Patrick v. Floyd Medical Center , 201 F.3d 1313 ( 2000 )

  •                                                                     [PUBLISH]
                            FOR THE ELEVENTH CIRCUIT
                                     No. 98-9542
                          D. C. Docket No. 97-00300-4-CV-RLV
                     Appeal from the United States District Court
                        for the Northern District of Georgia
                                (January 26, 2000)
    Before ANDERSON, Chief Judge, COX and HULL, Circuit Judges.
    COX, Circuit Judge:
          Ronald D. Patrick, M.D., appeals the summary judgment granted in favor of
    Floyd Medical Center, Floyd Healthcare Management, Inc., and the Hospital
    Authority of Floyd County. Patrick claims that Floyd Medical Center violated his
    Fourteenth Amendment rights to due process and equal protection by denying him
    medical staff membership and general surgical privileges at Floyd Medical Center.
    Patrick seeks redress for these constitutional violations pursuant to 42 U.S.C. §
    1983. On appeal, Patrick contends that the district court erred in concluding that
    the actions of Floyd Healthcare Management, Inc. did not constitute state action for
    purposes of § 1983. We affirm.1
                                    I. BACKGROUND
          The Hospital Authority of Floyd County (HAFC), a public hospital authority
    under Georgia law, entered into a Management Agreement (the Agreement) with
    Floyd Healthcare Management, Inc. (FHM), a private entity, to manage and
    operate its hospital, Floyd Medical Center. Under the Agreement, FHM contracted
    to supervise the hiring and firing of hospital employees, maintain the hospital,
    enforce rules and regulations for safety considerations, and operate the hospital on
                 Patrick also appeals the district court’s denial of his June 19, 1998
    motion to compel production of documents and information. Patrick, however, has
    not explained how the discovery requested pursuant to that motion would change
    the court’s analysis on the dispositive question of state action. Accordingly, we
    need not reach this issue in light of our disposition of the case.
    a daily basis. FHM was named the governing body of the medical staff, with the
    ability to extend membership and clinical privileges, to take disciplinary and other
    corrective action, and to afford hearings and other process to physicians in
    connection with all questions of medical staff membership, clinical privileges and
    corrective action. FHM’s decisions and actions under its powers governing the
    medical staff are deemed by § 8.12 of the Agreement to be decisions and actions
    taken by HAFC.
          HAFC maintained some control over the financial activities of the hospital
    under the Agreement. For example, HAFC retained control over the accounts
    receivable of the hospital and used those funds to pay on the public bonds issued
    by HAFC. HAFC also reimbursed FHM for the reasonable costs and expenses
    incurred in running the hospital and paid FHM a management fee. HAFC agreed
    to indemnify FHM from liability arising from the operation of the hospital.
    Finally, FHM did not assume any of HAFC’s liabilities.2 FHM, however, had
    numerous financial responsibilities, including maintaining insurance, providing
    financial reports to HAFC, maintaining the hospital premises, establishing rates
                  FHM did assume HAFC’s liabilities in a later Lease Agreement (LA).
    The parties entered into the LA in December of 1996; however, it did not take
    effect until January of 1998, after the actions at issue in the present case had
    and charges for the hospital’s services, and collecting fees for the hospital’s
          Patrick submitted an application for medical staff membership and privileges
    to practice at Floyd Medical Center in May 1995. Patrick’s application was
    subjected to several levels of review, some of which were not specified in the by-
    laws governing such applications. Patrick’s application was finally denied by
    FHM’s Board of Directors in May 1997.
                                      II. DISCUSSION
          The threshold issue is whether the denial of hospital privileges by FHM is
    state action for purposes of § 1983. We review de novo the district court’s grant of
    summary judgment on this issue, applying the same familiar standards as the
    district court. See Gitlitz v. Compagnie Nationale Air France, 
    129 F.3d 554
    , 556-
    57 (11th Cir. 1997).
          To obtain relief under § 1983, Patrick must show that he was deprived of a
    federal right by a person acting under color of state law. See Willis v. University
    Health Servs., Inc., 
    993 F.3d 837
    , 840 (11th Cir. 1993). Recent Supreme Court
    precedent reiterates that:
          state action requires both an alleged constitutional deprivation “caused
          by the exercise of some right or privilege created by the State or by a rule
          of conduct imposed by the State or by a person for whom the State is
          responsible,” and that “the party charged with the deprivation must be
          a person who may fairly be said to be a state actor.”
    American Mfrs. Mut. Ins. Co. v. Sullivan, 
    526 U.S. 40
    , ___, 
    119 S. Ct. 977
    , 985
    (1999) (citations omitted, emphasis in original). Patrick argues that FHM’s actions
    can be attributed to HAFC, a state actor for purposes of § 1983, under the Supreme
    Court’s nexus/ joint action test because FHM and HAFC were “intertwined in a
    ‘symbiotic relationship’” under the Agreement. Willis, 993 F.2d at 840 (explaining
    the nexus/ joint action test). The nexus/ joint action test finds state action where
    “[t]he State has so far insinuated itself into a position of interdependence with [the
    private party] that it must be recognized as a joint participant in the challenged
    activity[.]” Burton v. Wilmington Parking Auth., 
    365 U.S. 715
    , 725, 
    81 S. Ct. 856
    862 (1961) (originating the nexus/ joint action test). The Supreme Court has
    suggested that the symbiotic relationship must involve the alleged constitutional
    violation. See National Broadcasting Co. v. Communications Workers, 
    860 F.2d 1022
    , 1027 (11th Cir. 1988) (citing San Francisco Arts & Athletics, Inc. v. United
    States Olympic Comm., 
    483 U.S. 522
    , 547 n.29, 
    107 S. Ct. 2971
    , 2986 n.29
          Under the nexus/ joint action test, each case must be analyzed on its own
    facts to determine whether the interdependence between the private and state
    entities reflects sufficient state involvement to sustain a § 1983 claim. See Burton,
    365 U.S. at 726, 81 S. Ct. at 862. In Willis, our most recent application of the
    nexus/ joint action test, we scrutinized the relationship between the private entity
    and the public entity. Willis, 993 F.2d at 841. We noted, among other things, that:
    the private and public entities were separate and distinct under the law; the private
    entity had the sole discretion to hire and fire employees and was the governing
    body of the hospital and medical staff; the private entity was responsible for
    maintenance and repair of the medical facility at its own expense; the private entity
    was responsible for maintaining insurance and for providing a financial report to
    the auditor; the private entity had the right and authority to make and enforce rules,
    regulations, and safety considerations; and the private entity agreed to indemnify
    the public entity from liability. See id. After weighing these factors, we concluded
    that the private and public entities were not sufficiently intertwined in a symbiotic
    relationship to satisfy the nexus/ joint action test and held that the private entity’s
    termination of a registered nurse’s employment did not involve sufficient state
    action to sustain a § 1983 claim. See id.
          Patrick argues that HAFC is intertwined in a symbiotic relationship with
    FHM because HAFC receives direct financial benefits from FHM. For example,
    FHM collects revenues from the hospital for HAFC’s use in paying the public
    bonds issued to construct the hospital, while HAFC reimburses FHM only for
    reasonable expenses incurred in managing the hospital. Furthermore, the
    Agreement provides the opposite relationship for two factors considered in Willis:
    (1) FHM assumed no risk of loss because HAFC agreed to indemnify FHM for any
    liability arising from its management of Floyd Medical Center, and (2) FHM did
    not assume any of HAFC’s liabilities.
          FHM and HAFC respond that, despite the fact that FHM managed and
    operated Floyd Medical Center primarily for the benefit of HAFC, FHM had sole
    responsibility over personnel issues, including credentialing authority over the
    medical staff; managed and ran the hospital on a daily basis; procured insurance;
    assumed maintenance (albeit not at FHM’s expense); and provided financial audits
    and reports. Furthermore, FHM and HAFC are distinct legal entities.3
          It is true that HAFC has retained more control over FHM’s financial
    activities than the public entity retained over the private entity in Willis. See id.
    There is no evidence, however, that HAFC had anything to do with FHM’s
    decision to deny Patrick’s application; rather, the Agreement gave sole authority
    regarding such decisions to FHM. This fact is critical. We hold that, to sustain a §
                 In fact, counsel informed the court during oral argument that the one
    member of both entities’ boards of directors recused himself from FHM’s
    consideration of Patrick’s application.
    1983 claim under the nexus/ joint action test, the symbiotic relationship between
    the public and private entities must involve the alleged constitutional violation.
    Here, HAFC did not participate in hospital personnel matters. Moreover, HAFC
    did not participate in FHM’s decision to deny Patrick’s application.
          The gravamen of Patrick’s claim appears to be that competing general
    surgeons in the relevant geographic area conspired, via their participation and
    influence in the credentialing process, to deny Patrick’s application for economic
    reasons, not that HAFC did anything to affect Patrick’s ability to practice medicine
    at Floyd Medical Center. There is no evidence that HAFC received any benefit
    from FHM’s decision to deny Patrick’s application. See NBC, 860 F.2d at 1027-28
    (finding no state action where the benefits to the state from a relationship were
    unrelated to the challenged unconstitutional action by the private entity). Nor has
    Patrick produced any evidence that HAFC endorsed the constitutional violations
    about which Patrick complains. Cf. Burton v. Wilmington Parking Auth., 
    365 U.S. 715
    , 725, 
    81 S. Ct. 856
    , 862 (1961) (finding state action where the state “elected to
    place its power, property and prestige behind the admitted discrimination.”). The
    relationship between the entities does not present the nexus or joint action
    sufficient to constitute state action in the denial of Patrick’s application.
          Patrick argues, in the alternative, that § 8.12 of the Agreement, which
    authorizes FHM to extend membership and clinical privileges at FHM in the name
    of and on behalf of HAFC and deems all decisions and actions made pursuant to
    this authority to be decisions and actions of HAFC, automatically transforms
    FHM’s denial of Patrick’s application into state action. We cannot agree. Section
    8.12 of the Agreement gives FHM agency status to act for HAFC regarding issues
    of medical staff membership and clinical privileges. The Agreement, however,
    does not establish that FHM is an entity which can fairly be said to be a state actor.
    See American Mfrs. Mut. Ins. Co. v. Sullivan, 
    526 U.S. 40
    , ___, 
    119 S. Ct. 977
    , 985
    (1999). We concluded above that FHM’s denial of medical staff membership and
    clinical privileges to Patrick was solely FHM’s action and that this action could not
    be fairly attributed to HAFC.
          The fact that HAFC may be liable for the acts of FHM under an agency
    theory does not automatically transform FHM’s action into state action. As the
    Supreme Court has held, a local government entity may not be sued under § 1983
    for an injury inflicted solely by its agent. See Monell v. Department of Soc. Servs.,
    436 U.S. 658
    , 694, 
    98 S. Ct. 2018
    , 2037 (1978). In other words, a governmental
    entity, such as HAFC, cannot be held liable under § 1983 merely as a matter of
    respondeat superior. See Brown v. Neumann 
    188 F.3d 1289
    , 1290 (11th Cir. 1999)
    (citing Monell, 436 U.S. at 694, 98 S. Ct. at 2037-38). Rather, it is only “when
    execution of a government's policy or custom, whether made by its lawmakers or
    by those whose edicts or acts may fairly be said to represent official policy, inflicts
    the injury that the government as an entity is responsible under § 1983.” Monell,
    436 U.S. at 694, 98 S. Ct. at 2037-38. Patrick does not contend that FHM acted
    pursuant to an official policy or custom of HAFC. Nor does the record reveal any
    such policy or custom. Instead, the record shows that FHM acted pursuant to
    recommendations of its own agents, and that its agents may not, in all respects,
    have been acting pursuant to Floyd Medical Center’s written by-laws. The
    inevitable conclusion, therefore, is that Patrick has not established that the
    constitutional violations at issue involved state action for purposes of § 1983.
                                     III. CONCLUSION
          We affirm the district court’s grant of summary judgment on the ground that
    Patrick has failed to establish sufficient state action to support a § 1983 claim.