Commercial Litigation Update

The Supreme Court of New Jersey recently issued its decision in Comprehensive Neurosurgical, P.C. v. Valley Hospital, vacating a $24.3 million award to a neurosurgery practice. The Court’s opinion offers valuable insight regarding the scope of implied contractual obligations under New Jersey law, particularly in the hospital industry.

The underlying dispute involved Valley Hospital’s grant of exclusive privileges to a new group of neurosurgeons, which effectively revoked the longstanding privileges held by plaintiffs. These privileges included the right to use specialized medical equipment and treat “unassigned” emergency room patients, an essential part of plaintiffs’ practice. The plaintiffs alleged that Valley’s actions were retaliatory, prompted by plaintiffs’ association with a newly opened nearby hospital. As a result, plaintiffs filed suit against Valley, claiming the hospital’s decision violated public policy and the hospital’s medical staff bylaws. Valley argued that it made a valid administrative healthcare decision because plaintiffs were diverting patients to the newly opened hospital.