Surgeon Wins $4.7M Sham Peer Lawsuit

May 31, 2011

LOS ANGELES – A surgeon who complained about the safety of reprocessing practices at Cedars-Sinai Medical Center and the subsequent restriction of his privileges there is entitled to the multi-million dollar arbitrated settlement the hospital agreed to pay him in 2009 but later attempted to reverse, a California appeals court has ruled.

Outpatient Surgery

The court denied Cedars-Sinai’s request to strike down the arbitrated award of $4,691,774 to Hrayr K. Shahinian, MD, for economic, emotional and punitive damages, noting that the Los Angeles hospital “agreed to “‘final and binding’ arbitration” after years of legal wrangling with the surgeon, “and that is what it got.”

According to court records, Cedars-Sinai recruited Dr. Shahinian to establish and direct its skull-base surgery program in 1996.  His tenure, however, was marred by controversy. The hospital’s neurosurgeons doubted his qualifications for the task, and even the chairman who had recruited him noted that he’d alienated hospital management. His remarks in August 2002 that the hospital’s lack of support for the program compromised patient care were met a month later by a notification that his position as a faculty physician and the program’s director would end in a year’s time.

In the meantime, Dr. Shahinian registered complaints over the unavailability, malfunctioning and inadequate reprocessing of surgical instruments. Court records report that a hospital investigation bore out Dr. Shahinian’s protests and revealed that certain instruments, which had been routinely flash sterilized, were contaminated with bioburden.

After his termination, Dr. Shahinian sued Cedars-Sinai for tortious discharge in violation of public policy, a suit that was settled in June 2005. Under the settlement, the hospital agreed to extend Dr. Shahinian operating privileges in a non-retaliatory manner and to properly maintain its supply of surgical instruments.

The disputes continued, though: First over “custom” instruments the hospital hadn’t agreed to maintain; then over a 90-day moratorium on Dr. Shahinian performing any surgeries at the center (issued, the hospital said, while it investigated the surgeon’s safety concerns); then over the conditions he’d have to meet in order to perform surgeries there. These conditions included providing his own sets of instruments, having his own employee clean them prior to sterilization and personally inspecting the instruments before use, or agreeing that the hospital’s instrument handling process was satisfactory.

Dr. Shahinian sued the hospital again in December 2006, arguing that the hospital had restricted his privileges (and damaged his career) without a fair hearing process. The surgeon and the hospital agreed to arbitrate the matter.

In November 2009, the arbitrator concluded that the hospital’s moratorium on Dr. Shahinian’s surgeries was unlawfully retaliatory, since no other surgeon was barred from operating or burdened with conditions because of concerns over the safety of the hospital’s practices, and since it was conducted without a peer review or hearing process. Dr. Shahinian was awarded $508,124 in economic damages for breach of contract and interference with his practice, $1,603,650 in emotional distress damages and $2,580,000 in punitive damages. For his part, Dr. Shahinian gave up his staff privileges at Cedars-Sinai.

After agreeing to the arbitrated award, the hospital took it to court, arguing that it exceeded the arbitrator’s powers and violated public policy. The trial court rejected this claim, and the appeals court upheld that ruling on April 27.

“Defendant may be unhappy with the result, but defendant agreed to “‘final and binding’ arbitration, and that is what it got,” the court wrote in its decision. “None of these rules of law or public policies is implicated when a hospital becomes embroiled in a dispute with a doctor that has nothing to do with the doctor’s competence or the doctor’s professional conduct that puts patient care and safety at risk.”

Attorney Robert C. Baker, who represented Dr. Shahinian, was even more direct, describing the hospital’s continuing litigation as “an attempt to destroy a physician.”

“They were just playing with the legal system,” says Mr. Baker. “It was a premeditated effort to kill someone’s career.”

Attorneys for Cedars-Sinai did not immediately return calls seeking comment.

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