A federal lawsuit filed on November 12, 2021 in the United States District Court for the Eastern District of California Sacramento Division alleges: “Plaintiff Dr. Natarajan is a highly qualified and competent physician who made complaints to hospital administrators to protect the safety of patients at their hospitals. He also was a direct economic competitor of the hospital. The Defendant, a private health corporation who operated the hospital where he worked, subsequently retaliated against him and removed his privileges under color of state law through actions which violated federal due process protections.”
“This lawsuit seeks a declaration that California’s law governing medical disciplinary actions by private corporations violates the Fourteenth Amendment’s guarantee of due process of law and 42 U.S.C. section 1983. Dr. Natarajan also seeks an injunction requiring the reinstatement of his hospital privileges at St. Josephs which was terminated by Defendant Dignity on November 2015.”
“Under California Business and Professions Code section 805 et seq., private hospital entities are required by statute to give physicians a hearing before taking any action restricting or revoking privileges or employment for a “medical disciplinary cause or reason.” A medical disciplinary cause or reason is defined in Business and Professions Code section 805, subd. a(6) as “that aspect of a licentiate’s competence or professional conduct that is reasonably likely to be detrimental to patient safety or to the delivery of patient care.” Business and Professions Code section 809.5 permits a healthcare corporation to summarily suspend a physician without a hearing, but only if patients or someone else might be in “imminent danger” if the physician is allowed to continue to practice. In addition, Section 809.5 requires a physician to receive the opportunity for a “fair hearing” after the summary suspension. Business and Professions Code Section 805, subds (c) and (e) require that disciplinary actions taken by private corporations be reported to the State in “805 Reports.” A failure to make a required 805 report is punishable by fines up to $100,000. These 805 reports are then used by both State and other private healthcare corporations to determine whether the physician’s practice of medicine should be further restricted or terminated. Hospitals and other healthcare corporations are required to request and review any 805 reports on file with the Medical Board of California before granting or renewing a physician’s medical staff privileges pursuant to Business and Professions Code section 805.5. A failure to comply with section 805.5 is a criminal offense. The State’s system of monitoring and disciplining physicians to ensure the public health and safety is intertwined with the performance by private healthcare corporations of medical disciplinary hearings and medical disciplinary actions.”
Due Process Violations
The plaintiff alleges: “The first due process violation occurs because California law permits private health corporations who are adversaries of a physician to choose the hearing officer and hearing panel that will render a decision as to whether the private health corporations’ actions against the physician are reasonable and warranted. Disciplinary proceedings against a physician are inherently adversarial. Healthcare corporations seeking to impose discipline on a physician may do so for a variety of reasons besides a genuine concern about the quality of a physician’s care or his or her behavior. A healthcare corporation may want to eliminate or punish whistleblowers, to prevent further whistleblowing by that physician and to deter whistleblowing by other physicians. Personal antagonisms or fear of bad publicity also lead to disciplinary actions by a healthcare corporation. A healthcare corporation may want to eliminate its direct economic competitor.”
“The California law governing the selection of the hearing officer and hearing panel members, Business and Professions Code section 809.2, subd. a, gives the healthcare corporations the authority to decide whether physicians charged with conduct detrimental to patient care or safety will have their hearings decided by (1) neutral arbitrators chosen by a process mutually agreeable to the physician and the healthcare corporations, or (2) by a panel of physicians with a hearing officer who serves as the presiding judge. The statute is silent on the question of who should pick the hearing officer and panel members if neutral arbitrators are not used. Healthcare corporations have taken advantage of this silence to assert their authority to unilaterally appoint a hearing officer and hearing panel members … This is the only system of law in American jurisprudence in which a private entity in an adversarial confrontation with another private party is permitted to choose the judge and jury who will decide the conflict. This is a fundamental violation of due process.”
“The second violation of due process occurs because California law permits healthcare corporations to discipline a physician for alleged quality problems without the requirement of any known objective standard … In regard to clinical medical issues, neither the California legislature nor the California courts have ever adopted a standard for clinical issues … in healthcare corporations’ disciplinary proceedings, there is no legal requirement that the standard of care be used as the applicable standard in a hearing. As a consequence, a healthcare corporation’s hearing panel may determine that discipline is warranted even though it does not find that the physician violated the standard of care.”
“The third reason that California’s disciplinary system violates due process is the fact there is not effective, timely and independent judicial review of healthcare corporations’ disciplinary hearings before, during or after disciplinary actions are taken. Physicians are not permitted to challenge in state court the hearing officer and hearing panel appointed by a healthcare corporation in state court, no matter how biased or unfair their selection, until after the hearing is concluded … A healthcare corporation can appoint a biased hearing officer, even one of its own attorneys, as the hearing officer, without fear that a court can will intervene to disqualify the hearing officer before the hearing decision. A healthcare corporation likewise can appoint one of its top managers to a hearing panel, without fear of court intervention during the hearing process … Under California law, there is also no independent review of the evidence used to support a healthcare corporation’s disciplinary action against a physician … an exceedingly weak case against a physician may be decided against him by a jury handpicked by the hospital, but neither a California superior court nor a California court of appeal has the legal authority to reverse the decision on substantive grounds, if any substantial evidence supports the decision. On the other hand, if a physician wins his disciplinary hearing, the healthcare corporation is not required to accept the decision under California law. Even if the hearing panel’s decision against discipline is supported by substantial evidence, the governing body may choose to disregard the decision and discipline the physician anyway.”
“There is also no effective judicial review of healthcare corporations’ disciplinary decisions because under California law, judicial review often takes six years or more, depriving a physician of his right to practice medicine in a hospital during a substantial part of his or her career without due process.”
With regard to his experience, the plaintiff alleges: “Dr. Natarajan is a highly competent physician. At the time of his hearing, he had treated approximately 10,000 different hospitalized patients. He has never been sued for malpractice. Before St. Joseph’s 2013 charges, no one had raised any issues about Dr. Natarajan’s competence … Dr. Natarajan seeks a declaration from this Court pursuant to 42 U.S.C. section 1983 that California law governing medical disciplinary hearings of physicians and other California licentiates pursuant to California Business and Professions Code section 809 et seq. violates Federal due process guaranteed by the Fourteenth Amendment of the United States Constitution.”
Source Natarajan v. Dignity Health, Case 2:21-at-01092.
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