iFollowing the suspension, conditional renewal, and subsequent termination of medical staff privileges at a hospital operated by Christiana Care Health System, Dr. Lynn Talley (“Physician”) brought claims against Christiana Care for breach of contract, defamation, interference with prospective economic advantage, tortious interference with contractual relations, and breach of the implied covenant of good faith and fair dealing.1 In Talley v. Christiana Care Health System, the United States District Court, District of Delaware, granted summary judgment to Christiana Care, at least in part, because Christiana Care followed the processes in its bylaws and credentials manual.
The Facts
Physician is a board-certified OB-GYN who was a member of the MedicalDental Staff at a teaching hospital operated by Christiana Care Health System (the hospital and Christiana Care Health System are collectively referred to as the “Hospital”), from 1982 until she was terminated on July 15, 2016.2 On March 24, 2016, following an incident with a patient, the Physician became subject to a precautionary suspension in accordance with Hospital’s MedicalDental Staff Credentials Manual (“Credentials Manual”).3 The OB-GYN Peer Review Committee reviewed the suspension on March 30, 2016, and determined Physician’s behavior to be “At-Risk.”4 The following day, the OB-GYN Credentials Committee recommended the Physician’s precautionary suspension be terminated, subject to conditions.5 On April 1, 2016, however, the new OB-GYN Department Chair, Dr. Hoffman, reviewed the Credentials Committee’s recommendation and determined it should be modified.6 He sent the Credentials Committee’s recommendation, along with his own recommendation, to the Hospital’s Medical Executive Committee (“MEC”).7 Upon review, the MEC decided to continue the “precautionary suspension” as a “summary suspension,” and set out a number of conditions for the Physician to meet in order for her privileges to be reinstated.8 The Physician agreed to abide by the conditions, and the summary suspension was lifted on April 23, 2016.9
In February of 2016, prior to her suspension, the Physician submitted an application to renew her privileges at the Hospital, and this application was still pending during and after her suspension.10 The OB-GYN Credentials Committee reviewed the Physician’s application on April 5, 2016, but deferred making a recommendation on the application until Dr. Hoffman “had the opportunity to seek additional input.”11 Dr. Hoffman met with Hospital’s Chief Clinical Officer and in-house counsel, and recommended that the Physician’s privileges only be renewed for a four-month term, rather than the typical two-year term, subject to certain conditions.12 The Medical-Dental Staff Peer Review Committee, the MedicalDental Staff Credentials Committee, and the MEC each reviewed and endorsed the recommendation.13 On May 9, 2016, the Hospital’s Board approved and implemented the conditional renewal.14 The most significant condition of the Physician’s renewal was that she have “[n]o further workplace concerns regarding behavioral or clinical issues that are found by the [OB/GYN] Peer Review Committee to constitute ‘at risk’ or ‘reckless’ behavior.”15
Thereafter, the Physician was involved in at least two more patient-related incidents, which were referred to the OB-GYN Peer Review Committee.16 Four members of the committee met with the Physician to discuss the incidents.17 The OB-GYN Peer Review Committee then met and determined that both of the cases amounted to “At-Risk Behavior” and recommended the Physician receive “coaching” to remedy the issues.18 Because the “at-risk” findings violated the conditions set forth in the conditional renewal of the Physician’s privileges, the Physician’s privileges were terminated.19
Breach of Contract
This case was largely viewed by the court as a dispute over the provisions of two contracts: The Hospital Medical-Dental Staff Bylaws (the “Bylaws”) and the Credentials Manual.20 The Physician argued that the Hospital failed to follow the specific procedures in the Bylaws and Credentials Manual in terminating her privileges, and was therefore in breach of contract.21 The court determined the Hospital’s conduct conformed to the contractual provisions, and granted summary judgment to the Hospital on each breach of contract claim.22 Relying on state contract law, the court found that (1) the Hospital followed the applicable procedures in the Bylaws and Credentials Manual in terminating the Physician’s privileges; (2) under the Credentials Manual, shortening the term of Physician’s privileges was not a reduction of privileges; (3) the Credentials Committee’s failure to meet with the Physician did not amount to a breach of the contract; and (4) Physician did not suffer damages as a result of alleged breaches because even if the Hospital failed to follow certain applicable procedures outlined in the Bylaws and Credentials Manual in terminating the Physician’s privileges, the result would have been the same (i.e., termination of Physician’s privileges).23
Breach of Implied Covenant of Good Faith and Fair Dealing
“The covenant [of good faith and fair dealing] is best understood as a way of implying terms in [a contractual] agreement, whether employed to analyze unanticipated developments or to fill gaps in the contract’s provisions.”24 Physician argued that the Hospital breached the implied covenant and acted in an “arbitrary and unreasonable manner” by (1) terminating her privileges without providing her an opportunity to be heard; (2) terminating her privileges even though outcomes in her cases were not as bad as those for other physicians; and (3) allowing Dr. Hoffman to circumvent the review system, leading to her termination.25 The court rejected her arguments, and granted summary judgment to Hospital. First, the court found that Physician was given an opportunity to be heard when she met with four members of the OB-GYN Peer Review Committee prior to the OB-GYN Peer Review Committee’s meeting.26 Second, the Hospital did not act arbitrarily or unreasonably in determining that Physician’s conditional reappointment could be terminated for at-risk behavior (even if her behavior did not result in a “poor outcome”), because Physician agreed to be bound by the Credentials Manual and the terms of her conditional reappointment and “… could not have reasonably assumed that one of the fruits of the bargain was that she could never be terminated for at-risk behavior that fell short of causing a poor outcome (regardless of whether other physicians currently on staff at the Hospital have previously been involved in different cases that resulted in such “poor” outcomes).”27 Finally, Dr. Hoffman’s actions at issue in this case were governed by express contractual terms and could not be a basis for the application of the implied covenant.28
Defamation and Tortious Interference
Finally, the court granted summary judgment to the Hospital on the Physician’s claims for defamation, interference with prospective economic advantage, and tortious interference with contractual relations.29 Each of these claims was premised on statements allegedly made by a Hospital employee during the Physician’s suspension.30 The Physician alleged she was defamed when a Hospital-employed nurse told one of her patients that Physician was no longer practicing at the Hospital because she lost her privileges, and told the spouse of another patient that the Physician was no longer on staff at the Hospital.31 The Physician relied only on inadmissible hearsay to support her claim.32 The nurse, however, stated on the record that she told patients that the Physician “wasn’t seeing patients in the hospital[,]” a truthful statement during the Physician’s suspension, but did not otherwise make the alleged untrue and defamatory statements.33 The Physician could not establish her defamation claim because “the record did not contain any admissible evidence that the allegedly defamatory statements were actually made by [Hospital’s] employee(s).”34
Conclusion
The court relied on state contract and tort law in granting summary judgment to the Hospital. The Bylaws and Credentials Manual were contracts entered into between the Hospital and the Physician. This case did not turn on the substance of the provisions of the Bylaws and Credentials Manual, or whether those provisions were reasonable. Rather, the question before the court was whether the Hospital’s conduct conformed to the specific provisions of the Bylaws and Credentials Manual. This case demonstrates how important it is for committees and leaders of medical staffs to understand and follow the procedures in the medical staff’s governing documents when making decisions related to the privileges of medical staff members
1 Talley v. Christiana Care Health System, No. CV 17-926-CJB, 2019 WL 5102926 (D. Del. Oct. 9, 2019).
2 Id.
3 Id. at 4.
4 Id. at 4. Under Christiana Care’s Culture of Responsibility Physician Algorithm, a physician’s assertedly problematic conduct may be classified as “Human Error,” “At-Risk Behavior” or “Reckless Behavior.” Id. at note 4.
5 Id. at 4.
6 Id. at 4.
7 Id. at 4.
8 Id. at 4.
9 Id. at 4.
10 Id. at 3.
11 Id. at 4.
12 Id. at 5.
13 Id. at 5.
14 Id. at 5.
15 Id. at 5.
16 Id. at 5.
17 Id. at 6.
18 Id. at 6.
19 Id. at 6.
20 Id. at 7 (“In this case, there is no dispute that two relevant contracts existed—the Bylaws and the Credentials Manual—or that both parties are bound by the terms of these contracts.”).
21 Id. at 7.
22 Id. at 8. The court took a holistic view of the Bylaws and Credentials Manual, rather than reviewing each allegedly breached provision in isolation. For example, in rejecting one of Physician’s breach of contract claims, the court states that “…the Court need not and should not read Section 1.C [of the Credentials Manual] in isolation. Instead, it should also consider the content of the Bylaws and the remainder of the Credentials Manual. And in doing so, the Court concludes that the provisions of Article 3 of the Credentials Manual (not Article 1.C of the Credentials Manual) clearly apply to the factual scenario at play.” Id.
23 See Id. at 7-13.
24 Id. at 13, citing Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 441 (Del. 2005).
25 Id. at 14.
26 Id. at 14.
27 Id. at 14 (internal quotations omitted).
28 Id. at 15.
29 Id. at 16.
30 Id. at 16.
31 Id. at 16.
32 Id. at 17.
33 Id. at 16.
34 Id. at 17.
