeles, California 90067

(213) 277-2223

Attorneys for petitioners

Summit Health, Litd., Midway Hos pi

tal Medical Center, the Medical Staff

of Midway Hospital Medical Center,

Mitchell Feldman, August Reader,

M. D., Arthur N. Lurvey, M. D.

Jonathan I. Macy, M. D., James J.

Salz, M. D., Gilbert Perlman, M. D.

Mark Kadzielski and Weissburg and

Aronson, Ine.

A-1

Simon J. PINHAS, Plaintiff-Appellant,

SuMMIT HEALTH, LTp.; Mipway Hosprral MEDICAL

CENTER; THE MEDICAL STAFF OF Mipway HospI!ItaL

MEDICAL CENTER; MITCHELL FELDMAN, ET Al.,

Defendants-A ppellees.

No. 87-6530.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Feb. 7, 1989.

Decided July 26, 1989.

As Amended on Denial of Rehearing and

Rehearing En Bane Jan. 25, 1990.

Physician whose hospital staff privileges were revoked

brought antitrust action. United States District Court for

the Central District of California, Ferdinand F. Fernan-

dez, J., dismissed complaint, and appeal was taken. The

Court of Appeals, Wiggins, Circuit Judge, held that:

(1) state action doctrine did not protect peer-review

proceedings from application of antitrust laws, and

(2) peer-review proceeding did not deprive physician of

due process absent showing of state action.

Affirmed in part, reversed in part, and remanded.

Opinion, 880 F.2d 1108, superseded.

1. Federal Courts — 776

Dismissal for failure to state claim pursuant to Federal

Rule of Civil Procedure 12 (b) (6) is ruling on question of

law that Court of Appeals reviews de novo; review is

limited to contents of complaint. Fed. Rules Civ. Proc. Rule

12(b) (6), 28 U.S. C. A.

A-2

2. Declaratory Judgment — 393

Customery deference for district court is not applicable

to its determination to grant declaratory judgment; Court

of Appeals must exercise its own sound diseretion to

determine propriety of district court's grant or denial of

declaratory relief.

3. Monopolies — 12(15.5)

State action doctrine did not shield California hospi-

tal's peer-review proceedings from antitrust challenge

absent showing that proceedings were actively supervised

by state; state agencies did not actively supervise peer-

review procedures and judicial review was insufficient to

constitute active supervision.

4. Federal Courts — 13

Physician's antitrust suit against hospital, challenging

peer-review procedure, was ripe, though peer-review pro-

ceedings were not yet completed when suit was filed, in

that physician had already lost staff privileges and report

of such loss had already been filed with state. West's Ann.

Cal.Bus. & Prof.Code § 805.

5. Administrative Law and Procedure — 229

Monopolies — 24(1)

Physician challenging hospital peer-review process on

antitrust grounds was not required to first exhaust ad-

ministrative remedies; where there was no statutory re-

quirement of exhaustion of administrative remedies,

application of exhaustion doctrine lay within diseretion of

trial court.

A-

6. Administrative Law and Procedure — 228

Monopolies — 28(3)

Doetrine of primary jurisdiction did not preclude re-

view of physician's antitrust suit against hospital, though

physician was currently seeking review by state of hospi-

tal's peer-review decision; proceedings at state level, de-

signed to determine whether physician had received fair

— would not help clarify and narrow his antitrust

claims.

7. Federal Courts — 47

Burford abstention was not appropriate in physician's

antitrust suit against hospital; application of federal anti-

trust law did not involve difficult questions of state law.

. Commerce — 62.14

Physician alleging that peer-review proceedings which

deprived him of staff privileges violated antitrust laws

sufficiently alleged required nexus with interstate com-

merece; hospital was engaged in interstate commerce and

peer-review proceedings affected hospital's entire staff.

9. Monopolies — 12(11)

Physician alleging that hospital's denial of his staff

privileges violated antitrust laws sufficiently alleged ad-

verse effect on competition; physician alleged that he

provided services to patients at lower prices, and thus his

exclusion from market would injure competition by al-

lowing other similar doetors to charge higher prices for

their services.

A-4

10. Attorney and Client — 26

Attorney is not immune from antitrust liability if he

becomes active participant in formulating policy decisions

with his elient to restrain competition.

11. Conspiracy — 18

Physician's complaint, alleging that hospital's denial of

his staff privileges violated antitrust laws, sufficiently

alleged antitrust conspiracy; complaint alleged that hos-

pital and its parent corporation conspired with their

attorneys and medical staff to exclude him. Sherman

Anti-Trust Act, § 1, 15 U.S.C.A. § 1.

12. Constitutional Law — 296(1)

Hospitals — 6

Hospital's peer-review process did not violate physi-

cian’s due process rights absent showing of state action;

though peer-review process was statutorily mandated,

decision to remove physician's staff privileges was made

by private parties according to professional standards

that were not established by state. U.S.C.A. Const.

Amend. 14.

13. Declaratory Judgment — 300

Defendants in physician's antitrust suit against hospi-

tal which removed his staff privileges were not appropri-

ate parties to defend physician's additional constitutional

challenge to state and federa! statutes requiring hospital

to report its actions to government agencies. Health Care

Quality Improvement Act of 1986, §§ 423, 425, 42

U.S.C.A. §§ 11133, 11135; West's Ann.Cal.Bus. &

Prof.Code § 805.

— —

A-5

Lawrence Silver, Beverly Hills, Cal., for plaintiff-

appellant.

J. Mark Waxman, Weissburg and Aronson, Ine., Los

Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the

Central District of California.

Before CANBY, WIGGINS and O’SCANNLAIN, Cir-

cuit Judges.

WIGGINS, Circuit Judge:

Appellant Dr. Simon J. Pinhas appeals the dismissal of

his action challenging the removal of his staff privileges at

Midway Hospital Medical Center (Midway) in Los Ange-

les. Pinhas alleges claims under section 1 of the Sherman

Antitrust Act, 15 U.S.C. § 1 (1982) and 42 U.S.C. 66 1983,

1985 (3) (1982). Pinhas also seeks a declaratory judgment

that Cal.Bus. & Prof Code §§ 805, 805.5 (West

Supp.1989), and the Health Care Quality Improvement

Act of 1986, 42 U.S.C. § 11101-11152 (Supp. IV 1986), are

unconstitutional under the fourteenth amendment. The

district court granted appellees’ motion to dismiss all

four claims. We reverse the dismissal of the antitrust

claim, and affirm the dismissal of the section 1983 claim

and request for declaratory judgment.“

BACKGROUND

Dr. Pinhas is an eye physician and ophthalmological

surgeon. He became a member of the medical staff at

Midway in October 1981. Reimbursement under Medicare

'Pinhas does not challenge the dismissal of the section 1985 (3)

claim on appeal.

A-6

for the charges of an assistant surgeon in the perform-

ance of eye surgery became unavailable in February 1986.

Pinhas alleges that most hospitals in Los Angeles subse-

quently eliminated their requirement that assistant sur-

geons be utilized during eye surgeries. Pinhas, together

with several other ophthalmic surgeons at Midway, peti-

tioned the medical staff at Midway to eliminate its assis-

tant surgeon requirement. The medial staff refused to do

so. Pinhas advised the hospital administration that the

medical staff's refusal to eliminate the assistant surgeon

requirement would cost him approximately $60,000 per

year. Pinhas allegedly told the hospital that although he

wished to keep the majority of his practice at Midway, he

would nevertheless move his practice if the assistant

surgeon requirement was not abolished. Pinhas alleges

that rather than abolish the assistant surgeon require-

ment, Midway offered him what he characterizes as a

“sham” contract in which he was to be paid the sum of

$36,000 per year (later raised to $60,000 per year) for

consulting services he contends he would not have been

expected to perform. Pinhas refused to sign the contract.

Despite repeated requests by appellees Dr. Lurvey, the

Chief of Staff at Midway, and Mitchell Feldman, regional

vice-president of Summit Health Ltd. (Summit), the

parent corporation of Midway, Pinhas refused to return

the contract.

Pinhas contends that as a result of his refusal to return

the contract, Lurvey and Feldman conspired to initiate

disciplinary proceedings against him. By letter dated

April 13, 1987, Pinhas was advised by Summit Health and

Midway, through Lurvey and Feldman, that he was sum-

marily suspended as of that date. The letter stated that he

was being suspended based on a “medical staff review of

Dr. Pinhas’s medical records with consideration as to the

questions raised regarding: indications for surgery; ap-

A-7

propriateness of surgical procedures in light of patient's

medical condition; adequacy of documentation in medical

records; and ongoing pattern of identified problems.” The

letter also indicated that the Midway Executive Commit-

tee (MEC) would convene within ten days to review and

consider the action. The MEC met on April 20, 1987, and

permitted Pinhas to make a statement. The MEC upheld

the summary suspension with the recommendation to

terminate his staff privileges at Midway. Midway's board

of direetors concurred with the MEC's recommendation.

In accordance with the medical staff by-laws, Pinhas

requested a hearing by the Midway Judicial Review Com-

mittee (JRC). He was granted the hearing and received

notice of seven charges against him. In accordance with

the bylaws, Lurvey appointed seven members of the medi-

cal staff to serve on the JRC. Attorney Richard Posell was

selected by Midway's attorney Mark Kadzielski of Weiss-

burg & Aronson to serve as the hearing officer. The peer-

review hearings began on May 26 and proceeded for six

hearing sessions, concluding on June 12, 1987. Both

parties were permitted to call witnesses and introduce

evidence. Pinhas was not permitted representation by

legal counsel prior to or during the proceedings. The JRC

issued its report on June 12, 1987, upholding only one of

the seven charges against Pinhas. It reeommended that

Pinhas be reinstated subject to Pinhas’s agreement to

several special conditions relating to the conduct of his

operations and to be placed on a six-month probationary

period.

The MEC and Pinhas both appealed the JRC“ decision

to the Governing Board of the hospital in July 1987. On

February 2, 1988, the Governing Board affirmed the

decision of the JRC, but imposed more stringent condi-

tions upon Pinhas’s six-month probationary period. Fi-

A-8

nally, sometime in October 1988, Pinhas filed a petition

for writ of mandate pursuant to Cal.Civ.Proe.Code

§ 1094.5 (West Supp.1989). No decisions has yet been

reached in that matter.

On May 21, 1987, following his suspension, but before

the hearing before the JRC, Pinhas filed this suit in

federal court. Named as defendants are Summit Health;

Midway; the Midway medical staff; Dr. Lurvey; Feldman;

Drs. Reader, Macy, Salz, and Perlman, each of whom are

ophthalmologists and competitors of Pinhas; Peggy Far-

ber, an employee in the risk management section with

Summit Health/Midway; Kadzielski; Weissburg & Aron-

son; and Posell (collectively “appellees”).? Pinhas alleges

in his complaint that as a result of his refusal to sign the

“sham” contract, appellees entered into a conspiracy to

preclude him from practicing at Midway or any other

hospital in California or the rest of the United States in

violation of section one of the Sherman Act, 15 U.S.C. § 1

(1982). The thrust of Pinhas’s antitrust claim is that

appellees conspired summarily to suspend and terminate

his medical staff privileges at Midway, and to have the

report of his termination disseminated to hospitals in

California pursuant to Cal. Bus & Prof. Code 55 805, 805.1

(West Supp. 1989), and to hospitals throughout the entire

country pursuant to 42 U.S.C. 56 11133, 11135 (Supp. IV

1986) in order to preclude him from practicing elsewhere.

Section 805 of the California Business and Professions

Code requires a health care facility to report actions

adversely affecting a doctor's clinical privileges to the

California Board of Medical Quality Assurance (BMQA).

Before granting or renewing a staff privilege for a physi-

“Also named as a defendant was the Califorma Board of Medica

Quality Assurance (BMQA). BMQA, however, was disminsed by

stipulation.

A-9

cian or surgeon, a health care facility is also required

under section 805.5 to request a report from BMQA to

determine whether the applying doctor has been denied

staff privileges by another hospital.’ Similar reporting

requirements are mandated by federal law under 42

U.S.C. $§ 11133, 11135. Pinhas contends that as a result

of his termination and the dissemination of the reports,

appellees have effectively boycotted his practice and pre-

eluded him from continued competition in the

marketplace.

Pinhas also alleges under sections 1983 and 1985(3)

that the peer-review proceedings did not comport with the

due process guarantee of the fourteenth amendment. In

support of his due process claim, Pinhas contends he did

not receive adequate notice of the charges against him, he

was not permitted legal counsel at the hearing, the hear-

ing officer Posell was biased, he was not permitted to

cross-examine the MEC’s witnesses and was precluded

from calling several of his own. In addition to his anti-

trust and civil rights claims, Pinhas requests a declara-

tory judgment that Cal. Bus. & Prof. Code 66 805, 805.1

and 42 U.S.C. §§ 11133, 11135 violate the equal protection

and due process clauses of the fourteenth amendment.

Appellees filed a motion to dismiss on August 4, 1987,

and the court dismissed the case on September 21, 1987.

The distriet court coneluded that the appellees were

protected from antitrust liability under the state action

doctrine pursuant to Patrick v. Burget, 800 F.2d 1498 (9th

Cir.1986), rev'd, 486 U.S. 94, 108 S.Ct. 1658, 100 L.Ed.2d

53 (1988). The court dismissed the civil rights

Failure to file a report under section 405, or to request one under

section 805.1, constitutes a misdemeanor. Cal Rus & Prof. Code

§§ 805 (, 805.5(e).

A-10

claims because of a lack of state action under the four-

teenth amendment. It dismissed the claim for declaratory

relief as not ripe, and also because the appellees were not

the right parties to defend either the state or federal

statute. Pinhas s request for reconsideration by the court

based on the filing of certiorari with the Supreme Court in

Patrick was denied. Pinhas appeals dismissal of his anti-

trust and section 1983 claims, as well as his request for

declaratory relief. He does not appeal the dismissal of his

section 1985(3) claim. We have jurisdiction under 28

U.S.C. § 1291 (1982).

STANDARD OF REVIEW

[1] A dismissal for failure to state a claim pursuant to

Fed.R.Civ.P. 12(b) (6) is a ruling on a question of law

that we review de novo. See Fort Vancouver Plywood Co. v.

United States, 747 F.2d 547, 552 (9th Cir.1984). Review is

limited to the contents of the complaint, see id., and the

complaint should not be dismissed under the rule “unless

it appears beyond doubt that the plaintiff can prove no set

of faets in support of his claim which would entitle him to

relief,” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99,

101-02, 2 L.Ed.2d 80 (1957); see also Gibson v. United

States, 781 F.2d 1334, 1337 (9th Cir.1986), cert. denied.

479 U.S. 1054, 107 S.Ct. 928, 93 L.Ed.2d 979 (1987).

[2] “The customary deference for the district court is

not applicable to its determination to grant a declaratory

judgment. The court of appeals must exercise its own

sound diseretion to determine the propriety of the district

court's grant or denial of declaratory relief.” United States

v. Washington, 759 F.2d 1353, 1356-57 (9th Cir.) (en

hance) (citations omitted), cert. denied, 474 U.S. 994, 106

S.Ct. 407, * L.Ed.2d 358 (1985); aecord Guerra v.

A-11

Sutton, 783 F. 2d 1371, 1376 (9th Cir. 1986) (the court

reviews the denial of declaratory relief de novo).

III

ANALYSIS

A. Antitrust Claim

Pinhas contends on appeal that the district court's

dismissal of his antitrust claim based on the state action

doctrine must be reversed in light of the Supreme Court's

recent decision reversing our decision in Patrick. Patrick

v. Burget, 486 U.S. 94, 108 S.Ct. 1658, 100 L.Ed.2d 83

(1988). Appellees contend that the Supreme Court's deci-

sion in Patrick does not alter the district court’s holding,

but that even if the state action doctrine does not apply,

Pinhas’s amended complaint does not state a viable anti-

trust claim because Pinhas’s claim was not ripe for

determination and the complaint fails to demonstrate the

required nexus with interstate commerce, plead sufficient

facts to establish injury to competition, and adequately

plead an antitrust conspiracy.

1. State Action

a. Patrick

In Patrick we considered whether the state action

doctrine protected physicians in Oregon from federal

antitrust liability for their involvement with hospital peer-

review proceedings. The facts in Patrick are similar to

those of this case. The plaintiff, a general and vascular

surgeon, was subjected to a review of his staff privileges

at a hospital in Astoria, Oregon, whereupon it was recom-

mended that his privileges be terminated. 800 F.2d at

1502. The doctor brought suit in federal court while the

hospital’s peer-review proceedings were still being con-

A-12

ducted, alleging claims under sections 1 and 2 of the

Sherman Act. /d. at 1504. He alleged that the members of

his former elinie initiated the hospital peer-review pro-

ceedings to preclude him from competing against them.

Id. at 1502-04. We held that the doctors’ conduct in the

peer-review proceedings was immune from antitrust seru-

tiny under the state action doctrine because Oregon had

articluated a policy in favor of peer review and actively

supervised the peer-review process. 800 F. 2d at 1505-07.

The Supreme Court reversed our decision, holding that

the state action doctrine did not shield the hospital peer-

review proceedings from an antitrust challenge. 108 S.Ct.

at 1665-66.

In considering the state action doctrine, the Court

applied the rigorous two-prong test first devised in Cali-

fornia Retail Liquor Dealers Ass u v. Midcal Aluminum,

Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980).

Patrick, 108 S.Ct. at 1662-63. Under the Midcal test, ‘the

challenged restraint must be “one clearly articulated and

affirmatively expressed as state policy,” ’” and “the anti-

competitive conduct ‘must be “actively supervised” by the

State itself.) Jd. 108 S.Ct. at 1663 (quoting Midcal, 445

U.S. at 105, 100 S.Ct. at 943). The Court found it

unnecessary to consider the “clear articulation” prong of

the Midcal test, finding that the second prong was not

satisfied. Id.

The Court stated that the “active supervision’ or sec-

ond requirement, “mandates that the State exercise ulti-

mate control over the challenged anticompetitive

conduet,” and “requires that state officials have and

exercise power to review particular anticompetitive acts

of private parties and disapprove those that fail to accord

with state policy.” Id. The defendants argued that the

state of Oregon actively supervised the peer-review pro-

A-13

cess through (1) the state Health Division; (2) the Board

of Medical Examiners (BOME); (3) and the state judi-

cial system. Id. The Court had little difficulty in conelud-

ing that neither the Health Division nor the BOME

actively supervised the peer-review decisions. Jd. 108

S.Ct. at 1663-64. The Health Division had general super-

visory powers over such matters as licensing hospitals

and the endorsement of health laws. Although the statute

authorizes the Health Division to compel a hospital to

meet its obligation to establish and review peer-review

procedures, the Court concluded that this authority was

insufficient because the Health Division had no power to

review actual peer-review decisions and overturn a deci-

sion that failed to accord with state policy. Jd. at 1664.

Similarly, the BOME, whose principal function was to

regulate the licensing of physicians, also lacked the au-

thority to disapprove individual peer-review decisions. Id.

With respect to the state judiciary, the Court declined

to decide whether judicial review of private conduct can

ever satisfy the active supervision requirement. “This

case, however, does not require us to decide the broad

question whether judicial review of private conduct ever

can constitute active supervision, because judicial review

of privilege-termination decisions in Oregon, if such re-

view exists at all, falls far short of satisfying the active

supervision requirement.” Id. at 1664-65. The Court noted

that there was no statute in Oregon, or any holding by a

state court, which provided a physician whose privilege

had been revoked by à hospital a means of judicial review

of private peer-review decisions. Id. at 1665. The Court

emphasized that any judicial reivew that did exist was

insufficient to constitute “active supervision,” because the

review would not involve a review of the merits of a

privilege termination decision. Id. (citing Straube v.

Emanuel Lutheran Charity Bd., 287 Or. 375, 384, 600 P.2d

A-14

381, 386 (1979), cert. denied, 445 U.S. 966, 100 S.Ct. 1657,

64 L.Ed. 2d 242 (1980)). The Court thus coneluded that

no state actor in Oregon actively supervised hospital peer-

review decisions and that the state action doctrine was

inapplicable. Id.

b. Application of Patrick

3] Because we conclude that the second prong of the

Midcal test is not satisfied, we have no need to address its

“clear articulation” prong. Patrick, 108 S.Ct. at 1663.

Appellees’ arguments in support of their contention that

California actively supervises the peer-review process

mirror those made in Patrick. Appellees contend that the

State Department of Health Services (SDHS), California

Board of Medical Quality Assurance (BMA), and the

state judiciary all actively supervise the peer-review

system.

The SDHS has substantively the same role in Califor-

nia as the Oregon State Health Division has in Oregon:

the licensure and review of hospital procedures, including

procedures for the review of staff decisions.’ Also like the

Oregon State Health Division, it has no authority to

review privilege decisions and therefore does not actively

supervise these procedures.

Similarly, the BMQA serves relatively the same role in

California as the BOME in Oregon. Its primary function

is the regulation and disciplining of physicians. See

Cal.Bus. & Prof.Code §§ 2001-2006 (West Supp.1989).

And, as in Oregon, any adverse action taken by a hospital

agreement against a member physician must be reported

pursuant to its rule-making authority under Cal. Health & Safety

Code § 1275, the SDHS has promulgated extensive regulations

governing the operation of an acute care facility. See Cal.Admin.Code

tit. 22, § 70701 et seq. (1982).

A-15

to the BMQA. See Cal.Bus. & Prof. Code § 805 (West

Supp.1989). Also like the BOME, the BMQA has no

authority to review the outcome of a peer review proceed-

ing. Although it may not disseminate a report it finds to

be without merit, this restriction does not constitute the

type of active supervision necessary under Patrick.

We join the Supreme Court in avoiding the broad

question whether state courts, acting in their judicial

capacity, ever can adequately supervise private conduct

for purposes of the state action doctrine. See Patrick, 108

S.Ct. at 1664-65. The judicial review that does exist in

California does not satisfy the active supervision

requirement.

Unlike Oregon, California is actively engaged in review-

ing peer-review decisions. Such review is created by

statute under Cal.Civil Proe.Code § 1094.5 (West Supp.

1989) (reviewing quasi-judicial decisions) and

Cal.Civ.Proe.Code § 1085 (West 1980) (reviewing quasi-

legislative administrative proceedings). The plethora of

cases cited by appellees demonstrate the willingness of

California courts to entertain challenges to the peer-

review process. The function of the trial and appellate

California law recognizes two types of mandamus review of the

decisions made by hospitals with regard to physician medical staff

privileges. Where a physician's medical staff privileges have been

denied, suspended or terminated on the ground the physician has not

demonstrated an ability to comply with established standards, that

administrative decision is classified as “quasi-judicial” and review is

by administrative mandamus. However, where the physician has had

privileges denied or curtailed because of the implementation of a

“policy” of the hospital, the administrative action is classified as

‘“quasi-legislative” and reviewable by traditional mandamus.

Hay v. Scripps Memorial Hosp.-La Jolla, 183 Cal.App.3d 753, 758, 228

Cal.Rptr. 413, 417 (1986) (citations omitted).

A-16

courts, however, is limited under both types of

proceedings.

[Under Section 1094.5,] if the decision was substan-

tively rational, lawful, not contrary to established

publie policy and the proceedings were fair, a court

may not substitute a judgment for that of the gov-

erning board even if it disagrees with the board’s

decision. The scope of review in traditional manda-

mus proceedings [under section 1085] is limited to

an examination of the record of the hospital proceed-

ings to determine whether the action taken was

substantively irrational, unlawful or contrary to es-

tablished publie policy or procedurally unfair.

Hay v. Scripps Memorial Hosp.-La Jolla, 183 Cal.App.3d

753, 758, 228 Cal Rptr. 413, 417 (1986) (citations omit-

ted). This limited form of review is similar to the stan-

dards applied by the Oregon courts that the Supreme

Court found insufficient to constitute active supervision.

Patrick, 108 S.Ct. at 1665. “Such constricted review does

not convert the action of a private party in terminating a

physician’s privileges into the action of the State for

purposes of the state action doctrine.” Id.

We therefore find that the California judiciary does not

actively supervise the peer-review process. Accordingly,

the state action doctrine does not protect peer-review

proceedings in California from application of the anti-

trust laws.

2. Reviewability

[4] Appellees raise several arguments in support of

the contention that we should decline to review the case at

this time. The argument that the case is not ripe is

frivolous because Pinhas has already been removed from

Midway and an “805 Report” has been filed against him.

A-17

Regardless of the outcome of the writ of mandamus

action, Pinhas still has a viable antitrust claim. As is clear

from the Supreme Court’s decision in Patrick, that the

peer-review proceedings were not yet complete when this

suit was filed does not bar review of Pinhas’s action. See

id. at 1661 (stating that case was filed during course of

peer-review proceedings).

[5] Appellees also appear to contend that Pinhas

failed to exhaust his available administrative remedies.

Initially, we are not convineed that the requirement of

exhaustion of administrative remedies is applicable in

this ease because an administrative agency is not in-

volved. The peer-review process is conducted by a private

entity and is judicially reviewable in the California state

courts. The reasons for giving deference to an agency, see

e.g., Morrison-Knudsen Co. v. CHG Int'l, Inc., 811 F.2d

1209, 1223 (9th Cir.1987), simply are not applicable here.

In any event, where, as here, there is no statutory require-

ment of exhaustion of administrative remedies, applica-

tion of the exhaustion doctrine lies within the diseretion

of the trial court. See id. The district court did not abuse

its diseretion by entertaining Pinhas's suit.

[6] Appellees next argue that the doctrine of primary

jurisdiction precludes review of Pinhas's suit while the

peer-review proceedings remain ongoing. The primary

jurisdiction doctrine “is applicable whenever the enforce-

ment of a claim subject to a specific regulatory scheme

requires resolution of issues that are ‘within the special

competence of an administrative body,. Farley Transp.

Co. v. Santa Fe Trail Transp. Co., 778 F.2d 1365, 1370

(9th Cir. 1985) (quoting United States v. Western Pacific

H. R., 352 U.S. 59, 64, 77 S.Ct. 161, 165, 1 L.Ed.2d 126

(1956) ). Again, we doubt the application of this argument

where no agency action is directly involved. Nevertheless,

A-18

the doctrine does not apply here because the proceedings

at the state level, designed to determine whether Pinhas

received a fair hearing, will not help clarify and narrow

Pinhas’s antitrust claims. See 6 J. Von Kalinowski, Anti-

trust Laws d Trade Regulation § 44A.01[2][b], at 44A-14

(1989) (“The doctrine of primary jurisdiction will not be

invoked if it is clear that the agency's decision will have

no bearing on the antitrust issues.)

7] Abstention under Burford v. Sun 0 Co., 319 U.S.

315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), is also inappro-

priate. Burferd abstention is appropriate when a federal

court is presented with “difficult questions of state law

bearing on policy problems of substantial publie import

‘whose importance transcends the result in the case then

at bar. Newberry v. Pacific Racing Ass'n, 854 F.2d 1142,

1151 (9th Cir.1988) (quoting Colorado River Water Con-

serv. Dist. v. United States, 424 U.S. 800, 814, 96 S.Ct.

1236, 1244, 47 L.Ed.2d 483 (1976)). Application of the

Sherman Act, ia this ease, does not involve difficult

questions of state law.

Finally, appellees rely on Mir v. Little Co., 844 F.2d 646

(9th Cir.1988), for the proposition that the court should

abstain under principles of federalism and comity. In Mir.

however, we concluded that a doctor's common-law claims

against a hospital were precluded under California state

law beeause the doctor had failed to sueceed in his action

against the hospital for a writ of mandate. Id. at 650-51.

The holding in Mir is thus inapposite to Pinhas’s claim

under the Sherman Act.

3. Nexus with Interstate Commerce

[8] Appellees contend that Pinhas’s amended com-

plaint fails to establish jurisdiction under the Sherman

Act because it does not sufficiently allege “a required

A-19

nexus with interstate commerce.” Appellees’ primary con-

tention is that interstate commerce will not be affected by

the removal of Pinhas from the hospital staff.

In order to establish jurisdiction under the Sherman

Act, a plaintiff must “identify a relevant aspect of inter-

state commerce and then show ‘as a matter of practical

economics’ that the Hospital's activities have a ‘not insub-

stantial effect on the interstate commerce involved.“

Mitchell v. Frank R. Howard Memorial Hosp., 853 F.2d

762, 764 (9th Cir.1988) (summarizing this eireuit's inter-

pretation of McLain v. Real Estate Bd., 444 U.S. 232, 100

S.Ct. 502, 62 L.Ed.2d 441 (1980); quoting Palmer v.

Roosevelt Lake Log Owners Ass'n, 651 F.2d 1289, 1291 (9th

Cir. 1981)) cert. denied — U.S. —, 109 S.Ct. 1123, 103

L.Ed.2d 1986 (1989).

Appellees do not contend that Pinhas has failed to

identify any relevant aspect of interstate commerce. In-

stead, their argument is directed at the second considera-

tion, the effeet on the relevant interstate commerce.

Under the second requirement, Pinhas must show that

“as a matter of practical economics” the activities of the

appellees — the peer review process in general — have a

“not insubstantial effect on the interstate commerce in-

volved.” McLain, 444 U.S. at 246; 100 S.Ct. at 511. Pinhas

need not, as appellees apparently believe, make the more

particularized showing of the effect on interstate com-

meree caused by the alleged conspiracy to keep him from

“They argue that any medieal payments received by the hospital

will not be materially affected by Pinhas s removal from the staff at

Midway. Appellees contend that alt most, the extent of interstate

commeree affected by such a removal, would be the number of out-of-

state patients currently served and/or the amount of out-of-state

revenues currently received by appellee for services specifically re-

lated to eye care and ophthalmic surgery.” Appellant's Brief at 25.

A-20

working. Id. at 242-43, 100 S.Ct. at 509. He need only

prove that peer-review proceedings have an effect on

interstate commerce, a fact that can hardly be disputed.

The proceedings affect the entire staff at Midway and

thus affect the hospital's interstate commerce. Appellees’

contention that Pinhas failed to allege a nexus with

interstate commerce because the absence of Pinhas's

services will not drastically affect the interstate com-

merece of Midway therefore misses the mark and must be

rejected.

4. Injury to Competition

{9} Appellees argue that Pinhas’s complaint was prop-

erly dismissed because it fails to allege an adverse effect

on competition; appellees contend that the entire thrust of

Pinhas’s allegation of antitrust damages in his complaint

is that his own private medical practice was injured and

that unfair procedures in the administrative hearings will

restrict his ability to gain income from a hospital-based

practice at Midway.

To maintain a successful antitrust action, Pinhas must

show that the alleged conspiracy among the appellees did

more than injure him; he must prove an injury to the

competition in the relevant market. See Brunswick Corp.

v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 97 S.Ct. 690,

697, 50 L.Ed.2d 701 (1977); Christofferson Dairy, Inc. v.

MMM Sales, Inc., 849 F.2d 1168, 1172 (9th Cir.1988).

Although the emphasis in determining whether an injury

has occurred is properly on the injury to competition and

not to the competitor, see Ralph C. Wilson Indus. v.

Chronicle Broadcasting Co., 794 F.2d 1359, 1363 (¢ h Cir.

1986) (quoting Brown Shoe Co. v. United States, 370 U.S.

294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962)), “injury to

competitors may be probative of harm to competition,”

Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1040 (9th

A-21

Cir.1988) cert. granted, — U.S. —, 109 S.Ct. 3154, 104

L. Ed. 2d 1018 (1989); accord USA Petroleum Co. v Atlantic

Richfield Co., 859 F.2d 687, 696 (9th Cir.1988) (quoting

Hasbrouck), cert. granted, — U.S. — , 109 8. Ct. 2446, 104

L.Ed.2d 1001 (1989).

Finhas alleges in his complaint that the conspiracy was

intended to boyeott his attempts at providing patients

with lower prices as a result of his ability to perform

operations at a rate quicker than that of his competitors.

Assuming Pinhas’s allegation that he provides his ser-

vices at a rate cheaper than that of his competitors to be

true, the preclusion of Pinhas from practicing could

conev.vably injure competition by allowing other similar

doe’ rs to charge higher prices for their services. Or

Pinuas may show that his preclusion otherwise substan-

tially reduced total competition in the market. We there-

fore conclude that Pinhas has adequately pleaded injury

to competition.

5. Conspiracy

Finally, appellees contend that the amended complaint

fails adequately to plead an antitrust conspiracy. See-

tion 1 of the Sherman Act is direeted at prohibiting

unreasonable restraint of trade effected by a “contract,

combination ...or conspiracy” among separate entities.

See Copperweld Corp. v. Independence Tube Corp., 467

U.S. 752, 768, 104 S.Ct. 2731, 2740, 81 L.Ed.2d 628

(1984). “The phrase ‘contract, combination, or conspir-

acy’ limits application of the Sherman Act to concerted

conduct by more than one person or single entity.” Oltz v.

St. Peter's Community Hosp., 861 F.2d 1440, 1449 (9th

Cir.1988).

10] Appellees contend that the dismissal of Weiss-

burg & Aronson, and its principal, Mr. Kadzielski, should

A-22

be affirmed because they were only acting as agents of

Summit Health. An attorney is not immune from anti-

trust liability if he becomes an active participant in

formulating policy decisions with his elient to restrain

competition. See Tillamook Cheese and Dairy Ass'n v.

Tillamook County Creamery Ass'n, 358 F.2d 115, 118 (9th

Cir.1966); Brown v. Donco Enter., Inc., 783 F.2d 644, 647

(6th Cir.1986) (per curiam). Pinhas sufficiently alleges in

his complaint that Kadzielski, Weissburg & Aronson, and

Posell exerted their influence over Summit Health and

Midway so as to direct them to engage in the complained

of acts for an anticompetitive purpose.

11] Drs. Lurvey, Reader, Macy, Salz and Perlman are

members of the medical staff at Midway. Any action taken

by a medical staff satisfies the “contract, combination or

conspiracy” requirement. Weiss v. York Hosp. 745 F.2d

786, 814-17 (1984), cert. denied, 470 U.S. 1060, 105 S.Ct.

1777, 84 L.Ed.2d 836 (1985).

Appellees apparently argue that Summit Health, as a

parent of Midway, cannot “conspire” with Midway, and

that Midway cannot “conspire” with the medical staff. See

Oltz, 861 F.2d at 1449-50 (recognizing that a hospital and

member of its medical staff may under certain cireum-

stances constitute separate entities for purposes of ade-

quately pleading a section 1 conspiracy); but see Weiss,

745 F.2d at 814-815. Pinhas alleges, however, that both

entities conspired with Kadzielski, Weissburg & Aronson,

and Posell, all outside agents of both Midway and Sum-

mit Health. Accordingly, Midway and Summit Health are

not properly dismissed.

Finally, Feldman and Farber, as employees of Midway

and/or Summit Health, cannot “conspire” with their

employer corporations. Id. at 1450 (quoting Copperweld,

467 U.S. at 769, 104 S.Ct. at 2740). Again, however,

A-23

Pinhas’s complaint, read in the light most favorable to

him, alleges that Feldman and Farber entered into an

agreement with the other appellees. We therefore find the

“eonspiracy” requirement of section 1 of the Sherman Act

satisfied as to each of the defendants. For the foregoing

a" we reverse the dismissal of Pinhas’s antitrust

claim.

B. Procedural Due Process Claim

12] Pinhas alleges that the peer-review proceedings

before the JRC violated his right to due process under the

fourteenth amendment. The district court dismissed

Pinhas’s due process claim concluding that it did not

meet the “state action” requirement.

The central inquiry in determining whether a private

party's actions constitute “state action” under the four-

teenth amendment is whether the party's actions may be

“fairly attributable to the State”. Lugar v. Edmondson Oil

Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 2753, 73 L.Ed.2d

482 (1982). To this end, the Court has followed a two-part

analysis: “First, the deprivation must be caused by the

exercise of some right or privilege created by the State or

by a rule of conduct imposed by the State or by a person

for whom the State is responsible. ... Second, the party

charged with the deprivation must be a person who may

fairly be said to be a state actor.” Id.

There is little doubt that the first prong under Lugar

has been satisfied. Midway is required under California

state law to include in its bylaws a mechanism by which a

physician may appeal a hospital's decision to remove him

from its staff. See Cal. Admin. Code tit. 22, § 70703(b).

Additionally, the SDHS, in reviewing hospitals during

the licensing process, looks to determine whether a fune-

tional, operating peer-review process is in place. The peer-

A-24

review process is thus a rule of conduct imposed by the

state of California within the meaning of Lugar.

Under the second prong in Lugar, Pinhas argues that

the actions of those involved in the peer-review process

should be construed as that of the state because of the

statutorily created system of peer-review, which Pinhas

argues, actively seeks to integrate private and public

systems of review. State regulation of a private entity,

however, is not enough to support a finding of state

action. See Jackson v. Metropolitan Edison Co., 419 U.S.

345, 350, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974); Blum

v. Yaretsky, 457 U.S. 991, 1004, 102 S.Ct. 2777, 2785, 73

L.Ed.2d 534 (1982). Pinhas must show that “there is a

sufficiently close nexus between the State and the chal-

lenged action of the regulated entity so that the action of

the latter may be fairly treated as that of the State itself.”

Jackson, 419 U.S. at 351, 95 S.Ct. at 453; see also Blum,

457 U.S. at 1004, 102 S.Ct. at 2785. Additionally, a state

may be held responsible for the action of a private party

only when it “has exereised coercive power or has pro-

vided such significant encouragement, either overt or

covert, that the choice must in law be deemed to be that of

the State.” Id.

The challenged action here, the removal of Pinhas s

staff privileges at Midway, cannot be attributed to the

state of California. Only private actors were responsible

for the decision to remove Pinhas. That the decision was

made pursuant to a review process that has been ap-

proved by the state is of no consequence: the decision

ultimately turned on the “judgments made by private

parties according to professional standards that are not

established by the State.” Blum, 457 U.S. at 1008, 102

S.Ct. at 2788. Additionally, the fact that a hospital must

forward to the BMQA an “#05 report” whenever any

A-25

adverse action is taken against a doctor is irrelevant in

determining whether the state took an active role in

removing Pinhas's privileges. See id. at 1009-10, 102 S.Ct.

at 2788 (penalties imposed for violating regulation re-

quiring nursing home officials to conduct periodic review

of type of care necessary for each resident adds nothing

to claim of state action). In short, Pinhas has failed to

demonstrate that the state exercised coercive power or

encouraged his removal in any way.

Pinhas also attempts to characterize the appellees as

state actors by arguing that the “integration of publie and

private systems of peer review” meets the “symbiotic

relationship” test set forth in Burton v. Wilmington Park-

ing Auth., 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961).

Pinhas appears to argue that the state of California acts

with those involved in the review proceedings as a “joint

participant” in deciding whether a physician has been

properly removed.

The relationship which exists between the state of

California and those involved in the peer-review proceed-

ings is far different than that which existed between the

city of Wilmington and the lessee of the restaurant in the

publie parking garage in Burton. There is no financial

relationship between the two, nor is any real property

involved. This difference is sufficient to place this case out

of the ambit of Burton. See Jackson, 419 U.S. at 357-58, 95

S.Ct. at 456-57 (limiting reach of Burton); Blum, 457 U.S.

at 1010-11, 102 S.Ct. at 2789 (same).

Finally, we note that the Sixth and Seventh Cireuits

have also determined that a decision by a hospital to

terminate or restrict the staff privileges of one of its

physicians may not be attributed to the state for purpose

of establishing state action under the fourteenth amend-

ment. See Ezpeleta v. Sisters of Mercy Health Corp., 800

A-26

F.2d 119, 122-23 (7th Cir.1986); Crowder v. Conlan, 740

F.2d 447, 451 (6th Cir. 1984). Because Pinhas’s removal

was instrumented solely by private parties, state action is

absent and his due process claim was properly dismissed.

C. Declaratory Judgment

[13] The district court dismissed Pinhas's claim for a

declaratory judgment because it was not ripe and the

appellees had no interest in the enforcement of either the

state or federal regulation and therefore were not the

proper parties to defend the statutes.

We agree with the district court that the appellees are

not the appropriate parties to defend a constitutional

challenge to the relevant state and federal statutes. See

Jacobson v. Tahoe Regional Planning Agency, 566 F.2d

1353, 1361 (9th Cir.1977) (dismissing claim for declara-

tory judgment against counties because counties’ interest

in the ordinance challenged was purely ministerial),

affirmed in part, reversed in part, 440 U.S. 391, 99 S.Ct.

1171, 59 L.Ed.2d 401 (1979).

"In Jacobson, the plaintiffs requested a declaratory judgment to

preclude the enforcement of a land use ordinance enacted by the

Tahoe Regional Planning Authority (TRPA). The court dismissed

the claim for declaratory judgment against several counties in the

Lake Tahoe Basin:

[Tine action against the counties was properly dismissed because

the alleged infringement of constitutional rights arises from the

action of the TRPA. The Compact limits the involvement of the

counties to a sharing of the enforcement power with the cities, the

states and the TRPA. Their involvement is purely ministerial, and

thus peripheral to the allegations underlying this suit.

Jacobson, 566 F.2d at 1361.

A-27

CONCLUSION

We reverse the dismissal of the antitrust claim and

affirm the dismissal of the section 1983 claim and request

for declaratory judgment. Each party shall bear its own

costs on appeal.

AFFIRMED in part, REVERSED in part, and

REMANDED

A-28

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Simon J. Prnunas, M. D.,

Plaintiff,

Summit HEALTH, LTD., a corporation; Mib wav

HospiTtaAL MEDICAL CENTER, a California general

hospital; THE MepicaL Starr OF Mipway Hospitat

MEDICAL CENTER, an unincorporated association;

MITCHELL FELDMAN; AUGUST READER; ARTHUR N.

LurRVEY, RicHarp E. Posklz JONATHAN I. Macy;

James J. SALZ; GILBERT PERLMAN; PEGGY FARBER;

MARK KADZIELSKI; WEISSBURG and ARONSON, INC.;

and STATE OF CALIFORNIA BOARD OF

MEDICAL QUALITY ASSURANCE,

Defendants.

Case No. 87 03292 FFF (GHKx)

ORDER DISMISSING ACTION

FILED: October 5, 1987

ENTERED: October 9, 1987

On September 21, 1987 the Motions of defendants

Summit Health, Ltd., Midway Hospital Medical Center,

The Medical Staff of Midway Hospital Medical Center,

Mitchell Feldman, August Reader, Arthur N. Lurvey,

Richard E. Posell, Jonathan I. Macy, James J. Salz.

Gilbert Perlman, Peggy Farber, Mark Kadzielski and

Weissburg and Aronson, Ine. to dismiss plaintiff's Com-

plaint and this action made pursuant to Federal Rules of

Civil Procedure 12(b)(1) and 12(b)(6), together with

defendants’ Motions for Sanctions pursuant to Rule 11! of

the Federal Rules of Civil Procedure came on for hearing

before Ferdinand F. Fernandez, United States District

Judge, Judge Presiding. The moving parties were repre-

A-29

sented by J. Mark Waxman, Esq. of Weissburg and

Aronson, Ine. Plaintiff was represented by Lawrence

Silver, Esq. and Alicia G. Rosenberg, Esq.

The Court, having considered all of the pleading, files,

memoranda and documents on file herein, determined to

grant the Motion for Dismissal filed by moving parties,

and to deny the Motion for Sanctions pursuant to Rule

11.

Accordingly, it is hereby ORDERED, ADJUDGED

AND DECREED that plaintiff's Complaint against Sum-

mit Health, Ltd., Midway Hospital Medical Center, The

Medical Staff of Midway Hospital Medial Center, Mitch—

ell Feldman, August Reader, Arthur N. Lurvey, Richard

E. Posell, Jonathan I. Macy, James J. Salz, Gilbert

Perlman, Peggy Farber, Mark Kadzielski and Weissburg

and Aronson, Ine. shall be and is hereby dismissed with-

out leave to amend.

Dated: October 2. 1987

FERDINAND F. FERNANDEZ

United States District Judge

Presented by:

J. MARK WAXMAN, Esd.

WEISSBURG AND ARONSON, INC.

Attorneys for Summit Health, Ltd. et al.

A-30

CASE NO. C 699 088

SUPERIOR COURT FOR THE STATE OF

CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

Simon J. Pinnas, M. D.

Petitioner

Mipway Hosprral MepicaL CENTER, a California cor-

poration, AND THE MEDICAL STAFF OF Mipway Hospt-.

TAL, an unineorporated association,

Respondents.

_ JUDGMENT DENYING PREEMPTORY

WRIT OF MANDATE AND AWARDING COSTS

This matter came on regularly for hearing before the

Honorable Dzintra Janavs in Department 86 of this court

on April 14, 1989. Lawrence Silver, Esq. appeared as

attorney for Petitioner and Weissburg and Aronson, Inc.,

by Kenneth M. Stern, Esq. appeared as attorneys for

Respondent. The Court having reviewed all pleadings,

records, evidence and papers filed herein and having

heard the oral argument of counsel,

IT IS HEREBY ORDERED, ADJUDGED AND DE-

CREED THAT:

(1) Judgment herein is entered in favor of Respondent

against the Petitioner denying the Petition for Writ of

Mandate;

(2) The action is hereby dismissed with prejudice;

A-31

(3) Respondent Midway Hospital Medical Center is

awarded its costs in the amount of $

Dated: May 17, 1989

DZINTRA JANAVS

Dzintra Janavs

Judge of the Superior Court

A-32

SUPERIOR COURT OF CALIFORNIA,

COUNTY OF LOS ANGELES

DEPT. 86

Date April 20, 1989. Honorable Dzintra Janavs, Judge,

C. Hudson, Deputy Clerk.

C 699 088

SIMON J. PINHAS, M.D.

vs.

MIDWAY HOSPITAL MEDICAL CENTER,

a California corporation, ete.

RULING ON SUBMITTED MATTER

On April 14, 1989, at the hearing on petitioner's motion

for a peremptory writ of mandate this Court admitted

into evidence by reference:

1. Transeript of hearing Vols. I-IV (5/26 — 6/12/87)

2. Transeript of hearing Vols. I-IV (10/29/87 —

1/25/88)

3. Exhibits, Vol. I

4. Petitioner's Exhibit List and Exhibits attached

thereto.

5. Declaration of Lawrence Silver dated 9/19/88 at-

tached to Trial Brief dated 9/19/88. Objections are over-

ruled as no objection is addressed to a specific statement.

Objections that the “entire declaration is filled with con-

clusions, opinions and hearsay” cannot be sustained.

6. Exhibits A, B, C attached to Request to Take

Judicial Notice, ete. will be judicially noticed.

After arguments, the matter was taken under

submission.

— —

A-33

The Court now rules:

Substantial judgment test is applicable herein. Anton,

19 Cal.3d 802, has disposed of petitioner's equal protec-

tion argument. However, even if the independent judg-

ment test applied, this Court's ruling would be the same.

The Motion for a Writ of Mandamus is denied.

I. The findings as to Charge le are supported by

substantial evidence. See generally Vol. I. pp. 96-118, Vol.

II. pp. 277, 297-308, 299-300, 491-492, Vol. V. pp. 768-769,

947-962. Specific charts are mentioned at pp. 99-116, 108-

118, 297-300, 947 et seq.

Il. Due Process Issues.

The Court has carefully reviewed all of the transeripts

and documentary evidence, including portions not rele-

vant to charges under le, to determine whether peti-

tioner's contentions of unfairness of the hearing are

substantiated by the record or whether or not the hearing

was fair and comported with the requirements of due

process. The Court concludes that the hearing was fair

and did not violate Dr. Pinhas due process rights.

With respect to the specific issues raised by the peti-

tioner in this regard, the Court holds as follows:

1. Failure to produce Dr. Lurvey and Dr. Feldman:

There is no indication that these witnesses were

pereipient witnesses as to any of the events at issue.

Petitioner's offer of proof shows why their non-appear-

ance does not violate due process and is not prejudicial.

The issue here is whether or not the charge on which

petitioner was found to be guilty is supported by the

evidence. These witnesses’ motives for signing the

charges are irrelevant.

A-34

2. Witness intimidation:

The record does not show that the nurse witnesses were

threatened by Ms. Farber. Rather she provided them with

the kind of advice that the hospital apparently provides to

all prospective witnesses who might testify in a case. The

record indicates that all four witnesses did proceed to

testify on Pinhas behalf. There are no declarations by

any of them that they, in fact, testified untruthfully or

that they would have offered different testimony except

for the “threats.” =

3. The burden of proof:

Petitioner contends that he was denied due process

because the burden of proof was imposed on him. Anton

disposes of petitioner's contention, this Court agreeing

with respondent's interpretation of the case. See also Gull,

4. Petitioner's contention of unfairness because two of

his competitors sat on the judicial review committee:

Presence on the committee by these individuals was in

accordance with respondent's bylaws. Under the case law

dealing with administrative hearings, no case holds that

due process is violated in the cireumstances here. Fur-

thermore, these “competitors” ruled in Pinhas favor on

six out of seven charges, though, based on the reeord, a

different result would not be surprising if indeed the

decision makers were acting with bias.

5. Ex parte contacts, quorum, right to counsel:

The record does not show improper ei parte contacts

tainting the proceedings. Because of the pend, ug federal

lawsuit by Dr. Pinhas, it would have been ‘mpo.uble to

avoid some ez parte contacts without the Hospital hiring

additional counsel. Although it would've been preferable

A-35

to avoid all ex parte contacts, there is no indication that

petitioner's case herein was prejudiced by such contacts

as did oceur.

Less than à full board hearing of the JRC appeal is

permissible under the bylaws, which allow a quorum of

five members out of the nine. Nor was Pinhas improperly

deprived of counsel. See Anton, Gill,

6. Hearing Officer Posell

With respect to the bias of Hearing Officer Powell, the

Court's review of the transeript does not indicate that Mr.

Posell was biased towards the defendants. In fact, he

admonished the petitioner and petitioner's witnesses as

much as the respondents’. Furthermore, Mr. Powell did

not take part in the decision making and there is no

indication that anything he did resulted in prejudice to

the petitioner.

Copies of this Minute Order are mailed this date to:

Lawrence Silver, Esq.

A Law Corporation

9100 Wilshire Bivd., Ste. 360

Beverly Hills, CA 90212

Robert J. Gerst, Eaq,

Kenneth M. Stern, Esq.

Mark A. Kadzielski, Enq.

WEISSBURG & ARONSON, INC.

And Fl., Two Century Plaza

2049 Century Park East

Los Angeles, CA 90067

A-36

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Simon J. Pinnas, M. D.

Plaintiff,

Sunn Hxalru, Lrb., a corporation: Mipway Hosprra.

Mepicat CentER, a California general hospital; THE

MepIcaL Starr oF Mipway HosprraL MepicaL CENTER,

an unineorporated association; MITCHELL FELDMAN; AUGUST

Reaper; Artuur N. Lurvey; Ricnarp E. Poser;

JONATHAN I. Macy; James J. SaLz; GILBERT PERLMAN;

Peaoy FARBER; MARK KADZIELSKI;

Weisserre & ARONSON; and STATE OF CALIFORNIA BoarkDp

OF MEDICAL QUALITY ASSURANCE,

Defendants.

Case No. 87-03292 FFF (GHKx)

FIRST AMENDED COMPLAINT FOR VIOLATION OF

CONSTITUTIONAL RIGHTS AND CIVIL RIGHTS

(42 U.S.C. § 1983 and § 1985(3)); DECLARATORY

JUDGMENT AND TREBLE DAMAGES FOR

VIOLATION OF SECTION 1 OF THE SHERMAN

ANTL-TRUST ACT AND INJUNCTIVE RELIEF

DEMAND FOR JURY TRIAL

STATEMENT AS TO JURISDICTION

1. This civil action arises under the Constitution of the

United States and 42 U.S.C. § 1983, § 1955, and § 195; 2s

U.S.C. § 2201 and § 2202, and 15 U.S.C. 6 1.

2. This court has jurisdiction of the action under 2*

U.S.C. § 1331, § 1337 and § 1343, and 15 U.S.C. §4 and

§ 15.

A-37

3. The matter in controversy exceeds Ten Thousand

Dollars ($10,000), exclusive of interest and costs.

VENUE

4. Venue is proper pursuant to 28 U.S.C. §§ 1391 and

1392.

PARTIES

5. Plaintiff, Simon J. Pinhas, M.D., (Dr. Pinhas”) is

a physician and surgeon duly licensed by the defendant,

State of California, Board of Medical Quality Assurance

and has limited his practice to that of eye physician and

ophthalmological surgeon. Plaintiff presently, and at all

times stated herein, was a Board certified surgeon, having

been certified in 1982. Plaintiff has been engaged in the

practice of medicine and surgery since 1977 and as such

has engaged in interstate commerce. Until the grievances

hereinafter complained of, plaintiff was a member, in good

standing, of the defendant Medical Staff of Midway Hos-

pital. Plaintiff is a citizen of the United States and a

resident of the State of California and this judicial

district.

6. Defendant Summit Health Lid. (“Summit Health”)

is corporation authorized to do business pursuant to the

laws of the State of California and is the parent of

Midway Hospital and Medical Center. Summit Health is

engaged in interstate commerce and owns and operates

approximately 19 hospitals and 49 nursing home facilities

in California, Arizona, Colorado, Oregon, lowa, Washing-

ton, Texas and Saudi Arabia.

7. Defendant Midway Hospital Medical Center (Mid.

way Hospital”) is engaged in interstate commerce and is

a general hospital organized and existing pursuant to the

A-38

laws of the State of California and conducts its business

by providing medical facilities and medical care in Los

Angeles, California.

„ Defendant Medical Staff of defendant Midway Hos-

pital (“Medical Staff is an unincorporated association

of physicians engaged in interstate commerce practicing

medicine at Midway Hospital with its principal place of

activity located at Los Angeles, California. Defendant

Medical Staff, in a conspiracy with other defendants, has

wrongfully summarily suspended plaintiff and has com-

stitutional peer review proceeding (“Peer Review

Proceeding’) against plaintiff.

9. Mitchell Feldman (“Mr. Feldman at all times

mentioned herein was the regional vice-president of de-

fendant Summit Health, a citizen of the State of Califor-

nia, and a resident of this judicial district, and he, along

with others yet unknown to the plaintiff, has caused,

directly or indireetly, the commencement and prosecution

of the Peer Review Proceeding against plaintiff in viola-

tion of plaintiff's rights.

10. Defendant August Reader, M.D. (Dr. Reader

is a physician and surgeon duly licensed by the defen-

dant, State of California, Board of Medical Quality As-

surance and has limited his practice to that of eye

physician and ophthalmological surgeon and is competi-

tion with plaintiff Dr. Pinhas. Dr. Reader is engaged in

interstate commerce and is a member of the defendant

Medical Staff, a citizen of the State of California, and a

resident of this judicial distmet, and he, along with others

yet unknown to the plaintiff, has caused, directly or

indirectly, the commencement and prosecution of the

Peer Review Proceeding against plaintiff in violation of

plaintiff's richts.

A-39

11. Defendant Arthur Lurvey, M.D. (Dr. Lurvey“) is

a physician and surgeon duly licensed by the defendant,

State of California, Board of Medical Quality Assurance

and at all times mentioned herein was the Chief of Staff of

Midway Hospital. Dr Lurvey is engaged in interstate

commerce, is a citizen of the United States, resident of

the State of California and a resident of this judicial

district, and he, along with others yet unknown to the

plaintiff, has caused, directly or indirectly, the eommence-

ment and prosecution of the Peer Review Proceeding

against plaintiff in violation of plaintiff's rights.

12. Defendant Richard E. Posell (“Mr. Posell“) is,

and at all times herein mentioned was engaged in inter-

state commerce and was, an attorney at law, duly admit-

ted and practicing law in the State of California and is a

eitizen of the United States, resident of the State of

California and a resident of this judicial district, and has

caused. directly or indirectly, the prosecution of the Peer

Review Proceeding against plaintiff in violation of plain-

tiff's rights.

13. Defendant Jonathan I. Macy, M.D. (Dr. Macy’)

is a physician and surgeon duly licensed by the defen-

dant, State of California, Board of Medical Quality As-

surance and has limited his practice to that of eye

physician and ophthalmological surgeon and is in compe-

tition with plaintiff Dr. Pinhas. Dr Macy is engaged in

interstate commerce and is a member of the_defendant

Medical Staff, a citizen of the State of California, and a

resident of this judicial district, and he, along with others

yet unknown to the plaintiff, has caused, directly or

indirectly, the commencement and prosecution of the

Peer Review Proceeding against plaintiff in violation of

plaintiff's rights.

A-40

14. Defendant James J. Salz, M.D. (Dr. Salz“) is a

physician and surgeon duly licensed by the defendant,

State of California, Board of Medical Quality Assurance

and has limited his practice to that of eye physician and

ophthalmological surgeon and is in competition with

plaintiff Dr. Pinhas. Dr. Salz is engaged in interstate

commerce and is a member of the defendant Medical

Staff, a citizen of the State of California, and a resident of

this judicial district, and he, along with others yet un-

known to the plaintiff, has caused, directly or indirectly,

the commencement and prosecution of the Peer Review

Proceeding against plaintiff in violation of plaintiff's

rights.

15. Defendant Gilbert Perlman, M.D. (“Dr. Perl-

man”) is a physician and surgeon duly licensed by the

defendant, State of California, Board of Medical Quality

Assurance and has limited his practice to that of eye

physician and ophthalmological surgeon and is in compe-

tition with plaintiff Dr. Pinhas. Dr. Perlman is engaged in

interstate commerce and is a member of the defendant

Medical Staff, a citizen of the State of California, and a

resident of this judicial district, has caused, directly or

indirectly, the commencement and prosecution of the

Peer Review Proceeding against plaintiff in violation of

plaintiff's rights.

16. Defendant Peggy Farber (Ms. Farber”) is em-

ployed by defendants Summit Heath and Midway Hospi-

tal in their Risk Management Section. At the direction of

her employers and others, she was charged with

(a) securing the information which was placed in the

false charges brought against Dr. Pinhas and

(h) interfering with Dr. Pinhas defense against those

charges at the Peer Review Proceedings. Ms. Farber is a

A-41

citizen of the State of California, and a resident of this

judicial district.

17. Defendant Mark A. Kadzielski (“Mr. Kadzielski“)

is a principal of defendant Weissburg & Aronson Inc.,

and at all times herein mentioned was engaged in inter-

state commerce and was, an attorney at law, duly admit-

ted and practicing law in the State of California. Mr.

Kadzielski is a citizen of the State of California, and a

resident of this judicial district, and has caused, directly

or indirectly, the commencement and prosecution of the

Peer Review Proceeding against plaintiff in violation of

plaintiff's rights.

18. Defendant Weissburg & Aronson Ine. (“W&A") is

engaged in interstate commerce and is a professional

corporation engaged in the practice of law in the State of

California and this judicial district, and has caused,

directly or indirectly, the commencement and prosecution

of the Peer Review Proceeding against plaintiff in viola-

tion of plaintiff's rights.

19. Defendant State of California, Board of Medical

Quality Assurance (“BMQA") is an agency of the State

of California created by and existing pursuant to Busi-

ness and Professions Code, § 2000 et seq. Defendant

BMQA is charged with the responsibility of enforcing,

among others, Sections 805, 805.1 and 805.5 of the Cali-

fornia Business and Profession Code as well as Section

423 et. seq. of the Health Care Quality Improvements Act

of 1986, 42 U.S.C. § 11133, et. seq.

20. Relief is sought against each and all defendants,

as well as their agents, assistants, successors, employees,

attorneys, representatives and all persons acting in con—

cert or in cooperation with them or at their direction.

A-42

FACTUAL ALLEGATIONS

21. From October, 1981 through the present, plaintiff

Dr. Pinhas, a diplomat of the American Board of Ophthal-

molugy, has been a member of the defendant Medical

Staff. As such, he has had the right to cause the admis-

sion of his patients to defendant Midway Hospital and to

use defendant Midway Hospital's facilities for the care

and treatment of his patients, ircluding, but not limited

to, the facilities to perform eye surgery. :

22. By reason of his training, experience and skill, Dr.

Pinhas holds a national and international reputation as a

specialist in corneal eye problems. He performs general

eye surgery and specifically cornea transplants, cataract

removal, and interocular lens replacements. Because of

his training, experience and skill, Dr. Pinhas is able to

perform these surgeries with a high level of success and

with few, if any, complications. One of the reasons for his

suecess is the rapidity with which he, as distinguished

from his competitiors, ean perform such surgeries. The

speed with which such surgery can be completed benefits

the patient because the exposure of cut eye tissue is

drastically reduced. Some of Dr. Pinhas’ competitors

regularly require, on the average, six times the length of

surgical time to complete the same procedures as Dr.

Pinhas. Because of his reputation, skill and successes Dr.

Pinhas has performed more surgeries than any other

ophthalmic surgeon at Midway Hospital during the rele-

vant time period.

23. Prior to February, 1986, the common practice in

Los Angeles County was to have most eye surgeries,

especially cataract extractions, performed by a primary

surgeon and a second, assistant surgeon. This practice

required by the defendant Medical Staff, the (“assistant

A-43

surgeon requirement“), significantly increased the cost of

such eye surgeries.

24. In February 1986, the administrators of Medicare,

the federal health insurance program for the elderly,

determined that assistant surgeons were not necessary in

connection with the performance of such eye surgeries

and refused, henceforth, to provide reimbursement for the

charges of any such assistant.

25. Certain ophthalmic surgeons of staff at defendant

Midway Hospital, ineluding plaintiff Dr. Pinhas, re-

quested that the defendant Medical Staff modify its

assistant surgeon requirement. Nearly all hospitals in

Southern California, except defendant Midway Hospital

and Cedars-Sinai (whose Medical Staff overlaps with that

of defendant Midway Hospital), abolished the assistant

surgeon requirement at or about the time that Medicare

made its change. The request to eliminate the assistant

surgeon requirement at Midway Hospital was denied and

remains in effect at the time of the filing of this First

Amended Complaint.

26. The consequence of the failure to make the change

was that surgeons, such as the plaintiff, would have to

compensate their competitors to be their assistants dur-

ing surgery since Medicare would no longer compensate

such assistants. Plaintiff Dr. Pinhas advised the adminis-

tration of Midway Hospital that the additional costs to

him of the Medical Staff's refusal to eliminate the as

tant surgeon requirement would be about $60,000 per

year. Dr. Pinhas, expressing a desire to keep the bulk of

his practice at defendant Midway Hospital, nonetheless

stated that he would move his practice if the assistant

surgeon requirement was not abolished.

A-44

27. On or about January 26, 1987 defendants Summit

Health and Midway Hospital, seeking to resolve the

difficulty created by defendant Medical Staff's refusal to

abolish the assistant surgeon requirement and Medicare's

refusal to reimburse for assistant surgeons. Defendant

Summit Health and Midway Hospital offered a “sham”

contract to Dr. Pinhas, a true and correct copy of this

“sham” contract is attached hereto and made a part

hereof as Exhibit “A”. The scheme provided by this

“sham” contract was to “hire” Dr. Pinhas for $36,000 per

year (later raised orally to $60,000 per year) to perform

certain services, except, Dr. Pinhas would never be called

upon to do such work. The sham contract was a vehicle

by which defendants Summit Heath and Midway Hospital

would pay Dr. Pinhas for continuing to bring patients to

Midway Hospital. When the “sham” contract was ex-

plained to Dr. Pinhas, he was told that many of the

members of the defendant Medical Staff had similar

contracts, and that the Chief of the defendant Medical

Staff, defendant Dr. Lurvey, was aware of this proposed

contract and the other sham contracts.

28. Dr. Pinhas refused to in anyway participate in

such a scheme, refused to sign the contract, and refused

to return the contract, even after defendant Dy. Lurvey,

acting on behalf of himself, defendant Summit Health,

defendant Mr. Feldman, defendant Midway Hospital and

defendant Medical Staff threatened that plaintiff's failure

to do so would cause a review of his charts and possible

Peer Review Proceedings. Nevertheless, defendants Sum-

mit Health and Midway Hospital made one monthly

payment of $5000 to Dr. Pinhas. This payment was

“hidden” in a reimbursement check to Dr. Pinhas and was

promptly recorded by Dr. Pinhas as an overpayment and

a credit against the amount of defendants Midway Hospi-

tal and Summit Health otherwise owed Dr. Pinhas.

A-45

29. By letter dated April 13, 1987 (“April 13, 1987

letter). and without prior notice or an opportunity for a

hearing, Dr. Pinhas was advised by defendants Summit

Health and Midway Hospital, through defendants

Dr. Lurvey and Mr. Feldman, that he was summarily

suspended as of that immediate date. As such, Dr. Pinhas

was deprived of all medical staff privileges, including the

right to admit his patients and to perform surgical proce-

dures. The April 13, 1987 letter stated that such action

was the result of a “medical staff review of Dr. Pinhas

medical records, with consideration as to the questions

raised regarding: indications for surgery; appropriateness

of surgica! procedures in light of patient's medical condi-

tion; adequacy of documentation in medical records: and

ongoing pattern of identified problems.” (A true and

correct copy of the April 13, 1987 letter is attached hereto

as Exhibit B and made a part hereof.)

30. By the same April 13, 1987 letter, Dr. Pinhas was

advised that the Midway Hospital Medical Executive

Committee (“Midway Executive Committee”) would con-

vene to review and consider the action within 10 days.

31. On April 20, 1987 the Midway Executive Commit-

tee met. After an initial meeting from which Dr. Pinhas

was excluded, the Executive Committee invited him into

the meeting room and requested that Dr. Pinhas make a

statement. Lacking sufficient notice, unprepared, con-

fused and without benefit of legal or fellow staff advice, he

asked what the charges were, and was told that the letter

of April 13, 1987 was self-explanatory. Thereafter,

Dr. Pinhas attempted to reply briefly.

32. By letter dated April 20, 1987, the same date of

that meeting, defendants Midway Hospital and Summit

Health notified Dr. Pinhas that the Midway Executive

Committee had upheld the summary suspension with the

A-46

recommendation to terminate his staff privileges at Mid-

way Hospital. He was also informed that the Midway

Hospital Board of Directors had coneurred with the

Midway Executive Committees recommendation. (A true

and correct copy of the April 20, 1987 letter is attached

hereto as Exhibit “C” and made a part hereof.)

33. In accordance with the Midway Hospital Medical

Staff Bylaws ( Bylaus a true and correct copy of the

relevant portions of which are attached hereto as Exhibit

“D” and made a part hereof), Dr. Pinhas requested a

hearing by the Midway Hospital Judicial Review Commit-

tee (“Judicial Review Committee”) by letter dated

April 30, 1987. (A true and correct copy of the April 30,

1987 letter is attached hereto as Exhibit E and made a

part hereof.)

34. In his April 30, 1987 letter, Dr. Pinhas made

certain proeedural and discovery requests, including the

right to be represented by retained counsel, the right to

full diselosure with sufficient particularity of all charges

against him, the right te an impartial hearing officer, and

the mght to an unbiased, unprejudiced hearing panel.

35. On May 7, 1987 Dr. Pinhas received Midway Hos-

pital’s Notice of Hearing (“May 7, 1987 Notice”) from

defendants Midway Hospital and Summit Health,

through defendant Mr. Feldman, scheduling the Judicial

Review Committee's proceedings to commence on May 12,

1987. (A true and correct copy of the May 7, 1987 Notice

is attached hereto as Exhibit F and made a part

hereof.)

36. The May 7, 1987 Notice, according to the Bylaws,

is also meant to serve the function of notifying a Respon-

dent before the Judicial Review Committee of the charges

that are being made against him. Those charges as con-

A-47

tained in the May 7, 1987 Notice were rendered in broad,

general terms. The Notice listed “specific charts” that the

Hospital contended would support those charges. But the

charts identified were not made available to Respondent

as of the date of May 7, 1987 Notice. Approximately 128

charts were identified, though some appeared to be

duplicates.

37. The May 7, 1987 Notice announced the appoint-

ment, by defendant Dr. Lurvey, ‘of the members of the

Judicial Review Committee and the appointment of the

Hearing Officer, defendant Mr. Posell. All of the physi-

cians who are included as members of the Judicial Review

Committee are dependent upon the defendants Midway

Hospital and Summit Health for their economic livelihood

and professional activities. The members of the Judicial

Review Committee, members of the defendant Medical

Staff, together with defendants Summit Health, Midway

Hospital, Dr. Lurvey, Mr. Feldman and Mr. Posell are

represented by the same counsel, defendant W&A. W&A

has represented the other defendants in connection with

the preparation of the false and unjustified charges

brought against plaintiff Dr. Pinhas.

38. The Judicial Review Committee, over the objection

of Dr. Pinhas, ineluded physicians who were and are in

direet economic and professional competition with plain-

tiff Dr. Pinhas: John Hofbauer, M.D. and Stephen Seiff,

M.D.

39. The May 7, 1987 Notice, in a summary fashion

dismissed some of Dr. Pinhas procedural and discovery

requests, and stated that the Judicial Review Committee

had unanimously voted not to permit Dr. Pinhas to be

represented by an attorney at law at the hearing.

A-48

40. On May 9, 1987, Dr. Pinhas filed his Objections to

the Notice of Hearing (“Objections”). (A true and cor-

reet copy of Dr. Pinhas Objeections is attached hereto as

Exhibit “G" and made a part hereof.)

41. In his Objections, Dr. Pinhas contended that the

May 7, 1987 Notice did not provide a reasonable quantum

of time in which he could prepare, present, and have

decided the preliminary Motions that he believed had to

be resolved — with respect to procedure and substance —

prior to the hearing of his matter. Moreover, Dr. Pinhas

argued that without more specific information, and with-

out possession and sufficient review and analysis of docu-

mentary evidence, the Judicial Review Committee

hearing, as established and scheduled, contravened his

rights under the United States and California Constitu-

tions, the laws of the State of California, and the contrac-

tual obligations imposed upon defendant Midway

Hospital and the defendant Medical Staff to fair notice

and a rational and meaningful opportunity to be heard.

42. In his Objections, Dr. Pinhas requested that the

Judicial Review Committee sustain those objections and

dismiss the Notice of Hearing as totally defective.

43. On May 12, 1987, the administration of defendants

Midway Hospital and Summit Health did not act upon

the objection, but treated it as a request for a continuance

and granted Dr. Pinhas a two week continuance,

rescheduling the Judicial Review Committee hearing for

May 26 and 27, 1987.

44. Beeause the May 7, 1987 Notice of Hearing named

defendant Mr. Posell as the Hearing Officer, on May 8,

1987, Dr. Pinhas, through his counsel Lawrence Silver,

sent Mr. Posell a letter requesting that he respond to

certain questions in order that Dr. Pinhas could deter-

A-49

mine whether to file a challenge to Mr. Posell sitting as

the Hearing Officer. (A true and correct copy of the

May 8, 1987 letter is attached hereto as Exhibit H“ and

made a part hereof.)

45. By letter (“Posell letter”) dated May 11, 1987,

Mr. Posell refused to respond to Dr. Pinhas’ request. (A

true and correct copy of the Posell letter is attached

hereto as Exhibit I“ and made a part hereof.)

46. On May 14, 1987, Dr. Pinhas, through his counsel,

filed 15 Motions with respect to procedural and discovery

issues, including Motions regarding his request for repre-

sentation by tounsel and his request that Mr. Posell

respond to certain voir dire questions in order to ascer-

tain any bias, prejudice, or interest on Mr. Posell's part.

(True and correct copies of these Motions are attached

hereto as Exhibit “J” and made a part hereof.)

47. On information, knowledge and belief, plaintiff

alleges that defendant Mr. Posell is biased and

prejudiced sgainst he and his counsel, Lawrence Silver,

and that Mr. Posell and members of the law firm of which

he is a partner, Shapiro, Posell & Close, serve as hearing

officers at the request of defendant W&A in cases where

W&A represents the hospital. There is a unity of interest

between defendants W&A and Mr. Posell. Mr. Posell and

his law firm are retained and continue to be retained as

counsel to the Hospital because Mr. Posell ensures that

Judicial Review Committees achieve the results that

W&A and the clients of W&A desire. Mr. Posell and

Shapiro, Posell & Close have an economic interest in the

outeome of the Peer Review Proceeding and had such an

economic interest at the outset because his continued

employment by defendant Summit Health, defendant

Midway Hospital, defendant W&A and defendant

Kadzielski depends upon his continued rulings in favor of

A-50

the defendant Midway Hospital's position and against

physicians who are in the same position as Dr. Pinhas.

48. On May 18, 1987, Mr. Posell wrote to Dr. Pinhas’

counsel and reiterated that the May 7, 1987 Notice ad-

vised Dr. Pinhas that the Judicial Review Committee had

unanimously voted not to permit either Dr. Pinhas or the

Medical Staff to be represented by an attorney at law at

the hearing. Mr. Posell further stated that neither the

Hearing Officer nor the Judicial Review Committee may

consider Motions or requests made “in any phase of the

hearing or appeal procedure by an attorney at law unless

the Hearing Committee, in its diseretion, permits both

sides to be represented by legal counsel.” Mr. Posell cited

Bylaw Article VIII. Seetion 2(b), stating further that Dr.

Pinhas counsel's continued participation was a violation

of that Bylaw. (A true and correct copy of Mr. Posell’s

May 18, 1987 letter is attached hereto as Exhibit K and

made a part hereof.)

49. On May 19, 1987, Dr. Pinhas’ counsel asked defen-

dant Mr. Posell to recuse himself because of bias and

prejudice and to answer three questions related to his ex

parte communications with counsel for the defendant

Midway Hospital, and for clarification of his ruling. (A

true and correct copy of the letter to Mr. Posell dated

May 19, 1987 is attached hereto as Exhibit L. and made

a part hereof.) Mr. Posell has not responded to that

letter.

50. On May 19, 1987, Dr. Pinhas, appearing in propria

persona, refiled the same 15 Motions respecting procedu-

ral and diseovery matters, specifically including: the re-

quest to be represented by counsel; the request that the

Hearing Officer respond to the voir dire questions submit-

ted to him; the request for the full disclosure with partieu-

larity of the charges against him; and the request that Dr.

A-51

Pinhas’ motions be heard and decided at a reasonable

time prior to the commencement of the hearing.

51. On May 21, 1987, defendant Mr. Posell denied

nearly all of the Motions filed by Dr. Pinhas. (A true end

correct copy of the letter from Mr. Posell dated May 21.

1987 is attached hereto as Exhibit M' and made a part

hereof.)

52. The alleged peer review hearings concerning Dr.

Pinhas commenced on May 26 and proceeded for a total

3222 Ä on Sune £2,

53. During the course of the hearings, defendants

Summit Health, Midway Hospital, the Medical Staff, Mr.

Posell, Mr. Kadzielski, W&A, Dr. Periman, Mr. Feldman,

Dr. Lurvey and Ms. Farber, engaged in conduct to de-

prive plaintiff Dr. Pinhas of a fair hearing.

54. On information, knowledge and belief, plaintiff

alleges that defendants Mr. Kadzielski and WA, di-

reetly and indireetly, had improper ex parte communica-

tions with defendant Mr. Posell.

55. On information, knowledge and belief. plaintiff

alleges that defendants Mr. Kadzielski and W&A. di-

reetly and indirectly, had improper ex parte communica-

tions with members of the Judicial Review Committee.

alleges that defendant Dr. Perlman had improper ex

parte communications with members of the Judicial Re-

view Committee.

57. On information, knowledge and belief, plaintiff

alleges that defendants Dr. Lurvey, the Medical Staff.

Summit Health, Midway Hospital had improper ex parte

A-52

communications with members of the Judicial Review

Committee.

58. On information, knowledge and belief, plaintiff

alleges that defendant Mr. Posell had improper ex parte

communications with members of the Judicial Review

Committee.

59. Defendants Summit Health, Midway Hospital,

Medical Staff and others sought to, and did in fact,

intimidate witnesses Dr. Pinhas sought to call as wit-

nesses in his defense of the case, including the threat of

initiating Peer Renew Proceedings against physicians

who might testify on behalf of Dr. Pinhas.

60. Defendants Summit Health, Midway Hospital.

Medical Staff, Ms. Farber and others sought to, and did

in fact, intimidate witnesses Dr. Pinhas sought to call as

witnesses in his defense of the case.

61. On June 1, 1987, at approximately 6:30 pm. defen-

dant Ms. Farber of Midway Hospital's Risk Management

Section approached a table in the cafetema where Manna

Nine, Barbara Aviles, Rose Pierce and Suprani Watana,

all of whom were employed by defendants Summit Health

and Midway Hospital, were sitting while they were wait-

ing te be called inte the hearing regarding Dr. Pinhas’

privileges. Ms. Farber said the following:

a. “I want te prepare you for what you are getting

yourselves into.”

b. “You dont have te de this.”

ce. “You can leave if vou want te. You will not be

persecuted or harassed if you leave.”

d. “You are on your own, the hospital will not pay

for your time.”

A-53

e. “It is going to be like a court in there. There is a

court stenographer. Everything you say will be taken

down and under oath.”

f. “You will each be called, one by one, you will not

be allowed to go in as a group.”

g. “You will be questioned in there by doctors, you

will be cross-examined.”

62. Shortly thereafter, Kay Deol, an administrator of

defendant Midway Hospital and an employee of defend-

ants Summit Health, Midway Hospital and Mr. Feldman,

came over to the table and she and defendant Ms. Farber

stayed around and hovered around the cafeteria for the

rest of the evening. (True and correct copies of the

declarations dated June 9, 1987 of Marina Nino and

Barbara Aviles are attached hereto as Exhibit N“ and

made a part hereof.)

63. Defendants Summit Health, Midway Hospital,

Medical Staff, Mr. Kadzielski, W&A, Mr. Posell, Mr.

Feldman, and Dr. Lurvey, precluded plaintiff Dr. Pinhas

from examining two important witnesses, Mr. Feldman,

the person who signed the charges against Dr. Pinhas and

Ur. Lurvey, Chief of Staff who allegedly authorized the

charges against Dr. Pinhas. Said defendants refused to

produce Mr. Feldman and Dr. Lurvey as witnesses for

cross-examination even though,

a. Mr. Feldman signed the charges,

b. Dr. Lurvey was listed in Exhibit F“, the

charges, as a witness who would appear at the hear-

ing, and

e. Dr. Pinhas and his representative repeatedly

requested that they appear at the hearing and testify

truthfully. (A true and correct copy of Dr. Pinhas

A-54

request to Dr. Lurvey and Mr. Feldman to appear

are attached hereto as Exhibit 0“ and made a part

hereof.)

64. It is ustom and practice in California that during

the peer review proceeding, even if the Judicial Review

Committee does not permit counsel to be present at the

hearing, counsel is permitted to be on the grounds of the

hospital to confer with his client during appropriate

breaks in the proceeding.

65. Defendant Mr. Posell issued an order ordering

counsel for Dr. Pinhas, who had been listed as a witness,

excluded from the Hospital grounds during any portion

of the hearing, while permitting counsel for the Hospital,

Mr. Kadzielski and/or associates of W&A, not only to

utilize hospital facilities, but also to communicate with

the proseeutor, defendant Dr. Perlman.

66. Defendant Mr. Posell acted not only as Hearing

Officer but also as counsel for defendant Midway Hospi-

tal and the Medical Staff, and ruled and continued to

rule, without legal or factual justification, adversely to

Dr. Pinhas.

67. Defendant Mr. Posell, acting as counsel for the

Medical Staff, refused to allow Dr. Pinhas to have

_ counsel.

68. Defendant Mr. Posell made rulings during the

course of the entire proceeding to frustrate and interfere

with plaintiff Dr. Pinhas ability to defend against the

charges brought against him.

69. Defendant Mr. Posell ruled that Dr. Pinhas coun-

sel's correspondence would not be answered, and yet

complied with all requests of defendants Mr. Kadzielski

and W&A.

A-55

70. Defendant Mr. Posell intentionally ordered wit-

nesses not to testify to the fact that defendant Dr. Macy

and defendant Dr. Salz, who testified adversely to Dr.

Pinhas at the hearing, also engaged in the same similar

conduet with which Dr. Pinhas was charged. Mr. Posell

precluded them from being identified by witnesses who

were prepared to identify Dr. Macy and Dr. Salz to

establish what the “standard in the community” was.

Defendant Mr. Posell declined to permit Dr. Pinhas and

his physician representative to have breaks and time to

confer. In addition, Mr. Posell issued time requirements

which were inherently unfair, and substantially

prejudiced Dr. Pinhas. Mr. Posell, on the other hand,

always considered and granted whatever requests were

made by the prosecutor defendant Dr. Perlman.

71. Defendant Mr. Posell precluded testimony and

evidence from being presented by Dr. Pinhas, and made

hostile verbal comments to Dr. Pinhas, his physician

representative and witnesses who appeared on behalf of

Dr. Pinhas on and off the record made before the Judicial

Review Committees.

72. Defendant Mr. Kadzielski and W&A retained, as

they have done in the past, the services of Lacey Short-

hand Reporting Service (“Lacey Reporters“), over whom

they seek to exercise and do exercise control by reason of

the substantial business they place with Lacey Reporters.

Dr. Pinhas needed a copy of the transcript in order to

adequately examine witnesses and prepare cross-examina-

tion. Plaintiff Dr. Pinhas, through counsel, ordered a copy

of the transeript from Lacey Reporters on an expedited

basis. Notwithstanding the order, defendant Mr. Kadziel-

ski and W&A ordered Lacey Reporters not to produce the

transeript. On the same day as defendant Mr. Kadzielski

and W&A issued their instructions to Lacey Reporters,

A-56

counsel for Dr. Pinhas inquired how the preparation of

the transcript was coming and was advised that Lacey

Reporters could not produce a transcript in any timely

fashion by which Dr. Pinhas could be able to use it for

successive hearings. Upon information, knowledge and

belief, plaintiff alleges that Lacey Reporters did so at the

request of defendants Mr. Kadzielski and W&A. A day or

so later Lacey Reporters agreed to produce the tran-

seript, but not before the date that its utility for cross-

examination would have passed and at a page rate of

$12.00 per page.

73. Defendant Mr. Posell, after he heard from other

defendants that plaintiff Dr. Pinhas, through counsel, was

trying to secure a transcript, and while the hearing was

pending, called Dr. Pinhas on the telephone. During that

telephone conversation Mr. Posell called Dr. Pinhas a liar

and threatened him by saying that Dr. Pinhas’ attempts

to get a copy of the transcript would cause him problems

in the future.

74. On June 29, 1987 Dr. Pinhas received in the mail a

document entitled “Report and Decision of the Judicial

Review Committee (“Report and Decision’) (a copy of

the Report and Decision is attached hereto as Exhibit

75. Upon information, knowledge and belief, plaintiff

alleges that defendant Mr. Posell drafted the purported

Report and Decision in an effort to protect defendants

Summit Health, Midway Hospital, the Medical Staff, Dr.

Lurvey, Mr. Feldman and himself from liability, and that

such report was inconsistent with the findings and deter-

minations of the Judicial Review Committee.

76. Although the alleged Report and Decision pur-

ports to bear the signature of the Chairman of the Judi-

A-57

cial Review Committee, Ellis Berkowitz, M.D.; it does not.

Plaintiff on information knowledge and belief alleges that

this alleged Report and Decision is not reflective of the

determination of that tribunal. Plaintiff on information

knowledge and belief alleges that this alleged Report and

Decision was signed by an agent of defendants Summit

Health, Midway Hospital, the Medical Staff, Mr. Feldman

and Dr. Lurvey, without the authorization of each mem-

ber of the Judicial Review Committee.

77. On July 6, 1987 the defendant Medical Staff ap-

pealed the decision of the Judicial Review Committee to

the Governing Board of defendant Midway Hospital (a

copy of the appeal of Defendant Medical Staff is attached

hereto and made a part hereof as Exhibit “Q”).

78. On July 7, 1987 Plaintiff Dr. Pinhas appealed the

purported decision of the Judicial Review Committee to

the Governing Board of the Defendant Midway Hospital

(a copy of the appeal of plaintiff Dr. Pinhas is attached

hereto as Exhibit R).

FIRST CLAIM FOR RELIEF

(For Declaratory Relief Against Defendants Summit

Health, Midway Hospital, Medical Staff, Mr. Feldman,

Dr. Lurvey and BMQA Because They are Violating the

Constitution of the United States by Enforeing and

Participating in the Enforcement of Section 805 and

805.5 of the California Business and Professions Code

and Section 423, et seq of the Health Care Quality

Improvement Act of 1986, 42 U.S.C. § 11133)

79. Plaintiff incorporates Paragraphs 1 through 78,

inclusive, above by reference as though set forth in full

herein.

A-58

80. Defendants, and each of them, are estopped from

denying, that the actions which the defendants have

taken, and the actions which are threatened by the de-

fendants, have been done and are being done pursuant to

and under authority of the laws of the State of California

and the laws of the United States.

81. Defendants, and each of them, are estopped from

denying that they have acted, claim to act, and threaten to

continue to act, pursuant to, under the authority of, and

within the protection of:

a. Section 70703, et seq., of the California Admin-

istrative Code;

b. Section 805 of the California Business and Pro-

fessions Code;

e. Section 805.5 of the California Bus ness and

Professions Code;

d. Section 805.1 of the California Business and

Professions Code

e. Section 1094.5 of the California Code of Civil

Procedure and the case law decided thereunder,

f. Sections 1156 and 1157 of the California Evi-

denee Code;

g. Section 43.7 of the California Civi) Code;

h. Other provisions of the laws of the State of

California and the case law deeided thereunder, and

i. Seetions 423 et seq. of the Health Care Quality

Improvements Act of 1986, 42 U.S.C. § 11133, et. seq.

82. To maintain licenses, health care facilities regu-

larly must review privilege termination and restriction

procedures to assure their conformity to applicable law.

— —

liaison, to participate in the development of all hospital

poliey. Id. at (8), (9).

83. When a health care facility terminates or restricts

the privileges of a physician, it must promptly report to

the defendant BMQA all facts and circumstances that

caused the termination or restraint pursuant to Section

805 of the California Business and Professions Code,

which reads as follows:

“Califorma Business and Professions Code $805

The chief executive officer and the chief of the

medical staff, where one exists, of any health facility

licensed pursuant to Division 2 (commencing with

Section 1200), or any medical, psychological, dental

— — —Ü— enestell

society deseribed in Section 43.7 of the Civil Code, or

any health care service plan or medical care founda-

trist, or dentist is denied staff privileges, removed

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from the medical staff of the institution or if his or

her staff or membership privileges are restricted for

a cumulative total of 45 days in any calendar year for

any medical disciplinary cause or reason. The reports

shall be made within 20 working days following such

removal or restriction, shall be certified as true and

correct by the chief executive officer and the chief of

the medical staff, where one exists, and shall contain

a statement detailing the nature of the action, its

date and all of the reasons for, and circumstances

surrounding, the action. If the removal or restric-

tions is by resignation or other voluntary action that

was requested or bargained for in lieu of medical

disciplinary action, the report shall so state.

The reporting required herein shall not act as a

waiver of confidentiality of medical records and com-

mittee reports. The information reported or disclosed

shall be kept confidential except as provided in sub-

division (e) of Section 800, provided that a copy of

the report containing the information required by

this section may be disclosed as required by Section

805.5 with respect to reports received on or after

January 1, 1976. The Board of Medical Quality As-

surance, the Board of Osteopathic Examiners, and

the Board of Dental Examiners shall disclose such

reports as required by Section 805.5. A file eontain-

ing reports received pursuant to this section shall be

maintained by the agency receiving the reports for a

minimum of five years after receipt.

No person shall ineur any civil or criminal liability

as the result of making any report required by this

section.

Failure to make a report pursuant to this section

shall be a misdemeanor punishable by a fine of not

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less than two hundred dollars ($200) nor more than

one thousand two hundred dollars (81,200).

84. Pursuant to Section 805.5 of the California Busi-

ness and Professions Code, hospitals are required to

request from BMQA information regarding any adverse

determination made pursuant to the peer review process

contained in BMQA’s records. The pertinent parts of

Section 805.5 of the California Business and Professions

Codes read as follows:

“California Business and Professions Code § 805.5

(a) Prior to granting or renewing staff privileges

for any physician and surgeon, clinical psychologist,

podiatrist, or dentist, any health facility licensed

pursuant to Division 2 (commencing with Section

1200) of the Health and Safety Code, or any health

care service plan or medical care foundation, or the

medical staff of any such institution, shall request a

report from The Board of Medical Quality Assur-

ance, the Board of Osteopathie Examiners, or the

Board of Dental Examiners to determine if any

report has been made pursuant to Section 805 indi-

eating that the applying physician and surgeon,

clinical psychologist, podiatrist, or dentist has been

denied statt privileges, been removed from a medical

staff, or had his staff privileges restricted as pro-

vided in Section 805. The request shall include the

name and California license number of the physician

and surgeon, clinical psychologist, podiatrist, or den-

tist. Furnishing of a copy of the 805 report shall not

cause the 805 report to be a publie record.

(b) Upon a request made by an institution de-

scribed in subdivision (a) or its medical staff, which

is received on or after January 1, 1980, the board

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shall furnish a copy of any report made pursuant to

Section 805. However, the board shall not send a

copy of a report where the denial, removal, or restric-

tion was imposed solely because of the failure to

complete medical records.

In the event that the board fails to advise such

institution within 30 working days following its re-

quest for a report required by this section, the insti-

tution may grant or renew staff privileges for the

physician and surgeon, clinical psychologist, podia-

trist, or dentist. :

(e) Any institution deseribed in subdivision (a)

or its medical staff which violates the provisions of

subdivision (a) is guilty of a misdemeanor and shall

be punished by a fine of not less than two hundred

dollars ($200) nor more than one thousand two

hundred dollars ($1,200).”

85. California Business and Professions Code § 850.1

provides that the state licensing agency, defendant

BMQA, is entitled to inspect and copy statements of

charges, documents, medical charts or exhibits in evi-

dence; and any opinion findings or conclusions relating to

any disciplinary proceeding resulting in an action subject

to § 805 of the Business and Professions Code reporting

provisions.

86. A hospital’s decision terminating and restricting

privileges are judicially reviewable pursuant to Section

1094.5 of the California Code of Civil Procedure. (A copy

of the text of Section 1094.5 is attached hereto as Adden-

dum A.)

87. Peer review proceedings are confidential pursuant

to California Evidence Code Sections 1156 and 1157. (A

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copy of the text of Sections 1156 and 1157 are attached

hereto as Addendum B“.)

88. California provides immunity to participants in the

peer review process pursuant to Section 43.7 of the

California Civi! Code. (A copy of the text of Section 43.7

is attached hereto as Addendum C.)

89. Defendants are estopped from denying that they

have been, are presently, and will be acting under color of

authority of law and the protection afforded to them

provided by the laws of the State of California and of the

United States. All defendants are engaged in the enforce-

ment and execution of the laws of the State of California,

and more particularly, an alleged peer review process

directed to plaintiff at defendant Midway Hospital. As a

result of defendants’ wrongful conduct, plaintiff has been

deprived of his constitutionally protected rights.

90. Defendant BMQA is the “Board of Medical Exam-

iners“ as defined by the Health Care Quality Improve-

ment Act of 1986, Section 423, et. seq. § 11133 which

provides, in pertinent part:

“See. 423. REPORTING OF CERTAIN PRO-

FESSIONAL REVIEW ACTIONS TAKEN BY

HEALTH CARE ENTITIES[, 42 U.S.C. § 11133].

(a) REPORTING BY HEALTH CARE

ENTITIES. —

(1) ON PHYSICIANS. — Each health care en-

tity which —

(A) takes a professional review action that

adversely affects the clinical privileges of a phy-

sician for a period longer tan 30 days;

—

A-64

(3) INFORMATION TO BE REPORTED. —

The information to be reported under this subsec-

tion is —

(A) the name of the physician or practitioner

involved,

(B) a description of the acts or omissions or

other reasons for the action or, if known, for the

surrender, and

circumstances of the action or surrender as the

Secretary deems appropriate.

(b) REPORTING BY BOARD OF MEDICAL

EXAMINERS. — Each Board of Medical Examin-

ers shall report, in accordance with section 424,

the information reported to it under subsec-

tion (a) and known instances of a health care

entity’s failure to report information under

subsection (a) (1).

See. 425. DUTY OF HOSPITALS 10 OBTAIN

INFORMATION, [42 U.S.C. § 11135].

(a) IN GENERAL. — It is the duty of each

hospital to request from the Secretary (or the

agency designated under section 424(b)), on and

after the date information is first required to be

reported under section 424(a)) —

(1) at the time a physician or licensed health

care practitioner applies to be on the medical

staff (courtesy or otherwise) of, or for clinical

A-65

privileges at, the hospital, information reported

under this part concerning the physician or

practitioner, and

(2) once every 2 years information reported

under this part concerning any physician or such

practitioner who is on the medical staff (cour-

tesy or otherwise) of, or has been granted

clinical privileges at, the hospital.

A hospital may request such information at

other times. See. 427. MISCELLANEOUS

PROVISIONS[, 42 U.S.C. § 11137].

(a) PROVIDING LICENSING BOARDS

AND OTHER HEALTH CARE ENTITIES

WITH ACCESS TO INFORMATION. — The See-

retary (or the agency designated under section

424(b)) shall, upon request, provide information

reported under this part with respect to a physi-

cian or other licensed health care practitioner to

State licensing boards, to hospitals, and to other

health care entities (including health maintenance

organizations) that have entered (or may be enter-

ing) into an employment or affiliation relationship

with the physician or practitioner or to which the

physician or practitioner has applied for clinical

privileges or appointment to the medical staff.

(e) RELIEF FROM LIABILITY FOR RE-

PORTING. — No person or entity shall be held

liable in any civil action with respect to any report

made under this part without knowledge of the

falsity of the information contained in the report.

(d) INTERPRETATION OF INFORMATION.

— In interpreting information reported under this

A-66

part, a payment in settlement of a medical mal-

practice action or claim shall not be construed as

creating a presumption that medical malpractice

has occurred.“

91. Defendant BMQA is charged with the enforcement

of the Health Care Quality Improvement Act of 1986, see

Section 423, et. seq.

92. Defendant BMQA asserts that the following is

required pursuant to Sections 805 of the California Busi-

ness and Professions Code and pursuant to Section 423 of

the Health Care Quality Improvements Act of 1986:

a. Defendant Midway Hospital, by its administra-

tor, and defendant Dr. Lurvey, as Chief of Staff of

Midway Hospital, are required pursuant to Section

805 of the California Business and Professions Code

to submit a “Section 805 report” to it.

b. Defendant Midway Hospital is required, pursu-

ant to Section 423 of the Health Care Quality Im-

provements Act of 1986, to make a “Section 423

report” to it.

c. Absent notice and an opportunity for hearing,

the Section 805 report, or the contents thereof, shall,

pursuant to Business and Professions Code Section

805.5, be distributed to (a) all health care facilities

where plaintiff Dr. Pinhas has staff privileges, upon

reappointment to the staff, and (b) all hospitals

where Dr. Pinhas may apply for staff privileges.

d. Absent notice and an opportunity for hearing,

the Section 423 report, or the contents thereof, shall,

pursuant to Section 423 of the Health Care Quality

Improvements Act of 1986, be distributed, within two

years, to (a) all health care facilities where plaintiff

Dr. Pinhas has staff privileges, upon reappointment

A-67

to the staff, and (b) all hospitals where Dr. Pinhas

may apply for staff privileges.

93. Defendants Summit Health, Midway Hospital, the

Medical Staff, Mr. Feldman and Dr. Lurvey have

threatened to file and continue to threaten to file a

Section 805 report and a Section 423 report.

94. Defendant Midway Hospital’s chief executive of-

ficer and defendant Dr. Lurvey may claim immunity of

the content of the filing of a Section 805 report even if

that content is incorrect, misleading or malicious pursu-

ant to Section 805 of the Business and Professions Code.

95. Defendant Midway Hospital and defendant Dr.

Lurvey may claim immunity of the content of the filing of

a Section 423 report even if that content is incorrect,

misleading or malicious pursuant to Section 427 of the

Health Care Quality Improvements Act of 1986, 42 U.S.C.

§ 11137(e).

96. Dr. Pinhas has no control over the wording that is

contained in the Section 805 repert or Section 423 report

from defendant Midway Hospital and defendant Dr.

Lurvey.

97. The Section 805 report and the Section 423 report

was, or will be, prepared and the wording was selected

within the complete discretion of defendant Midway Hos-

pital and defendant Dr. Lurvey.

98. Defendant Midway Hospital and defendant Dr.

Lurvey are not required to submit, in advance, and do not

intend to submit, in advance of their filing it with BMQA,

the form of Section 805 report or Section 423 report to

Dr. Pinhas.

99. Defendant Midway Hospital and defendant Dr.

Lurvey are not required to provide Dr. Pinhas, and will

A-68

not provide Dr. Pinhas, with a copy of the Section 805

report or the Section 423 report after it has been filed

with BMQA.

100. The Section 805 report and the Section 423 report

or the content there of shall be distributed to other

hospitals, physicians and others pursuant to the statute,

regardless of the content of the reports.

101. Any receipt of the Section 805 report or Section

423 report, the maintenance of the Section 805 report or

the Section 423 report, or the distribution of the Section

805 report or the Section 423 report, is done with the

funds of the State of California, is done pursuant to the

authority provided by the statutes of the State of Califor-

nia, more particularly, the California Business and Pro-

fessions Code Sections 805 and 805.5 and the Health Care

Quality improvements Act of 1986. The obligation of

hospitals, to secure information contained in the Section

805 report or Section 423 reports for physicians whose

staff privileges are being renewed or who seek staff

privileges, is compelled and criminal sanctions may apply

to those who do not, pursuant to the laws of the State of

California, more particularly the California Business and

Professions Code Sections 805 and 805.5 and the Health

Care Quality Improvements Act of 1986.

102. It is common practice in California, for every

hospital who seeks appointment or reappointment of a

physician to the medical staff, to require that the physi-

cian disclose whether or not they have had medical staff

privileges suspended, terminated, or any action taken

thereon.

103. It is common practice in California for hospitals,

after the decision in Elam v. College Park Hospital, 132

Cal.App.3d 332, 183 Cal.Rptr. 156 (1982) to preclude

A-69

admission to the hospital staff if a physician has a report

that in any way casts any doubt on his competency to

practice medicine or engages in any * which may

adversely affect patient care.

104. Plaintiff Pinhas contends and seeks the declara-

tion of this Court that § 805 and § 805.5 of the Business

and Professions Code of the State of California as inter-

preted and implemented by the acts of the defendants,

including defendant BMQA, violates the Constitution of

the United States and more particularly the 14th and 5th

Amendments thereto in that Dr. Pinhas’ rights to due

process of law, the equal protection of the laws and his

rights to privacy secured to him by the Constitution of the

United States are violated.

105. Defendants contend and seek a declaration to the

contrary.

106. Plaintiff Pinhas contends and seeks a declaration

of this Court that Section 423 et. seq. of the Health Care

Quality Improvements Act of 1986 violates the Constitu-

tion of the United States and more particularly the 5th

Amendment thereto in that Dr. Pinhas’ rights to due

process of law, the equal protection of the laws and his

rights to privacy secured to him by the Constitution of the

United States are violated.

107. Defendants contend and seek a declaration to the

contrary.

108. It is necessary and appropriate that this dispute

between plaintiff Dr. Pinhas and defendants be adjudi-

cated and determined promptly, so that the parties to this

litigation may know their rights and obligations under the

laws and Constitution of the United States and because

failure to determine this dispute will result in irreparable

injury to Dr. Pinhas.

A-70

SECOND CLAIM FOR RELIEF

(For Damages for Violations of Plaintiff's Constitutional

Rights and the Civil Rights Act, 42 U.S.C. § 1983 by

Defendants Summit Health, Midway Hospital, Medical

Staff, Mr. Feldman, Dr. Reader, Dr. Lurvey, Mr.

Posell, Dr. Macy, Dr. Salz, Dr. Perlman, Ms. Farber,

Mr. Kadzielski, W&A, and Each of Them)

109. Plaintiff incorporates Paragraphs 1 through 78

and 80 through 103, inclusive, above by reference as

though set forth in full herein.

110. Dr. Pinhas has been summarily, knowlingly, and

intentionally deprived of the status and his property

interest in membership on Midway Hospital’s medical

staff, including admitting and surgical privileges at Mid-

way Hospital, without prior notice or an opportunity to be

heard.

111. By virtue of the unjustified and unlawful Peer

Review Proceeding which has been commenced and is

continuing to be prosecuted against Dr. Pinhas, defend-

ants and each of them have been, are presently, and will

be acting under the color of authority and law of the State

of California and of the United States. Defendants and

each of them claim that they are engaged in the enforce-

ment and execution of the laws of the State of California

and the peer review process. Under such circumstances,

Dr. Pinhas is entitled to due process rights under the

United States Constitution.

112. Defendants, and each of them, by denying Dr.

Pinhas representation by counsel, full disclosure with

particularity of the charges against Dr. Pinhas and by

refusing to take action on plaintiff's request that Dr.

Pinhas’ Motions be heard and decided at a reasonable

time prior to the commencement of the hearing, are acting

A-71

in contravention of procedures required by due process.

Further, defendants and each of them, by denying plain-

tiff his right to an unbiased, unprejudiced, detached

hearing officer, and by appointing the Judicial Review

Committee that consists of members who are in active

economic and professional competition with plaintiff and

of defendant’s own medical staff and subject to the

control, persuasion and undue influence of defendants, is

further depriving defendant of a fair opportunity to be

heard as guaranteed to him by the due process and equal

protection clauses of the Constitution of the United

States. Further, improper ex parte communications be-

tween counsel for the Medical Staff, the hearing officer,

the Judicial Review Committee members, the prosecutor,

and officers of the Hospital deny plaintiff a fair hearing

consistent with due process. Further, defendants’ intimi-

dation of witnesses, depriving witnesses of the plaintiff

from attending the hearing, threatening plaintiff's coun-

sel with arrest and ordering him off Hospital grounds

during the hearing — even though he was listed as a

witness, ordering witnesses not to testify to facts helpful

to plaintiff Dr. Pinhas, vilifying plaintiff, his physician

representative, his witnesses, and interfering with plain-

tiff's ability to timely get a copy of the transcript of

proceedings deprive plaintiff of due process of law.

113. Based on the conduct of defendants, and each of

them, as set forth above, Dr. Pinhas has been deprived of

his rights in violation of the 5th and the 14th Amend-

ments and Due Process and Equal Protection Clauses of

the United States Constitution together with his constitu-

tional right to privacy and has been and will continue to

suffer damages in an amount to be determined at the trial

of this matter, but in excess of the jurisdictional limits of

this Court.

A-72

114. As a result of the conduct of defendants and each

of them, plaintiff is entitled to reasonable attorneys fees,

pursuant to 42 U.S.C. § 1988.

THIRD CLAIM FOR RELIEF

(For Damages for Violations of the Constitution of the

United States and the Civil Rights Act 42 U.S.C.

§ 1985(3) by Defendants Summit Health, Midway Hos-

pital, Medical Staff, Mr. Feldman, Dr. Reader, Dr.

Lurvey, Mr. Posell, Dr. Macy, Dr. Salz, Dr. Perlman,

Ms. Farber, Mr. Kadzielski, W&A, and Each of Them)

115. Plaintiff realleges and incorporates herein by ref-

erence paragraphs 1 through 78, 80 through 103 and 110

inclusive, of this First Amended Complaint.

116. Defendants, and each of them, have conspired to

deprive plaintiff of equal protection under the laws and of

equal privileges and immunities under the laws. In fur-

therance of this conspiracy, defendants, and each of them,

have denied Dr. Pinhas representation by counsel, full

disclosure with particularity of the charges against Dr.

Pinhas and denied plaintiff's request that Dr. Pinhas’

Motions be heard and decided at a reasonable time prior

to the commencement of the hearing, and have acted in

contravention of procedures required by due process.

Further, defendants and each of them, have denied plain-

tiff his right to an unbiased, unprejudiced, detached

hearing officer, and by appointing the Judicial Review

Committee that consists of members who are in active

economic and professional competition with plaintiff and

of defendant's own medical staff and subject to the

control, persuasion and undue influence of defendants,

has further deprived defendant of a fair opportunity to be

heard as guaranteed to him by the due process and equal

protection clauses of the Constitution of the United

A-73

States. Further, improper ex parte communications be-

tween counsel for the Medical Staff, the hearing officer.

the Judicial Review Committee members, the prosecutor,

and officers of the Hospital have denied plaintiff a fair

hearing consistent with due process. Further, defendants’

intimidation of witnesses, depriving witnesses of the

plaintiff from attending the hearing, threatening plain-

tiff's counsel with arrest and ordering him o Hospi‘+

grounds during the hearing — even though he us '

as a witness, ordering witnesses not to testify to facts

helpful to plaintiff Dr. Pinhas, vilifying plaintiff, jis

physician representative, his witnesses on and off the

record before the Judicial Review Committee, and inter-

fering with plaintiff's ability to timely get a copy of the

transcript of proceedings has deprived plaintiff of due

process of law.

117. As a result of the conduct of defendants, and

each of them, plaintiff has suffered property damage to

his medical practice, and has suffered the deprivation of

his property interest in membership on the Midway Hos-

pital’s medical staff, including admitting and surgical

privileges, at Midway Hospital. As a consequence, plain-

tiff has been deprived of his rights in violation of the 5th

and 14th Amendments and Due Process and Equal Pro-

tections Clauses of the United States Constitution to-

gether with the constitutionally protected right of

privacy.

118. As a result of the conduct of defendants, and

each of them, plaintiff has been damaged in an amount to

be determined at the time of trial, but in an amount in

excess of the jurisdictional limits of this Cour’

119. As a result of the conduct of defendants, and

each of them, plaintiff is entitled to reasonable attorneys

fees, pursuant to 42 U.S.C. § 1988 of the Civil Rights Act.

A-74

FOURTH CLAIM FOR RELIEF

(Treble Damages for Violation of the Sherman Anti-Trust

Act, Section 1, 15 U.S.C. $1 by defendants Summit

Health, Midway Hospital, the Medical Staff, Mr. Feld-

man, Dr. Reader, Dr. Lurvey, Dr. Macy, Dr. Salz, Dr.

Perlman, Mr. Kadzielski, W&A and Each of Them)

120. Plaintiff realleges and incorporates herein by ref-

erence paragraphs 1 through 78, 80, 84, 90, 91, 93 through

103, and 112, inelusive, of the First Amended Complaint.

121. Detendants Dr. Reader, Dr. Macy, Dr. Salz, Dr.

Perlman, and others are engaged in the practice of

medicine limited to eye medicine and ophthalmologic

surgery and are in competition with plaintiff Dr. Pinhas.

122. Defendants are seeking to effectuate a boycott

and drive Dr. Pinhas out of business so that other

ophthalmologists and eye physicians, including, but not

limited to, defendants Dr. Reader, Dr. Macy, Dr. Salz

and Dr. Perlman, will have a greater share of the eye care

and ophthalmie surgery in Los Angeles.

123. In an effort to effectuate the boycott and to

boyeott plaintiff Dr. Pinhas, defendants Dr. Reader, Dr.

Macey, Dr. Salz, Dr. Perlman, and others, including, but

not limited to, Dr. Lurvey have sought to control and do

control defendant Medical Staff. Defendant Mr. Feldman

controls Summit Health insofar as it relates to Dr.

Pinhas and Midway Hospital.

124. After Dr. Pinhas refused to aecept the terms and

conditions of the “sham” contract and refused to return a

copy of it to Midway Hospital, and after defendant Dr.

Lurvey threatened that proceedings may be instituted

against him in the event that he sought to utilize this

Exhibit “A” in any way detrimental to Midway Hospital,

in late Mareh, 1987 Summit Health, Midway Hospital,

A-75

Medical Staff, Mr. Feldman, Dr. Reader,-Dr. Lurvey, Dr.

Macy, Dr. Salz, and Dr. Perlman entered into a combina-

tion and conspiracy to retaliate against Dr. Pinhas and to

preclude him from continued competition in the market

place, not only at defendant Midway Hospital, but by

reason of the filing of an improper Section 805 report and

a Section 423 report, preclude plaintiff Pinhas from prac-

ticing medicine in California, if not the United States. In

furtherance of the conspiracy of defendants Summit

Health, Midway Hospital, Medical Staff, Mr. Feldman,

Dr. Reader, Dr. Lurvey, Dr. Macy, Dr. Salz, and Dr.

Pearlman, defendants enlisted the assistance and re-

ceived the assistance of Mr. Posell, Mr. Kadzielski, and

W&A to create unjustified charges, to secure adverse

determinations against plaintiff Dr. Pinhas, to cause a

summary suspension and termination of his privileges at

Midway Hospital and report that summary suspension

and termination to the defendant BMQA, and causing

dissemination of that adverse determination to all hospi-

tals which Dr. Pinhas is a member, and to all hospitals to

which he may apply so as to secure similar actions by

those hospitals, thus effectuating a boycott of Dr. Pinhas.

125. Without admission to other hospitals, plaintiff

Pinhas has no method by which he ean practice

ophthalmic surgery, which constitutes the greater portion

of his practice.

126. The actions undertaken by defendants in connec-

tion with the bringing of false enarges against Dr. Pinhas

were done with oppression and malice and:

a. Were not done in a reasonable belief that the

action was in furtherance of the quality of health

care;

A-76

b. Were not done after a reasonable effort to

obtain the facts of the matter;

ce. Were not done after adequate notice and hear-

ing procedures afforded to Dr. Pinhas, and utilized

procedures which were not fair under the eireum-

stances; and

d. Were not based upon the reasonable belief that

the action was warranted by the facts after defend-

ants’ efforts to obtain facts.

FIFTH CLAIM FOR RELIEF

(Injunetive Relief Against All Defendants)

127. Plaintiff realleges and incorporates herein by ref-

erence all of the allegations of this First Amended

Complaint.

128. Defendants, and each of them, threatened to, and

unless restrained will, continue to deprive plaintiff Dr.

Pinhas of his right to due process and fair procedure

under both the United States Constitution and the Con-

stitution of the State of California.

129. Defendants’ conduct has caused, and will con-

tinue to cause, plaintiff great and irreparable injury,

including, but not limited to, the injury which resulted in

the filing of a California Business and Professions Code

Section 805.5 notice for which pecuniary damages would

not afford adequate relief, in that they would not com-

pletely compensate plaintiff's professional reputation and

good standing, and would be extremely difficult to

ascertain.

WHEREFORE, plaintiff requests judgment to be en-

tered for plaintiff and against defendants, and each of

them, as follows:

A-77

1. On the First Claim for Relief, for a declaratory

judgment that Sections 805 and 805.5 of the California

Business and Professions Code and Section 423 et seq of

the Health Care Quality Improvement Act of 1986, 42

U.S.C. § 11133 et seq., are unconstitutional, together with

costs of suit incurred herein, including reasonable attor-

neys fees pursuant to 42 U.S.C. § 1988, and for such other

and further relief as the Court deems just and proper.

2. On the Second Claim for Relief, for damages ac-

cording to proof, for costs of suit ineurred herein, inelud-

ing reasonable attorneys fees pursuant to 42 U.S.C.

§ 1988, and for such other and further relief as the Court

deems just and proper.

3. On the Third Claim for Relief, for damages accord-

ing to proof, for costs of suit incurred herein, including

reasonable attorneys fees pursuant to 42 U.S.C. § 1988,

and for such other and further relief as the Court deems

just and proper.

4. On the Fourth Claim for Relief, for damages ac-

cording to proof and then trebled, and for costs of suit

ineurred herein, including reasonable attorneys fees as

allowed by law, and for such other and further relief as

the Court deems just and proper.

5. On all Claims for Relief an injunction, preliminary,

and final, against each and all defendants, their agents,

assistants, successors, employees, attorneys, representa-

tives, and all persons acting in concert or cooperation

with them or at their direction from violating the right of

plaintiff.

A-78

JURY TRIAL DEMAND

1. Plaintiff hereby demands trial by jury herein.

DATED: July 13, 1987

LAWRENCE SILVER

A Law Corporation

By: LAWRENCE SILVER

Attorneys for Plaintiff

Simon J. Pinhas, M.D.

{Exhibits Omitted ]

PROOF OF SERVICE BY MAIL

STATE OF CALIFORNIA =e

County OF Los ANGELES

I am a citizen of the United States and a resident of or

employed in the City of Los Angeles, County of Los

Angeles; I am over the age of 18 years and not a party to

the within action; my business address is 1706 Maple

Avenue, Los Angeles, California 90015.

On April 24, 1990, I served the within Petition For a

Writ of Certiorari in Re: “Summit Health, Ltd., Midway

Hospital Medical Center, The Medical Staff of Midway

Hospital Medica! Staff, Mitchell Feldman, August

Reader, M.D., Arthur N. Lurvey, M.D., Johnathan I.

Macy, M.D., James J. Salz, M.D., Gilbert Perlman, M. D.,

Mark Kadzielski and Weissburg and Aronson, Inc., Peti-

tioners vs. Simon J. Pinhas, M.D., Respondent,” in the

United States Supreme Court, October Term 1989, No.

on all parties interested in said action, by placing

three copies thereof enclosed in a sealed envelope, with

postage thereon fully prepaid, in the United States Post

Office mail box at Los Angeles, California, addressed as

follows:

Maxwell Blecher

Blecher & Collins

611 West Sixth Street

Lawrence Silver, Esq.

A Law Corporation

10920 Wilshire Blvd.

Suite 800 Suite 2800 -

Los Angeles, CA 90024-6510 Los Angeles, CA 90017

(213) 443-9500 (213) 622-4222

Attorney for Respondent Attorneys for Respondent

Simon J. Pinhas, M.D. Simon J. Pinhas, M.D.

All parties required to be served have been served.

—

I declare under penalty of perjury that the foregoing is

true and correct.

Executed on April 24, 1990, at Los Angeles, California

S COLA. 07-

CHUCK ALBRECHT

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.