Surgeon whistleblower awarded $4.7 million

Cedars-Sinai Medical Center in Los Angeles will have to pay almost $4.7 million to a surgeon who claims the hospital retaliated against him for blowing the whistle on unsafe practices in his department, unless the hospital manages to have the award overturned.

The hospital already has spent as much as $1 million to appeal the arbitration decision, according to the informed estimate of the plaintiff's attorney.

In a 2009 arbitration, the hospital agreed to pay Hrayr K. Shahinian, MD, $4.7 million for economic, emotional, and punitive damages, but then it asked a California appeals court to reverse that decision. The court recently denied Cedars-Sinai's request to strike down the arbitrated award.

Cedars-Sinai provided a statement to the publisher of Same-Day Surgery that says the hospital is considering a further appeal of the decision and claims that the surgeon's competence was an issue that was not adequately considered in the arbitration. "As a general rule, Cedars-Sinai does not believe it is appropriate to comment on matters pending in the judicial process. We are doing so now only to set the record straight in light of Dr. Shahinian's incomplete and inaccurate statements in his recent news release," the statement says. "Although this matter remains pending in the appellate system, Dr. Shahinian has made certain claims about the outcome of the process so far that are incorrect as to what both the arbitrator and Court of Appeal actually decided. He has also presented an incomplete and inaccurate picture, ignoring that the arbitrator rejected some of the very claims for which he says he was vindicated." (See the story below for more of the response from Cedars-Sinai.)

The crux of the case was that the hospital did not follow its own bylaws when restricting the surgeon's privileges, says the plaintiff's attorney, Robert C. Baker, JD, a partner with the law firm of Baker, Keener & Nahra in Los Angeles. That action ultimately led the arbitrator to side with Shahinian, he says. (For details on the dispute, see the story, below.)

Shahinian contends that the hospital punished him for complaining about patient safety and other concerns in the department. "Two witnesses testified that they targeted him because he complained," Baker says. Baker says he expects the hospital to appeal once more, this time to the California Supreme Court. The hospital's continued fighting almost defies logic, he says. Testimony from the Cedars-Sinai chief financial officer revealed that the hospital has $800 million in cash or cash equivalents, Baker says, an astounding sum which he says might explain why it is willing to continue fighting even after the arbitration.

"My educated guess is that since November 2009 they've spent probably at least a half million and maybe a million dollars on their appellate lawyers, and they've run up interest in the neighborhood of $600,000. That's on top of the $4.7 million the arbitrator told them to pay," Baker says. "They've got enough of a bankroll to continue pursuing this beyond anything that is remotely close to what everyone else would consider reasonable. They don't like this guy, and they're willing to spend a huge sum of money to get him."


Robert C. Baker, JD, Partner, Baker, Keener & Nahra, Los Angeles. Telephone: (213) 241-0900.

Hospital dispute led to restriction of duties

Court records indicate that Cedars-Sinai recruited Hrayr K. Shahinian, MD, to establish and direct its skull-base surgery program in 1996. The doctor's experience at the hospital was rocky from the start, says his attorney Robert C. Baker, JD, a partner with the law firm of Baker, Keener & Nahra in Los Angeles.

The hospital's neurosurgeons doubted his qualifications for the task, and even the chairman who had recruited him said that he had alienated hospital management, Baker says. Shahinian stated in August 2002 that the hospital's lack of support for the program compromised patient care, and a month later he was notified that his position as a faculty physician and the program's director would end in one year.

Before that year was up, Shahinian registered complaints over the unavailability, malfunctioning, and inadequate reprocessing of surgical instruments, Baker says. Court records report that a hospital investigation bore out Shahinian's protests and revealed that certain instruments, which had been routinely flash sterilized, were contaminated with bioburden.

After his termination, Shahinian sued Cedars-Sinai for tortious discharge in violation of public policy, a suit that was settled in June 2005, Baker says. Under the settlement, the hospital agreed to extend Shahinian operating privileges in a non-retaliatory manner and to properly maintain its supply of surgical instruments, Baker says. The disputes continued, however. There was disagreement over who was responsible for maintaining the surgeon's custom instruments, and the hospital issued a 90-day moratorium on Shahinian performing any surgeries at the center while it investigated the surgeon's safety concerns. The parties then argued about the conditions Shahinian would have to meet 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.

Shahinian sued the hospital again in December 2006 and argued 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 Shahinian's surgeries was unlawfully retaliatory, Baker says.

The arbitrator pointed to the fact that no other surgeon was barred from operating or burdened with conditions because of concerns over the safety of the hospital's practices, and the arbitrator noted that the moratorium was enacted without a peer review or hearing process. Shahinian was awarded $508,124 in economic damages for breach of contract and interference with his practice, $1.6 million in emotional distress damages, and $2.6 million in punitive damages, Baker says. Shahinian agreed to give up his staff privileges at Cedars-Sinai.

After agreeing to the arbitrated award, the hospital took it to court and argued that it exceeded the arbitrator's powers and violated public policy. The trial court rejected this claim, and the appeals court recently upheld that ruling.

"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."

Hospital: Competence of surgeon was issue

In challenging the arbitration award of $4.7 million to a surgeon whose privileges were restricted, Cedars-Sinai Medical Center in Los Angeles alleges that the doctor's competence was in doubt.

"The arbitrator found that Dr. Shahinian's competence was at issue," says a statement the hospital provided to the publisher of Same-Day Surgery after a court of appeals found in favor of the surgeon. "However, she refused to decide one way or the other whether the concerns that Cedars-Sinai harbored about Dr. Shahinian's competence were justified. Thus, she did not vindicate Dr. Shahinian on the question of competence — she did not decide the issue. But she did bar Dr. Shahinian from reapplying to Cedars-Sinai's medical staff until 2016."

The arbitrator found that parts of Shahinian's testimony lacked credibility, the hospital notes. "Her finding of lack of credibility is consistent with another recent judicial finding. Last year, in a case having nothing whatever to do with Cedars-Sinai (Dr. Shahinian had already left the Center and was practicing elsewhere), a Los Angeles Superior Court judge found against Dr. Shahinian for both professional negligence and fraud," the statement says. "It awarded over $950,000 against him, including $300,000 in punitive damages. Among other things, the judge found that Dr. Shahinian was negligent in performing a surgery; that he had falsely represented to his patient that the surgery had a 98% rate of success; that, in a 'failed attempt at subterfuge' Dr. Shahinian caused an altered pathology report to be sent to the plaintiffs in willful and conscious disregard for plaintiff's health and safety; and that he engaged in 'trickery' and 'was more interested in marketing than medicine as it relates to these plaintiffs.'"

The hospital also notes that "The arbitrator rejected Dr. Shahinian's allegations that Cedars-Sinai 'failed to adequately clean or sterilize instruments' and that Cedars-Sinai failed to supply non-custom instruments. The arbitrator found that Dr. Shahinian failed to live up to his obligation to provide sufficient custom instruments."