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11/30/88 William B. Knapp Et Al., v. Palos Community Hospital

November 30, 1988

WILLIAM B. KNAPP ET AL., PLAINTIFFS-APPELLANTS AND, APPELLEES

v.

PALOS COMMUNITY HOSPITAL ET AL., DEFENDANTS-APPELLEES AND, APPELLANTS



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

531 N.E.2d 989, 176 Ill. App. 3d 1012, 126 Ill. Dec. 362 1988.IL.1727

Appeal from the Circuit Court of Cook County; the Hon. Warren D. Wolfson, Judge, presiding.

APPELLATE Judges:

JUSTICE FREEMAN delivered the opinion of the court. WHITE, P.J., and RIZZI, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE FREEMAN

This litigation arises from the termination by defendant, Palos Community Hospital (Palos), of the medical staff privileges of the plaintiffs, William B. Knapp, M.D., Francisco Lopez, M.D., and Hugh Savage, M.D. This is the second appeal arising from this litigation. A different panel of this division of the Appellate Court, First District, previously held that the trial court had abused its discretion in granting plaintiffs a preliminary injunction prohibiting Palos from denying them reappointment to its medical staff because plaintiffs had not shown a likelihood of success on the merits. (Knapp v. Palos Community Hospital (1984), 125 Ill. App. 3d 244, 465 N.E.2d 554.) By the time the mandate of this court was returned to the circuit court, after leave to appeal to the supreme court had been denied, this cause had proceeded to a jury trial on the second amended complaint. At the Conclusion of the trial, the jury returned a verdict for Dr. Knapp against Palos and certain individual defendants and awarded him $400,000 in damages.

The facts underlying this litigation have been amply set forth and discussed in our prior opinion (hereinafter Knapp I) and will be repeated here only insofar as necessary. Plaintiffs are cardiologists engaged in a group practice. All three were employed by William B. Knapp and Associates, Inc. As members of Palos' medical staff, plaintiffs had the privilege of admitting patients, receiving treatment referrals from other physicians for patients already admitted, ordering tests and conducting surgery. All medical staff members are subject to an annual peer-review process, governed by the medical staff by-laws, to determine their fitness for staff reappointment. The annual redetermination of staff privileges and the increase or curtailment thereof at other times is based on the direct observation of care provided by the applicant through: (1) a review of the records of patients treated by him at Palos or other hospitals; (2) a review of the medical staff's evaluations of the applicant's participation in the delivery of medical care; and (3) other pertinent information concerning clinical performance obtained from reliable sources.

The bylaws provide the following procedures in the annual reapplication process. The first step in that process is a review of all pertinent information on an applicant for reappointment by the privilege evaluation committee of the department in which the applicant holds privileges and a recommendation by that body to the department chairman. Next, the members of the department either approve or disapprove the recommendation by majority vote and the chairman submits both recommendations to the medical executive committee. If that committee's findings are favorable to the applicant, they are forwarded to Palos' board of directors; if its findings are adverse to him, the applicant is entitled to notice and a hearing before an ad hoc hearing panel which reports its decision and findings back to the medical executive committee. That committee forwards its findings to the board of directors. If the board's decision is adverse to the applicant, he is entitled to a hearing before an appellate review committee, which may refer the matter back to an appropriate body for further investigation and review or recommend affirmance, modification or reversal of the adverse decision to the board of directors for the ultimate Disposition of the application.

Plaintiffs' original complaint alleged that their medical staff privileges to write orders for ventilation therapy had been wrongfully curtailed. The trial court granted plaintiffs a temporary restraining order prohibiting defendants from denying them reappointment to the medical staff. Plaintiffs then amended the complaint to allege that Palos had violated its bylaws in denying them reappointment. Thereafter, the trial court dissolved the temporary restraining order and entered a preliminary injunction reinstating plaintiffs to the medical staff. Defendants appealed the preliminary injunction and this court reversed the order of the trial court. This court held that, as Palos had not violated its bylaws in denying plaintiffs reappointment, its actions were not subject to judicial review and that, therefore, the trial court's order was an abuse of discretion since plaintiffs had not established a likelihood of success on the merits.

After defendants had appealed the preliminary injunction, plaintiffs filed a seven-count, second amended complaint on which this cause proceeded to trial. All seven counts are predicated on defendants' alleged violation of the medical staff bylaws in denying plaintiffs reappointment to Palos' medical staff. Counts I and II allege wilful, wanton and malicious breaches of contract; count III alleges wilful, wanton and malicious interference with plaintiffs' rights to practice medicine; count IV alleges wilful, wanton and malicious injury to plaintiffs by the individual defendants' inducement of Palos to withhold staff privileges; count V alleges the individual defendants' wilful, wanton and malicious interference with plaintiffs' business relationship with Palos; count IV alleges certain individual defendants' unfair competition with plaintiffs; count VII alleges the individual defendants' intentional, wilful, wanton and malicious infliction of severe emotional distress upon plaintiffs. Plaintiffs prayed for, inter alia, preliminary and permanent injunctive relief requiring defendants to grant plaintiffs full medical staff privileges and compensatory and punitive damages of at least $500,000. At the close of all the evidence, the trial court directed verdicts on all counts against plaintiffs Lopez and Savage and on all counts but I and II in favor of all but Palos and several individual defendants and against plaintiff Knapp. The jury returned a verdict for Knapp on counts I and II and awarded damages of $400,000.

This opinion consolidates three separate appeals taken by the parties from: (1) the verdicts directed by the trial court against plaintiffs Lopez and Savage and its denial to all plaintiffs of a permanent injunction requiring Palos to grant plaintiffs staff privileges (appeal No. 84-3004); (2) the judgment for plaintiff Knapp entered on the jury verdict in his favor (appeal No. 85-0917); and (3) the award under section 11-110 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 11-110) to defendants for damages resulting from the wrongful issuance of the preliminary injunction vacated in Knapp I (appeal No. 85-0218).

Opinion

Notwithstanding the voluminous and multifarious arguments of the parties, we believe that the one issue dispositive of appeals Nos. 84 -- 3004 and 85 -- 0917 is whether the trial court erred in entertaining the causes of action pleaded seeking equitable and legal relief against the defendant private hospital and the hospital's physicians, officers and directors. We believe that the trial court did err in entertaining plaintiffs' claims and requests for relief. In so doing, it violated the rule of limited judicial review of hospital medical staffing decisions established in Jain v. Northwest Community Hospital (1978), 67 Ill. App. 3d 420, 385 N.E.2d 108, and reaffirmed by relevant statutory law. We believe that the rule required the trial court to decline to exercise subject matter jurisdiction over plaintiffs' causes of action and requests for relief based thereon. On that basis, we (1) affirm the directed verdicts against plaintiffs Lopez and Savage and the denial to all plaintiffs of permanent injunctive relief, and (2) reverse the judgment and award of damages for plaintiff Knapp.

We recognize that "[other] than for jurisdictional reasons a reviewing court should not normally search the record for unargued and unbriefed reasons to reverse a trial court judgment." (Saldana v. Wirtz Cartage Co. (1978), 74 Ill. 2d 379, 386, 385 N.E.2d 664.) However, we believe that our Conclusion that the trial court should have declined to exercise its jurisdiction in this case is in the nature of a Conclusion that it did not have jurisdiction here. We believe that, just as with our power to sua sponte conclude that the trial court had no jurisdiction in this case, our authority as a court of review to conclude that the trial court improperly exercised its jurisdiction cannot be denied. This Conclusion is buttressed by the fact that we need not even search the record to find an improper exercise of jurisdiction as we believe that fact appears on the face of plaintiffs' second amended complaint. Also, while the ultimate basis for our Disposition of these appeals, an improper exercise of jurisdiction, was not argued or briefed by the parties or the amici curiae, the Illinois Hospital Association and the Chicago Hospital Council, the underlying bases of that Conclusion were argued and briefed by them.

"Subject matter jurisdiction" has been variously defined as the power of a court to hear and decide a particular case or controversy (Dahl v. Grenier (1984), 126 Ill. App. 3d 891, 467 N.E.2d 992), the power to hear and determine a class of cases and the power to grant the particular relief requested (People ex rel. Illinois Department of Human Rights v. Arlington Park Race Track Corp. (1984), 122 Ill. App. 3d 517, 461 N.E.2d 505), and the power of a particular court to hear the type of case that is then before it (Lescher v. Barker (1978), 57 Ill. App. 3d 776, 373 N.E.2d 1007). The sources of subject matter jurisdiction of the circuit courts are article 6, section 9, of the Illinois Constitution of 1970 and legislative enactments. (Fredman Brothers Furniture Co. v. Department of Revenue (1985), 109 Ill. 2d 202, 486 N.E.2d 893.) Obviously, then, Jain could not abolish or limit the power of the trial court to hear and decide plaintiffs' causes of action or requests for relief.

However, we believe that Jain did, in effect, establish a rule requiring circuit courts to decline to exercise jurisdiction over the types of causes of action and requests for relief pleaded by plaintiffs based on Palos' decision regarding their membership on its medical staff. The decision of an appellate court of any district are binding precedent on all circuit courts where there are no contrary rulings, although they are not ...


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