CA Supreme Court decides on disqualification of hearing officer for financial bias

Under California law, a hospital must provide a physician with a fair hearing before revoking staff privileges. A panel of peers serves as the trier of fact, and a hearing officer conducts the hearing and makes evidentiary and procedural rulings but may not vote on the merits. The panel members and hearing officer may not gain a "direct financial benefit from the outcome of the hearing."

In the following case, the California Supreme Court decided whether a hearing officer hired by a hospital may be disqualified for financial bias on grounds he had an incentive to favor the hospital to increase the chances of receiving future appointments.

Facts

St. Joseph's Medical Center of Stockton is a private hospital owned by Dignity Health, a California-based healthcare organization. St. Joseph's hired Sundar Natarajan, MD, as director of its hospitalist program in 2007.

A couple years later, Natarajan started his own hospitalist group that operated out of St. Joseph's. St. Joseph's medical staff repeatedly reprimanded and issued fines against him because of his record-keeping deficiencies.

In 2013, a committee of physicians launched an investigation into the record-keeping deficiencies and recommended terminating Natarajan's medical staff membership and hospital privileges. After considering the recommendation and Natarajan's response, the medical executive committee adopted the recommendation. In response, Natarajan requested a peer review hearing.