F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
June 27, 2007
UNITED STATES CO URT O F APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
ROBERT L.G. STEARS, M .D.,
Plaintiff-Appellant,
v. No. 05-8092
SH ERID A N CO U N TY M EM O RIAL
HOSPITA L BOARD OF TRUSTEES,
a governmental entity,
Defendant-Appellee.
A PPE AL FR OM T HE UNITED STATES DISTRICT COURT
FOR T HE DISTRICT OF W YOM ING
(D .C . NO. 04-CV-223-W FD)
W .W . Reeves of Park Street Law Office, Casper, W yoming, for Plaintiff-
Appellant.
Scott E. Ortiz (Nicol Thompson Kramer with him on the brief), of W illiams,
Porter, Day & Neville, P.C., Casper, W yoming, for Defendant-Appellee.
Before L UC ER O, O’BRIEN, and SILER, * Circuit Judges.
SILER, Circuit Judge.
*
The Honorable Eugene E. Siler, Jr., Senior United States Circuit Judge for
the Sixth Circuit, sitting by designation.
Plaintiff Dr. Robert L.G. Stears appeals from the district court’s grant of
summary judgment in favor of the Board of Trustees of Sheridan County
M emorial Hospital (the “Hospital”). He argues that when the Hospital entered
into an exclusive contract with another radiologist services provider, he was
deprived of his clinical privileges, a right he claims is preserved under W yoming
law, 42 U.S.C. § 1983, and the Hospital’s bylaws. W e AFFIRM .
I. Facts and Procedural Background
In 1995, Dr. Stears accepted employment with D r. Lindemann, a radiologist
in Sheridan, W yoming, to practice with Northern W yoming Diagnostic Radiology.
Dr. Stears purchased Dr. Lindemann’s practice in 1996 and incorporated
W yoming Radiology, which took over D r. Lindemann’s exclusive contract with
the Hospital. From 1996-2000, Dr. Stears practiced at the Hospital pursuant to
the terms of the Radiology Service A greement (“RSA”) negotiated by Dr.
Lindemann. In 2000, Dr. Stears negotiated another exclusive contract (the “2000
RSA ”) with the Hospital for a term of seven years. The 2000 RSA established
that Dr. Stears’s group would be the exclusive provider of radiology services to
the Hospital. In return, Dr. Stears agreed he would not provide radiology services
at any other facility within a 100-mile radius of Sheridan.
In early 2002, Sheridan Orthopedic Associates began providing radiology
services in their office. Competition with this new imaging center caused a
substantial loss in income to the Hospital and to Dr. Stears. In February 2002,
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Dr. Stears attempted to change the terms of the contract. Specifically, he wanted
to rescind his non-compete agreement, but the Hospital refused to renegotiate the
contract. In April 2003, Dr. Stears sought to amend the 2000 RSA , and again the
Hospital declined to change the contract.
He then hired AGI Healthcare Group (“AGI”) to evaluate the potential of
an outpatient imaging center. Based on the report provided by AGI Healthcare,
Dr. Stears presented a M emorandum of Understanding to the Hospital, proposing
a joint venture between the Hospital and W yoming Radiology to establish an
outpatient imaging center. The venture would give each a fifty percent interest
and would supersede the 2000 RSA. The Hospital’s CEO, Kenneth Huey,
declined the proposed venture.
In January 2004, Dr. Stears, through his attorney, sent a letter to the
Hospital stating that W yoming Radiology was terminating the 2000 RSA . The
letter claimed, “Despite the numerous communications between our respective
organizations concerning M RI services and the increasing threat posed by new
local M RI competition, the hospital has discarded attempts to effectively compete
for M RI patients. As such, continued performance . . . is impossible.” Dr. Stears
notified the Hospital that W yoming Radiology would “continue to serve all the
patients of Sheridan County for the foreseeable future.”
Although Dr. Stears continued to provide radiology services and assured
the Hospital that coverage would continue, the Hospital entered into a new
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exclusive provider contract for radiology services with Capital Radiology, PLLC,
d/b/a Bighorn Radiology (“Bighorn Radiology”) in June 2004. The Hospital then
informed Dr. Stears that the radiology department would be closed to radiologists
who were not part of the new exclusive provider. Dr. Stears was not afforded a
hearing before or after this determination was made.
Dr. Stears was reappointed to the Active M edical Staff of the Hospital
effective January 1, 2005. Even so, he has not performed a procedure in the
Hospital since Bighorn Radiology became the exclusive provider.
In July 2004, Dr. Stears brought a state court action alleging that the
Hospital had violated W YO . S TAT . A NN . § 35-2-113, revoked his clinical
privileges in breach of the bylaws, and violated his due process rights under 42
U.S.C. § 1983. The case was removed to federal court, and the district court
granted summary judgment in favor of the Hospital on all counts.
II. Discussion
W e review summary judgment de novo, construing the record in the light
most favorable to Dr. Stears and resolving all reasonable inferences in his favor.
Alder v. Wal-M art Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998).
A. Procedural Due Process
Dr. Stears first contends that the district court erred when it determined that
the Hospital did not violate his due process rights under 42 U.S.C. § 1983 when it
denied him access to the radiology department. To set forth an actionable
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procedural due process claim, a plaintiff must demonstrate: (1) the deprivation of
a liberty or property interest and (2) that no due process of law was afforded.
Hennigh v. City of Shawnee, 155 F.3d 1249, 1253 (10th Cir. 1998).
It is undisputed that Dr. Stears was not given a due process hearing.
Consequently, the only issue is whether Dr. Stears was deprived of a protected
property interest. “To have a property interest in a benefit, a person clearly must
have more than an abstract need or desire for it. He must have more than a
unilateral expectation of it. He must, instead, have a legitimate claim of
entitlement to it.” Board of Regents v. Roth, 408 U.S. 564, 577 (1972). Property
interests are not derived from the Constitution. Id. Rather, “C ourts must look to
‘existing rules or understandings that stem from an independent source such as
state law’ to define the dimensions of protected property interests.” Setliff v.
M em’l Hosp. of Sheridan County, 850 F.2d 1384, 1395 (10th Cir. 1988) (quoting
Cleveland Bd. of Educ. v. Louderm ill, 470 U.S. 532, 538 (1985)).
The district court engaged in a lengthy discussion of how to characterize
the property interest at issue. Ultimately, it reached the same conclusion
regardless of how the property interest was analyzed. It found that if Dr. Stears’s
asserted property right is his hospital privileges, then although he may be entitled
to this interest, he has not been deprived of it. The court emphasized that the
grant of privileges did not constitute a contract of employment w ith the Hospital.
After Dr. Stears terminated the 2000 RSA, he could no longer claim a right to
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practice as a radiologist in the Hospital. On the other hand, if his property
interest was in the exercise of his hospital privileges, then the court reasoned that
the claim fails because he does not have a legitimate claim of entitlement to this
interest in the first place. W e agree with the district court’s analysis.
The Hospital’s bylaws define “clinical privileges” as “the permission
granted to a practitioner to render specific diagnostic, therapeutic, medical,
dental, or surgical services.” Privileges “shall be extended only to professionally
competent and ethical practitioners who continuously meet the qualifications,
standards, requirements, and responsibilities set forth in [the bylaws].” W hen a
physician’s privileges are “reduced, suspended, or revoked,” if such action is
“deemed adverse,” the physician must be afforded notice and a hearing.
Dr. Stears argues that because the privileges he now possesses have no
practical value, his privileges have been reduced, thus triggering the notice and
hearing requirement. Yet, Dr. Stears acknowledges that, as a member of the
active medical staff, he has the rights to vote, to hold office, and to serve on
medical staff committees. The Hospital’s decision to obtain a new exclusive
provider in no way signifies a negative assessment of Dr. Stears’s professional
competence. Indeed, if he joined Bighorn Radiology, he could treat patients, as
his privileges remain intact. The distinction between having medical staff
privileges and being able to exercise those privileges is not a “fiction,” as Dr.
Stears claims, and we join a number of other courts in recognizing this
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distinction. See, e.g., Englestad v. Virginia M un. Hosp., 718 F.2d 262, 267-69
(8th Cir. 1983); Garibaldi v. Applebaum, 194 Ill.2d 438, 448-449 (Ill. 2000);
Dutta v. St. Francis Reg. M ed. Ctr., Inc., 867 P.2d 1057, 1062-63 (Kan. 1994);
Bartley v. Eastern M aine M ed. Ctr., 617 A.2d 1020, 1022-23 (M e. 1992); Holt v.
Good Samaritan Hosp. and Health Ctr., 590 N.E.2d 1318, 1323 (Ohio Ct. App.
1990).
B. Breach of Contract
Dr. Stears next argues that the district court erroneously held that the
Hospital did not violate the terms of the bylaws by entering into an exclusive
contract with Bighorn Radiology without providing him a hearing. Using the
same reasoning discussed above, the court found that Dr. Stears’s privileges w ere
not “reduced, revoked, or suspended” w ithin the meaning of the bylaws. Further,
the court distinguished between an action taken against the physician that arises
incidentally out of a hospital’s business decision to use exclusive contracts and
corrective action taken directly against a physician. The court concluded that
“nothing in the bylaws prevents a reasonable managerial decision by the Hospital
Board to enter into an exclusive contract.” W e also find that the procedural
requirements set forth in the bylaws are not implicated in this situation.
As stated above, the Hospital has not suggested that Dr. Stears is in any
way incompetent or failed to perform under his contract. Therefore, at a hearing,
Dr. Stears would not be defending his professional competence or ethics, but
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would be contesting the Hospital’s decision to enter into an exclusive contract
with another radiology services provider. As the court in Englestad found, the
procedural requirements of the bylaws “were not intended to cover cases . . .
where the use a doctor can make of his staff privileges has been incidentally
affected by the hospital’s administrative decision to terminate a personal service
contract with the hospital. [A doctor’s] staff privileges guarantee[] him only the
authority, not the wherewithal, to practice his profession.” 718 F.2d at 268. Any
other finding “would be the death knell of exclusive contracts.” Holt, 590 N.E.2d
at 1321.
C. W YO . S TAT . A NN . § 35-2-113
Finally, Dr. Stears claims that the Hospital violated W YO . S TAT . A NN . § 35-
2-113 when it entered into an exclusive contract with Bighorn Radiology. This
argument is without merit. W yoming Statute § 35-2-113 states:
Any hospital owned by the state, or any hospital district, county or city
thereof, and any hospital whose support, either in whole or in part, is
derived from public funds, shall be open for practice to doctors of
medicine, doctors of osteopathy, doctors of chiropractic, doctors of
dentistry and podiatrists, who are licensed to practice medicine or surgery,
chiropractic, dentistry or podiatry in this state. Provided, however, that
these hospitals by appropriate bylaws shall promulgate reasonable and
uniform rules and regulations covering staff admissions and staff
privileges. Admission shall not be predicated solely upon the type of
degree of the applicant and the governing body shall consider the
competency and character of each applicant.
W e agree with the district court that this statute is simply an anti-discrimination
statute. D r. Stears argues that even if this interpretation is correct, the statute
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creates an expectation of enjoyment of staff privileges, subject only to reasonable
and uniform regulations. However, as explained above, Dr. Stears’s staff
privileges have not been revoked. The Hospital’s regulations conform to the
requirements of W YO . S TAT . A NN . § 35-2-113.
III. Conclusion
For the foregoing reasons, we AFFIRM .
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