Falcone v. Middlesex County Medical Society
62 N.J. Super. 184 (Law Div. 1960) (1961)
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Rule of Law:
When a private professional association holds a virtual monopoly over an economic necessity, such as hospital access for physicians, its power to exclude qualified applicants is not absolute. Courts may compel admission when the association's denial of membership is arbitrary, unreasonable, and contrary to public policy.
Facts:
- Dr. Falcone received a Doctor of Osteopathy (D.O.) degree from the Philadelphia College of Osteopathy in 1946.
- In 1950, after passing the state's medical examination, the New Jersey State Board of Medical Examiners granted Dr. Falcone a license to practice medicine and surgery.
- In 1951, Dr. Falcone graduated from the University of Milan, an American Medical Association (A.M.A.) approved medical college, with a Doctor of Medicine (M.D.) degree.
- After completing an A.M.A.-approved internship, Dr. Falcone was admitted as an associate member of the Middlesex County Medical Society in 1953.
- In 1956, the Society denied Dr. Falcone's application for active membership, applying an unwritten rule that required four years of study at an A.M.A.-approved medical college.
- Dr. Falcone practiced surgery and obstetrics, not osteopathy, and was regarded as qualified by his medical colleagues who were members of the Society.
- As a result of the Society's denial, Dr. Falcone was dropped from the medical staffs of local hospitals, which required Society membership, thereby preventing him from continuing his practice of surgery and obstetrics.
Procedural Posture:
- Dr. Falcone instituted a proceeding in the Law Division of the Superior Court of New Jersey against the Middlesex County Medical Society, seeking an order compelling his admission to membership.
- The Law Division entered judgment in favor of Dr. Falcone, directing the Society to admit him to full membership.
- The Middlesex County Medical Society, as appellant, appealed the judgment to the Appellate Division of the Superior Court.
- While the appeal was pending in the Appellate Division, the Supreme Court of New Jersey certified the case on its own motion for direct review.
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Issue:
Does a county medical society, which exercises a virtual monopoly over local hospital privileges, have the right to deny membership to a state-licensed physician based on an unwritten requirement that is arbitrary and contrary to public policy?
Opinions:
Majority - Jacobs, J.
No, a county medical society with such monopolistic power cannot deny membership based on an arbitrary rule that contravenes public policy. While courts are generally reluctant to interfere in the internal affairs of private associations, this deference does not apply to organizations that wield monopolistic control over an individual's ability to earn a livelihood. The Society's power over hospital access gives it a quasi-public character and imposes a fiduciary duty to exercise its power reasonably and in the public interest. Dr. Falcone is a state-licensed physician, holds an M.D. from an A.M.A.-accredited school, and is considered competent by his peers. The Society's unwritten 'four-year' rule, as applied to him, is patently arbitrary, has no relation to elevating professional standards, and runs counter to public policy by restricting a qualified physician's right to practice and limiting patients' choice of doctors.
Analysis:
This landmark decision establishes that judicial review extends to the membership practices of private professional organizations when those organizations function as 'gatekeepers' to a profession. It narrows the traditional distinction between private clubs and quasi-public entities, holding that when a private group's actions have significant public consequences and control economic opportunities, its decisions must be reasonable and not contrary to public policy. The ruling significantly curbed the power of professional societies to arbitrarily exclude qualified individuals, setting a precedent for challenging exclusionary practices in other fields where membership is a practical necessity for employment.
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