COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 70372 DR. BRENDAN O'NEILL, M.D. : : Plaintiff-Appellant : : JOURNAL ENTRY -vs- : AND : OPINION ST. LUKE'S MEDICAL CENTER : : Defendant-Appellee : : DATE OF ANNOUNCEMENT OF DECISION NOVEMBER 27, 1996 CHARACTER OF PROCEEDING Civil appeal from Court of Common Pleas Case No. 294218 JUDGMENT Affirmed DATE OF JOURNALIZATION APPEARANCES: For Plaintiff-Appellant: For Defendant-Appellee: MICHAEL TERRENCE CONWAY, ESQ. GREGORY V. MERSOL, ESQ. Michael Terrence Conway Co. JOHN B. LEWIS, ESQ. 20813 Springfield Circle ROBERT A. ZIMMERMAN, ESQ. Strongsville, Ohio 44136 Arter & Hadden 1100 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115-1475 - 2 - JAMES M. PORTER, J., Plaintiff-appellant Dr. Brendan O'Neill, M.D. appeals from the trial court's order granting summary judgment to defendant- appellee St. Luke's Medical Center arising out of termination of plaintiff's ophthalmic residency at the hospital. Plaintiff claims that the trial court erred in finding that plaintiff had failed to exhaust his administrative remedies before seeking judicial review. We find no error and affirm. Plaintiff, Dr. O'Neill, participated in St. Luke's ophthalmology residency program pursuant to a series of identical one-year residency agreements beginning July 1, 1993. In each of these agreements, renewed annually, Dr. O'Neill agreed to abide by the terms and conditions for participation in the residency program including "all policies, rules and regulations of the Hospital." The agreements stated that "failure to meet any of the terms and conditions set forth may result in disciplinary action up to and including termination ***." The agreement also provided that "in the event of disciplinary action the House officer [the resident] shall be entitled to a hearing in accordance with the Grievance and Fair Hearing Procedure applicable to House Officers." The procedure available to a resident who is disciplined or terminated is an administrative review by a three-person panel consisting of two residency program directors and the current house staff president to hear the resident's grievances. Following the filing of a grievance, this Procedure allowed for the presentation - 3 - of evidence by the staff to justify the discipline or termination. The resident then had to establish by clear and convincing evidence that the grounds for the action lack any substantial basis. Paragraph 8 of the Procedure stated as follows: "The proceedings set forth herein shall constitute the sole remedy of the resident. By requesting a hearing, the resident agrees that no representative of the hospital or the medical staff or no third party shall be liable to him or her for damages or other relief by reason of having provided information, testimony, evidence or participating in the hearing panel. This includes such material as may otherwise be privileged or confidential." By the end of Dr. O'Neill's second year of residency (June 30, 1995), the St. Luke's ophthalmology attending staff concluded that his clinical performance was "significantly below that expected of a resident beginning the third year of ophthalmology training" and his interpersonal skills were lacking. On June 29, 1995, St. Luke's placed Dr. O'Neill on probation and on an oversight plan to improve and monitor his clinical and interpersonal skills. The written plan read and signed by Dr. O'Neill stated: "3) [i]f there has been inadequate improvement, Dr. O'Neill will be dismissed from the program." Despite training and supervision provided under the oversight plan, St. Luke's finally concluded that Dr. O'Neill's performance remained deficient "both in regard to medical care issues and in issues regarding relations with colleagues." Accordingly, in a letter dated August 11, 1995, St. Luke's terminated Dr. O'Neill's - 4 - appointment due to "inadequate overall improvement" of his performance. In the termination letter, St. Luke's informed Dr. O'Neill of his right to a hearing and attached a copy of the Fair Hearing Procedure. However, Dr. O'Neill never filed a grievance nor invoked the Procedure. Instead, he filed this action in Common Pleas Court on August 21, 1995, claiming breach of his employment contract and promissory estoppel. He also sought a declaratory judgment that the hospital's administrative review process was invalid as contrary to public policy, and an order enjoining his termination. On September 29, 1995, St. Luke's moved for summary judgment based on the Ohio Supreme Court's decision in Nemazee v. Mt. Sinai Medical Ctr. (1990), 56 Ohio St.3d 109, which held that a physician terminated by a private hospital must exhaust the administrative remedies of his employment contract prior to seeking judicial review. On February 16, 1996, the trial court, citing Nemazee, granted St. Luke's motion for summary judgment "because it is undisputed that plaintiff failed to exhaust administrative remedies." From that order, this timely appeal ensued. - 5 - Plaintiff's sole assignment of error states as follows: I. THE TRIAL COURT COMMITTED PREJUDICIAL AND REVERSIBLE ERROR WHEN IT GRANTED DEFENDANT- APPELLEE'S MOTION FOR SUMMARY JUDGMENT RESPECTING PLAINTIFF-APPELLANT'S CLAIM FOR BREACH OF CONTRACT AND OTHER RELATED CAUSES OF ACTION AGAINST DEFENDANT UPON THE GROUNDS THAT PLAINTIFF-APPELLANT FAILED TO EXHAUST ADMINISTRATIVE REMEDIES PURSUANT TO THE DECISION IN NEMAZEE V. MT. SINAI MEDICAL CENTER. Under Civ. R. 56, summary judgment is proper when: (1) no genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to the party against whom the motion for summary judgment is made. State, ex rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511; Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327. It is well settled that the party seeking summary judgment bears the burden of showing that no genuine issue of material fact exists for trial. Celotex Corp. v. Catrett (1987), 477 U.S. 317, 330; Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 115. Doubts must be resolved in favor of the nonmoving party. Murphy v. Reynoldsburg (1992), 65 Ohio St.3d 356, 358-59. However, the nonmoving party must produce evidence on any issue for which that party bears the burden of production at trial. Wing v. Anchor Media, Ltd. (1991), 59 Ohio St.3d 108, 111; Celotex, supra, at 322-323. In accordance with Civ. R. 56(E), "a nonmovant - 6 - may not rest upon the mere allegations or denials of his pleadings, but must set forth specific facts showing there is a genuine issue for trial." Chaney v. Clark Cty. Agricultural Soc. (1993), 90 Ohio App.3d 421, 424. In Dresher v. Burt (1996), 75 Ohio St.3d 280, the Supreme Court of Ohio modified the summary judgment standard as was applied under Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio St.3d 108. Presently, under the new standard, "*** the moving party bears the initial responsibility of informing the trial court of the basis for the motion, and identifying those portions of the record which demonstrate the absence of a genuine issue of fact or a material element of the nonmoving party's claim." Dresher at 296. This Court reviews the lower court's granting of summary judgment de novo. Brown v. Scioto Bd. of Commrs. (1993), 87 Ohio App.3d 704, 711 ("We review the judgment independently and without deference to the trial court's determination"). An appellate court reviewing the grant of summary judgment must follow the standards set forth in Civ. R. 56(C). "The reviewing court evaluates the record *** in a light most favorable to the nonmoving party. *** [T]he motion must be overruled if reasonable minds could find for the party opposing the motion." Saunders v. McFaul (1990), 71 Ohio App.3d 46, 50; Link v. Leadworks Corp. (1992), 79 Ohio App.3d 735, 741. - 7 - As did the trial court, we find the issues in this case are governed by the Supreme Court's decision in Nemazee v. Mt. Sinai Medical Ctr. (1990), 56 Ohio St.3d 109, where the syllabus states: A physician in a private hospital whose employment and/or hospital privileges have been terminated must exhaust all internal administrative remedies prior to seeking judicial review. The facts in Nemazee appear to be "on all fours" with those in the instant case, in that Dr. Nemazee, like Dr. O'Neill, signed a residency contract requiring use of a grievance procedure to challenge discipline or termination. Similarly, he was placed on probation and eventually terminated for deficiencies in both his clinical and interpersonal skills. 56 Ohio St.3d at 109-10. Although Dr. Nemazee originally requested a hearing under the hospital's due process policy to contest the termination, he later withdrew that request and brought suit for breach of his employment contract. Id. at 110. In reversing this Court's decision, the Supreme Court held that the plaintiff was required to exhaust the administrative remedies provided in his employment contract prior to initiating suit. After analyzing the general doctrine of exhaustion of remedies from administrative agencies, the Court noted that the same principle applied to decisions on staff competence under administrative due process procedures in hospitals, stating: "[t]he great weight of case authority in the United States is that a board of trustees of a private hospital has the authority to appoint and remove members of the medical staff of the - 8 - hospital and to exclude members of the medical profession in its discretion from practicing in the hospital." *** Based upon our previous rulings regarding the role of the courts in hospital staffing decisions and the persuasive reasoning from other jurisdictions, we hold that a physician in a private hospital whose employment and/or hospital privileges have been terminated must exhaust all internal administrative remedies provided by a hospital's charter, bylaws, rules, regulations and employment contract prior to seeking judicial review. Thus, in this case, appellee must first avail himself of the administrative remedies referred to in his employment contract prior to seeking judicial review. Our ruling is consistent with the purposes of the exhaustion doctrine, to wit: to afford the hospital the ability to correct its own errors; to provide a trial court with an adequate factual record upon which to make an informed decision as established by the expert testimony of the medical staff; and to promote judicial economy through the resolution of these disputes without the premature need for judicial intervention. 56 Ohio St.3d at 113-114. We do not find plaintiff's attempts to distinguish Nemazee persuasive. Although Dr. O'Neill argues that he did not "consent" to the Fair Hearing Procedure because he did not sign it, (Aplnt's Brf. at 9), in the three successive residency Agreements he agreed to abide by all hospital policies including the Grievance and Fair Hearing Procedure which was specifically referenced. In the event of disciplinary action the House Officer shall be entitled to a hearing in accordance with the Grievance and Fair Hearing Procedure applicable to House Officers. (Residency Agreements at p. 3). - 9 - He can not now disclaim his knowledge or acquiescence in the process referenced in his employment contract. Nemazee at 112. Dr. O'Neill also argues that the Fair Hearing Procedure is invalid because it allegedly constitutes a waiver of all rights to judicial review. "The proceeding set forth herein shall constitute the sole remedy of the resident." (Aplnt's Brf. at 20). In Nemazee, the Supreme Court was confronted by similar language ("Decisions rendered by subcommittee shall be deemed final and non- appealable"). Nevertheless, the Court held that the resident "must first avail himself of the administrative remedies referred to in his employment contract prior to seeking judicial review." Nemazee at 114. The Fair Hearing Procedure does not require a resident to "waive" all potential civil claims, but assures that those who participate in hearings can do so without retribution. This is necessary to the functioning of the process. The Supreme Court in Nemazee recognized that judicial review of hospital decisions relating to staffing privileges is appropriate when the hospital "has acted in an arbitrary, capricious or unreasonable manner or in other words, has abused its discretion." Nemazee, 56 Ohio St.3d at 114, citing Bouquett v. St. Elizabeth Corp. (1989), 43 Ohio St.3d 50. As recognized by Nemazee, judicial review is available once the internal procedures have been exhausted. We find no merit to the "waiver" argument. - 10 - Furthermore, by invoking the Fair Hearing Procedure, a resident does not waive the right to assert any and all legal claims arising out of disciplinary action or termination. To the contrary, by following the procedure, a resident merely agrees that no hospital employee or third party will be liable to him for damages for providing information or otherwise participating in the due process hearing. By requesting a hearing, the resident agrees that no representative of the hospital or the medical staff or no third party shall be liable to him or her for damages or other relief by reason of having provided information, testimony, evidence or participation to the hearing panel. This includes such material as may otherwise be privileged or confidential. (Fair Hearing Procedure at Section 8). The procedure is not a waiver of his legal rights to attack the process in court, but serves to protect those who participate in hearings from damage claims. In this state, physicians and employees of hospitals are given a qualified privilege, pursuant to R.C. 2305.25, regarding statements made in a utilization review committee, quality assurance committee or peer review committees. R.C. 2305.25 provides: No hospital, no state or local society, and no individual who is a member or employee of any of the following committees shall be liable in damages to any person for any acts, omissions, decisions, or other conduct within the scope of the function of the committee: (A) A utilization review committee, quality assurance committee, or tissue committee of a hospital, a not-for-profit health care corporation which is a member of the hospital - 11 - or of which the hospital is a member, or a community mental health center; (B) A board or committee of a hospital or of a not-for-profit health care corporation which is a member of the hospital or which the hospital is a member reviewing professional qualifications or activities of the hospital medical staff or applicants for admission to the medical staff; *** R.C. 2305.25 was enacted in order to confer protection to those who provide information to certain health care provider review boards and committees to encourage the free flow of communication without the fear of civil liability. Browning v. Burt (1993), 66 Ohio St.3d 544, 562; Jacobs v. Frank (1991), 60 Ohio St.3d 111, 113. The statute protects those serving on committees in order to ensure candid review and participation in the process for it would be difficult to staff the committees without such protections. Browning, supra; Kalb v. Morehead (1995), 100 Ohio App.3d 696, 700; Moore v. Burt (1994), 96 Ohio App.3d 520. Conferring immunity on the peer review committee reviewing Dr. O'Neill's competence is clearly within the spirit of these authorities. There is nothing unfair about this process or protecting those who exercise this quasi-judicial function. The immunity which accompanies peer review or arbitration- like proceedings is not limited solely to court actions. It extends to participants in quasi-judicial proceedings, including such proceedings as those at issue. In Moore v. Conliffe (Cal. 1994), 7 Cal.4th 634, 871 P.2d 204, the California Supreme Court held that an expert witness who testified at a private, contractual - 12 - arbitration proceeding was immune from tort liability based on the absolute privilege for statements made in a judicial proceeding. The Court acknowledged that the absolute privilege not only applied to court proceedings, but also to quasi-judicial proceedings such as a private arbitration, which are "functionally equivalent to court proceedings." 871 P.2d at 210. Similarly, in Odyniec v. Schneider (Md. 1991), 322 Md. 520, 588 A.2d 786, the Maryland Court of Appeals extended the absolute privilege to a doctor who testified as an expert witness in an arbitration of a medical malpractice claim. The Court held that the privilege should extend to all administrative proceedings, including health care arbitrations, because of their similarity to judicial proceedings. 588 A.2d at 792-93. In addition, the Court relied upon public policy considerations in applying an absolute privilege to health care arbitrations since the "social benefit derived from free and candid participation by potential witnesses in the arbitration process is essential to achieve the goal of a fair and just resolution of claims ***." 588 A.2d at 793. See, also, General Motors Corp. v. Mendicki (C.A.10, 1966), 367 F.2d 66 (absolute privilege applies to grievance proceedings under collective bargaining agreement); Hill v. Aro Corp. (N.D. Ohio 1967), 263 F.Supp. 324 (labor arbitrator immune from liability for statements made during arbitration). Dr. O'Neill also argues that the requirements of the Fair Hearing Procedure deprived him of "due process under the laws of - 13 - Ohio." (Aplnt's Brf. at 5). The fourteenth Amendment to the United States Constitution states that no state shall deprive any person of life, liberty or property without due process of law. Thus, the first step in determining whether due process protections apply is to ascertain whether state action has affected any of these interests. Kentucky Department of Corrections v. Thompson (1989), 490 U.S. 454, 460. Dr. O'Neill was not entitled to due process because no state action affected his constitutionally protected rights. St. Luke's is a private hospital, not a state agent. Because his termination did not involve state action, he cannot assert that St. Luke's violated his constitutional due process rights. Dr. O'Neill next argues (Aplnt's Brf. at 13) that the Fair Hearing Procedure is contrary to public policy. To the contrary, the Supreme Court in Nemazee likened the due process policy at issue to an arbitration agreement in that the parties agreed to submit disputes to a panel of hospital staff and residents. 56 Ohio St.3d at 113, fn.4. The Court also noted that arbitration "has been favored by the courts of Ohio from early times" and that every effort will be made to enforce an arbitrator's decision. Id. See, also, City of East Cleveland v. East Cleveland Firefighters, Local, 500, I.A.F.F. (1994), 70 Ohio St.3d 125, 128-29 (Ohio courts promote the arbitration of employment disputes.) The procedures set in place by the St. Luke's Fair Hearing Procedure satisfy the requirement of due process and further the public policy of dispute - 14 - resolution. Salvation Army v. Blue Cross & Blue Shield (1993), 1993), 92 Ohio App.3d 571, 577; Johnson v. Wilkinson (1992), 84 Ohio App.3d 509, 514. Finally, Dr. O'Neill argues that the Fair Hearing Procedure is invalid because it somehow favors St. Luke's and is otherwise unfair to the resident. (Aplnt's Brf. at 14). If there were any merit to this argument, plaintiff has waived it by failing to invoke the grievance procedure in the first instance. He does not have standing to question the fairness of the procedure because he never invoked it. See Tufts v. U.S. Postal Service (N.D. Ohio 1976), 431 F.Supp. 404; Lewis v. Hillsborough Transit Authority (C.A.11, 1983), 726 F.2d 664 (terminated employee cannot challenge fairness of employer's grievance procedure when he has not filed a grievance). It is a basic tenet of labor law that a claim based upon an alleged violation of a collective bargaining agreement is barred by the employee's failure to use the contract grievance procedure. Schultz v. Owens-Illinois, Inc. (C.A.7, 1982), 696 F.2d 505, 511, citing Republic Steel Corp. v. Maddox (1965), 379 U.S. 650; Boggs v. Target Stamped Products, Corp. (Jan. 29, 1992), Summit App. No. 15181, unreported; Thompson v. Basic Parking Systems (July 6, 1988), Lorain App. No. 4300, unreported. In any event, the procedure on its face is fair to the resident. It does not simply permit termination at-will, but, in fact, provides for a resident to challenge the action before a fair - 15 - hearing panel; the hospital must first present its reasons for termination; the resident may call and cross-examine witnesses and introduce documents and medical records without being bound by strict rules of evidence; he may be represented by a member of the medical or hospital staff of his choice. The three panel members are doctors with expertise to assess a resident's grievance in the medical specialty at issue. The panel may consult with legal counsel to assure that the hearing and deliberation comply with hospital policy and are otherwise conducted in a fair and reasonable manner. A competent record of the hearing is kept by a medically-qualified court reporter and the resident has the right to request a copy of the hearing transcript. The Policy requires a majority vote of the panel to decide a grievance and obligates the panel to make a written report of its findings and recommendations, and to issue those findings within ten days. The policy in question is similar to the policy reviewed and deemed fair by the Supreme Court in Nemazee. We find no deprivation of elementary due process in these procedures. For the reasons hereinbefore stated, we find that the trial court correctly entered summary judgment in favor of the hospital on the authority of the Nemazee decision. Plaintiff's sole assignment of error is overruled. Judgment affirmed. - 16 - It is ordered that appellee recover of appellant its costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Court of Common Pleas to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. BLACKMON, P.J., and TIMOTHY E. McMONAGLE, J., CONCUR. JAMES M. PORTER JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .