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	West Virginia Supreme Court Decides Exclusive Contract Case on Tortured Logic

	HIPAA Compliance Alert

Healthcare Law Briefs

June 11, 2004

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1. West Virginia Supreme Court Decides Exclusive Contract Case on Tortured Logic

In Kessel v. Monongalia General Hospital, the West Virginia Supreme Court decided that the hospital could not enter into an exclusive contract for anesthesia services if it prevented other physicians from exercising their pre-existing clinical privileges, but the Court arrived at this result in a tortured manner.

First, the West Virginia Supreme Court:

Rejected the line of cases in the majority of the States, including Pennsylvania, holding that Medical Staff Bylaws constitute contracts, and instead stated that, since the hospital licensing statutes require hospitals to adopt bylaws, the adoption of such bylaws was merely the performance of a pre-existing duty and, not consideration for the creation of a separate contract.
Stated that the termination of clinical privileges by exclusive contracts is not a professional peer review activity triggering the due process of the bylaws.

Second, the Court also decided that medical staff membership and clinical privileges are not property rights, but that physicians are permitted to practice at public or quasi-public hospitals and may not be deprived of that "valuable benefit" in an unreasonable, arbitrary or capricious manner. However, the Court also declared that the governing boards were legally and morally responsible for the operation and management of the hospital.

Third, in order to balance these competing interests, the Court also recognized that patients have a right to choose their physicians. It is interesting to note that the Court lapsed into calling this a "right" while so carefully describing medical staff membership as merely a "valuable benefit". The Court stated:

"Our decision essentially is based on the determination that the total exclusion of physicians from their hospital practice, and the concomitant complete deprivation of patient choice, simply cannot be justified by the alleged ends to be achieved."

Finally, although as dicta, the Court did reject the artificial construct, frequently asserted by hospitals, that there is a difference between possessing clinical privileges and actually being able to use them. Hospitals have argued that denying physicians access to facilities, so that they cannot actually use the privileges, does not constitute legal termination of those privileges. This opinion recognizes that argument as fiction.

2. HIPAA Compliance Alert: HGSAdministrators reports that 95.39% of the EDI submitted as of June 7, 2004 are HIPAA, as contrasted to a nationwide average of 86.17%.

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