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Baptist Health Systems v. Rutledge

Supreme Court of Arkansas

March 17, 2016

BAPTIST HEALTH SYSTEMS, MERCY HEALTH SYSTEM, AND WASHINGTON REGIONAL MEDICAL CENTER, APPELLANTS/CROSS-APPELLEES
v.
LESLIE RUTLEDGE, ARKANSAS ATTORNEY GENERAL; ARKANSAS DEPARTMENT OF HEALTH; AND NATHANIEL SMITH, MD, MPH, DIRECTOR, APPELLEES/CROSS-APPELLANTS

          APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT. 60CV-14-2218. HONORABLE TIMOTHY DAVIS FOX, JUDGE.

         Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Megan D. Hargraves, for appellants.

         Leslie Rutledge, Att'y Gen., by: Bourgon B. Reynolds, Ass't Att'y Gen., for appellees.

         Mitchell, Blackstock, Ivers, Sneddon & Marshall, PLLC, by: Emily Sneddon and Michael W. Mitchell, amicus curiae in support of appellees.

         Elisa White, Vice President and General Counsel, Arkansas Hospital Association, amicus curiae in support of appellants.

         ROBIN F. WYNNE, Associate Justice. DANIELSON and WOOD, JJ., dissent.

          OPINION

Page 508

          ROBIN F. WYNNE, Associate Justice

         At issue in this appeal is Act 766 of 2013, known as the Arkansas Peer Review Fairness Act (the Act). Act of Apr. 5, 2013, No. 766, 2013 Ark. Acts 2890 (codified at Ark. Code Ann. § 20-9-1301 (Repl. 2014)). Before the Pulaski County Circuit Court, the case was decided on competing motions for summary judgment. The hospitals appealed, and the defendants cross-appealed. The Arkansas Hospital Association and the Arkansas Medical Society have filed amicus curiae briefs. We reverse the circuit court's denial of the defendants' motion for summary judgment as to whether this case presents a justiciable controversy, and we dismiss the direct appeal.

         The appellants, plaintiffs below, are three Arkansas corporations that operate private hospitals in the state (the Hospitals). In June 2014, the Hospitals filed a complaint for declaratory judgment in the Pulaski County Circuit Court seeking a judgment declaring the Act unconstitutional under the Arkansas and United States Constitutions.[1] The complaint named the following parties as defendants: the Attorney General[2] in his official capacity; the Arkansas Department of Health; and Nathaniel Smith, MD, MPH, Director. The defendants answered, denying that they were proper parties to this action, denying that the Act is unconstitutional, and pleading various affirmative defenses. Eventually, the parties filed competing motions for summary judgment. No hearing was held, and the circuit court entered two separate orders on April 24, 2015. The circuit court denied paragraph four of the defendants' motion for summary judgment, which stated as follows:

This Court should also enter summary judgment in favor of the state defendants because plaintiffs lack standing to file this declaratory judgment action. There is no justiciable controversy between plaintiffs and these state defendants, and plaintiffs' declaratory judgment complaint is not ripe for consideration.

         Without elaboration, the circuit court ruled that the Act is not unconstitutional for the following reasons: the Act is not pre-empted by federal law; the Act does not unconstitutionally treat the Hospitals

Page 509

differently from other healthcare entities; the Act does not restrict the Hospitals' right to retain the attorney of their choice; the Act does not unconstitutionally interfere with the exclusive jurisdiction of Arkansas courts to regulate the practice of law; and the Act is not unconstitutionally vague and ambiguous. The Hospitals filed a timely notice of appeal; the defendants filed a timely notice of cross-appeal.

         Cross-Appeal: Is this a proper declaratory judgment action?

          Peer review is a process for monitoring quality and improving care within a healthcare institution. See Ark. Code Ann. § 20-9-1302(a)(1). It was addressed by Congress in 1986 with the passage of the Health Care Quality Improvement Act (HCQIA), codified at 42 U.S.C. § § 11101 et seq. Generally speaking, HCQIA provides immunity from liability for civil damages for those who participate in a professional-review action and meet the standards set forth in HCQIA (regarding the purpose of the action, notice and hearing, and procedures). See 42 U.S.C. § 11111. In 2013, our General Assembly passed the Act, codified at Ark. Code Ann. § § 20-9-1301 to -1308. Arkansas Code Annotated section 20-9-1302 provides as follows:

( a) The General Assembly finds that:
(1) The peer review process is well established as the most important and effective means of monitoring quality and ...

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