Contempt of court order against hospital vacated.

HOSPITALS OFTEN ENTER INTO CONTRACTS WITH PHYSICIANS' GROUPS RELATIVE TO THE TREATMENT OF PATIENTS. In this interesting Connecticut case, one hospital entered into an agreement with a group of pediatricians with whom they had an exclusive contract. Later it contracted that it would not favor a competing group that had left the original group. Despite the fact that at one point the original group unsuccessfully attempted to hold the hospital in contempt for violating the contractual agreement, the group sought, and successfully obtained, an order holding a hospital in contempt of a court order when the hospital started making referrals, through its nurse practitioners to a third group. This precipitated a legal battle, which went all the way to the United States Court of Appeals.

IN 1994, CNC PHYSICIANS GROUP SPLIT OFF FROM DOPS PHYSICIANS' GROUP TO FORM THEIR OWN NEONATAL PRACTICE GROUP. The two groups coexisted at Danbury Hospital. However, their relationship was less than harmonious. In 1994, in response to the hospital's attempts to exclude CNC physicians from treating newborns at the hospital, CNC physicians sued for violation of federal and state antitrust laws. After a jury found for the plaintiffs, the parties settled, and consent decree was entered. The decree was designed to preclude the hospital from engaging in any anti-competitive behavior. Pursuant to the agreement, the hospital was ordered to: "take no action, directly or indirectly; to limit, preclude, or obstruct ..., each from practicing neonatology at Danbury Hospital ... within the scope of their clinical privileges, in the same manner and to the same extent as any other neonatologist." Paragraph Two of the Agreement specifically required that the hospital ensure that its neonatal nurse practitioners not favor one group's patients over the other. Paragraph Three of the Agreement permitted the hospital to adopt neutral policies that "affect the matter, in which the plaintiffs practice neonatology at the hospital so long as ... policy ... (a) apply equally to all neonatologists with medical staff privileges at the hospital and (b) have been duly adopted and approved within the ordinary course of business. Later, in 1994, a hospital Committee of neonatologists, pediatricians, and obstetricians created guidelines for neonatologist referrals. The purpose was to identify exactly which neonatology group would be responsible for the care of a given newborn. This decision was to be made by the patient before the delivery of the baby. The guidelines emphasized patient choice. To this end, a form was given to obstetricians to record patients' timely choice of neonatologists. On March 1, 1996, the United States District Court for the District of Connecticut found that both DOPS and the hospital were in contempt of the court decree for the first time. Then District Court enjoined the defendants from further violations of the decree, ordering them to no longer, "directly or indirectly, by word or conduct of their officers, employees, or agents ... [to] affect or influence the designation of neonatologists at Danbury Hospital." Subsequently, another attempt was made to hold the hospital in contempt of the court order. The District Court found the hospital in contempt and ordered that the hospital assign the responsibility of recording patients' choice of neonatologists to non-obstetricians. The hospital appealed.

THE UNITED STATES COURT OF APPEALS, SECOND CIRCUIT REVERSED THE JUDGMENT OF THE LOWER COURT. The court held, inter alia, that the injunction requiring the hospital neonatologists designation policy to be changed, vacated the rule injunction. The court noted that the United States District Court at one point agreed that the injunction was perfectly harmonious with the hospital's neonatology referral guidelines and simply reiterated the relief contained in the consent decree. Accordingly, the court found that the defendants cannot be said to have violated a clear and unambiguous order ... that leaves "no uncertainty in the minds of those to whom the order was addressed."

HOSPITALS SHOULD ENSURE THAT ALL CONTRACTS WITH PROVIDERS ARE "FALL SAFE" AND NOT OPEN TO CHALLENGE BY ALLEGATIONS OF VIOLATIONS OF STATE OR FEDERAL ANTITRUST LAWS. Contracts between hospitals and practice groups should be scrutinized by competent hospital counsel to ensure that they comply with the letter of the law. More importantly, persons in charge of implementing hospital policies should be keenly aware that they must not violate any contractual terms and conditions by, de facto, showing favoritism to one group over the other. This is where the role of competent hospital administrators is key. Hospital administrators must ensure that neonatologist nurse practitioners are not showing any favoritism for one practice group over another. Perez v. Danbury Hospital, 347 F.3d 419 (2003)