Privileges at Stake in IR Lawsuit
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 15 years. Plaintiffs were given notice that the contract would not be renewed in November 2009. Although plaintiffs have not carried their burden with respect to either of the inquiries that inform a court’s decision on whether to issue a preliminary injunction, it is worth observing that plaintiffs benefited from the original hospital determination to institute an exclusive contract with plaintiffs’ medical group, yet here seek a mandatory injunction by challenging the factual predicate that gave rise to rise to the plaintiffs’ earlier contract under circumstances in which a similar contract has now been awarded to a competitor.”¹ Although the courts denied preliminary injunctions, the case is not finished, Miller says. The next step will probably be a discovery phase in which both sides look for documentary evidence to support their arguments. After that—within 18 months or so, Miller suggests—could come a trial. That trial, he says, might establish precedent for treating interventional radiology as differing from diagnostic radiology when a radiology practice is closed (made exclusive). Under California law, hospitals are allowed to close certain services by awarding exclusive contracts. Radiology is one of these, Miller says; others are anesthesia, emergency medicine, and pathology. Miller argues that as long as Sutter Health allows cardiologists and vascular surgeons to place stents and perform other hands-on interventional procedures that its interventional radiologists under exclusive contract also perform, the interventional-radiology portion of its radiology service cannot be termed closed. Therefore, his clients should be allowed to perform the procedures, too. “Our response is that they don’t have a closed service because cardiologists and vascular surgeons can do the same procedures, and therefore, the service can’t be closed,” Miller says. He acknowledges, however, that since 2004, RAS had a similar provision allowing cardiologists and vascular surgeons to do interventional procedures at the Sutter Health hospitals that RAS served. Therefore, he says, under the RAS contract, interventional radiology wasn’t closed, either. “Since 2004 there was no closed interventional radiology at either of these hospitals. They now contend that this is an exclusive contract,” Miller says, “but they say it’s not exclusive for cardiologists and vascular surgeons. Either closed means closed, or you are cherry-picking based on competitive-business means.” Miller says that these lawsuits—filed on behalf of each of the six interventional radiologists, individually—could establish case law that effectively bifurcates interventional radiology and diagnostic radiology, when it comes to closing services. “There is absolutely no precedent for the bifurcation of interventional radiology and diagnostic radiology,” he says. “This is the first time that I’m aware of that any hospital has argued that it can close medical procedures where medical staff privileges are given to three different categories of physicians, two are permitted to perform the procedures, and the third is not. That’s never happened.” Wider Implications Miller says that subspecialists in all medical disciplines should take note of this case. “It should be serious and scary stuff for every physician who has medical-staff privileges,” he says. “I would hope that physicians (and associations of physicians) would take a careful look at what’s going on here and ask themselves whether, if Sutter Health’s position is sustained, the whole structure—the security of medical staff privileges—might begin to crumble. All of a sudden, the economic interests of the hospital become the paramount concern, not the fact that the physicians have a vested property right in their privileges.” Miller says that at one point, Sutter Health suggested, in its arguments to the courts, that if a Sutter Health hospital patient wanted to be treated by one of his interventional-radiology clients, that patient could transfer to an RAS clinic, be treated, and transfer back to the hospital. Miller says that this is unreasonable. “The question is why we are being prevented from exercising privileges that the Supreme Court of the state of California has said are our vested property rights to exercise,” Miller says. “Why is a hospital able to get away with barring the door to interventional radiologists, while it steps aside to let vascular surgeons and cardiologists through to do exactly the same procedures?” Miller says that it’s hard to predict how the arguments in the case will develop. “At this point, there’s at least the potential—depending on how a court were to rule on all of this—for there to be a fundamental change. If Sutter Health were to prevail, there could be a fundamental change in the security that physicians now feel in the medical-staff privileges they have. They could be massively more vulnerable if Sutter Health were to prevail,” he says.