Economy v. Sutter East Bay Hospitals

May a hospital avoid its obligation to provide notice and a hearing before terminating a doctor’s ability to practice in the hospital for jeopardizing patient quality of care, by directing the medical group employing the doctor to refuse to assign the doctor to the hospital? We agree with the trial court that it may not, and that it will be liable for damages when it causes such a termination without complying with statutorily mandated procedures.

Defendants Sutter East Bay Hospitals and Alta Bates Summit Medical Center (collectively, the hospital) appeal a judgment awarding plaintiff Dr. Kenneth Economy substantial damages based on the suspension and later termination of his “staff privileges, membership, or employment” with the hospital. The termination was “based on a medical disciplinary cause or reason” without prior notice and a hearing in violation of Business and Professions Code section 809 et seq. The hospital contends the court erred in concluding that plaintiff was entitled to notice and a hearing prior to his suspension and termination and, alternatively, if he was entitled to any statutory protections, he failed to establish that the hospital’s failure to hold a hearing caused his damages. The hospital also challenges the inclusion of approximately $650,000 in damages to account for “tax neutralization” on the ground that the evidence in support of the award was speculative.  In a cross-appeal, plaintiff contends the court erred in denying his motion for attorney fees and costs under section 809.9. We find no error and shall affirm the judgment in full.

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