ESTATE OF PHUOC FAZALDIN v. ENGLEWOOD HOSPITAL & MEDICAL CENTER

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2165-08T32165-08T3

ESTATE OF PHUOC FAZALDIN, a/k/a

KATHY FAZALDIN, Deceased, by

RICHARD FAZALDIN, Executor of the

ESTATE OF PHUOC FAZALDIN and

RICHARD FAZALDIN, MEERAFAZAL

FAZALDIN a/k/a MEER FAZALDIN,

STEVEN FAZALDIN, FARIDAN FAZALDIN-

WATKINS a/k/a FARAH FAZALDIN-

WATKINS and ELAINE FAZALDIN,

Individually,

Plaintiffs-Appellants,

v.

ENGLEWOOD HOSPITAL & MEDICAL CENTER,

ROBERT STENSON, JR., M.D., ESTATE OF

ROBERT STENSON, JR., M.D., RICHARD

SALZER, M.D., ARNOLD J. FRIEDMAN,

M.D., FAITH FRIEDEN, M.D., DANIEL

KANE, M.D., and S. HEDLEY, M.D.,

Defendants,

and

BETH ISRAEL MEDICAL CENTER and

ALLAN JACOBS, M.D.,

Defendants-Respondents.

_________________________________________________

 

Argued October 1, 2009 - Decided

Before Judges Payne and Miniman.

On appeal from Superior Court of New Jersey,

Law Division, Bergen County, Docket No.

L-3572-02.

Dennis M. Donnelly argued the cause for

appellants (Blume, Goldfaden, Berkowitz,

Donnelly, Fried & Forte, P.C., attorneys;

Mr. Donnelly, on the briefs).

Peter L. Korn argued the cause for

respondents (McElroy, Deutsch, Mulvaney

& Carpenter, LLP, attorneys; Mr. Korn,

of counsel and on the brief; William

S. Mezzomo, on the brief).

PER CURIAM

Phuoc Fazaldin bled to death in May 2000 while undergoing a radical abdominal hysterectomy at Englewood Hospital following a diagnosis of cervical cancer. Suit was filed on behalf of Fazaldin's estate and surviving spouse and children against the operating surgeon, Robert Stenson, Jr., M.D.; Englewood Hospital & Medical Center; Arnold J. Friedman, M.D., the hospital's chief of obstetrics and gynecology; and various other hospital physicians. Following the death of Dr. Stenson, his estate was named as a defendant. Additionally, in a third amended complaint, New York Beth Israel Medical Center was added as a party, along with its chief of obstetrics and gynecology, gynecological oncologist Allan Jacobs, M.D. Dr. Stenson had been a member of the teaching staff of Beth Israel Medical Center until his "resignation" in March 1997 following rescission of a notice that, because of deficiencies in his performance, his employment as a full-time staff member was to be terminated, effective January 21, 1997, but that his clinical privileges would be preserved, subject to conditions. Soon thereafter, Dr. Stenson was hired by Englewood Hospital.

Prior to trial, plaintiffs settled their claims against Dr. Stenson, Englewood Hospital and Dr. Friedman, and they dismissed with prejudice their claims against the remaining defendants, with the exception of Beth Israel Medical Center and Dr. Jacobs. A lengthy jury trial then occurred at which plaintiffs' counsel argued that Beth Israel Medical Center and Dr. Jacobs were negligent and committed negligent misrepresentation when they did not disclose to Englewood Hospital the deficiencies that they perceived to exist in the performance of Dr. Stenson and, indeed, drafted a favorable written evaluation of his professional conduct. In support of their position, plaintiffs presented the expert testimony of Martin D. Merry, M.D., who criticized the actions and inactions of Beth Israel Medical Center and Dr. Jacobs. Relevant to the present appeal, Dr. Merry included among his criticisms the failure by Beth Israel Medical Center to report Dr. Stenson's unsatisfactory conduct and his departure from the staff of Beth Israel Medical Center to the New York State medical licensing authorities as required by New York Public Health Law 2800 to 2820.

At the conclusion of the trial, the jury found negligent misrepresentation on the part of Beth Israel Medical Center, but that the misrepresentation was not a proximate cause of Fazaldin's death. The jury found no other negligence on the part of Beth Israel Medical Center and neither negligence nor negligent misrepresentation by Dr. Jacobs. An appeal followed.

I.

In a per curiam decision, Estate of Fazaldin v. Englewood Mem. Hosp., No. A-4948-04T3 (App. Div. July 26, 2007), a panel consisting of Judges Stern, Collester and Sabatino concluded as a matter of law that, pursuant to New York Public Health Law

2803-e, Beth Israel Medical Center was required to report to the professional conduct databank maintained by the New York Department of Health (DOH) restrictions or curtailment placed by the Medical Center and Dr. Jacobs upon Dr. Stenson's employment and his professional privileges as the result of concerns for patient safety or welfare, as well as his involuntary resignation. Slip op. at 25-28. Although plaintiffs had not requested the trial judge to take judicial notice of 2803-e, and thus the panel found that the judge did not err in failing to do so, the panel took judicial notice of the New York reporting duty for purposes of appeal and held that such notice should be accorded if a new trial were to be held. Slip op. at 28 n.6 and 42 n.14.

In their initial appeal, plaintiffs argued further that Beth Israel Medical Center had a similar reporting duty pursuant to the Health Care Quality Improvement Act of 1986, 42 U.S.C.A. 11101-52, which created a federal National Practitioners Data Bank (NPDB) to address the "national need to restrict the ability of incompetent physicians to move from State to State without disclosure or discovery of the physician's previous damaging or incompetent performance," 42 U.S.C.A. 11101(2), and required hospitals to request information on file with the NPDB when a physician applies for a position on its medical staff or for clinical privileges at the hospital, and every two years thereafter. 42 U.S.C.A. 11135(a). As they had argued on appeal in connection with 2803-e, plaintiffs argued that the trial judge should have taken judicial notice of the Medical Center's legal duty pursuant to the federal statute.

As background to consideration of plaintiffs' argument, the panel found that Beth Israel Medical Center's reporting obligation under federal law was "murkier" than it was under New York law because the federal statute contains "somewhat more qualified language" than does 2803-e of the New York law. Slip op. at 28-29. The panel then rejected plaintiffs' position on judicial notice, stating:

First, plaintiffs did not raise the national databank whatsoever during pretrial proceedings but only brought it up on the first day of trial. Plaintiffs' expert Dr. Merry said nothing about the NPDB or the federal statutes in his expert report. The trial judge was rightly within his discretion to decline to address this substantive issue at the eleventh-plus hour. See Rivers v. L.S.C. Partnership, 378 N.J. Super. 68, 80 (App. Div.), certif. denied, 185 N.J. 296 (2005).

[Slip op. at 32.]

The panel noted, as well, that plaintiffs had never made a specific request that judicial notice be taken of the federal statute and that, as the result of the analysis that we have previously set forth, it was "not convinced that such a legal duty for respondents to report Dr. Stenson to the NPDB was necessarily triggered." Ibid.

Significantly, however, the panel recognized that plaintiffs had advanced a "more compelling legal argument that even if respondents had no direct obligation to report Dr. Stenson to the NPDB, the NPDB would have indirectly received adverse information about Dr. Stenson through New York authorities, if respondents had discharged their obligations to report him under New York law." Ibid. The panel framed plaintiffs' argument as follows:

"State disciplinary and licensure boards are required to report disciplinary actions against physicians to the Federally established National Practitioner Data Bank." People v. Kleiner, 174 Misc.2d 261, 264 N.Y.S.2d 704, 707 (Sup. Ct. 1997). If Beth Israel and Dr. Jacobs had made such a timely report to New York in 1997, plaintiffs assert, the information would have been passed on to the NPDB by New York authorities. Thus, the information would have been available when Englewood Hospital checked with the NPDB about Dr. Stenson in April 1997 before hiring him later that spring.

[Slip op. at 33.]

In assessing this argument, the panel expressed uncertainty as to whether the New York DOH "would have automatically transmitted to the NPDB a hypothetical adverse report from Beth Israel about Dr. Stenson." Ibid. It was also uncertain whether "there was a legal obligation for the New York authorities to report to the NPDB information that was reportable under New York law but not necessarily reportable under federal law." Ibid.

At trial, evidence disclosed that Englewood Hospital had not contacted the New York Department of Health to determine whether any adverse reports regarding Dr. Stenson had been filed pursuant to 2803-e. As a consequence, the trial judge had barred the jury from considering the New York reporting requirements on issues of proximate cause. On initial appeal, the panel found that the trial judge "could" have erred in this regard. Slip op. at 37. The panel reasoned:

At a minimum, there are lingering issues of practice and custom as to whether an unfavorable report about Dr. Stenson to New York authorities would or would not have been accessible in 1997 to Englewood Hospital through the NDPB. Likewise, there are genuine issues as to whether such an adverse report would have impacted Englewood's decision to appoint to its staff, and to continue to employ, Dr. Stenson. . . . In this hotly-disputed context, the court's limiting instruction, by taking the New York statute completely out of the picture on issues of proximate cause, had the patent capacity to lead the jury to an unsound result, if indeed the New York DOH would have passed on an unfavorable report about Dr. Stenson from Beth Israel to the NPDB.

[Id. at 37-38 (footnote omitted).]

After finding that the trial judge "too readily" deemed the violation of New York's reporting statute to be inconsequential to the causal chain of events, id. at 38, the panel concluded:

a remand of this matter is necessary for an evidentiary hearing, pursuant to N.J.R.E. 104, on the pivotal question of whether the New York DOH would have, in the ordinary course, forwarded to the NPDB adverse information about Dr. Stenson reported by Beth Israel under Section 2803-e, even if such information were not required to be directly reported by the hospital to the NPDB under federal law. That Rule 104 hearing will determine whether or not a new trial is required. At such a hearing, the parties are free to marshal, with appropriate reciprocal discovery, supplemental proofs that might shed more light on the customary practices of the New York DOH in forwarding adverse information about physicians to the NPDB. The parties may also furnish any additional legal authorities relevant to the issue.

If, following the Rule 104 hearing, the trial judge determines that the New York DOH would not have forwarded adverse information from Beth Israel about Dr. Stenson to the NPDB, then no new trial is warranted and the judgment for respondents shall remain intact.

[Slip op. at 39-40 (citation omitted).]

Following this determination, the panel addressed, and rejected, plaintiffs' argument that the trial judge erred in instructing the jury not to consider acts by Beth Israel Medical Center and Dr. Jacobs after 1999 in determining whether either was negligent in failing to communicate negative information about Dr. Stenson. In this regard, plaintiffs noted that in 2000, Dr. Friedman had left Englewood Hospital to assume Dr. Jacobs's position at Beth Israel Medical Center. Dr. Friedman was replaced at Englewood Hospital by Faith Frieden, M.D. In a letter dated March 27, 2000, Dr. Frieden advised Dr. Friedman (who was then employed by Beth Israel Medical Center) that Englewood Hospital was in the process of reviewing Dr. Stenson's application for reappointment, solicited comment, and requested a response by April 7, 2000. However, a timely response was not received, in large part because Dr. Friedman had sought legal advice from Beth Israel's in-house counsel as to the proper reply. The resultant response, received in June 2000 after Dr. Stenson's reappointment had occurred, stated that no information could be given, other than Dr. Jacobs's prior recommendation letter, without a release from Dr. Stenson. On the basis of this evidence, plaintiffs sought an instruction to the jury that the failure of Beth Israel Medical Center to act in 2000 was a breach of its continuing duty to disclose information, and that its failure to respond to Dr. Frieden's 2000 letter constituted a new negligent omission that gave rise to liability. The judge declined to give the proffered instruction, and the panel affirmed his decision, finding among other things that no legal basis existed for plaintiffs' continuing-duty theory and that the theory was "newly-minted." Id. at 46. The panel observed:

Assuming, without granting, that the complaint could be read broadly enough to have included the continuing duty theory conceptually, the March 17, 2000 letter was not specifically mentioned in the complaint and was never addressed prior to trial. Plaintiffs' answers to interrogatories did not mention this theory, even though an interrogatory had specifically asked plaintiffs to list what each defendant did that was negligent and when the negligence occurred. Moreover, plaintiffs' expert Dr. Merry did not mention the respondents' lack of response to the March 17, 2000 letter as a basis for liability, either in his report or his testimony.

Considering all of these factors, we discern no reversible error in this aspect of the judge's instruction, insofar as it precluded the jury from considering respondents' post-1999 conduct as germane to their alleged liability. On any second trial, the judge is free to maintain a similar temporal boundary.

[Slip op. at 46-47.]

II.

In discovery conducted in connection with the remand, it was learned that the New York DOH would have regarded any communication from Beth Israel Medical Center as a form of complaint, and it would not have automatically forwarded the information to the NPDB. It would instead have launched an investigation and would only have forwarded information to the NPDB if a finding unfavorable to Dr. Stenson resulted from the investigation.

Nonetheless, plaintiffs' expert in hospital administration and operating standards, William L. Nellis, rendered an opinion in which he concluded, despite the lack of an automatic referral of unconfirmed information by the New York DOH to the NPDB if reported by Beth Israel, the adverse information regarding Dr. Stenson would have become known to Englewood Hospital prior to its hiring of Dr. Stenson in 1997. This would have occurred as the result of an investigation into the allegations by the New York State Office of Professional Medical Conduct (OPMC), since at the time, Englewood Hospital was an affiliate of Beth Israel Medical Center and Dr. Stenson conducted surgery at Englewood, as well as at Beth Israel, and one of the four surgeries upon which Dr. Jacobs focused his criticism of Dr. Stenson and, indeed, the only one in which Dr. Jacobs found overt malpractice had occurred at Englewood.

Additionally, Nellis concluded that if Beth Israel had timely reported Dr. Stenson's conduct to the New York DOH, it is likely that the OPMC investigation would have been concluded by December 1999 and reported to the NPDB before an inquiry was made by Englewood Hospital to the NPDB on December 12, 1999 regarding the status of Dr. Stenson in connection with his application for reappointment a date prior to the doctor's malpractice on Fazaldin.

At a non-testimonial hearing on remand, plaintiffs' counsel conceded that he could not have asserted at trial the facts that had become clear in post-trial discovery. However, as the result of the post-trial deposition testimony of Dr. Ansel Marks regarding the investigatory procedures that would have been employed by the OPMC, as interpreted by plaintiffs' expert Nellis, he could now claim that a jury issue existed as to whether the investigation by the OPMC of Dr. Stenson's cases would have included his surgery at Englewood Hospital, thereby providing notice to the Hospital of potential sub-standard conduct prior to the time that Stenson was hired. In this connection, the following exchange occurred between counsel and the court:

THE COURT: But that circumstance was never argued to the jury, was it?

[COUNSEL]: The circumstance of the Englewood Hospital? That was argued.

THE COURT: No, the circumstance that if Beth Israel had reported to New York, that New York would have then reached out for Englewood Hospital.

[COUNSEL]: Without a doubt it wasn't, and it only arises now because of the unusual remand and hearing, et cetera, [in] which my position is expanded . . . to be[:] what difference would it have made if the jury could have considered the reporting over from New York.

I agree. I mean, it was not in the underlying case, by the expert's testimony or otherwise.

In response to the arguments of plaintiffs' counsel, defense counsel argued that the only issue on remand was whether the New York DOC would have forwarded adverse information regarding Dr. Stenson to the NPDB in 1997, and that the answer was "no." Such information would not have been reported unless and until it resulted in institution and resolution of charges against Dr. Stenson, which would not have happened in 1997.

In an oral opinion, the trial court read the Appellate Division panel's decision to remand the matter for a Rule 104 hearing literally to require a determination only as to whether the New York DOC would have, "in the ordinary course," forwarded to the NPDB adverse information about Dr. Stenson reported by Beth Israel Medical Center under 2803-e, even if such information were not required to be directly reported by the hospital to the NPDB under federal law. In response to the panel's query, the judge found "the evidence is so clear and so one-sided that the information would not, in the ordinary course, have been forwarded to the NPDB; and that it would not have been accessible in 1997 to Englewood Hospital through the NPDB."

Despite the judge's citation to precedent holding that he should not exceed the scope of the remand, the judge additionally addressed plaintiffs' argument, supported by the opinion of Nellis, that a jury issue existed as to whether an adverse finding by the OPMC would have been reported to the NPDB prior to the date of Englewood's final inquiry to it in December 1999. In this regard, the judge found Nellis to lack the expertise to render an opinion as to the potential for discipline of Dr. Stenson and that his statements in that regard constituted a net opinion. Moreover, the judge found that a report by the New York DOH to the NPDB in such circumstances would not have been "in the ordinary course" and thus outside the scope of the events that the panel ordered to be considered on remand.

III.

On appeal, plaintiffs argue that the remand judge viewed his role on remand too narrowly, and that he should have ordered a new trial on the basis of plaintiffs' newly formulated theories, premised upon post-trial discovery, that (1) if the New York DOH had been properly informed by Beth Israel Medical Center of Dr. Stenson's conduct pursuant to 2803-e, it would have launched an investigation that would have brought the doctor's conduct to the attention of Englewood Hospital prior to his hiring in April 1997 and (2) because the malpractice occurred in May 2000 and there was evidence that Englewood Hospital had contacted the NPDB in December 1999, there was at least a jury issue as to whether Englewood Hospital would have learned of Dr. Stenson's professional inadequacies before the malpractice at issue took place and would have declined to reappoint him.

We do not accept plaintiffs' arguments. The purpose of the initial remand in this matter was to determine whether the trial judge had committed reversible error in barring the jury's consideration of the failure of Beth Israel Hospital to notify the New York DOH of Dr. Stenson's conduct on the issue of proximate cause because Englewood Hospital never contacted the DOH, "if indeed the New York DOH would have passed on an unfavorable report about Dr. Stenson from Beth Israel to the NPDB," which Englewood Hospital did, in fact, contact prior to hiring the doctor. Slip op. at 38. We permitted discovery upon remand, but we understood that discovery would encompass only the issue we had framed. We did not contemplate that our offer of an opportunity for discovery would open the door to a new trial in which plaintiffs offered theories of liability that were unarticulated at the time of the initial trial and that plaintiffs' counsel conceded he could not have presented then, because a factual basis for such theories had not been timely developed and, in fact, was unimagined. Our inquiry as to whether a charging error occurred as the result of potential disclosure of information regarding Dr. Stenson by the New York DOH to the NPDB in 1997 did not open the door to a wholesale relitigation of the case, based on facts and theories unaddressed initially.

As a consequence of the foregoing, we conclude that the remand judge properly interpreted our remand instruction, In re Plainfield-Union Water Co., 14 N.J. 296, 302-03 (1954), and correctly ruled in its light that a new trial in this matter was not warranted as the result of the absence of any evidence that the New York DOH would have forwarded information provided by Beth Israel Medical Center to the DPDB upon its receipt in 1997 and prior to any investigation or substantiation of the claims presented. Plaintiffs' newly minted theories, which were not a part of the decisional landscape at the time of the initial trial, come too late for consideration at this point.

Affirmed.

It does not appear that the letter was ever received by Englewood Hospital.

The federal statute requires reporting by a health care entity when it "takes a professional review action that adversely affects the clinical privileges of a physician for a period longer than 30 days" or "accepts the surrender of clinical privileges (i) while the physician is under an investigation by the entity relating to possible incompetence or improper professional conduct, or (ii) in return for not conducting such an investigation or proceeding." 42 U.S.C.A.

11133(a)(1). The panel found that the letter dismissing Dr. Stenson from Beth Israel Medical Center's staff arguably did not affect his "clinical privileges" and that although the Medical Center accepted surrender by Dr. Stenson of his clinical privileges, "the proofs [were] far from conclusive" as to whether he was under investigation or whether he resigned to preclude such an investigation. Slip op. at 30-31.

(continued)

(continued)

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A-2165-08T3

December 2, 2009