McCord v. HCA Health Servs. of Tenn., Inc.

DAVID H. MCCORD v. HCA HEALTH SERVICES OF TENNESSEE, INC.

No. M2014-00142-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT NASHVILLE

November 21, 2014 Session

April 27, 2015

Appeal from the Circuit Court for Davidson County

No. 13C291

Carol Soloman, Judge

A hospital instituted a review of an orthopaedic surgeon's removal of spinal hardware from patients within one year of implantation; the review resulted in a peer review proceeding under the hospital's bylaws and the eventual revocation of the doctor's surgical privileges. The doctor filed suit for breach of contract, defamation, common law and statutory disparagement, and intentional interference with business relationships, arising out of the revocation of his surgical privileges. Upon the hospital's motion to dismiss all claims for failure to state a claim for relief, the court dismissed the breach of contract claims. The hospital subsequently moved to dismiss the remaining claims for lack of subject matter jurisdiction or, in the alternative for summary judgment; the court granted the motion to dismiss and denied summary judgment. Doctor appeals the dismissal of his claims; hospital appeals the denial of its motion for summary judgment. We affirm the dismissal of the breach of contract claims and reverse the dismissal of the tort claims for lack of subject matter jurisdiction; we hold that the hospital is entitled to summary judgment on the remaining claims and dismiss the case.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part and Reversed in Part; Case Dismissed

RICHARD H. DINKINS, J., delivered the opinion of the court, in which ANDY D. BENNETT and W. NEAL MCBRAYER, JJ., joined.

C. Bennett Harrison, Jr., Jennifer M. Lankford, and Dan Warlick, Nashville, Tennessee, for the appellant, David H. McCord, M. D.

C. J. Gideon, Jr., Nashville, Tennessee, for the appellee, HCA Health Services of Tennessee, Inc., d/b/a Centennial Medical Center.

OPINION

I. FACTUAL BACKGROUND¹

This appeal arises from a suit filed by Dr. David McCord, an orthopedic surgeon who held spinal surgery privileges at Centennial Medical Center ("Centennial"), against HCA Health Services of Tennessee, Inc. ("HCA"), which owns and operates Centennial, to redress the revocation of his surgical privileges. Dr. McCord was granted privileges to perform spinal surgery at Centennial in 1991, and by 2010, received privileges to perform surgery to implant hardware into patients to secure the bony structures of the spine.

In 2010, Ilene Marshall, an administrative quality coordinator for the departments of surgery, anesthesia and ophthalmology, was assigned to collect data regarding patients who had spinal hardware removed within one year of placement and to look for any "hardware failure" in connection with the removals. The data she collected showed that Dr. McCord had 19 patients whose spinal hardware was removed within one year of implantation and that none of the patients had any "hardware failure." Dr. Michael Schlosser, the Chief of Surgery at Centennial, was subsequently asked to review the patient files to determine the appropriateness, propriety and necessity of the 19 surgeries.

In May 2011, Dr. McCord met with Dr. F. J. Campbell, Centennial's Chief Medical Officer, who told him that the 19 cases "represented and divulged problems with [his] practice"; the renewal of Dr. McCord's surgical privileges was also discussed. Centennial then sent the files to a physician in Oregon for outside review; at Dr. McCord's request, the files were also sent to an orthopedic surgeon in California.

Thereafter, pursuant to its Medial Staff Bylaws², Centennial's Medical Executive Committee ("MEC") appointed an ad hoc committee comprised of Dr. Schlosser, Dr. Roger Passmore, an orthopedic surgeon specializing in foot and ankle surgery, and Dr. BrandonDowns, Chief of Orthopedic Surgery, to investigate Dr. McCord.³ On June 6, 2011, the MEC met with Dr. McCord and informed him that his "hardware removal rate within one year of implantation was 7.5% and that the next highest rate of the approximately one dozen surgeons who performed the same or similar surgery at Centennial was 1.5%."

On October 13, 2011, pursuant to Section 6.3 of the bylaws, Dr. John Wilters, President of the Medical Staff and Chairman of the MEC, sent Dr. McCord a letter reporting that the MEC had met and reviewed the ad hoc committee's report and recommendation regarding his privileges; the letter stated that Dr. McCord's privileges were suspended and that a follow-up letter would provide a summary of his rights under the fair hearing process. On October 19, Dr. Wilters sent a letter to Dr. McCord which detailed his rights under the bylaws and the reasons for the adverse action. On October 27, Dr. McCord sent a letter to Thomas L. Herron, CEO of Centennial, requesting a hearing to contest the suspension and recommendation for permanent revocation of his privileges; on December 9, Centennial notified Dr. McCord by letter that a hearing would be held on January 9, 2012.⁴

On January 4, 2012, Dr. McCord, through his counsel, sent a letter to counsel for Centennial memorializing their conversation on January 3, wherein his counsel was advised of the names of the hearing panel members; the letter questioned the impartiality of the hearing panel and asked that the hearing be postponed due to insufficient time to prepare forCentennial's witnesses.⁵ On January 9, counsel for Dr. McCord sent a letter to Dr. Geoffrey Smallwood, the chairman and presiding officer of the hearing panel, stating in pertinent part:

After serious consideration, Dr. McCord has determined that he would not want to practice at Centennial based upon what he perceives to be a hostile environment toward him.

Dr. McCord further is of the opinion that he simply cannot get a "fair" hearing based upon information we have obtained in preparation for tonight's hearing, and he does not wish to incur the extra expense of going through the charade of presenting a case when the conclusion has already been agreed upon by the MEC. Accordingly, you are advised that Dr. McCord will not attend or participate in the fair hearing process at Centennial Medical Center. I wanted to let you know as soon as possible following his decision so that you could make whatever arrangements or inform those individuals involved to avoid further disruption of their schedules.

The hearing proceeded as scheduled before a panel consisting of Dr. Smallwood, Dr. Mark Christoferson, a pediatric orthopedic surgeon, and Dr. Mark Flora, a urologist⁶; Dr. McCord did not attend. Centennial presented the testimony of Dr. Schlosser, Ms. Marshall, and Dr. Michael Metzman, a neuroradiologist, along with several exhibits; the panel approved the MEC's recommendation to suspend and permanently revoke Dr. McCord'ssurgical privileges.⁷ Centennial's Board of Trustees affirmed the MEC's recommendation on February 23. On March 2, Centennial submitted an "Adverse Action Report" to the National Practitioner Data Bank ("NPDB"), which reported the following relative to Dr. McCord:

Practitioner first came under scrutiny in June 2011 after evaluation of the practitioner's professional performance revealed concerns over the number of spinal surgery patients returning to the operating room within twelve months of the date of their original fusion procedure. An investigation was conducted by an ad hoc committee and the findings presented to the Medical Executive Committee. The MEC decided to summarily suspend the practitioner's privileges as of October 13, 2011 and recommend termination of the practitioner's medical staff membership. A fair hearing was conducted to consider the practitioner's appeal of the MEC's recommendation. The hearing committee found that the practitioner had a pattern of performing spine surgeries on patients for whom surgery is not indicated. The hearing committee approved the MEC's recommendation after affirming that the recommendation had a substantial factual basis and it was not arbitrary, unreasonable, or capricious. The Board of Trustees affirmed the MEC's recommendation on February 23, 2012.

On January 18, 2013, Dr. McCord filed a complaint against Centennial⁸ asserting causes of action for breach of contract for violating the bylaws and failing to follow them in good faith, defamation, common law and statutory disparagement, and intentional interference with existing and prospective business relationships. He also sought a declaration that Centennial unjustifiably revoked his privileges and injunctive relief, specifically, reinstatement of his privileges and that Centennial be required to report his reinstatement to the NPDB.

Centennial moved to dismiss Dr. McCord's claims on the ground that the complaint failed to state a claim for relief pursuant to Tenn. R. Civ. P. 12.02(6). On May 10 and 21, 2013, the court held a hearing on Centennial's motion and on June 27 entered an orderdismissing the breach of contract claims; the court denied the motion as to the remaining claims, stating that it needed more information before ruling.

Centennial thereafter filed a motion to dismiss the remaining claims for lack of subject matter jurisdiction pursuant to Tenn. R. Civ. P. 12.02(1) on the ground that Dr. McCord failed to exhaust his administrative remedies prior to filing the action or, alternatively, for summary judgment; the court granted the Rule 12.02(1) motion. The court also denied Centennial's motion for summary judgment on the basis that there was a genuine issue of material fact as to whether the NPDB report was false and made with knowledge of its falsity. On appeal, Centennial argues that, if we determine that dismissal under Rule 12.02(1) was inappropriate, it is entitled to summary judgment on Dr. McCord's remaining claims.

Dr. McCord raises the following issues on appeal:

1. Whether the trial court improperly made findings of fact in granting Centennial's motion to dismiss on the

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