NJ Hospital Urges State Supreme Court to Overturn $26M Verdict

Valley Hospital recently argued before the New Jersey Supreme Court to overturn a $26 million verdict that a jury awarded the North Jersey Brain and Spine Center (NJBSC) and its 11 neurosurgeons following a four-week trial. According to the hospital, the neurosurgeon group failed to state a claim upon which relief could be granted, and the trial court should have dismissed the case before it ever went to trial before a jury. The case is Comprehensive Neurosurgical, P.C. v. The Valley Hospital, case number A-52-22, Supreme Court of the State of New Jersey.

NJBSC sued the hospital in 2016 after it terminated its longstanding relationship by contracting with a competing neurosurgery group to allow it exclusive emergency department coverage rights and use of certain hospital equipment. In its suit, NJBSC claimed that the hospital violated its bylaws regarding the reassignment of doctors in signing the agreement with the competitor by denying it a hearing. NJBSC contended that the hospital ended its 13-year relationship with the group by retaliating against it for affiliating with a rival hospital.

A jury found that the hospital breached no contract with NJBSC but violated the implied covenant of good faith and fair dealing. As a result, the jury awarded NJBSC $24 million in damages, over $662,000 in attorney’s fees, and over $1.3 million in interest on the judgment.

On appeal, the hospital argued that it breached its agreement with NJBSC only regarding emergency department coverage and the use of designated hospital equipment, not to frustrate the neurosurgery group’s ability to complete their part of the agreement. According to the hospital, a good faith and fair dealing breach of contract cause of action may not be solely based on breach of contract under New Jersey law.

The hospital also emphasized the deferential standard of review that courts have shown to hospitals making healthcare-related decisions. It characterized its decisions as routine, reasonable, and strategically designed to improve patient care.

In response, NJBSC characterized the hospital’s actions as purely retaliatory based on its lack of loyalty rather than any good faith effort to improve patient healthcare. It also pointed out that the hospital argued at the trial court level to include the good faith and fair dealing breach of contract claim to eliminate other claims. As a result, NJCBSC continued, the court should hold the hospital in the same position now.

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