                                                                                  F I L E D
                                                                          United States Court of Appeals
                                                                                  Tenth Circuit
                       UNITED STATES COURT OF APPEALS
                                                                                   FEB 12 2003
                                    TENTH CIRCUIT
                                                                              PATRICK FISHER
                                                                                       Clerk

 BRIAN E. CONNER, M.D.,

               Plaintiff - Appellant,

 v.                                                            No. 00-3348
                                                        D.C. No. 99-CV-2451-GTV
 SALINA REGIONAL HEALTH                                        (D. Kansas)
 CENTER, INC.,

               Defendant - Appellee.


                            ORDER AND JUDGMENT*
                     _______________________________________

Before SEYMOUR and PORFILIO, Circuit Judges, STAGG, District Judge.**
                     __________________________________________

       Brian E. Conner, M.D. (“Conner”) applied for reappointment to the medical staff

of Salina Regional Health Center (“SRHC”). The privately-owned hospital referred the

matter to its peer review panel, which recommended denial of the application. SRHC

affirmed the panel and this lawsuit followed. Finding that SRHC’s decision to deny

Conner’s application could not be fairly attributable to the state of Kansas, the district



       *
        This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.

        The Honorable Tom Stagg, United States District Judge for the Western District
       **

of Louisiana, sitting by designation.
court granted a Rule 12(b)(6) motion to dismiss. As a result, Conner’s federal and

supplemental state law claims were dismissed. Conner appeals these dismissals. For the

reasons set forth below, we AFFIRM the district court’s dismissal of Conner’s claims.

                                   I.   BACKGROUND

       SRHC is a privately-owned Kansas corporation. Prior to 1997, Conner served as

an opthamologist on SHRC’s medical staff. As required by SRHC by-laws, Conner

submitted an application for reappointment to SRHC’s medical staff. However, on

February 3, 1997, SRHC notified Conner that his application for reappointment to the

medical staff was denied.

       After exhausting all administrative remedies, Conner filed this action alleging

violations of his rights to due process and free speech under 42 U.S.C. § 1983.1 In his

complaint, Conner asserted that as health care providers are heavily regulated under

Kansas law, they can be liable under section 1983. See Kan. Admin. Reg. § 28-34-6a and

Kan. Stat. § 65-4921-4930. Conner further contended that section 65-4929(b)2 of the

       1
         In his complaint, Conner also asserted breach of contract and tortious interference
as theories for recovery. Below, the district court declined the opportunity to exercise
supplemental jurisdiction over these claims after dismissing all federal law claims. As we
are affirming the district court’s dismissal of all federal claims, it is unnecessary to revisit
the state law issues.
       2
        Section 65-4929(b) provides:

              Health care providers and review, executive or impaired
              provider committees performing their duties under K.S.A. 65-
              4922, K.S.A. 65-4923 and K.S.A. 65-4924 and peer review
              pursuant to K.S.A. 65-4915 and amendments thereto for the

                                              -2-
Kansas Statutes designates health care providers, such as SRHC, as “state officers” and as

such SRHC could be attacked under section 1983. Conner’s due process claim rested on

his assertion that he was deprived of protected property interests without due process of

law. According to Conner, this deprivation was specifically manifested in an October

1995 administrative suspension which prevented him from performing certain medical

procedures, and ultimately the denial of his application for reappointment to SRHC’s

medical staff. Conner’s freedom of speech claim was based on his argument that his

suspension and application denial were meted out in retaliation for complaints he had

made in relation to the quality of patient care at SRHC. In lieu of an answer, SRHC

moved to dismiss for failure to state a claim upon which relief can be granted. See

Fed.R.Civ.P. 12(b)(6). SRHC asserted that it was a privately-owned hospital corporation

and, therefore, could not act under color of state law.

       In a Memorandum and Order granting SRHC’s motion, the district court found

that the language of section 65-4929(b) was written to protect qualified health care

providers against antitrust liability and noted that there were different analyses to

determine the existence of the state action immunity doctrine for protection from antitrust




              purposes expressed in subsection (a) and 65-4915 and
              amendments thereto shall be considered to be state officers
              engaged in a discretionary function and all immunity of the
              state shall be extended to such health care providers and
              committees, including that from the federal and state antitrust
              laws.

                                             -3-
liability as compared with the analysis to establish state action for purposes of section

1983. As a result, the court found that section 65-4929(b) did not “in and of itself

establish that such health care providers act under color of law for purposes of section

1983.” The court explained that “the issue is whether a private health care provider’s

actions are fairly attributable to the State” and that under traditional section 1983

analyses, SRHC’s “decision in denying reappointment of plaintiff to its medical staff was

not an action fairly attributable to the State.” On appeal, Conner contends that the district

court misinterpreted section 65-4929(b) and erred in determining that under no set of

facts could he prove that SRHC’s denial of his application constituted state action.

                                    II.   DISCUSSION

       We review the granting of a Rule 12(b)(6) motion to dismiss de novo, applying the

same standard as the district court. See Ramirez v. Dept. of Corrections, State of

Colorado, 222 F.3d 1238, 1240 (10th Cir. 2000). The purpose of a motion to dismiss is to

test the sufficiency of the complaint, and the court must “accept all allegations of the

complaint as true and must construe them in the light most favorable to the plaintiff.”

Coosewoon v. Meridian Oil Co., 25 F.3d 920, 924 (10th Cir. 1994). The court accepts as

true all well-pleaded facts, as distinguished from conclusory allegations,3 and reads all

reasonable inferences in favor of the plaintiff. See Witt v. Roadway Express, 136 F.3d

1424, 1428 (10th Cir. 1998). We will uphold dismissal “only when it appears that the


       3
        See Maher v. Durango Metals, Inc., 144 F.3d 1302, 1304 (10th Cir. 1998).

                                              -4-
plaintiff can prove no set of facts in support of the claims that would entitle him to relief.”

Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99 (1957).

       In order to state a claim under section 1983, two allegations are required. First,

Conner must “allege that some person has deprived him of a federal right. Second, he

must allege that the person who has deprived him of that right acted under color of state

or territorial law.” Gomez v. Toledo, 446 U.S. 635, 640, 100 S. Ct. 1920, 1923 (1980)

(internal citation omitted). As Conner has raised due process and free speech claims in

his complaint, he has unquestionably alleged deprivation of his federal rights. The

primary issue, therefore, is whether these alleged deprivations were accomplished under

color of state law.

       In determining if SRHC acted under color of state law, the ultimate issue is

whether its actions were “fairly attributable” to the state. Lugar v. Edmondson Oil Co.,

457 U.S. 922, 937, 102 S. Ct. 2744, 2753 (1982). In Lugar, the Supreme Court adopted a

two-part approach to determine the question of fair attribution. First, the deprivation of

the right must be 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.” Id. Second, the depriving party must “fairly be said to be a state actor.” Id.

A party can be “fairly said to be a state actor” if he is a state official, if “he has acted

together with or has obtained significant aid from state officials,” or if “his conduct is

otherwise chargeable to the State.” Id.


                                               -5-
       Conner’s appeal primarily flows from his interpretation of section 65-4929 of the

Kansas Statutes. Section 65-4929 is a part of the Kansas Risk Management Act

(“KRMA”) which was enacted as a part of comprehensive medical malpractice legislation

in 1986. See Anglemyer v. Hamilton County Hospital, 58 F.3d 533, 540 (10th Cir. 1995).

In an effort to “protect the public’s general health,” the KRMA requires

“[i]mplementation of risk management plans and reporting systems . . . and peer review.”

Kan. Stat. § 65-4929(a). Under section 65-4929(b), health care providers required to

perform these duties are considered “state officials engaged in a discretionary function

and all immunity of the state shall be extended to such health care providers . . . ,

including that from the federal and state antitrust laws.” Conner argues that such

language transforms SRHC, a private hospital, into a state actor.

       A federal court should apply the rules of statutory interpretation and construction

applied by the highest court of that state. Citizens for Responsible Gov’t State Political

Action Comm. v. Davidson, 236 F.3d 1174, 1191 (10th Cir. 2000); Comm’r v. Estate of

Bosch, 387 U.S. 456, 465, 87 S. Ct. 1776, 1782 (1967) (“[The District Court] may be said

to be, in effect, sitting as a state court”). The Supreme Court of Kansas has held that “[i]n

interpreting a statute, we must give effect to its plain and unambiguous language, without

determining what, in our view, the law should be.” George v. Capital South Mortgage

Invs., Inc., 961 P.2d 32, 43 (Kan. 1998). However, courts are not permitted to consider

isolated parts of an act but must construe all parts together because literal interpretation of


                                              -6-
one section, alone, could conceivably contravene the purpose of the legislation. See

Kansas Comm’n. on Civil Rights v. R.G. Howard, 544 P.2d 791, 794 (Kan. 1975).

       When read in its entirety, section 65-4929, by itself, cannot be read to subject

health care providers to section 1983 liability. Although Conner correctly points out that

health care providers that perform the duties set out under the KRMA are considered state

officials, no mention is made of the potential for section 1983 liability. Rather,

immediately following this language, section 65-4929(b) clearly and unambiguously

provides that “all immunity of the state shall be extended to such health care

providers . . . , including that from the federal and state antitrust laws.”

       While such language explicitly manifests the Kansas legislature’s intention to

shield health care providers from antitrust liability, it is not necessarily instructive of a

desire within the legislature to create new liabilities. In fact, the Supreme Court has

stated, “[a]lthough by no means identical, analysis of the existence of state action

justifying immunity from antitrust liability is somewhat similar to the state action inquiry

conducted pursuant to § 1983 and the Fourteenth Amendment.” Nat’l Collegiate Athletic

Ass’n v. Tarkanian, 488 U.S. 179, 195 n. 14, 109 S. Ct. 454 n. 14 (1988). We have also

recognized that there is a distinction between the state action immunity doctrine for

purposes of federal antitrust laws and the requirement that a private party act “under

color” of law for purposes of section 1983 claims. See Tarabishi v. McAlester Reg’l

Hosp., 951 F.2d 1558, 1565 n. 6 (10th Cir. 1991) (holding that the determination that a


                                               -7-
public hospital was liable under section 1983 was not dispositive of the issue of whether

the hospital was entitled to antitrust immunity) (comparing Ezpeleta v. Sisters of Mercy

Health Corp., 800 F.2d 119, 122 (7thCir. 1986), implicitly overruled on other grounds by

Patrick v. Burget, 486 U.S. 94, 99-101, 108 S. Ct. 1658 (1988)). In order to establish

state action immunity, the challenged restraint must be clearly articulated as state policy

and the policy must be actively supervised by the state itself. See Patrick, 486 U.S. at

100, 108 S. Ct. at 1663. By contrast, the test for state action under section 1983 requires

that the infringement of federal rights be fairly attributable to the state. See Lugar, 457

U.S. at 937, 102 S. Ct. at 2753. As such, the language of section 65-4929(b) is not

indicative of the statute’s ability to attach section 1983 liability to health care providers.

       To the contrary, section 65-4929(c) provides that “[n]othing in this section shall be

construed to require health care providers or review, executive or impaired provider

committees to be subject to or comply with any other law relating to or regulating state

agencies, officers or employees.” Such language suggests that the legislature did not

intend to subject health care providers to the same responsibilities and liabilities of state

officials. Accordingly, measuring section 65-4929(b)’s silence in relation to state action

liability against the statute’s stated intent to establish state action immunity while

establishing no further duties, we find that mere application of the term “state official” to

health care providers that undertake risk management and peer review is not

determinative of a section 1983 claim.


                                              -8-
       Conner also argues that the regulatory scheme implemented by the KRMA

mandated the risk management and peer review process utilized by SRHC in denying

Conner’s reapplication. Specifically, Conner contends that through the KRMA, the state

influences and in fact delegates the duties of risk management and peer review to health

care providers.

       The Supreme Court has noted that “[w]hat is fairly attributable is a matter of

normative judgment, and the criteria lack rigid simplicity.” Brentwood Acad. v.

Tennessee Secondary Sch. Athletic Ass’n, 531 U.S. 288, 295, 121 S.Ct. 924, 930 (2001).

As a result, we have recognized that we must take a fairly flexible approach in

determining if state action exists. See Gallagher v. Neil Young Freedom Concert., 49

F.3d 1442, 1447 (10th Cir. 1995). In fact, the Supreme Court has developed, and we have

utilized, a variety of approaches to assist in determining if state action exists. See id.

(discussing the close nexus, symbiotic relationship, joint action, and public function

tests). While these tests illustrate that fair attribution can be present absent direct

government involvement, the hallmark remains fair attribution. Accordingly, every

successful section 1983 claim against a nominally private entity must allege state

involvement so pervasive that the challenged action can be said to be fairly attributable to

the state, whether that involvement is effectuated through state coercion, state influence,

state reliance, or delegation of state power. See Blum v. Yaretsky, 457 U.S. 991, 1004,

102 S.Ct. 2777, 2786 (1982).


                                              -9-
       Such involvement is not present by virtue of the state regulatory scheme in

question. While the KRMA sets out fairly extensive regulations in relation to risk

management programs and reporting requirements, it does not develop a system for health

care providers to implement with respect to their peer review functions. Specifically,

Section 65-4922 of the KRMA provides guidelines that medical care facilities must

establish risk management programs and submit to the department of health and

environment their risk management plan for approval. Section 65-4923 of the KRMA

establishes requirements for reporting acts by health care providers that fall below the

applicable standard of care or may be grounds for disciplinary action. However, at no

point does the KRMA mandate or even suggest peer review procedures for medical care

facilities to implement. Rather, section 65-4929(a) merely states “peer review pursuant to

K.S.A. 65-4915 and amendments thereto effectuate this policy [for providing and

regulating certain aspects of health care delivery in order to protect the public’s general

health].” Section 65-4915 provides, inter alia, “‘[p]eer review’ means any of the

following functions: . . . (D) evaluate the qualifications, competence and performance of

the providers of health care or to act upon matters relating to the discipline of any

individual provider of health care . . . .” Although this language illustrates that peer

review is important to the underlying policy of the KRMA, nowhere does the Act indicate

state involvement in the process used by health care providers.

       Kansas Administrative Regulations section 28-34-6a also includes provisions


                                             -10-
relating to medical staff admission. Section 28-34-6a provides in pertinent part:

       Each hospital shall maintain an organized medical staff. Admission to the
       staff and clinical privileges associated with membership shall be granted by
       the governing authority through a mechanism which evaluates each
       member’s qualifications to engage in that member’s area of clinical
       practice.

In relation to the necessary qualifications for admission to the staff, section 28-34-6a

provides various factors including “certification, fellowship, membership on a specialty

board or society, or the completion of a general practice residency.” However, the section

clearly provides that membership decisions cannot be made solely on one of these factors.

Such provisions are hardly coercive.

       Even if these provisions were not so limited, we have previously recognized that

“government funding and regulation of an ostensibly private organization, in the absence

of other factors, is insufficient to establish government action.” Gilmore v. Salt Lake

Cmty. Action Program, 710 F.2d 632, 635 (10th Cir. 1983). In fact, under circumstances

similar to the case at bar where a private entity has been pervasively regulated by the

state, state action will not be found “absent evidence of state influence, involvement, or

control over the personnel decisions which are subject to challenge.” McDonald v.

Eastern Wyoming Mental Health Center, 941 F.2d 1115, 1118 (10th Cir. 1991).

Therefore, it is clear that these regulations alone do not suffice to support a finding of

state action.

       Ultimately, we agree with the district court’s determination that Conner’s action


                                             -11-
should not survive a Rule 12(b)(6) motion for dismissal because the power to revoke staff

privileges and make other personnel decisions have not traditionally been held by the

state. In this context, we find the Fifth Circuit’s holding in Wong v. Stripling, 881 F.2d

200 (5th Cir. 1989), persuasive. In Wong, the plaintiff, a member of the medical staff of

the defendant private hospital, had his medical privileges revoked. On appeal, the doctor

argued that his dismissal constituted state action due to comprehensive regulation of

revocation, restriction, or suspension of staff privileges in Mississippi hospitals. The

Fifth Circuit disagreed and held that “private hospitals had at common law a right to

revoke the staff privileges of physicians for good cause.” Id. at 202. The Fifth Circuit

further concluded that the legislation in question “simply authorizes action which is

already legal, and requires only that the hospital comply with its own bylaws in making

staffing decisions.” Id.

       Similar to the defendant hospital in Wong, SRHC’s power to deny reappointment

of staff privileges existed before the Kansas regulatory scheme was promulgated.

Additionally, neither section 65-4929 nor section 28-34-6a impose upon medical facilities

any further requirements than those contained within their own bylaws. In fact, as noted

above, section 28-34-6a specifically provides:

       After considering medical staff recommendations, the governing body shall
       affirm, deny or modify each recommendation for appointment to the
       medical staff and the granting of clinical privileges to any practitioner.
       Formal application for membership and for granting of clinical privileges
       shall follow established procedures set forth in the bylaws, rules and
       regulations of the medical staff.

                                            -12-
Therefore, the power to affirm, deny or modify an appointment or reappointment lies

squarely on the governing body of the medical facility. Consequently, the denial of

Conner’s application for reappointment cannot be fairly attributable to the state.

AFFIRMED.

                                          Entered for the Court


                                          Tom Stagg
                                          District Judge




                                            -13-
