The doctor said no to a hospital’s request to open a practice in its community, then files suit after the facility hires its own nephrologist.

Dr. V, 52, was a nephrologist with a thriving practice in Middletown, a mid-sized community in the Southwest. For years, patients had been traveling to his office for dialysis and other outpatient nephrology services. Many of Dr. V’s patients were Native Americans from the Ute tribe living on a reservation near Smalltown, an hour’s drive from Middletown.

These patients had to make this trip three times a week to get their dialysis treatments. Smalltown had no nephrology practice and Smalltown Hospital did not have a nephrologist on staff. Dr. V had consulting privileges at the hospital and occasionally took phone inquiries from doctors there, but he had not used the hospital to treat patients for almost 10 years. 

For the past seven years, Dr. V had been barraged with requests to provide nephrology services in Smalltown. The incidence of diabetes in that area was extremely high, especially among the Ute tribe. The tribe, the town rotary club, and Smalltown Hospital had made concerted efforts to encourage Dr. V to set up a practice in town to serve the community. Dr. V made it clear that he was not interested. He liked where he was. He did not want to make the drive to Smalltown even if it was only a few times a week.

When the Smalltown Hospital and Ute tribe realized that they were not going to be able to entice Dr. V to provide services in the town, they began interviewing other physicians. Eventually they hired a young nephrologist, Dr. M. To convince Dr. M to start a practice there, the hospital hired him in a salaried position and permitted him to serve as director of an independently owned outpatient dialysis center in town.

Under the bylaws of Smalltown Hospital, the employment of Dr. M automatically terminated Dr. V’s consulting privileges at the hospital. According to the bylaws, the purpose of a consulting physician was to fill gaps in practice areas not covered by hospital staff. Once Dr. M came aboard, Dr. V was not needed as a consultant. He did, however, remain a member of the hospital’s courtesy staff, which allowed him to consult and write orders with the permission of an attending physician.

Dr. V was incensed when he found out. He quickly filed an application with Smalltown Hospital to become a member of the hospital’s active staff, on a par with Dr. M and competing for the same business. While the hospital’s bylaws had no restrictions against having two physicians with the same expertise, the rules did specify that active staff members must live within 30 minutes of the hospital to be available for emergencies. Dr. V did not live within 30 minutes, and put down a nearby office space address instead. When this gambit failed, Dr. V told the administrators that he had leased a house near Smalltown, but when the administrators checked, it turned out to be a plot of vacant land.