State action is an American legal concept that includes activities of the government and quasi-governmental entities. When there is state action, the affected parties enjoy protections provided by federal law and the U.S. Constitution, especially procedural protections of the Fourteenth Amendment that do not usually apply to purely private conduct. 42 U.S.C. § 1983, which establishes a remedy for violations of the Constitution, only applies to state action.
The boundaries of what constitutes state action when the actor is private but serving a public function are murky. In Brentwood Acad. v. Tenn. Secondary Sch. Ath. Ass'n, 531 U.S. 288, 295 (2001), the U.S. Supreme Court found the existence of state action because "there is such a 'close nexus between the State and the challenged action' that seemingly private behavior 'may be fairly treated as that of the State itself.'" Similarly, the Ohio Supreme Court found state action in State ex rel. Ohio AFL-CIO v. Ohio Bureau of Workers' Comp., 97 Ohio St. 3d 504, 507 (2002), "when the state provides significant encouragement for the activity" (citing Brentwood Acad., 531 U.S. at 296).
For most physicians the revocation of hospital privileges triggers the federally mandated, career-ending adverse report in the National Practitioner Data Bank. Courts have not yet recognized this as state action.
Arguably, "liability attaches to those wrongdoers who ‘carry a badge of authority of a [s]tate and represent it in some capacity.’” Untracht, 2006 U.S. Dist. LEXIS 61896, at *72 (A55-56) (quoting National Collegiate Athletic Ass’n v. Tarkanian, 488 U.S. 179, 191 (1988)). Arguably, the federally mandated National Practitioner Data Bank confers that “badge of authority” on the defendant hospitals to destroy a physician by branding him as substandard through the Data Bank. Put another way, the “symbiotic relationship” test for state action has been met when entities are given the special authority to ruin physicians through use of a federal database. In such a context the state has “insinuated itself into a position of interdependence” with private actors, so as to be considered a joint participant with them and thereby trigger state action. Burton v. Wilmington Parking Auth., 365 U.S. 715, 725 (1961). See also Brentwood Acad. v. Tenn. Secondary Sch. Ath. Ass’n, 531 U.S. 288, 295 (2001) (finding state action because “there is such a ‘close nexus between the State and the challenged action’ that seemingly private behavior ‘may be fairly treated as that of the State itself.’”).
Federal law mandates reporting of the summary suspension to the Data Bank for nationwide distribution. See 42 U.S.C. § 11133(a), 11134(b), 45 C.F.R. §§ 60.1, .2, .7-.9. This federally required reporting, along with the state regulatory scheme governing the hospital proceeding, is arguably sufficient nexus for state action. State ex rel. Ohio AFL-CIO v. Ohio Bureau of Workers’ Comp., 97 Ohio St. 3d 504, 507 (2002) (finding state action “when the state provides significant encouragement for the activity”) (citing Brentwood Acad., 531 U.S. at 296).
The Data Bank has an effect on reputation similar to that of a criminal indictment, which surely is state action. The Data Bank possesses this awesome power not due to freedom of speech or the press, but solely because the federal government established it and mandates its use. The Data Bank is equivalent to the grand jury, which is composed of private citizens, when it announces an indictment. The hospitals play the role of a prosecutor, who does not need be an actual employee of the state to be a state actor. As with HCQIA, state action exists because the defendant possessed power by law (HCQIA reporting) and this is made possible because the defendant is cloaked with the authority of state law (others, such as physicians and individuals, cannot report to the Data Bank). See Groman v. Twp. of Manalapan, 47 F.3d 628, 639 n. 17 (3d Cir. 1995).