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Babchuk v. Indiana University Health, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

March 20, 2015




Presently pending before the Court are: (1) a Motion for Summary Judgment filed by Defendants Indiana University Health, Inc. ("IU Health"), Indiana University Health Tipton Hospital, Inc. ("Tipton Hospital"), and Michael Harlowe, Joellen Scott, Carl Pafford, Dianna Andrews, Kevin Conduct, Michael Harper, and Richard Young (collectively, "the Individual Defendants"), [Filing No. 64]; and (2) a Motion for Partial Summary Judgment filed by Plaintiffs William Babchuk, M.D. and William I. Babchuk, M.D., P.C. d/b/a Comprehensive Medical Imaging ("Babchuk, P.C."), [Filing No. 100].[1] Plaintiffs sue Defendants pursuant to 42 U.S.C. ยง 1983 for violation of their Fourteenth Amendment right to procedural due process in connection with the termination of a contract between Tipton Hospital and Babchuk, P.C., and the suspension of Dr. Babchuk's medical staff privileges at Tipton Hospital.



A motion for summary judgment asks the Court to find that a trial is unnecessary because there is no genuine dispute as to any material fact and, instead, the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). As the current version of Rule 56 makes clear, whether a party asserts that a fact is undisputed or genuinely disputed, the party must support the asserted fact by citing to particular parts of the record, including depositions, documents, or affidavits. Fed.R.Civ.P. 56(c)(1)(A). A party can also support a fact by showing that the materials cited do not establish the absence or presence of a genuine dispute or that the adverse party cannot produce admissible evidence to support the fact. Fed.R.Civ.P. 56(c)(1)(B). Affidavits or declarations must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on matters stated. Fed.R.Civ.P. 56(c)(4). Failure to properly support a fact in opposition to a movant's factual assertion can result in the movant's fact being considered undisputed, and potentially in the grant of summary judgment. Fed.R.Civ.P. 56(e).

In deciding a motion for summary judgment, the Court need only consider disputed facts that are material to the decision. A disputed fact is material if it might affect the outcome of the suit under the governing law. Hampton v. Ford Motor Co., 561 F.3d 709, 713 (7th Cir. 2009). In other words, while there may be facts that are in dispute, summary judgment is appropriate if those facts are not outcome determinative. Harper v. Vigilant Ins. Co., 433 F.3d 521, 525 (7th Cir. 2005). Fact disputes that are irrelevant to the legal question will not be considered. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed. 202 (1986).

On summary judgment, a party must show the Court what evidence it has that would convince a trier of fact to accept its version of the events. Johnson v. Cambridge Indus., 325 F.3d 892, 901 (7th Cir. 2003). The moving party is entitled to summary judgment if no reasonable factfinder could return a verdict for the non-moving party. Nelson v. Miller, 570 F.3d 868, 875 (7th Cir. 2009). The Court views the record in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Darst v. Interstate Brands Corp., 512 F.3d 903, 907 (7th Cir. 2008). It cannot weigh evidence or make credibility determinations on summary judgment because those tasks are left to the fact-finder. O'Leary v. Accretive Health, Inc., 657 F.3d 625, 630 (7th Cir. 2011). The Court need only consider the cited materials, Fed.R.Civ.P. 56(c)(3), and the Seventh Circuit Court of Appeals has "repeatedly assured the district courts that they are not required to scour every inch of the record for evidence that is potentially relevant to the summary judgment motion before them, " Johnson, 325 F.3d at 898. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Ponsetti v. GE Pension Plan, 614 F.3d 684, 691 (7th Cir. 2010).

"The existence of cross-motions for summary judgment does not, however, imply that there are no genuine issues of material fact." R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Engineers, 335 F.3d 643, 647 (7th Cir. 2003). Specifically, "[p]arties have different burdens of proof with respect to particular facts; different legal theories will have an effect on which facts are material; and the process of taking the facts in the light most favorable to the nonmovant, first for one side and then for the other, may highlight the point that neither side has enough to prevail without a trial." Id. at 648.



The Court notes at the outset that the parties have failed to comply with the Court's Practices and Procedures, which provide that "[w]hen citing documents that have been electronically filed, counsel should cite the docket number, the attachment number (if any), and the applicable.pdf page. For example, [dkt. 25-2 at 5]' would refer to page five of attachment two to the item filed as docket number 25." [Filing No. 59 at 3.] Instead of following this citation format, Defendants frequently cited the name of the exhibit and sometimes the section or paragraph number, but not the.pdf page number. [ See, e.g., Filing No. 65 at 6 (citing to "Tipton Aff. Ex. M (Affiliation Agreement, Sec. 2.5)".] This required the Court to locate the document containing the cited information, then locate the page on which the cited information appeared. While Plaintiffs cited to their exhibits with the docket number, they also did not provide the.pdf page number. This failure to comply with the Court's Practices and Procedures has made the Court's review of the pending motions unnecessarily and extremely cumbersome, particularly where - as here - the parties rely upon a large number of lengthy exhibits. The Court does not have a duty to "scour every inch of the record" to find potentially applicable evidence, Johnson, 325 F.3d at 898, but has done its best to locate the information the parties have cited. However, the parties should ensure that they follow the Court's Practices and Procedures in the future.

The Court finds the following to be the undisputed facts, supported by admissible evidence in the record:

A. Formation and Structure of Tipton Hospital and IU Health

IU Health (formerly Clarian Health Partners, Inc.) is a private Indiana nonprofit corporation, with two classes of members - the University Class (the Trustees of Indiana University) and the Methodist Class (members of the Methodist Health Group, which is a nonprofit corporation). [Filing No. 66-11 at 9.] A Definitive Health Care Resources Consolidation Agreement among the Trustees of Indiana University, Methodist Health Group, Inc., Methodist Hospital of Indiana, Inc., and Consolidated Health Group, Inc. (the "Consolidation Agreement") provides that IU Health is not a religious organization, nor is it "part of Indiana University, the School of Medicine or the State or any political subdivision of the state and is not a public or state agency within the meaning of the various statutes conferring rights and duties on public or state agencies." [Filing No. 66-11 at 9.]

IU Health is controlled by a Board of Directors which consists of thirteen to fifteen members. [Filing No. 66-11 at 20; Filing No. 66-13 at 5.] The University Class elects one director, the Dean of the IU School of Medicine is an ex officio director, the Methodist Class elects one director, the Bishop of the Indiana Area of the United Methodist Church (or a designee) is an ex officio director, the President and CEO of IU Health is an ex officio director, and nine to ten at-large directors are jointly elected by the vote of both member classes. [Filing No. 66-13 at 5-6.]

The Trustees retain the authority to operate the IU School of Medicine, and retain certain authority related to the operation of Riley Children's Hospital (which is statutorily designated as a department of the School of Medicine). [Filing No. 66-11 at 21-22.] The University Class also retains certain authority, but that authority does not include authority related to privileging or peer review decisions in general, or at Tipton Hospital. [Filing No. 66-11 at 22-23.] The Trustees have delegated certain authority to IU Health for the operations of "Indiana University Hospitals, " which is defined in the Definitive Agreement to include only Indiana University Hospital and Outpatient Center and James Whitcomb Riley Hospital for Children, and does not include Tipton Hospital. [Filing No. 66-11 at 14.] The Definitive Agreement does not give the Trustees any authority over peer review or privileging decisions for IU Health facilities in general or for Tipton Hospital in particular. [Filing No. 66-11 at 21-22.] IU Health uses the name and marks of Indiana University pursuant to a licensing agreement that permits IU Health affiliates like Tipton Hospital to sublicense the name and marks. [Filing No. 66-15.]

Tipton Hospital is a private, non-profit corporation. [Filing No. 66-8.] The former county hospital in Tipton, Indiana transferred its assets and operations to Tipton Hospital through an Affiliation and Asset Purchase Agreement Among Clarian Health Partners, Inc., Tipton Hospital, Inc., The Board of Trustees of Tipton County Memorial Hospital, and Tipton County, Indiana (the "Affiliation Agreement"). [Filing No. 66-6.] Tipton County leases the hospital building and grounds to Tipton Hospital. [Filing No. 66-6.] Tipton County does not retain authority over Tipton Hospital's day-to-day operations, or its privileging or peer review decisions. [Filing No. 66-6; Filing No. 66-17 at 1-2.]

IU Health is Tipton Hospital's sole member, and has not reserved authority for the day-today operations of Tipton Hospital or privileging or peer review. [Filing No. 66-3; Filing No. 66-6.] IU Health has the right to appoint one more than one-half of Tipton Hospital's Board of Directors, and the remaining directors are elected by the Board. [Filing No. 66-3 at 10; Filing No. 66-6.] IU Health's power to appoint and remove directors is "[s]ubject to the Board's approval." [Filing No. 66-3 at 13.] Tipton Hospital's Chief Executive Officer is appointed by the Board of Directors of Tipton Hospital, [Filing No. 66-3 at 17], and is paid by IU Health, [Filing No. 66-16 at 1].

Tipton Hospital is controlled by a Board of Directors, which is responsible for the management, operation, functioning, and control of Tipton Hospital, including privileging decisions for all health care providers within Tipton Hospital. [Filing No. 66-2 at 5; Filing No. 66-3 at 8.] The Board of Directors has delegated to the Medical Staff the day-to-day duties related to privileging and peer review, and the Medical Staff must advise the Board of Directors on those matters. [Filing No. 66-3 at 18-21.] The Medical Staff carries out its peer review duties through peer review committees including the Patient Care Review Committee ("PCRC") and the Medical Executive Committee ("MEC"). [Filing No. 66-2 at 6; Filing No. 66-3 at 18-21.]

B. Dr. Babchuk's and Babchuk, P.C.'s Interactions With Tipton Hospital

Dr. Babchuk is a radiologist, who owns Babchuk, P.C. [Filing No. 1 at 2.] Babchuk, P.C. and Tipton Hospital entered into an Imaging Services Agreement (the "Agreement") on September 4, 2008, which provides that:

[Babchuk, P.C.] shall designate qualified Physicians who are employees of or under contract with [Babchuk, P.C.] to provide Imaging Services to Patients and shall have, in addition to Hospital non-physician personnel and except as provided hereinafter, the exclusive right to utilize the Department equipment, and to provide Imaging Services in the Hospital.... Physicians employed or contracted by [Babchuk, P.C.] to provide coverage shall be required to have been granted privileges for specific procedures through the normal credentialing process of the Hospital and only those privileges granted to individual Physicians will be able to be exercised pursuant to this Agreement.

[Filing No. 66-4 at 3-4.]

The Agreement also provides that, in the event a physician is "deprived of Medical Staff Privileges" at Tipton Hospital, the physician "shall not be permitted to perform any services under this Agreement." [Filing No. 66-4 at 14.] The Agreement states that it can be terminated if either party defaults and the default is not cured within thirty days, or if the terminating party gives the other party 180 days written notice of the intent to terminate. [Filing No. 66-4 at 15.] It also states that if a physician "fails to manage, with reasonable success, professional and personal relationships with members of the Hospital's Medical Staff, Hospital employees, patients, and/or their families, and such failure, in the considered opinion of the Chief Executive Officer, creates a working environment in the Department that is hostile or otherwise detrimental to the personnel ...

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