I can almost see both sides of this. Knee surgery ought to have a nearly zero chance that blood will be needed, so it seems like the doctor was probably overreacting somewhat. Unless there was something unusual in play here, putting the patient under anesthesia presents a greater risk of death than does the refusal of blood. I had 3 knee surgeries of varying levels of invasiveness as a jw and both doctors acted like it was weird that we were even bringing it up because the likelihood that blood would be needed was so low.
That said, if a doctor isn't comfortable with the parameters of a surgery, do you really want him operating on you anyway? Even if their discomfort isn't reasonable, I wouldn't want them to just ignore it and go on. Lots of people have knee injuries so it's not that hard to find a knee specialist and I'm sure the surgeon here would've been all too happy to provide a referral. Sometimes things don't go exactly how you want, it's not the end of the world. Why people can't just move on and instead feel the need to sue in cases like this just baffles me.
Hopefully this gets thrown out. Doctors ought to have their ability to follow the Hippocratic oath protected.
Edit: that's what I get for posting before reading the article fully... Apparently there were complications so the JW is clearly 100% stupid.