Privileges at Stake in IR Lawsuit

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The attorney for six interventional radiologists who have been barred, under an exclusivity contract, from practicing at three Sutter Health hospitals in the greater Sacramento, California, area is warning physicians that if Sutter Health prevails in these cases, subspecialists at other hospitals might find that their hospital privileges are no assurance that they can actually perform services.

William McD. Miller III, a partner in the Los Angeles offices of law firm Musick, Peeler & Garrett LLP, says, “This is pure economics. The extension of this is scary.” If Sutter Health wins, hospitals could decide which services should be granted exclusive contracts elsewhere, choosing with which groups they want to compete. “You can have privileges, but you’re barred,” Miller says.

Loss of privileges or practice rights for competitive reasons might be unlikely on a broad scale, but the lawsuits that Miller has filed on behalf of his clients do illustrate how service consolidation inside hospitals is putting pressure on physicians to adhere to hospital-centered delivery of care.

At the Sutter Health hospitals, Miller says, cardiologists and vascular surgeons who are not part of Sutter Health’s exclusive radiology provider group are allowed to perform exactly the same interventional procedures that the hospital’s contracted interventional radiologists do, but other outside interventional radiologists (such as his clients) are barred from performing the procedures.
“The reality here is that this is a blatant, obvious, and admitted act of discrimination against these physicians because they are radiologists—and it has been done for competitive reasons, because Sutter Health is trying to build a radiology practice,” Miller says.

Injunctions Denied

The situation is complex. All six of Miller’s clients are partners in Radiological Associates of Sacramento (RAS), the radiology practice with which Sutter Health had a decades-long exclusive contract prior to April 2010. Sutter Health allowed that contract to lapse and opted to build its own radiology practice—the Division of Medical Imaging within Sutter Medical Group (SMG)—and award it an exclusive contract.

Sutter Health contends that it can legally bar the six interventional radiologists who are part of RAS, since they are not included under the new radiology contract. Miller argues that the interventional radiologists, by virtue of the hands-on procedures that they perform on patients, are more like cardiologists and vascular surgeons than they are like diagnostic radiologists, and thus cannot legally be prevented from exercising their hospital privileges to perform interventional procedures at Sutter Health hospitals.

“If they called themselves cardiologists or vascular surgeons, they could do these procedures,” Miller says. “It demonstrates the absurdity of the position taken by Sutter Health. If you’re a vascular surgeon, it’s OK to take business away from SMG, but if you’re a radiologist, it’s not OK.”

For now, however, the courts are agreeing with Sutter Health, not with the six RAS interventional radiologists who are barred. In August, in Sacramento and Placer counties (where the lawsuits were filed), preliminary injunctions were denied that would have let the physicians practice at the three Sutter Health hospitals named in the lawsuits—Sutter General Hospital and Sutter Memorial Hospital (both in Sacramento) and Sutter Roseville Medical Center.

Citing active litigation, Sutter Health officials are unwilling to comment on the lawsuits. According to an August 12 Sutter Health press release,1 however, the courts ruled in the hospitals’ favor because Sutter Health’s previous contract with RAS protected the exclusivity of the group—including its interventional radiologists—in the same way that the current Sutter Health contract protects its new radiology provider.

Margaret Wells, commissioner of Placer County’s Superior Court, is quoted by Sutter Health as ruling, “Plaintiff’s claim that defendant’s contract with [Sutter Medical Foundation]/SMG for radiology services is not an exclusive contract because nonradiologist physicians can perform interventional radiological procedures fails in that there was an identical exception under the RAS contract.”¹

Judge Kevin Culhane of Sacramento County’s Superior Court is quoted as ruling, “Plaintiff’s interest in the right to practice interventional radiology benefited from plaintiff’s earlier exclusive contract, which lasted