DEALING WITH THE DISRUPTIVE PRACTITIONER

It is entirely appropriate for hospitals and medical staff executive committees to give less weight to disruptive incidents in the past when the offending practitioner’s performance has improved and a substantial period of time has passed. Nevertheless, removing memoranda documenting these past incidents entirely from the practitioners file is not a good idea, since most disciplinary policies are progressive.

A progressive policy applies increasingly more severe sanctions to additional incidents of bad behavior.  Without documentation of past performance, when future incidents occur, it is difficult to justify more severe sanctions. While there is a tendency to reduce the importance of minor incidents, the totality of the circumstances, including past performance and actions taken, should be considered.

It is very important that the organized medical staff have a disruptive practitioner policy.  The first step is to include a statement in the medical staff bylaws to the effect that each member of the staff is expected to comply with all of the hospital and medical staff rules, regulations, policies and procedures relating to behavior and performance.  Failure to do so will subject the member to sanction under the corrective action procedure delineated in the bylaws and/or fair hearing plan.

It is also important to understand what constitutes disruptive behavior.  Disruptive behavior includes violent or verbally abusive activity, but it is not limited to such behavior. Some examples of disruptive behavior from actual cases:

  • In a 2009 Ohio case involving Fairfield Medical Center, the hospital’s CEO delineated the disruptive activity as:

Disruption of the normal function of the department as evidenced by:

1)                  complaints from staff of harassment;

2)                  numerous unscheduled prolonged meetings of the radiology group during normal business hours and after hours to address your behavior and issues raised by you;

3)                  conflict with department management and failure to take issues regarding staff through proper channels as requested;

4)                  continued imposition of personal issues upon department staff during business hours;

5)                   ongoing concern regarding your perceived threatening demeanor and cryptic remarks which raise concerns about staff safety;

6)    failure to alter behavior in spite of requests to do so both by Hospital Administration and the radiology group;

7)    a direct threat made by you to one of the other radiologists.[1]

  • In a case involving St. Joseph Health Center[2], the court described the disruptive behavior as:

. . . posting the “Kama Sutra Indian Sex Guide” on a hospital bulletin board, posting an article titled “Police say man kills wife at work” in the labor and delivery unit, with appellant’s hand-written comments stating, “This happens when wives talk too much. They never learn, they never stop. Why?” Appellant posted this article shortly after a heated argument with a nurse, and it was viewed as a threat. While on vacation, appellant sent a postcard containing pictures of naked men’s buttocks to the nurses’ station with his name or the name of an actor written on each man’s buttocks. Appellant also sent other inappropriate postcards to hospital staff. Appellant posted an article titled, “Cohabitation, Contraception, and Sperm Exposure” on a bulletin board with a bulleted item referring to oral sex. A nurse also completed an incident report wherein she described appellant discussing with her why men enjoy performing oral sex on women and the taste of female ejaculation.

  • In a case involving Southern Ohio Medical Center, the practitioner was terminated because she made death threats against others, telling another resident, “if I had a gun I’d kill them both,” referring to another physician and a staff employee.[3]
  • In a case involving Trumbull Memorial Hospital, the court described the disruptive behavior as:

Appellant has been reprimanded for leaving self-promotional materials in the hospital’s cafeteria, for his verbal and written attacks on colleagues and the hospital, and for inappropriate sexual comments toward nurses.

Matters came to a head over three issues: (1) the hospital’s lack of a twenty-four hour pediatric house officer to aid in the resuscitation of distressed newborns; (2) appellant’s belief that certain pediatricians were not responding immediately to calls to assist distressed newborns; and (3) his department chief,  . . . refusal to serve a rotation on the house emergency obstetrics schedule.

Because of his concerns, appellant wrote numerous letters in an effort to resolve these issues to his satisfaction. Many of these letters were pointedly critical of his colleagues. Appellant engaged in numerous verbal altercations with staff members, . . .[4]

(This appears to be the same physician as the one involved in the St. Joseph Hospital proceeding.)

  • In a case involving St. Vincent Charity Hospital, the disruptive activity involved statements before a public hearing:

[The practitioner] attended a public hearing on Charity Hospital’s request for an Urban Development Action Grant. Dr. Siegel identified himself as being the President of 2475, the Director of the Eye Department, and the Director of the Lions Eye Clinic. He made various statements at the hearing, indicating that the Hospital’s expansion plan was the “laughing stock” of other community hospitals and that the plan was “a ruse” to acquire the land.[5]

So we see that disruptive activity takes many forms. Understanding that, when it happens, what steps should the hospital and/or the medical staff take to see that it does not affect patient care or disrupt operations.

After having the bylaws clearly state that such activity will not be tolerated, the next step is to have a medical staff policy regarding disruptive behavior that includes progressive discipline and/or sanctions that may be imposed before taking formal action under the corrective action directives.  Such a policy should include:

  • Where a practitioner is not meeting the medical staff’s standards of behavior and/or performance, the staff member responsible for the staff section to which the practitioner is assigned (usually the department chairman) should take the following action:

o   meet with the offending practitioner to discuss the matter (it is usually a good idea to have another staff member in attendance who can testify to what occurred if necessary);

o   inform the practitioner of the nature of the problem and the action required to correct it; and

o   prepare a memorandum for the practitioner’s file detailing the problem, the meeting and the required action.

  • When there is a second incident, the supervising staff member should again meet with the offending practitioner and take the following action:

o    issue a written reprimand to the practitioner;

o   inform the practitioner in writing that if there is a future incident, the matter will be referred to the medical executive committee for appropriate sanction under the corrective action procedures; and

o   prepare a memorandum for the practitioner’s file detailing the problem, the meeting and the action taken. A copy of the reprimand and the notice to the practitioner should be included as attachments to this memorandum.

  • If there is a third incident, the supervising member should refer the matter, along with the practitioner’s file, to the medical executive committee with a recommendation that formal action be taken in accordance with the corrective action procedures.
  • Sometimes the medical executive committee can address this issue without taking a formal adverse action.  There are several good programs available dealing with correcting disruptive behavior.  The medical executive may want to consider requiring the offending practitioner to attend one of these programs.
  • Where there is serious misconduct, the matter should be referred to the medical executive committee for corrective action immediately, disregarding the series of steps outlined above.

Many times as a hearing officer, I find that the medical staff management simply condones the problem until it gets to a point where it can no longer be ignored.  In these cases, even where there are meetings with the practitioner, they are poorly documented, or there is no documentation.  Therefore, when the medical executive committee attempts to impose corrective action, there is little documented evidence of the prior offending behavior and/or of the action taken.  It then appears that the staff is, to use a metaphor, trying to kill a fly with a sledge-hammer.

However, if the steps outlined above are taken, there is ample evidence that this is a continuing problem, and the staff has made every effort to correct it without resorting to an adverse action.  This procedure also provides documentation that the medical executive committee took the adverse action based on a substantial factual basis and that its action was not arbitrary, unreasonable or capricious.

[1] Cramer v. Fairfield Med. Center., 182 Ohio App. 3d 653, 914 N.E.2d 447, 452 (2009).

[2] Catipay v. Humility of Mary Health Partners, 2006-Ohio-1700, No. 2005-T-0030 (OHCA11).

[3] Baird v. Southern Ohio Med. Ctr., 2004-Ohio-5888, 04CA2939, 04-LW-4928 (4th) (OHCA4).

[4] Catipay v. Trumbull Memorial Hospital, 2004-Ohio-5108, 2003T0136, 04-LW-4449 (11th) (OHCA11).

[5] Siegel v. St. Vincent Charity Hosp. & Health Center, 35 Ohio App.3d 143, 520 N.E.2d 249 (Ohio App. 8 Dist. 1987).

 

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I Think I Have Evidence of Fraud: Can I be a Whistleblower?

The Federal False Claims Act (“FCA”) is a federal statute that prohibits, among other things, anyone from presenting a false or fraudulent claim for payment to the Federal Government, or causing the use of a false record to get a claim paid by the Federal Government.  In the health care context, this would include billing for work not performed, upcoding, billing for unnecessary services, and even billing for services that were obtained in violation of other regulations (such as the anti-kickback statute).

False claims act recoveries have exceed $35 billion since 1986 when the law was amended to make it more Relator friendly. This includes more than $3.8 billion in 2013 plus $443 million for state governments; $4.9 billion was recovered in FY 2012.

The FCA provides a financial incentive for people with knowledge of false claims against the Federal Government to come forward.  It does so by awarding a successful relator (the plaintiff in a FCA case) with between 15-30% of any recovery from a defendant. Since 1986, whistleblowers have been awarded nearly $4 billion, with $439 million in awards in fiscal year 2012 and $385 million in 2013 .

How does the FCA work? The relator files a FCA suit (also called a “qui tam” suit) on behalf of the United States.  It is filed under seal (not a public document), along with a disclosure statement providing evidence to the government.

While under seal, the government investigates the allegations, and decides whether to intervene.  During this period, the defendant may not even be aware the case. If the government intervenes, the government is the primary prosecutor (although the relator still has input), and the relator receives 15-25% of any recovery.  If the government does not intervene, the relator can still go forward with the suit and, if successful, receives 25-30% of any recovery.

To prove an FCA violation, the relator must show that the defendant was responsible for a false claim to the Federal Government.  The relator initially presents this evidence in a “disclosure statement,” submitted to the Government when the complaint is filed.  This disclosure statement sets forth all of the evidence the relator possesses regarding the false claim, and generally points the Government to additional persons or documents that would substantiate the allegations.

The evidence provided needs to be as detailed as possible.  It is not sufficient to base a complaint on rumors of wrongdoing; there should be specific allegations showing the time, date, place and content of any false claim.  It is also helpful to have documentation supporting the allegations.

It is all about the evidence – you need hard evidence that has not been previously disclosed.  In United States ex rel. Rector v. Bon Secours Richmond Health Corp., the court found that Relator didn’t sufficiently allege that Bon Secours actually submitted false claims to the government. Had the Relator produced “a single actual bill or claim or payment, amounts of any charges, actual dates of claims, policies about billing, or even second-hand information about billing practices,“ he would have met the pleading requirements.  In essence, the Relator’s allegations failed because he did not show “that the defendants actually submitted reimbursable claims for service.”

The false claim must be shown by the civil standard – preponderance of the evidence (more likely than not); it does not have to be shown by the criminal standard – beyond a reasonable doubt.  The relator does not have to show specific intent to defraud.  The statute defines “knowingly” to include acting with “deliberate ignorance” or “reckless disregard” of the truth or falsity of the information.

The 1986 amendments to the FCA clarified and relaxed these burdens of proof, in part to prevent the ostrich or “head in the sand” defense.  For example, a physician signing off on a HCFA 1500 form would find it difficult to defend an FCA violation by claiming that he knew nothing of the billing practice and left it all to his staff.

Anyone with knowledge of the illegal conduct can bring an FCA suit.  This is often a current or former employee of a defendant.  However, if the relator “planned and initiated” the false claims violation, the award to the relator may be reduced; if the relator is criminally convicted for his or her role, they must be dismissed from the suit.

However, there are limits on bringing an FCA suit; you must bring the case six years from the date of the false claim, or within three years after the Government knows or should have known of the false claim, but in no event later than ten years after the false claim. In addition, If the allegations in the FCA suit were already “publicly disclosed,” the relator has to be the “original source” of the allegations who brought the information to the Government before filing an action.  One cannot bring an FCA suit where the allegations are already the subject of a civil suit or administrative civil monetary penalty proceeding where the Government is a party.

Filing a suit is not without risk, however.  Once the Government decides whether to intervene, the case is unsealed. At that point, service of the complaint is made on the defendant and the defendant knows the identity of the relator.  This may lead to retaliation by a defendant.  However, a section of the FCA provides strong protections for whistleblowers; whether or not the relator proves the underlying FCA violation, this provision provides significant protection to the relator.  In addition, if the defendant prevails in the suit, and the court finds the suit was clearly frivolous, vexatious or brought for harassment, then the court may find the relator liable for the defendant’s expenses and fees.

As stated above, violation of the Anti-Kickback Statute or Stark can be the basis of a FCA suit. In United States ex rel. McNutt v. Haleyville Medical Supplies, Inc., the court stated that ”“. . . compliance with the [Anti-Kickback] Statute is necessary  for reimbursement under the Medicare program; and the  [Defendants]  submitted claims for  reimbursement knowing that they were  ineligible for the payments demanded in  those claims.” But see, United States ex rel. Rector v. Bon Secours Richmond Health Corp., (Apr. 14, 2014), where the court found that even if the Relator had shown that Bon Secours submitted a false claim while violating the Anti-Kickback and Stark Laws, he did not meet the FCA’s materiality requirement. Relator had relied on Bon Secours’ Medicare enrollment form (CMS-855) to show that the hospital certified its compliance with applicable federal laws. The court said reliance on an enrollment form was insufficient because it is only a “promise concerning eligibility for enrollment” rather than a promise regarding accurate billing.

The typical FCA case proceeds as follows: The whistleblower gathers evidence, organizes it, analyzes, and summarizes the case. Once the evidence is gathered, the whistleblower should find an attorney with False Claims Act experience. The attorney will then draft a complaint and put together a disclosure document detailing all the evidence. This disclosure document is filed with the Department of Justice and the same time the complaint is filed under seal.

Technically, the Justice Department is theoretically required to conduct its investigation within 60 days, during which time the case is “under seal.”  Routinely, at the end of this initial 60-day period, the government asks for a six-month extension of the seal in order to continue the investigation. The government’s decision to intervene or to decline intervention in the suit may be made at the end of the first 60-day period, or at the end of this first six-month extension period, or the seal may be renewed several times. On average, these cases take 38 months to resolve, however, some take a decade or longer.  Sometimes, the government may ask to have the seal partially lifted, in order to negotiate a settlement.

It is not unusual for a case to remain under seal for two years or longer, during which time agents from the FBI, or any of a number of other federal agencies may execute subpoenas, issue search warrants, interview witnesses, and review documents in order get a better understanding of the whistleblower’s fraud allegations. During this investigation period, the whistleblower is usually asked penetrating questions. If the government declines to intervene, the whistleblower can pursue the case on his/her own, or decide to drop the case at that time. Pursuing the case on his/her own involves both higher risk and higher potential rewards.

DOJ does not intervene in most cases (80% are declined).  In most cases where DOJ does not intervene, the case is dropped. The number of cases resolved each year is less than 150.

It is important to understand that this is evidence-based litigation. You have to have hard facts and evidence of fraud. Suspicion is not adequate: federal rules require fraud to be pleaded with specificity. Not having documents usually means you do not have a case. One of the worst things that can happen is to get fired before you gather the evidence.

A good example is this is United States ex rel. Rector v. Bon Secours Richmond Health Corp., where the court found that Relator didn’t sufficiently allege that Bon Secours actually submitted false claims to the government. Had the Relator produced “a single actual bill or claim or payment, amounts of any charges, actual dates of claims, policies about billing, or even second-hand information about billing practices,“ he would have met the pleading requirements. In essence, the Relator’s allegations failed because he did not show “that the defendants actually submitted reimbursable claims for service.”

Health care fraud has become one of the primary targets of FCA suits.  Not only has the number of FCA cases risen dramatically since 1986, but also there is a distinct trend toward health care fraud cases.  In 1994, only 18% of the cases involved health care fraud; of the current cases, a vast majority involves health care fraud.

In addition, recoveries have escalated dramatically.  In FY 1987, the year after the amendments to the False Claims Act, recoveries were just under $4.5 million.  In FY 2010, the year just ended, recoveries were a whopping $3 billion.  The realtors’ share of that 2010 recovery was $385 million.  Whistle-blowing can be very lucrative.

On the other hand, there are certainly downsides. What happened to all those people you thought were your friends?  And do not be surprised if you do not get support from top management. You will probably be accused of being in it for the money, or other suspect motives.You may experience ridicule or be excluded by  your friends. You will need a coping and support system to deal with the stress of the process. You need to be strong – this can be a taxing experience.

If you have hard evidence, and are willing to take the risk, you may end up very wealthy. However, you need to evaluate all of the risk that you will be taking.  Do not go into this lightly.

I have been counsel in a number of FCA suits.  If you are aware of healthcare fraud, and you would like to discuss the potential for an FCA suit, I would be pleased to talk to you about it.

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Website Updated

I have updated my website: http://www.copeland-law-llc.com.  Please check it out.

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The Health Care Quality Improvement Act: After Such Other Procedures As Are Fair the the Physician Under the Circumstances.

If it is not possible to provide a hearing after the physician requests a hearing, the courts must look to the second point of this standard, other procedures that are fair under the circumstances.  A case in point having exactly the scenario is Wahi v. Charleston Area Medical Center.[1] Charleston Area Medical Center (“CAMC”), a privately-run hospital in Charleston, West Virginia, suspended the medical privileges of Dr. Rakesh Wahi, a cardio–thoracic surgeon after a lengthy investigation.  Notice of the suspension was provided to Dr. Wahi, and Dr. Wahi on September 8, 1999 requested a hearing.[2]  What happened subsequently is delineated in the court’s opinion:

Correspondence during the next several months indicates on-going discussions between Wahi and CAMC regarding Wahi’s access to his medical affairs/quality assurance file, his dislike of the composition of the hearing panel, and other aspects of the conduct of a hearing. CAMC repeatedly asked Wahi to provide “a series of convenient dates … for the scheduling of the requested hearing. Wahi has never provided CAMC with any dates on which he would be available for a hearing, and a hearing date was never set.

In November 2000, Wahi filed a complaint in West Virginia state court requesting that the court intervene in the CAMC peer review process, declare certain of CAMC’s actions invalid, require CAMC to withdraw its reports to the NPDB and state Board of Medicine, and require a court-administered hearing that satisfied Wahi’s various demands. (LA. 99-114.) The West Virginia court ultimately dismissed the action on December 6,2001, after concluding that Wahi was not entitled to the relief he sought because the peer review process was still ongoing. It declined to ” render advisory opinions” or accept Wahi’s ” speculation” that he would receive an unfair hearing.

For a while, discussions between Wahi and CAMC continued after the state court case ended, with both parties setting forth various parameters and details of the conduct of a hearing. Then discussions halted,191 with the parties never reaching an agreement or conducting or scheduling a hearing. In January 2004, Wahi filed a complaint in the United States District Court for the Southern District of West Virginia.[3]

That case went through several iterations and amendments of the, but the District Court in September 2006 granted motions for summary judgment on all counts. Dr. Wahi appealed that decision. His primary argument on appeal “is that the district court erred in holding that CAMC was entitled to immunity under the HCQIA even though CAMC summarily suspended Wahi ‘without notice or a hearing.’”[4]

The court did not agree, stating:

While a health care entity is “deemed to have met” the subsection (a)(3) immunity requirements by following the safe harbor provisions of subsection (h), those provisions are not exclusive. “[F]ailure to meet the conditions described [in subsection (b) ] shall not, in itself, constitute failure to meet the standards of subsection (a)(3).” § 11112(b)(3). Therefore, Wahi’s argument that CAMC is not entitled to immunity, as a matter of law, because it did not comply with all of the provisions in subsection (b), fails under the plain language of the statute.…

Subsection (c) thus sets out distinct ways in which a health care entity can be immune under the HCQIA without having complied with the usual requirements for claiming immunity. Wahi would have us read the statute by ignoring this clear purpose and instead find that the HCQIA immunity is barred by failing to meet one of the subsection (c) prongs. To the contrary, subsection (c) presents additional routes to HCQIA immunity beyond that set forth in subsection (a)(3). Although Wahi may be correct that the facts show CAMC cannot assert immunity based on (c)(1) or (c) (2), the only significance is that CAMC must meet the usual standard of qualifying for immunity set forth in subsection (a)(3).

Under subsection (a)(3), a health care entity seeking HCQIA immunity must act ” after adequate notice and hearing procedures are afforded to the physician involved or after such other procedures as are fair to the physician under the circumstances.” § 11112(a)(3) (emphasis added). Stated in the disjunctive, the statute contemplates two independent avenues by which the subsection (a) immunity prong may be obtained. …  [T]he unique circumstances in this case show that Wahi received “other procedures as are fair to the physician under the circumstances,” and entitle CAMC to the HCQIA immunity.[5]

…Congress’ intent-and that expressed by the plain language of the statute-is that a physician be afforded adequate and fair “procedures” with regard to professional review actions, which could be something other than a formal hearing in some circumstances. If this were not so, Congress would have no reason to have included the “other procedures appropriate … under the circumstances” language contained in the statute in contrast to the specific “notice and hearing” language.[6]

The court next examined whether the hospital provided Dr. Wahi with “such other procedures as are fair … under the circumstances.” Prior to the suspension of Dr. Wahi’s privileges, the hospital informed Dr. Wahi of the allegations against him in several letters, as well as allowing him to meet with the Credentials Committee to explain himself regarding those allegations. Not only did the hospital inform Dr. Wahi of his suspension in writing, medical staff officials met with him on the same day as the letter to inform him of the suspension, and told him “that when he met with the Credentials Committee, he should be prepared to defend his lack of adherence to the limitation on his privileges.” The suspension letter delineated his right to a hearing and provided him with a copy of the Procedures Manual for his use.[7]

In a follow-up letter, the Credentials Committee offered Dr. Wahi the opportunity to review the file and delineated all of the issues that it intended to discuss with him at its meeting with him.  Dr. Wahi subsequently met with the committee and presented his case. The committee concluded it “was unable to identify evidence that Dr. Wahi’s clinical competence [and] professional Judgment … are sufficient to recommend … that he be reappointed to the Medical Staff.”[8] Dr. Wahi then received the Credentials Committee report and was once again notified of this right to a hearing.  Subsequently, his counsel requested a hearing. Dr. Wahi was then notified of the members of the hearing panel and requested to “work with the presiding officer to schedule and conduct the hearing ….” The court stated:

CAMC repeatedly requested that Wahi provide available dates for his hearing because “the hearing will take a number of days” and it was important to “select dates well enough in advance that all involved parties can clear their schedules.” In over 8 years since his request for a hearing, Wahi has yet to provide CAMC with any dates when he would be available for a hearing.

During the following year, the parties negotiated over how the hearing would be conducted. Wahi objected to the composition of the panel, its presiding officer, and the use of any incident or discipline during his medical practice at CAMC that he did not address at the August 17, 1999 Credentials Committee meeting. And while CAMC had opened many of its files to Wahi and his counsel, some items Wahi had requested had not been disclosed due to privacy disagreements, which had not been resolved. The parties also attempted to negotiate a resolution of the matter, including withdrawing Wahi’s suspension based on a written statement of the basis for CAMC’s actions. However, the parties were unable to reach an agreement.[9]

Dr. Wahi filed an action in state court to enjoin the hearing unless the hospital met his conditions. The state court dismissed this action.

In the meantime, the state medical board filed a complaint and set a hearing “to determine whether disciplinary action should be taken” with regard to Dr. Wahi’s medical license. He and the board engaged in protracted litigation, including his attempt to seek a writ of prohibition against the board from the Supreme Court of Appeals of West Virginia. The proceedings were subsequently dismissed, without a final ruling on the merits of the allegations. 

In reviewing these intervening events, the Fourth Circuit stated:

Wahi made no effort during this time period to pursue a hearing at CAMC. While CAMC argues this was a deliberate choice by Wahi to prevent a hearing that would create a record that could affect the Board of Medicine proceedings, the district court made no finding in that regard, CAMC assigns no error to the lack of a finding, and we therefore do not consider it. The next action in time was the filing of Wahi’s complaint in the district court.[10]

The Fourth Circuit concluded its analysis as follows:

Lastly, in considering whether the procedures provided by the health care entity are fair ” under the circumstances,” the July 1999 allegations against Wahi cannot be considered in a vacuum. These allegations were simply the latest in Wahi’s tumultuous history with CAMC, as the August 26, 1999 Credentials Committee letter set forth. Since his reappointment in 1995, Wahi had been the subject of numerous reports and complaints calling his professional competence and conduct into question. The record shows that these complaints arose from a multitude of discrete incidents, were made by different individuals, and were known to Wahi. After all Wahi had been through the suspension process previously at CAMC, including the prior reports to the NPDB. CAMC investigated and imposed restrictions, including temporary suspensions, as a result of those investigations. Wahi was aware of the consequences for failing to abide by the Bylaws and Procedures Manual. He was not a first-time offender who was unfamiliar with the responsibilities of his position at CAMC or the consequences for his failures in July 1999

While CAMCs path to immunity in this case is not a recommended model, it must be evaluated considering all the events which transpired, not just those Wahi views as favorable to him. Had CAMC simply set a prompt hearing, whatever Wahi’s objections and efforts to stop it, CAMC may have been within its rights to do so and may have met the first prong of subsection (a)(3). Similarly, CAMC should have followed its Bylaws and the Procedures Manual, and provided Wahi a witness list, even if it had to be later supplemented. However, these failures by CAMC, when viewed in the totality of the circumstances against a measuring stick of objective reasonableness, do not show Wahi met his burden of proof to rebut the presumption of immunity under the HCQIA. Wahi was on notice of the many charges against him, including the detailed Credentials Committee report of August 26,1999. He was repeatedly notified of his rights and given multiple copies of documents explaining these rights. He was repeatedly asked for dates for a hearing. While CAMC attempted to accord Wahi a hearing in conformity with the Procedures Manual, Wahi seemed more intent on forestalling a hearing than having one.

Had Wahi proceeded to a hearing, any complaint about the inadequacy of notice, defective witness list or discovery, the composition of the hearing panel, the conduct of the hearing, or other relevant issues could have been addressed and subjected to judicial review. In the face of Wahi’s recalcitrance, it is at the least disingenuous to now claim his right to a hearing was infringed when he has done all he could do not to have a hearing. Viewing the totality of these circumstances in an objectively reasonable manner, we cannot conclude that the district court erred in determining Wahi failed to rebut the presumption that CAMC afforded him “other procedures as are fair to the physician under the circumstances.” We therefore affirm the district court’s holding that CAMC is entitled to immunity under the HCQIA.[11]


[1] Wahi v. Charleston Area Medical Center, 562 F.3d 599 (4th Cir. 2009).

[2] Id. at 603.

[3] Id. at 603-4 (Internal references omitted).

[4] Id. at 605-6 (Internal references omitted).

[5] Id. at 608 (Internal references omitted).

[6] Id. at 609, citing H.R.Rep. No. 99-903, at 10-11 (1986), as reprinted m1986 U.S.C.C.A.N. 6384, 6393.

[7] Id. at 610.

[8] Id. at 611.

[9] Id. at 612 (Internal references omitted).

[10] Id. at 613.

[11] Id. at 613-614 (Internal references omitted).

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The Health Care Quality Improvement Act: Notice and Hearing Requirements

The third standard under The Health Care Quality Improvement Act: “After adequate notice and hearing procedures [were] afforded to the physician involved or after such other procedures as [were] fair to the physician under the circumstances,” must be met if immunity is to be achieved.

In Bryan  v. Holmes Regional Medical Center,[1] the court found:

“Section 11112(b) sets forth the “safe harbor” conditions that a health care entity must meet regarding adequate notice and hearing. Section 11112(b) provides as follows:

A health care entity is deemed to have met the adequate notice and hearing requirement of subsection (a)(3) of this section with respect to a physician if the following conditions are met (or are waived voluntarily by the physician):

(1) Notice of proposed action

        The physician has been given notice stating–

        (A)(i) that a professional review action has been proposed to be taken against the physician,

        (ii) reasons for the proposed action,

        (B)(i) that the physician has the right to request a hearing on the proposed action,

        (ii) any time limit (of not less than 30 days) within which to request such a hearing, and

        (C) a summary of the rights in the hearing under paragraph (3). 

 (2) Notice of hearing

        If a hearing is requested on a timely basis under paragraph (1)(B), the physician involved must be given notice stating–

        (A) the place, time, and date, of the hearing, which date shall not be less than 30 days after the date of the notice, and

        (B) a list of the witnesses (if any) expected to testify at the hearing on behalf of the professional review body.

(3) Conduct of hearing and notice

        If a hearing is requested on a timely basis under paragraph (1)(B)–

        (A) subject to subparagraph (B), the hearing shall be held (as determined by the health care entity)–

        (i) before an arbitrator mutually acceptable to the physician and the health care entity,

        (ii) before a hearing officer who is appointed by the entity and who is not in direct economic competition with the physician involved, or

        (iii) before a panel of individuals who are appointed by the entity and are not in direct competition with the physician involved;

        (B) the right to the hearing may be forfeited if the physician fails, without good cause, to appear;

        (C) in the hearing the physician has the right–

        (i) to representation by an attorney or other person of the physician’s choice,

        (ii) to have a record made of the proceedings, copies of which may be obtained by the physician upon payment of any reasonable charges associated with the preparation thereof,

        (iii) to call, examine, and cross-examine witnesses,

        (iv) to present evidence determined to be relevant by the hearing officer, regardless of its admissibility in a court of law, and

        (v) to submit a written statement at the close of the hearing; and

        (D) upon completion of the hearing, the physician involved has the right–

        (i) to receive the written recommendation of the arbitrator, officer, or panel, including a statement of the basis for the recommendations, and

        (ii) to receive a written decision of the health care entity, including a statement of the basis for the decision.”

In evaluating these standards, the Bryan court concluded:

       ” … [E]ach of these procedural requirements of section 11112(b) was satisfied. Documents introduced at trial indicate that the Hospital complied with the notice requirements and that the hearings were held in a timely fashion and in accordance with the Hospital’s bylaws. Bryan was afforded full rights of representation, cross-examination, and confrontation.

        Bryan’s principal argument is that the board of directors did not have a transcript of the [Ad Hoc] panel hearings when it rendered its decision. Yet HCQIA, like the Holmes bylaws, requires only that the Hospital ensure that a record of the proceedings be made; Bryan had the responsibility to request a complete transcript if he thought the board should have one, and he did not.

        It should be noted that section 11112(b) specifically provides that the failure of a review body to meet the enumerated conditions does not, per se, constitute a failure to meet the standards of section 11112(a)(3). Indeed, “[i]f other procedures are followed, but are not precisely of the character spelled out in [section 11112(b) ], the test of ‘adequacy’ may still be met under other prevailing law.” H.R.Rep. No. 903, at 10, reprinted in 1986 U.S.C.C.A.N. at 6393. Moreover, Bryan made no contemporaneous objections to the manner in which the hearing procedures were conducted; section 11112(b) explicitly provides that compliance with its terms is not required if the physician voluntarily waives them. On the record of this case, we conclude that no reasonable jury could conclude that the Hospital had not afforded Bryan the adequate procedures.”[2]

Next, we will discuss what happens when the respondent requests a hearing, but the entity is unable to accomodate the request.


[1] 33 F.3d 1318 (11th Cir. 1994).

[2] Id. at 1336.

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The Health Care Quality Improvement Act: The Investigative Process

The second requirement to obtain immunity under the Health Care Quality Improvement Act involves making a reasonable effort to obtain the facts. This requirement has been satisfied in the great majority of published cases by a showing that a representative portion of a physician’s practice had been examined and that the examiners had satisfactory expertise in the involved specialty area. “Significantly, the factual basis for a peer review action is sufficient ‘unless the information relied upon was obviously mistaken or inadequate.’”[1]

The relevant inquiry under this standard “is whether ‘the totality of the process leading up to the professional review action evidenced a reasonable effort to obtain the facts.”[2]  “[The physician under review] is entitled to ‘a reasonable investigation under the Act, not a perfect investigation.’  Thus, the [investigating body] is not required to carry out its investigation in any particular manner; it is only required to conduct a factual investigation that is reasonable under the circumstances.”[3]

Interestingly, meeting this investigative standard does not require that the conclusions reached by the investigators are correct. “[E]ven if [the physician under investigation] could show that these doctors reached an incorrect conclusion on a particular medical issue because of a lack of understanding, that does not meet the burden of contradicting the existence of a reasonable belief that they were furthering health care quality in participating in the peer review process.”[4] As stated above, “the factual basis for a peer review action is sufficient unless the information relied upon was so obviously mistaken or inadequate such as to make reliance on it unreasonable.”[5]

The Bryan court explained this concept further:

“The board terminated Bryan’s medical staff privileges only after Bryan’s conduct had been evaluated by the executive committee, the … peer review panel, and an appellate review panel of board members. Each of those groups submitted reports to the board, which made its decision based upon the documentary record developed during the various peer review proceedings and after Bryan had the opportunity to make a presentation. Bryan introduced no competent evidence at trial to suggest that the Hospital’s efforts to obtain the facts before terminating his staff privileges were not reasonable.”[6]

The key issue is: was the investigation by the body taking the adverse action reasonable under the circumstances?

A very instructive case in this regard is Brown v. Presbyterian Healthcare Servs.[7]  In Brown, the reviewers had reviewed the medical records in two cases. After a hearing in which both Dr. Brown and the hospital’s expert testified, the hospital decided to terminate Dr. Brown’s privileges.

In reviewing the action that resulted in Dr. Brown’s termination, the Tenth Circuit Court of Appeals stated:

“At trial, Dr. Brown presented sufficient evidence for a reasonable jury to find, by a preponderance of the evidence, the peer review action was not taken after a “reasonable effort to obtain the facts of the matter.” Dr. Norman Lindley, a physician specializing in obstetrics and gynecology, testified on behalf of Dr. Brown. Dr. Lindley reviewed the charts for every obstetrics patient Dr. Brown treated for the six-month period preceding her revocation and concluded Dr. Brown recognized high-risk obstetrics patients and obtained appropriate consultation when necessary. Dr. Lindley also testified the peer review panel’s review of only two charts prior to revoking Dr. Brown’s obstetrical privileges was unreasonably narrow and did not provide a reasonable basis for concluding Dr. Brown posed a threat to patient safety.

Thus, from Dr. Lindley’s testimony, a reasonable jury could have found the panel’s review to be unreasonably restrictive and not taken after a ‘reasonable effort to obtain the facts.'”[8]

While there does not have to be a perfect investigation, the investigation does have to be adequate and objectively review the respondent’s practice.  An adequate investigation would at least provide sufficient information to determine whether the respondent’s practice met the standard of care of other similarly situated physicians practicing in the community, whether he/she was exercising good judgment in the care of his/her patients, and/or whether the respondent’s continued practice at the hospital would place the hospital and its patients at risk.

For a review of how not to conduct in investigation, let us return to Osuagwu v. Gila Regional Medical Center.[9]  While this case was lacking in all four of the standards, the investigation was particularly shoddy. In addition to the facts stated above, details regarding the investigation are revealing:

Gila Regional Medical Center contracted with plaintiff, Dr. Osuagwu, an obstetrician/gynecologist, in February 2008 to provide obstetrical/gynecological services to the hospital.  He worked in a practice headed by the hospital’s obstetrical/gynecological department director.

On November 17, 2008, after a special meeting with no notice to Dr. Osuagwu, and of which he was completely unaware, the Medical Executive Committee (MEC) summarily but temporarily for 14 days suspended Dr. Osuagwu’s privileges to perform laparoscopic procedures.  This action was based on “complications from two diagnostic laparoscopic procedures.” Dr. Osuagwu was allowed to perform emergency laparoscopies during that 14-day period under the supervision of the department director. “[T]he notice of suspension did not specify which laparoscopic procedures were in question, nor did the MEC ever interview the [Dr. Osuagwu] regarding the charges against him or the two cases it was considering.” Such inadequate notice was in violation of the Medical Staff Bylaws.

After this summary action, and after the notice to Dr. Osuagwu, the MEC sent the two cases in question to its Professional Review Committee (PRC) for review and recommendation.  While there were several physicians on the PRC, none were gynecologists. The Chief Medical Officer (CMO), Dr. Remillard, was not a “voting member” of the PRC, but she otherwise fully participated in the review by the PRC and allegedly provided “expert opinion” as a non-practicing gynecologist.  In addition, Dr. Montoya, a retired gynecologist, a member of the MEC and the hospital’s Board of Trustees, also provided expert opinion to the PRC, although he was also not a member of the PRC.

In addition, Dr. Remillard, the CMO, informally talked with some unidentified physicians (who were not members of the MEC but who had been invited to the MEC meetings). These physicians were previous consultants on some of Dr. Osuagwu’s cases. They allegedly told Dr. Remillard that “they should have seen the patient earlier in unidentified instances.”

After the PRC had reviewed the two cases discussed above, and after other physicians (who were never identified) told Dr. Remillard and other members of the MEC “that they had never perforated a bowel during a laparoscopic procedure,” the PRC decided it needed a broader review than just Dr. Osuagwu’s surgical skills. The PRC then expanded the scope of its review to Dr. Osuagwu’s other skills. It wanted to see if there was “a problem with any other kind of cases.”

“The PRC pulled 34 of [Dr. Osuagwu’s] patients’ hospital charts, divided them up between ‘four or five’ unidentified physicians for review, and the reviewers filled out ‘Medical Staff QA & I’ forms by giving a brief summary of the reviewer’s ‘findings’ and ‘conclusions’ regarding each case; answering 8 general questions about the patient’s clinical management; and rating it between a 1 and a 5. Category 3 cases indicated a ‘marginal deviation from the standard of care;’ category 4 cases indicated ‘some deviation from the standard of care with possible change of outcome,’ and category 5 cases indicated “deviation from the standard of care with probable change of outcome.” Although the forms provided for the name and signature of the PRC member who reviewed the hospital chart, all of the forms for [Dr. Osuagwu’s] cases were unsigned. At a joint meeting on November 22, 2008, the PRC determined that 12 or 13 of the cases caused them some concern. Dr. Carreon [a member of the PRC and the MEC] testified that the PRC was concerned that the hospital charts indicated deficiencies in “preoperative evaluation[s], ” absences of “documented pelvic exam[s], ” lack of documentation regarding what “workup” had been done ‘prior to taking somebody to surgery;’ ‘whether general surgery should have been involved and wasn’t,’ about ‘hesitating to obtain consultations in patients that were very ill,’  about the ‘timeliness of consultations, ‘ and about a ‘diagnosis prior to an operation and the [subsequent] pathology not being consistent.’ Again, no one asked [Dr. Osuagwu] to appear before the PRC to comment on the cases or provide evidence or explanation during this peer-review process. But Dr. Carreon testified that unspecified members of the PRC again allegedly informally discussed the cases with unidentified ‘people that are in that field’ who reportedly said, ‘I would have done this first [or] I would have done that,’ in arriving at their conclusion that certain cases were concerning. Although he was never interviewed, [Dr. Osuagwu] was asked at some point to provide written comments or explanations on 1 of the 12 cases that gave the PRC some concern and on several cases that were not cause for concern. There is nothing in the record evidencing any written recommendations by the joint members of the PRC. And the MEC presented nothing indicating that any of the cases, other than the single laparoscopic case in which the Plaintiff apparently had perforated the bowel, gave cause to believe that Plaintiff’s patients were in ‘imminent danger.'”[10]

Allegedly, the PRC recommended that Dr. Osuagwu’s “laparoscopic privileges be suspended indefinitely” and urged the MEC to hold an emergency meeting to do so. That meeting was held on November 24, 2008, and “Without explanation in the record, and with no finding of ‘imminent danger,‘ in violation of the Bylaws, the MEC ‘broadened [the suspension] to all gynecological privileges and also to have mandatory consultation when obstetrical care… deviated from normal because of the timeliness of consultation.’” According to the Amended Complaint, the PRC “submitted findings in a report to the … MEC.” However, that report was not in the record before the court. Dr. Carreon, the PRC and MEC member, “stated that the PRC decided to send the charts ‘to somebody else outside the hospital to have them reviewed and see what their opinion was, as well.’”

After taking its action on November 24, 2008, the MEC informed Dr. Osuagwu of “its decision to broaden and continue the suspension, but again, the notice did not inform [him]which charts were under scrutiny or what specific actions he had taken or not taken that supplied support for immediate, summary suspension of all of his gynecological privileges, nor did it mention ‘imminent danger.’ The court notes that “Instead, the notice obliquely stated that ‘there were a high number of cases in which a change of outcome could have been achieved for the patients….’”Regarding “why Plaintiff was not given the opportunity to provide input during the whole peer-review process, Dr. Remillard attempted to justify the failure to do so by stating ‘we have enough evidence to support those actions, and to make sure that our public is protected, that [Dr. Osuagwu] doesn’t have privileges to go back to the OR and potentially put other patients in harm’s way.’”

The court stated its conclusion very succinctly:

“Although I conclude that it was not necessary for the MEC to give Dr. Osuagwu pre-deprivation notice and a hearing before it temporarily suspended his privileges and imposed other restrictions pending further investigation, I also find that Plaintiff has presented undisputed and compelling evidence showing, as a matter of law, that the MEC and the PRC did not make “a reasonable effort to obtain the facts” of the specific cases during his temporary suspensions.”[11]

It is very important to conduct an adequate investigation to determine the facts of the matter under review.  Such an investigation should include a review of the physician’s practice by one or more physicians that are in the same specialty as the physician under review.  An outside review by an independent body is always preferred.  Nevertheless, the review should be broad enough to provide the body taking the professional review action tangible evidence that there are problems with the practitioner’s level of care or inappropriate activity.

Next, we will discuss the notice and hearing requirements.


[1]Smigaj v. Yakima Valley Memorial Hosp. Assoc., 269 P.3d 323, 165 Wn.App. 837, 856 (Wash. App. Div. 3 2012) quoting  Fox v. Parma Comty. Gen. Hosp., 160 Ohio App.3d 409, 418, 827 N.E.2d 787, 794, 2005-Ohio-1665 (Ohio App. 8 Dist. 2005).
[2] Morgan v. PeaceHealth, Inc., 14 P.3d 773, 101 Wn.App. 750, 770 (Wash.App. Div. 1 2000).
[3] Cowell v. Good Samaritan Community Health Care, 225 P.3d 294,305,153 Wn.App. 911 (Wash.App. Div. 1 2009).
[4] Imperial v. Suburban Hosp. Ass’n, Inc., 37 F.3d 1026, 1030 (4th Cir. 1994).
[5] Smigaj, 165 Wn.App. at 856;  Fox, 160 Ohio App.3d at 418.
[6] Id. at 1335.
[7] 101 F.3d 1324 (10th Cir. 1996).
[8] Brown, F.3d at 1333-34.(Emphasis added.)
[9] Osuagwu v. Gila Regional Medical Center, 032712 NMDC, 11cv1 MV/SMV (Dist. NM, March 27, 2012).
[10] Id.
[11] Id. (Citation omitted) (Emphasis added.)
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The Health Care Quality Improvement Act: The Reasonable Belief Standard

In the last post, we reviewed the general requirements to obtain immunity under the Health Care Quality Improvement Act. As indicated, there are four standards that must be met to achieve that immunity.  In this blog, we will review the first of those standards.

                  In the reasonable belief that the action was in the furtherance of quality health care.  

 The “quality health care” issue is very interesting.  Two cases are directly on point regarding the responsibility the Hospital has for “quality health care.” In the first, Albain v, Flower Hospital, [1] the court states:

In regard to staff privileges, a hospital has a direct duty to grant and to continue such privileges only to competent physicians. A hospital is not an insurer of the skills of private physicians to whom staff privileges have been granted. In order to recover for a breach of this duty, a plaintiff injured by the negligence of a staff physician must demonstrate that but for the lack of care in the selection or the retention of the physician, the physician would not have been granted staff privileges and the patient would not have been injured.

Interestingly, there does not have to be a bad outcome for the body taking the adverse action to act.  In the second case, Georgopoulos, the court stated:

…the scope of “quality health care” encompasses more than a physician’s mortality and morbidity rates. “The fact that [a] Plaintiff achieve[s] good patient outcomes does not mean that he was not creating unnecessary risks for those patients or for other patients.” Pierson v. Orlando Health, M.D.Fla. No. 6:08-cv-466-Orl-28GJK, 2010 U.S. Dist. LEXIS 115101, at *56. As another federal court has recognized, the purpose of the Quality Improvement Act is “to prevent patient harm, not to assure an adequate response after it occurred.” Singh v. Blue Cross/Blue Shield of Massachusetts, Inc. (C.A.1, 2002), 308 F.3d 25, 38; Leal v. Secy., U.S. Dept. of Health and Human Servs. (C.A.11, 2010), 620 F.3d 1280, 1286 (a physician’s conduct, “although not resulting in any known harm to a patient, is conduct that ‘could affect adversely’ patient health or welfare”).[2]

Returning to the Bryan analysis, the court in that case stated:

This prong of the HCQIA immunity test is met if “the reviewers, with the information available to them at the time of the professional review action, would reasonably have concluded that their action would restrict incompetent behavior or would protect patients.” H.R.Rep. No. 903, at 10, reprinted in 1986 U.S.C.C.A.N. at 6393. The record in this case reveals that the revocation of Bryan’s privileges was prompted by the reasonable belief that doing so would promote quality health care. Bryan had exhibited a pattern of unprofessional conduct over a period of many years, and he was given a series of opportunities to remedy his difficulties in interacting with other staff members. Eventually, the Hospital concluded that, because of his behavior, Bryan’s presence in the operating room and in patient rooms was disruptive and interfered with the important work of other employees. Moreover, the board was properly concerned about the circumstances surrounding the misdirection of the two patients to surgery. Accordingly, the Hospital dealt appropriately with the perceived situation in terminating Bryan’s privileges.[3]

In Meyers v. Columbia/HCA Healthcare Corp., the court, consistent with Bryan, found that “[t]he ‘reasonable belief’ standard of the HCQIA is satisfied if ‘the reviewers, with the information available to them at the time of the professional review action, would reasonably have concluded that their action would restrict incompetent behavior or would protect patients.’”[4] The federal court for the Northern District of Ohio added, “The professional review need not result in the actual furtherance of the quality of health care so long as it was undertaken with a reasonable belief that such improvement would result.”[5]

The court in Mathews v. Lancaster General Hospital addressed the issue of evidence that concludes the suspended physician’s care was acceptable:

Viewed in the light most favorable to plaintiff, [the reviewer’s] report may provide a reasonable basis for a jury to conclude that [the suspended physician] rendered acceptable care. This, however, is a different question than whether defendants formed a reasonable belief that their actions were in furtherance of quality health care. The fact that a jury could possibly form a different conclusion as to whether the privilege restrictions were warranted is insufficient basis for a finding that the [hospital’s] opposite conclusion was unreasonable. Even viewed in the light most favorable to plaintiff, nothing in [the reviewer’s] report tends to suggest that [the hospital’s expert’s] report, upon which the [hospital] relied, was so obviously inadequate or inaccurate that it would have been unreasonable to rely on it as the basis for a belief that restrictions on [the suspended physician’s] privileges would further quality health care. (“[E]ven if [plaintiff] could show that these doctors reached an incorrect conclusion on a particular medical issue because of a lack of understanding, that does not meet the burden of contradicting the existence of a reasonable belief that they were furthering health care quality….”); [Austin v. McNamara, 979 F.2d 728, 735 (9th Cir. 1992)] (noting that ultimate reasonableness of doctor’s suspension was a “different question” than the issue of whether the defendants “acted in the ‘reasonable belief that the [suspension] was warranted by the facts known….’). Cf.Willman v. Heartland Hosp. East, 34 F.3d 605, 611 (8th Cir.1994), cert. denied, 514 U.S. 1018, 115 S.Ct. 1361, 131 L.Ed.2d 218 (1995) (“Although the record contains evidence from physicians to the effect that in their opinion [plaintiff] had provided acceptable care, we nevertheless conclude that it would not have been unreasonable for [plaintiff’s] peer reviewers to have doubts about the quality of [plaintiff’s] patient care.”). Thus, [the reviewer’s] report cannot serve as a basis for overcoming the presumption that defendants acted in the reasonable belief that their recommendation was in furtherance of quality health care.[6]

Again, in Bryan, citing the legislative history of the Act, the court also noted that, “It is an objective standard, rather than a subjective good faith requirement.”[7]  The legislative history of the HCQIA indicates that the statute’s reasonableness requirements were intended to create an objective standard of performance, rather than a subjective good faith standard. As the House Committee on Energy and Commerce explained:

Initially, the Committee considered a “good faith” standard for professional review actions. In response to concerns that “good faith” might be misinterpreted as requiring only a test of the subjective state of mind of the physicians conducting the professional review action, the Committee changed to a more objective “reasonable belief” standard. The Committee intends that this test will be satisfied if the reviewers, with the information available to them at the time of the professional review action, would reasonably have concluded that their action would restrict incompetent behavior or would protect patients.[8]

For an analysis of not meeting the standard, let us review the recent Osuagwu[9] case from the U.S. District Court in New Mexico. In Osuagwu, Dr. Osuagwu contracted with Gila Regional Medical Center (“Gila”) to provide obstetrical/gynecological (“OB/GYN”) services. He worked in an OB/GYN practice with the head of obstetrics at Gila. The Medical Executive Committee (“MEC”) at Gila consisted of its acting Chief of Staff, Chief Medical Officer, and three other physicians, including a retired gynecologist who was also a member of the Board of Trustees (and who also attended the peer review meetings).

The court delineates the procedure to be followed in summary suspensions:

Under Gila Regional’s bylaws, upon the request of the CEO, Board of Trustees, or its Chief of Medical Staff, the MEC may authorize an immediate, maximum 14-day summary suspension of any physician when “the failure to take such action may result in imminent danger to the health of any individual and otherwise be in the best interest of patient care at [Gila Regional], ” during which time the hospital would investigate to determine the need for permanent action. Within the following 5 days, the MEC is mandated to “interview the practitioner affected by the summary suspension, ” and to inform him of its specific basis, including a written statement and summary “of at least one or more particular incidents giving rise to the assessment of imminent danger” “demonstrating that failure to suspend could have reasonably resulted in an imminent danger to the health of an individual.” The bylaws expressly require the suspended practitioner “to be given an opportunity to discuss, explain, or refute the facts that made the basis of the suspension.” Within 10 days of the suspension, the MEC is required to report its findings, and if it finds that a failure to modify or continue the suspension may result in imminent danger, it must notify the doctor and provide a formal fair hearing … The notice of hearing is required to state “the acts or omissions with which the practitioner is charged, a list of specific or representative charts questioned, and/or the other reasons or subject matter that was considered in [the MEC] making the adverse recommendation….” The MEC appoints a representative at the fair hearing, who bears the burden to “present appropriate evidence in support of the adverse recommendation.” The suspended physician has the right to “challenge any witness, [and] to rebut any evidence.” The hearing may be recessed and reconvened for the participants’ convenience or for the purpose of “obtaining new or additional evidence or consultation, ” and after all of the presentation of evidence, the hearing is concluded and closed for the purposes of deliberation “outside the presence of the practitioner.” Within 30 days of the adjournment of the hearing, the FHC panel prepares a recommendation for the Board of Trustees to either continue, modify, or drop the suspension. The MEC also must make a recommendation to the Board of Trustees to accept or deny the FHC’s recommendation within 45 days of the adjournment of the hearing, and the physician also may similarly prepare a written statement that discusses the facts and recommendations with which he disagrees, which must become part of the record of the fair hearing that is presented to the Board. After the 45-day period has passed, the Board then must schedule a public hearing to review the findings and recommendations, which the physician must be allowed to attend. But the public hearing “shall not be an evidentiary proceeding” and the Board cannot admit or accept any evidence that the FHC panel did not consider unless “it could not have been presented to the hearing committee.” The Board issues its final ruling regarding the suspension after the public hearing.[10]

The court then specified the events:

…after a “Special [MEC] meeting, ” of which [Dr. Osuagwu] was completely unaware, based on “complications from two diagnostic laparoscopic procedures,” the MEC summarily but temporarily suspended [Dr. Osuagwu’s] privileges to perform elective laparoscopic procedures for 14 days, and required [the OB/GYN department director] to assist [Dr. Osuagwu] on emergency laparoscopies during that 14-day period. In violation of Gila Regional’s Bylaws, the notice of suspension did not specify which laparoscopic procedures were in question, nor did the MEC ever interview the Plaintiff regarding the charges against him or the two cases it was considering.

Next, we will review the investigative requirements.


[1] 50 Ohio St. 3d 251, 553 N.E.2d 1038 (1990), paragraph 2 of the syllabus.

[2] 958 N.E.2d at 1277.

[3] Id. at 1334-5.

[4] Meyers v. Columbia/HCA Healthcare Corp., 341 F.3d 461, 468 (6th Cir. 2003) (quoting Bryan v. James E. Holmes Reg’l Med. Ctr., 33 F.3d 1318, 1323 (11th Cir.1994).

[5] Badri v. Huron Hosp., 691 F.Supp.2d 744, 765 (N.D.Ohio 2010).

[6] Mathews v. Lancaster General Hosp., 883 F.Supp. 1016, 1032 (E.D.Pa. 1995)(emphasis in original).

[7] Bryan v. James E. Holmes Reg’l Med. Ctr., 33 F.3d 1318, 1323, 1335 (11th Cir.1994).

[8] H.R.Rep. No. 903, at 10, reprinted in 1986 U.S.C.C.A.N. at 6392-93. See Austin v. McNamara, 979 F.2d 728, 734 (9th Cir.1992) (holding that HCQIA reasonableness requirements create an objective standard, rather than a good faith requirement).

[9] Osuagwu v. Gila Regional Medical Center, 032712 NMDC, 11cv1 MV/SMV (D. NM, March 27, 2012).

[10] Id. (References omitted).

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The Federal Health Care Quality Improvement Act Of 1986

The Federal Health Care Quality Improvement Act of 1986[1] (HCQIA) was passed by Congress partially in response to Patrick v. Burget, et al.,[2] but also in response to what was perceived to be a tremendous malpractice crisis in the country.  Medical malpractice lawsuits were rising significantly during the years leading up to passage of the Act. It was claimed that physicians with a history of malpractice suits could move easily from state to state with no mechanism of interstate reporting available.

The substantial rise in the number of malpractice suits during the 1970s and 1980s created what has been referred to as the “malpractice crisis.”  In fact, the number of malpractice cases filed during the period ending in 1987 was more than “the entire previous history of American tort law.”[3]

Oregon Congressman Ron Wyden introduced legislation to address this malpractice problem in what became The Health Care Quality Improvement Act of 1986 (HCQIA). According to the Congressional Record, the HCQIA was designed to address two problems that were considered endemic to the medical community: honest peer review by physicians and the ability of practitioners to move from hospital to hospital and state to state without any record of their previous misdeeds.[4]

The Congressional Record is very specific about the purpose of the HCQIA.  It states that the purpose is “to improve the quality of medical care by encouraging physicians to identify and discipline other physicians who are incompetent or who engage in unprofessional behavior.”[5]  The statute itself notes that Congress found that “[t]he increasing occurrence of medical malpractice and the need to improve the quality of medical care have become nationwide problems that warrant greater efforts than those that can be undertaken by any individual State,”[6] and that these problems “can be remedied through effective professional peer review.”[7] To further this goal, HCQIA grants limited immunity, in suits brought by physicians who have been the subject of peer review proceedings, from liability for money damages to those who participate in professional peer review activities.[8]

Before the HCQIA was enacted, fear of litigation often stood in the way of development and vigorous enforcement of hospital peer review procedures. Congress found that “[t]he threat of private money damage liability under [state and] Federal laws, including treble damage liability under Federal antitrust law, unreasonably discourages physicians from participating in effective professional peer review.”[9]  Thus, HCQIA provides that, if a “professional review action” (as defined in the statute) “meets certain due process and fairness requirements, then those participating in such a review process shall not be liable under any state or federal law for damages for the results.”[10]. Therefore, “[d]octors and hospitals who have acted in accordance with the reasonable belief, due process, and other requirements of [HCQIA] are protected from damages sought by a disciplined doctor.”[11]

The case law is replete with references to the Congressional purpose and the immunities of the HCQIA:

HCQIA is designed to facilitate the frank exchange of information among professionals conducting peer review inquiries without the fear of reprisals in civil lawsuits.  The statute attempts to balance the chilling effect of litigation on peer review with concerns for protecting physicians improperly subjected to disciplinary action; accordingly, Congress granted immunity from monetary damages to participants in properly conducted peer review proceedings while preserving causes of action for injunctive or declaratory relief for aggrieved physicians. Because the statutory scheme is somewhat convoluted, we discuss the immunity provisions in detail.

The provision of HCQIA that limits the availability of damages for professional review actions provides as follows:

If a professional review action (as defined in … this title) of a professional review body meets all the standards specified in section 11112(a) of this title, …

(A) the professional review body,

(B) any person acting as a member or staff to the body,

(C) any person under a contract or other formal agreement with the body, and

(D) any person who participates with or assists the body with respect to the action,

shall not be liable in damages under any law of the United States or of any State (or political subdivision thereof) with respect to the action.[12]

The standards that professional review actions must satisfy to entitle the participants to such protection are enumerated in section 11112(a) as follows:

For purposes of the protection set forth in section 11111(a) of this title, a professional review action must be taken–

(1) in the reasonable belief that the action was in the furtherance of quality health care,

(2) after a reasonable effort to obtain the facts of the matter,

(3) after adequate notice and hearing procedures are afforded to the physician involved or after such other procedures as are fair to the physician under the circumstances, and

(4) in the reasonable belief that the action was warranted by the facts known after such reasonable effort to obtain facts and after meeting the requirement of paragraph (3).[13]

Importantly, HCQIA also creates a rebuttable presumption of immunity: “A professional review action shall be presumed to have met the preceding standards necessary for the protection set out in section 11111(a) of this title unless the presumption is rebutted by a preponderance of the evidence.” [14]

Section 11112(b) of HCQIA then enumerates the minimum, or “safe harbor” procedures that will, in every case, satisfy the adequate notice and hearing requirement of section 11112(a)(3). Id. Sec. 11112(b). Organized in the form of a detailed checklist, the provision defines what hospitals conducting peer review disciplinary procedures must do to obtain the Act’s protections for itself and the members of its peer review bodies. We discuss this checklist in more detail infra in part III. Congress was careful to explain, however, that “[a] professional review body’s failure to meet the conditions described in this subsection shall not, in itself, constitute failure to meet the standards of subsection (a)(3) of this section.”[15]

The legislative history of section 11112(a) indicates that the statute’s reasonableness requirements were intended to create an objective standard of performance, rather than a subjective good faith standard. As the House Committee on Energy and Commerce explained:

Initially, the Committee considered a “good faith” standard for professional review actions. In response to concerns that “good faith” might be misinterpreted as requiring only a test of the subjective state of mind of the physicians conducting the professional review action, the Committee changed to a more objective “reasonable belief” standard. The Committee intends that this test will be satisfied if the reviewers, with the information available to them at the time of the professional review action, would reasonably have concluded that their action would restrict incompetent behavior or would protect patients.

H.R.Rep. No. 903, at 10, reprinted in 1986 U.S.C.C.A.N. at 6392-93. See Austin v. McNamara, 979 F.2d 728, 734 (9th Cir.1992) (holding that HCQIA reasonableness requirements create an objective standard, rather than a good faith requirement).[16]

The HCQIA limits liability in damages for those who participate in professional peer review. For HCQIA immunity to attach, however, the peer review action must comport with due process. More specifically, the professional review action must be taken (1) “in the reasonable belief that the action was in the furtherance of quality health care;” (2) “after a reasonable effort to obtain the facts of the matter;” (3) “after adequate notice and hearing procedures are afforded;” and (4) “in the reasonable belief that the action was warranted by the facts known after such reasonable effort to obtain facts.”[17] The HCQIA also sets forth detailed standards to ensure that a physician receives adequate notice and a hearing and exempts any claim alleging a civil rights violation or claims for declaratory or injunctive relief. [18]

The legitimacy of Congress’s purpose in enacting the HCQIA is beyond question. Prior to enacting the HCQIA, Congress found that “[t]he increasing occurrence of medical malpractice and the need to improve the quality of medical care . . . [had] become nationwide problems,” especially in light of “the ability of incompetent physicians to move from State to State without disclosure or discovery of the physician’s previous damaging or incompetent performance.” [19]The problem, however, could be remedied through effective professional peer review combined with a national reporting system that made information about adverse professional actions against physicians more widely available. However, Congress also believed that “[t]he threat of private money damage liability under Federal laws, including treble damage liability under Federal antitrust law, unreasonably discourage[d] physicians from participating in effective professional peer review.”[20] Congress therefore enacted the HCQIA in order to “facilitate the frank exchange of information among professionals conducting peer review inquiries without the fear of reprisals in civil lawsuits. The statute attempts to balance the chilling effect of litigation on peer review with concerns for protecting physicians improperly subjected to disciplinary action.”[21]

Congress enacted the HCQIA to improve the quality of health care and to reduce the number of incompetent physicians.[22] Congress determined that both goals could be attained through “effective professional peer review.”[23] Accordingly, the HCQIA eliminates many deterrents to effective professional peer review of physician competence by providing immunity from damage suits to professional peer review groups and individuals acting in support of those groups.[24]

The HCQIA’s granting of professional peer review immunity, however, is conditioned by two factors. First, a professional peer review group must provide adequate due process protection to the physician subjected to review.[25] The HCQIA details a number of procedures which Congress deemed to be adequate due process, and creates a rebuttable presumption that the professional peer review group met the due process requirements even if it did not follow the HCQIA’s procedures. [26]Second, the peer review group must take any action it deems necessary with the reasonable belief that its action will further quality health care. [27]A professional peer review group that fails to fulfill either condition is not entitled to the immunity afforded it by the HCQIA. [28]… the HCQIA does not expressly create a cause of action in favor of a physician against a professional peer review group that has violated its due process requirements.

From a reading of the HCQIA and its legislative history, the court concludes that Congress merely intended, in enacting the HCQIA, to ensure effective professional peer review of physician competence by providing immunity from damage suits to those professional peer review groups that comply with the HCQIA.[29]

HCQIA does not provide unqualified immunity to all peer review decisions. In order to ensure that such review is effective and not abused, HCQIA only provides immunity to “professional review actions” based on a physician’s “competence or professional conduct,” 42 U.S.C. § 11151(9), and it mandates specific standards and procedures that must be followed, id. at § 11112(a).

In no sense did Congress mean to encourage fishing expeditions into private behavior. A “professional review action” requires that the record reflect a clear nexus between the basis for an “action” or ” recommendation” and a physician’s medical practice. [30]For the statute, notwithstanding its generous protections for peer review, imposes limits on the definition of “professional review action.” The statute uses the word ” professional” -a term that connotes the opposite of ” personal” -and further emphasizes that there are limits on ” professional review actions” by explicitly listing bases for actions which are outside of the definition, see 42 U.S.C. § 11151(9)(A)-(E), including ” any other matter that does not relate to the competence or professional conduct of a physician.”[31]

Section 11151(9) of HCQIA defines ” professional review action” as ” an action or recommendation of a professional review body … which is based on the competence or professional conduct of an individual physician (which conduct affects or could affect adversely the health or welfare of a patient or patients), and which affects (or may affect) adversely the clinical privileges … of the physician.” It provides further that ” an action is not considered to be based on the competence or professional conduct of a physician if the action is primarily based on-” (A) a physician’s association with a professional society, (B) a physician’s fees or advertising, (C) a physician’s participation in certain types of health plans, (D) a physician’s association with a private group practice, ” or (E) any other matter that does not relate to the competence or professional conduct of a physician.”

42 U.S.C. § 11151(9).

The legislative history of HCQIA reveals that Congress rejected a subjective standard in favor of an “objective ‘reasonable belief’ standard,” H.R. Rep. No. 903, 99th Cong., 2d Sess. 10 (1986), reprinted in 1986 U.S.C.C.A.N. 6287, 6392-93, and that Congress intended for the court to address the immunity issue well before trial. See id. at 12 (“The Committee intends that these provisions allow defendants to file motions to resolve the issue of immunity in as expeditious a manner as possible.”). Because “bad faith is immaterial” to the immunity issue, this court has found summary judgment proper on the basis of a HCQIA immunity defense.[32]

Under HCQIA, a professional review body, its members, its staff, and others under contract with or providing assistance to such a body are immune from damages liability with respect to the body’s actions.[33] In order for this immunity to apply, the professional review action must satisfy certain standards of fairness and reasonableness. [34]Significantly, the statute provides that “[a] professional review action shall be presumed to have met the … standards necessary … unless the presumption is rebutted by a preponderance of the evidence.”[35]

Congress passed the HCQIA because it found the threat of liability under federal law “unreasonably discourages physicians from participating in effective professional peer review” and “[t]here is an overriding national need to provide incentive and protection for physicians engaging” in peer review.[36]

With regard to the rights of the physician under review, during the hearing, he/she must have the right:

(i) to representation by an attorney or other person of the physician’s choice,

(ii) to have a record made of the proceedings, copies of which may be obtained by the physician upon payment of any reasonable charges …,

(iii) to call, examine, and cross-examine witnesses,

(iv) to present evidence determined to be relevant by the hearing officer, regardless of its admissibility in a court of law, and

(v) to submit a written statement at the close of the hearing. [37]

In addition, if a defendant “substantially prevails” and satisfies the immunity requirements of Sec. 11112(a)[38], the HCQIA provides:

[T]he court shall, at the conclusion of the action, award to a substantially prevailing party defending against any such claim the cost of the suit attributable to such claim, including reasonable attorney’s fee, if the claim, or the claimant’s conduct during the litigation of the claim, was frivolous, unreasonable, without foundation, or in bad faith.[39]

However, the legislation was not intended to protect bad faith review. As Representative Henry Waxman, (D) California, a principal sponsor of the Act, stated, “The immunity provisions have been restricted so as not to protect illegitimate actions taken under the guise of furthering the quality of health care. Actions that violate civil rights laws or actions that are really taken for anticompetitive purposes will not be protected under this bill.”[40]  Representative Waxman also stated that the bill was not intended to shield acts of discrimination. (“Actions that violate civil rights laws . . . will not be protected under this bill.”).[41]

With regard to a privilege for medical review materials, one court found:

Although we cannot conclude that Congress actually considered and rejected a privilege for medical review materials when enacting the HCQIA, it is clear that Congress considered the relevant competing interests–providing incentive and protection to physicians who would serve on review committees versus allowing putative victims of discrimination to pursue their claims–and decided to give greater weight to the latter.[42]

In addition, Representative Waxman indicated that the bill was not intended to override state shield laws “that restrict the type of evidence that may be introduced in lawsuits challenging a disciplinary action in the context of peer review.”[43]

Turning now to how the HCQIA has been implemented by the courts.  In Bryan  v. Holmes Regional Medical Center,[44] the Eleventh Circuit reversed a $4.2 million damages award for breach of contract. The trial court had found that the hospital had revoked the physician’s staff privileges in violation of its bylaws. The appellate court concluded that the hospital was entitled to protection from monetary liability under HCQIA.

In a lengthy opinion, the appeals court first found that the action taken was a professional review action as defined in the Act, and that the hospital and the entities doing the review qualified as professional review bodies, again as defined in the act. Therefore,”the Hospital is entitled to immunity from monetary liability under section 11111(a) of HCQIA if the peer review process met the standards set forth in section 11112(a).”[45]

NEXT:  A review of each of these four standards will be presented next as a four part series.


[1] 42 U.SC. §§ 11101 – 11152.

[2] 486 U.S. 94, 108 S. Ct. 1658, 100 L. Ed. 2d 83, 56 U.S.L.W. 4430.

[3] Rrzesr E., “The National Practitioner Data Bank,” Journal of Legal Medicine,  1992, 409-62.

[4] Heffernan, Margot, “The Health Care Quality Improvement Act of 1986 and the National Practitioner Data Bank: the controversy over practitioner privacy versus public access,” Bulletin Medical Library Association, Sept. 1995, pp. 263-269.

[5] H.R.Rep. No. 903, 99th Cong., 2d Sess. 2, reprinted in 1986 U.S.C.C.A.N. 6287, 6384, 6384.

[6] 42 U.S.C. § 11101(1).

[7] Id. § 11101(3).

[8] Id. §. 11111(a).

[9] Id. §. 11101(4).

[10] Bryan v. Holmes Regional Medical Center, 33 F.3d 1318, 1322-1323 (11th Cir. 1994), citing HCQIA § 11111(a)(1).

[11] H.R.Rep. 903, at 3, reprinted in 1986 U.S.C.C.A.N. at 6385.

[12] 42 U.S.C. Sec. 11111(a)(1).

[13] Id. Sec. 11112(a).

[14] Id.

[15] Id.

[16] 33 F.3d 1322-1323.

[17] 42 U.S.C. § 11112.

[18] Id.

[19] 42 U.S.C. § 11101.

[20] Id.

[21] Freilich v. Upper Chesapeake Health, Inc., 313 F.3d 205, 211-12 (4th Cir. 2002), citing Brian v. Holmes.

[22] See 42 U.S.C. Sec. 11101.

[23] Id.

[24] See 42 U.S.C. Sec. 11111(a)(1); see also Decker v. IHC Hospitals, Inc., 982 F.2d 433, 436 (10th Cir.1992).

[25] See 42 U.S.C. Sec. 11112.

[26] Id.

[27] Id.

[27] See Goldsmith v. Harding Hospitals, Inc., 762 F.Supp. 187, 188 (S.D.Ohio 1991); see also Austin v. McNamara, 979 F.2d 728, 733 (9th Cir.1992).

[29] Hancock v. Blue Cross-Blue Shield of Kansas, 21 F.3d 373, 374-375 (10th Cir. 1994); See 42 U.S.C. Sec. 11101 et seq.; H.R.Rep. No. 99-903, 99th Cong., 2d Sess. 2, reprinted in 1986 U.S.Code Cong. & Ad.News 6384-405.

[30] 42 U.S.C. § 11151(9).

[31] Moore v. Williamsburg Regional Hospital, 560 F.3d 166, 171-3 (4th Cir. 2009); 42 U.S.C. § 11151(9)(E).

[32] Austin, 979 F.2d at 734-35; accord Smith, 31 F.3d at 1486. [Smith v. Ricks, 31 F.3d 1478, 1485 (9th Cir. 1994); Austin v. McNamara, 979 F.2d 728, 734 (9th Cir. 1992).]

[33] See 42 U.S.C. § 11111(a)(1).

[34] See 42 U.S.C. § 11112(a).

[35] Parsons v. Sanchez, 46 F.3d 1143 (9th Cir.1995).

[36] 42 U.S.C. Sec. 11101(4)-(5); Smith v. Ricks, 31 F.3d 1478, 1485 (9th Cir. 1994).

[37] 42 U.S.C. §. 11112(b)(3)(C).

[38] Those requirements are: (1) in the reasonable belief that the action was in the furtherance of quality health care, (2) after a reasonable effort to obtain the facts of the matter, (3) after adequate notice and hearing procedures are afforded to the physician involved or after such other procedures as are fair to the physician under the circumstances, and (4) in the reasonable belief that the action was warranted by the facts known after such reasonable effort to obtain facts and after meeting the requirement of paragraph (3).

[39] Id. §11113.

[40] 141 Cong. Record H 9957 (Daily Ed. Oct. 14, 1986).

[41] 132 Cong. Rec. 30,766 (1986).

[42] Virmani v. Novant Health Incorp., 259 F.3d 284, 291-2 (4th Cir. 2001).

[43] 132 Cong. Rec.  33,117 (1986).

[44] 33 F.3d 1318 (11th Cir. 1994).

[45] Id. at 1334.

 


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The History of Peer Review in Hospitals: Abuse of the System

With the kind of backdrop established by Darling and its progeny, and given that the hospital board must rely on its medical staff to provide the review and enforcement of the bylaws and professional review, it was inevitable that there would be abuse of the system. This is particularly true where there is a small medical staff and its physicians are in competition with one another. Such was the case in Patrick v. Burget, et al.,[1] decided by the U.S. Supreme Court in 1988.  This was a particularly egregious case, in which “there was substantial evidence that the [medical staff physicians] had acted in bad faith in the peer-review process.”  The Court of Appeals characterized reviewing physicians’ conduct as “shabby, unprincipled and unprofessional.”[2]

The District Court held for the plaintiff, “awarded damages of $650,000 on the two antitrust claims taken together [and] …, as required by law … trebled the antitrust damages.”[3]The Court of Appeals for the Ninth Circuit reversed[4]and the U.S. Supreme Court granted certiorari.[5]

As stated above, the facts in Patrick are particularly egregious, as is delineated in the Supreme Court’s opinion:

“Astoria, Oregon, where the events giving rise to this lawsuit took place, is a city of approximately 10,000 people located in the northwest corner of the State. The only hospital in Astoria is the Columbia Memorial Hospital (CMH). Astoria also is the home of a private group-medical practice called the Astoria Clinic. At all times relevant to this case, a majority of the staff members at the CMH were employees or partners of the Astoria Clinic.

Petitioner Timothy Patrick is a general and vascular surgeon. He became an employee of the Astoria Clinic and a member of the CMH’s medical staff in 1972. One year later, the partners of the Clinic, who are the respondents in this case, invited petitioner to become a partner of the Clinic. Petitioner declined this offer and instead began an independent practice in competition with the surgical practice of the Clinic. Petitioner continued to serve on the medical staff of the CMH.

After petitioner established his independent practice, the physicians associated with the Astoria Clinic consistently refused to have professional dealings with him. Petitioner received virtually no referrals from physicians at the Clinic, even though the Clinic at times did not have a general surgeon on its staff. Rather than refer surgery patients to petitioner, Clinic doctors referred them to surgeons located as far as 50 miles from Astoria. In addition, Clinic physicians showed reluctance to assist petitioner with his own patients. Clinic doctors often declined to give consultations, and Clinic surgeons refused to provide backup coverage for patients under petitioner’s care. At the same time, Clinic physicians repeatedly criticized petitioner for failing to obtain outside consultations and adequate backup coverage.

In 1979, respondent Gary Boelling, a partner at the Clinic, complained to the executive committee of the CMH’s medical staff about an incident in which petitioner had left a patient in the care of a recently hired associate, who then left the patient unattended. The executive committee decided to refer this complaint, along with information about other cases handled by petitioner, to the State Board of Medical Examiners (BOME). Respondent Franklin Russell, another partner at the Clinic, chaired the committee of the BOME that investigated these matters. The members of the BOME committee criticized petitioner’s medical practices to the full BOME, which then issued a letter of reprimand that had been drafted by Russell. The BOME retracted this letter in its entirety after petitioner sought judicial review of the BOME proceedings.

Two years later, at the request of respondent Richard Harris, a Clinic surgeon, the executive committee of the CMH’s medical staff initiated a review of petitioner’s hospital privileges. The committee voted to recommend the termination of petitioner’s privileges on the ground that petitioner’s care of his patients was below the standards of the hospital. Petitioner demanded a hearing, as provided by hospital bylaws, and a five-member ad hoc committee, chaired by respondent Boelling, heard the charges and defense. Petitioner requested that the members of the committee testify as to their personal bias against him, but they refused to accommodate this request. Before the committee rendered its decision, petitioner resigned from the hospital staff rather than risk termination.”[6]

The Supreme Court reversed the opinion of the Court of Appeals and reinstated the District Court verdict.

Soon after this case was decided by the District Court, Congressman Ron Wyden from Orgeon introduced the Healthcare Quality Improvement Act of 1986[7] (HCQIA) in an effort to extend state peer review immunities on a federal level. It is interesting to note that even if the HCQIA had been in effect at the time of the actions taken by the hospital and its medical staff in Patrick, it would not have protected them.  HCQIA requires the peer review action to have been taken in good faith and in the reasonable belief that the action taken furthers quality health care for its protections to be effective. The HCQIA and state peer review protections laws are examined in Chapter 2.

In another case that was watched very closely, on July 23, 2008, the United States Fifth Circuit Court of Appeals reversed a very closely watched peer review case, Poliner v. Texas Health Systems,[8] a credentialing case out of the United States District Court for the Northern District of Texas involving a jury verdict awarding $366 million to a Dallas physician. [9]   The federal district court later reduced the award to $22,550,001.12.[10]   This contested peer review case was in its eighth year, with 558 separate docket entries, and while there was a reduction in the award, the district court had sustained the majority of the earlier order that upheld the jury verdict.[11]  The Fifth Circuit held that the hospital and the physician involved were immune under the Health Care Quality Improvement Act (“HCQIA”).

The case is important, not for its large damage award, but because it deals with many of the issues commonly found in credentialing cases, such as confidentiality of peer review records, the Health Care Quality Improvement Act immunity, state peer review statutes granting immunity, and damages.  Both the district court and the appeals court decisions should be required reading for any attorney who practices in the medical staff arena, whether representing hospitals or physicians, serving as hearing officer, or as counsel to the hearing officer or hearing panel.  The decisions are also excellent reference documents for individuals involved in the credentialing process and/or serving in executive positions in the hospital or medical staff.  This is a classic case of how not to impose a summary suspension.  I will briefly discuss the major points in both the district and the appellate court’s decisions, but first let us review the background of the case.

Background

Lawrence R. Poliner, M.D., is board certified in both internal medicine and cardiovascular diseases.  In 1997, he held medical staff privileges, including catheterization laboratory (“cath lab”) privileges, and was practicing cardiology at PresbyterianHospital of Dallas.   On three separate occasions, after procedures in the cath lab, nurses filed Committee Event Report Forms with respect to Dr. Poliner’s procedures.  The hospital’s Clinical Risk Review Committee received copies for these forms for appropriate action.  The committee reviewed two of these cases and referred them to the Internal Medicine Department for further review.  The other case was also referred to Internal Medicine after review.  While these cases were still pending, Dr. Levin, director of the cath lab, after reviewing another of Dr. Poliner’s cases, patient no. 36, brought it to the attention of the chief of cardiology.  Dr. Levin found “that Dr. Poliner performed an angioplasty on the wrong artery and missed a totally occluded left anterior descending coronary artery.”[12]  These issues were brought to the attention of Dr. Knochel, chair of internal medicine. Dr. Knochel then spoke to the hospital president, vice president of medical affairs, and in-house counsel.  The district court describes what happened next:

“Dr. Knochel asked plaintiff to accept abeyance of all procedures in the cath lab until an ad hoc committee appointed by Knochel could review plaintiff’s cath lab cases. Drs. Levin and Harper were present at the meeting between Knochel and plaintiff. According to plaintiff, he was given an abeyance letter after 2:00 p.m. on May 14, 1998 and told to sign and return it by 5:00 p.m. that day or his privileges would be immediately suspended. Plaintiff alleges he was not told about patient no. 36, was not given an opportunity to defend himself against the accusations, and was not told which of his patients were going to be reviewed by the ad hoc committee. Plaintiff was told not to consult an attorney before deciding whether to sign the abeyance letter. Plaintiff signed and returned the abeyance letter agreeing to an abeyance. The abeyance of plaintiff’s cath lab privileges did not extend to plaintiff’s admission and consultation privileges at the hospital.”[13]

The peer review process proceeded in a relatively normal fashion after this, with an ad hoc committee formed to review Dr. Poliner’s cases.  Finding substantial problems, the ad hoc committee referred the matter to the Internal Medicine Advisory Committee (“IMAC”).  At its meeting on May 27, the IMAC recommended additional reviews by an outside reviewer; however, an outside reviewer was not available in time for a scheduled meeting with Dr. Poliner.  The IMAC also recommended that the abeyance be extended as was provided in the bylaws. At Dr. Knochel’s direction, a letter was hand delivered to Dr. Poliner for his consent to the extension. Dr. Poliner was advised that the extension was investigational in nature with the ad hoc committee reviewing 44 of his cases. The letter indicated that Dr. Poliner would have an opportunity to meet with the IMAC to respond to the ad hoc committee review. Dr. Knochel again told Dr. Poliner that the alternative to abeyance was suspension. On May 29, Dr. Poliner signed the extension request.

Dr. Poliner received only three days notice of this meeting in which he was to defend his cases.  He requested a postponement for one day or at least to have it rescheduled from 8 a.m. to later in the day.  Dr. Knochel denied this request.

The day after this meeting, the IMAC voted unanimously to recommend suspension of Dr. Poliner’s privileges.  Dr. Knochel summarily suspended Dr. Poliner’s cath lab and echocardiography privileges but allowed all other privileges to stay in place.  Dr. Knochel told Dr. Poliner that he was entitled to an expedited hearing.

Dr. Poliner requested a hearing but not an expedited one.  The hearing proceeded as scheduled and the Hearing Committee recommended Dr. Poliner’s privileges be restored with conditions.  The Hearing Committee also found that the summary suspension was justified based on evidence available at the time.  The hospital’s Medical Board upheld the recommendation of the Hearing Committee.

Dr. Poliner then requested an appeal of the summary suspension, but was advised that pursuant to the hospital’s bylaws, appeal was limited to a determination of whether he had been substantially provided due process.  The appeal committee found that due process was adequate and told Dr. Poliner that it did not have authority to set aside the summary suspension.  The hospital’s Board of Trustees upheld the appeal committee.

The following year, Dr. Poliner filed suit in federal court[14] against the hospital, Dr. Knochel and several other physicians alleging  antitrust violations, violation of due process, business disparagement, slander and libel, tortuous interference with business and prospective advantage, violation of Deceptive Trade Practices Act, and intentional infliction of mental anguish and emotional distress.  He also requested a temporary restraining order, temporary injunction and permanent injunction, declaratory relief that immunity under the Health Care Quality Improvement Act (“HCQIA”) and the Texas Medical Practice Act did not apply, and declaratory relief that the two acts are unconstitutional.[15]

The Summary Judgment Proceeding

In the summary judgment proceeding, the court dismissed the antitrust claims,[16] and dismissed all charges against physicians other than Knochel, Harper and Levin.  The court found that the HCQIA protected the dismissed physicians.  With regard to Knochel, Harper, Levin and the hospital, the court found “a complete failure to investigate and to gather all of the facts from both sides before Dr. Knochel summarily suspended plaintiff’s privileges by telling plaintiff to sign the abeyance letter or face immediate suspension.”[17]

Another interesting finding in the summary judgment proceeding was that the hospital’s bylaws, not the medical staff bylaws, created a contract between the hospital and the physicians, and provided contractual due process rights. Therefore, the court denied summary judgment for the hospital on the breach of contract claims.[18]

In addition, the court denied summary judgment to Knochel, Harper, Lenin and the hospital on the other state law claims.  The court found that actual malice was a fact issue with regard to these defendants, indicating that there was evidence that these defendants “violated their own bylaws as well as the HCQIA in summarily suspending Dr. Poliner’s privileges.”[19] Dr. Poliner subsequently settled with Drs. Harper and Levin,[20] and the case went to trial with Dr. Knochel and the hospital as the only defendants.

The Jury Decision

The jury handed down a unanimous verdict on August 27, 2004, finding that defendants acted with actual malice and without justification or privilege.  The jury award for compensatory and exemplary damages was $366,210,159.30.[21]  Based on the evidence, the jury concluded that:

  1. The action to suspend Dr. Poliner’s cardiac cath lab privileges was not undertaken in the reasonable belief that the action furthered quality health care.  Dr. Knochel testified that he did not have enough information to assess whether Dr. Poliner posed a present danger to his patients;[22]
    1. The action lacked good faith and was taken with malice;[23]
    2. There was not adequate notice and hearing procedures afforded Dr. Poliner.  The only option he was offered was the abeyance, and he was not allowed to consult with an attorney before accepting the abeyance. In addition, defendants would not discuss patient cases with him;[24] and
      1. There was not a reasonable effort to obtain the facts of the matter.[25]

On September 18, 2006, the district court determined that the award was excessive and reduced it to $22,542,206.20, $21 million in actual damages and $1,542,106.20 in punitive damages.[26]  The court subsequently granted a settlement credit for the settlement with Drs. Levin and Harper and set the award at $21,000,000.00 in non-economic actual damages, and $7,894.92 in lost wages and $1,542,106.20, for a total award of $22,550,001.12.[27]

The Appeals Court Decision

On July 23, 2008, the appeals court reversed the district court and ruled in favor of the hospital and the defendant physician.  This decision is very instructive because the court provides a great deal of insight into how the courts construe the HCQIA.

Finding that the defendants were entitled to immunity under the HCQIA with regard to the abeyance and the extension of the abeyance, the appeals court stated:

“…The jury was charged that the May 14 abeyance and the extension of the abeyance were both professional review actions. We agree.

*  *  *

To be clear, the abeyances are temporary restrictions of privileges, and we use that terminology, which comes from the Medical Staff bylaws, in our discussion; but for the purposes of HCQIA immunity from money damages, what matters is that the restriction of privileges falls within the statute’s definition of “peer review action,” and what we consider is whether these “peer review actions” satisfy the HCQIA’s standards, and not whether the “abeyances” satisfy the bylaws.

We deal with one other preliminary matter now. The decision to extend the abeyance was made after the ad hoc committee reported the results of its review to Knochel and the IMAC; however, because of the district court’s pre-trial order of July 7, the jury did not learn of this. This does not impede our consideration of the evidence because the district court’s summary judgment and July 7 orders establish the relevant historical facts and the propriety of the ad hoc committee review for HCQIA purposes. The district court found that the ad hoc  committee members were entitled to HCQIA immunity, and more to the point, the ad hoc committee’s review undergirded the grant of HCQIA immunity for the June 12 suspension.”[28]

Regarding whether the actions were taken in the reasonable belief that they were in furtherance of quality health care, the appeals court, quoting Meyers v. Columbia/HCA Healthcare Corp., 341 F.3d 461, 468 (6th Cir. 2003) and Imperial v. Suburban Hosp. Ass’n, Inc., 37 F.3d 1026, 1030 (4th Cir. 1994), stated:

“[T]he ‘reasonable belief’ standard of the HCQIA is satisfied if ‘the reviewers, with the information available to them at the time of the professional review action, would reasonably have concluded that their action would restrict incompetent behavior or would protect patients.’” “[T]he Act does not require that the professional review result in an actual improvement of the quality of health care,” nor does it require that the conclusions reached by the reviewers were, in fact correct. It bears emphasizing that “the good or bad faith of the reviewers is irrelevant rather it is an objective inquiry in which we consider the totality of the circumstances.

*  *  *

The ad hoc committee’s review, upon which the extension of the abeyance rested, speaks for itself. A group of six cardiologists reviewed 44 of Poliner’s cases and concluded that he gave substandard care in more than half of the cases. We conclude that, as to both peer review actions, the belief that temporarily restricting Poliner’s cath lab privileges during an investigation would further quality health care was objectively reasonable.” [29]

Regarding the contention by Dr. Poliner that the restriction on his privileges resulted from anti-competitive motives, the appeals court indicated that “Our sister circuits have roundly rejected the argument that such subjective motivations overcome HCQIA immunity, as do we.”[30]

The appeals court found that no reasonable jury could conclude that defendants failed to make a reasonable effort to obtain the facts.

“[A]s to the abeyance extension, Knochel relied on the review of 44 cases conducted by the ad hoc committee.…Knochel was entitled to rely on the information provided to him by the other doctors, and there is nothing to suggest that the information was facially flawed or otherwise so obviously deficient so as to render Defendants’ reliance unreasonable.…[T]he [HCQIA] imposes a uniform set of national standards. Provided that a peer review action as defined by the statute complies with those standards, a failure to comply with hospital bylaws does not defeat a peer reviewer’s right to HCQIA immunity from damages.”[31]

Citing § 11112(c) of the HCQIA, the appeals court found that the actions taken by the defendants satisfy the procedural requirements of the Act.  “The abeyance was a restriction of privileges that was imposed to allow for an investigation to determine whether other action, such as a suspension, was necessary.”[32]  Dr. Poliner had argued that defendants did not comply because the restriction lasted 15 days, one day longer than permissible.  “For immunity purposes it is of no moment that they requested Poliner’s consent to the extension of the abeyance on May 29, the purported fifteenth day, because the decision to further restrict his privileges was made within the required 14 days. “[33]

Citing the emergency provision of § 11112(c)(2), the appeals court found that the extension of the abeyance falls within these parameters, because “The ‘emergency’provision requires only that a failure to act may result in an imminent danger to the health of any individual.…Defendants were fully warranted in concluding that failing to impose further temporary restrictions ‘may result’ in an imminent danger.”[34]

The court concluded that the actions taken by the defendants were taken in the reasonable belief that the action was warranted by the facts known at the time:

“Finally, we consider whether each peer review action was taken “in the reasonable belief that the action was warranted by the facts known after such reasonable effort to obtain facts.…Our analysis under § 11112(a)(4) closely tracks our analysis under § 11112(a)(1).” In both instances, the temporary restrictions were “tailored to address the health care concerns” that had been raised—procedures in the cath lab—leaving untouched Poliner’s other privileges. Nor was the information relayed to Knochel “so obviously mistaken or inadequate as to make reliance on [it] unreasonable.” There was an objectively reasonable basis for concluding that temporarily restricting Poliner’s privileges during the course of the investigation was warranted by the facts then known, and for essentially the reasons given above, we hold that Defendants satisfy this prong.

To allow an attack years later upon the ultimate “truth” of judgments made by peer reviewers supported by objective evidence would drain all meaning from the statute. The congressional grant of immunity accepts that few physicians would be willing to serve on peer review committees under such a threat; as our sister circuit explains, “‘the intent of [the HCQIA] was not to disturb, but to reinforce, the preexisting reluctance of courts to substitute their judgment on the merits for that of health care professionals and of the governing bodies of hospitals in an area within their expertise.’” At the least, it is not our role to re-weigh this judgment and balancing of interests by Congress.”[35]

This case shows how important following ones bylaws, state peer review laws and the HCQIA is.  It also provides a good reference guide for physicians’ counsel to review what steps the hospital and its medical staff must accomplish prior to imposing a summary suspension, or any other peer review action for that matter.

We next turn our attention to the HCQIA and the various state peer review laws.


[1] 486 U.S. 94, 108 S. Ct. 1658, 100 L. Ed. 2d 83, 56 U.S.L.W. 4430.

[2]486 U.S. 98, 106 (f.3); 800 F.2d, at 1509.

[3]486 U.S. at 98.

[4]800 F.2d 1498 (1986).

[5] 484 U.S. 814 (1987).

[6] 486 U.S. 96-97.

[7]42 U.SC. §§ 11101 – 11152. The Healthcare Quality Improvement Act of 1986, along with various state peer review statutes, provides the foundation of how peer review is conducted in hospitals today. A review of these statutory laws is the subject of Chapter 2.

[8] Poliner v. Texas Health Sys., No. 06-11235 (5th Cir. July 23, 2008).

[9] Poliner v. Texas Health Systems, U.S. Dist. LEXIS 13125 (N.D. Tex. Mar. 27, 2006 ) (Referenced herein as Doc. 488).

[10] Poliner v. Texas Health Systems, 2006 U.S. Dist. LEXIS 66819 (N.D. Tex. Sept. 18, 2006) (Referenced herein as Doc. 483); Poliner v. Texas Health Systems , 239 F.R.D. 468, 239 F.R.D. 468; 2006 U.S. Dist. LEXIS 74569 (N. Dist. TX Oct. 13, 2006)(Referenced herein as Doc. 494).

[11] See also the Court’s September 2003 summary judgment order, Poliner v. Texas Health Systems, 2003 U.S. Dist. LEXIS 17162 (N.D. Tex. Sept. 30, 2003) (Referenced herein as Doc. 238).

[12] Doc. 238 at 7.

[13] Id. at 7 & 8.

[14] Id. at 8-11.

[15] Id. at 4.

[16] Id at 13.

[17] Id. at 31.

[18] Id at 19.

[19] Id. at 31.

[20] Doc. 494 at 8.

[21] Doc. 483 at 3.

[22] Id. at 7-8.

[23] Id.  at 10.

[24] Id. at 9.

[25] Id.

[26] Doc. 238 at 9.

[27] Doc. 494 at 9.

[28] Poliner v. Texas Health Sys., No. 06-11235 (5th Cir. July 23, 2008) at 16. (Citations ommited.)

[29] Id. at 16-17.  (Citations omitted.)

[30] Id. at 19. (Citations omitted.)

[31] Id. at 20. (Citations omitted.)

[32] Id.at 22-23.

[33] Id.at 23.

[34] Id.

[35] Id. at 27. (Citations omitted.)

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The History of Peer Review in Hospitals: Part III

The New Institutional Responsibility (Continued)

By William Mack Copeland, Copeland Law, LLC, Cincinnati, OH

In McElhinney  v. William Booth Memorial Hospital,[1] the plaintiff was removed from the staff for comments made about the professional performance of some other members of the staff and hospital employees.  The court found the plaintiff to be “an especially competent, dedicated and busy surgeon whose prime concern is the welfare of his patients and the improvement of hospital conditions.”[2]  There was not a scintilla of evidence of negligence or incompetence found.[3]

After a discussion of the specific acts of which plaintiff was charged, the court states:

“The goal of providing high standards of medical care requires that physicians be permitted to assert their views when they feel that treatment of patients is improper or that negligent hospital practices are being followed.  Considerations of harmony in the hospital must give way when the welfare of patients is involved. . .”[4]

If one interprets the quoted language as meaning that physicians must be allowed freedom to review the professional performance of their colleagues, the natural conclusion would follow that the hospital is responsible for this monitoring and review.  This interpretation is reinforced by Blair v. Eblem,[5] which cites Pederson,[6] albeit for the proposition that quality care is defined by a nationwide standard.

In Ohio, the Kahn v. Suburban Community Hospital[7] case cites Darling and Joiner directly[8] and states: “hospital governing boards are responsible for upgrading the standards of health care to be maintained in a hospital.”[9]  The court further states, “so long as staff selections are . . . geared by a rationale compatible with hospital responsibility . . . a court should not interfere.”[10]

The reiterate, the notion that a hospital governing board bears some responsibility for the quality of care practiced within its walls was first adopted in 1965 bythe Illinois Supreme Court in Darling v. Charleston Community Memorial Hospital[11].   In Darling, the court enunciated a “corporate responsibility doctrine.” That doctrine holds that a hospital has a duty to provide adequate medical care, including nursing staff capable of recognizing the dangerous condition of a patient and of informing the attending physician of his condition.[12] The corporate responsibility doctrine replaced a standard under which hospitals were immunized from responsibility for medical care on the theory that lay persons were incapable of judging the quality of care. Accordingly, boards of trustees of hospitals had little choice but to accept physicians’ recommendations.[13] Darling holds a hospital responsible, in consultation with its medical staff, for establishing policies and procedures and monitoring the quality of medicine practiced to assure that physicians granted clinical privileges are competent.[14]Corporate responsibility must be distinguished from vicarious responsibility: Darling does not hold that a hospital may be vicariously liable for the negligence of a member of its hospital staff, as an employer is responsible for the acts of its employees.[15]Rather, Darling is limited to the concept that a hospital bears some responsibility for the quality of medicine practiced within it.

Courts in other jurisdictions have followed Darling.[16] Application of the corporate responsibility doctrine undoubtedly expanded the liability of hospitals for the quality of medical care. At the same time, however, the doctrine expanded hospital authority to limit or completely bar a physician’s practice at the hospital for incompetence, inexperience, and recklessness.[17]  Corporate responsibility does not depend on any intentional or negligent action by the hospital’s governing body:

“ I have reached the conclusion that the hospital is liable with great reluctance, because I am sure that the Sisters of Mercy have done everything within their power to run a proper institution. But they, like every hospital governing board, are corporately responsible for the conduct of their medical staff…. As for doctors on the Mercy staff, two thoughts keep going through my mind. The one is from Dr. Jones: ‘No one told me anything.’ The other is from Edmund Burke: ‘The only thing necessary for the triumph of evil is for good men to do nothing.’”[18]

An Arizona appellate court carried the hospital’s responsibility even further.[19] The court held a hospital responsible for professional review of the qualifications of members of its medical departments:

“[If] the Department was negligent in not taking any action against [the surgeon] or recommending to the board of trustees that action be taken, then the hospital would also be negligent.”[20]

The review must be based upon qualifications that are reasonably related to the hospital’s operation and be fairly administered:

“It is the board, not the court, which is charged with the responsibility of providing a staff of competent physicians. The board has chosen to rely on the advice of its medical staff, and the court may not surrogate for the staff in discharging this responsibility.”[21]

A hospital cannot adopt standards for staff membership or clinical privileges that are not “reasonably related to accepted measures of skill, education, and competence.” [22] For example, an Ohio hospital had adopted a standard for podiatrists that required two years of post-graduate education. The prevailing post-graduate education for podiatrists throughout the nation was a one-year internship. The court concluded that the hospital’s standard was not reasonably related to accepted measures of skill, education, and competence.[23]

When there is no evidence of class-wide discrimination, a hospital can evaluate the ethics, conduct, and degree of cooperation of each applicant for medical staff privileges.[24] Absent any evidence of class-wide discrimination:

“[T]he Board of Trustees of a hospital has substantial discretion in adopting bylaws and standards applicable to all applicants for medical staff privileges, provided such criteria are reasonable and non-discriminatory…. “[25]

 

A hospital’s standards for the granting of physicians’ privileges should be reasonably related to the operation of the hospital and fairly administered:

“[A] private hospital, regardless of the breadth of discretion that may be extended to it, cannot revoke the staff privileges of a physician in the absence of a sufficiently definite standard proscribing the conduct for which revocation is adjudged.”[26]

A hospital may adopt a standard for suspension or termination of staff privileges because of an inability to work in harmony with other hospital personnel, and it may revoke staff privileges on these grounds. Revocation of privileges may be based upon a disruptive activity of the physician and not on patient care considerations.

These results have been reached in other jurisdictions as well. The Washington Supreme Court ruled that the doctrine of corporate negligence imposes an independent duty owed directly by the hospital to the patient. The hospital must exercise reasonable care in selecting, retaining, and supervising the performance of its medical staff.19 The court distinguished a hospital’s duty under corporate negligence from vicarious liability: The court found that increasing public reliance on hospitals favored a more active role of the hospital in the quality of care. The Connecticut Supreme Court has carried the doctrine of corporate responsibility one step further. That court characterized the medical staff bylaws as a contract between the hospital and its existing staff members that had to be followed. The court declined, however, to extend this holding to new applicants.[27]

A finding against a hospital based upon its supervision of a physician requires that the plaintiff establish (1) that the hospital knew or should have known that the physician was not competent to provide certain care and (2) that the hospital’s failure to supervise the physician caused injury to the plaintiff.[28] The corporate negligence doctrine demands an alert and active governing body. That governing body, however, has wide discretion in its supervisory role as long as it exercises its discretion in a reasonable manner and under established standards that preclude arbitrary or capricious decisions.

In Texas, prior to its decision in St. Luke’s Episcopal Hospital[29], the Texas Supreme Court had never dealt with the question of whether a common-law cause of action exists for negligent credentialing.  Two lower courts had considered the question before the Texas statute providing immunity provisions was enacted in 1987[30], and those courts had reached opposite results.

In Park North General. Hospital, the San Antonio Texas Appeals Court upheld a cause of action for negligent credentialing and determined that a hospital has a duty to a patient to exercise reasonable care in the selection of its medical staff and in granting privileges to them. [31]   On the other hand, The Houston-based Texas Appeals Court in Jeffcoat held that absent an employer-employee, principal-agent, partnership, or joint venture relationship between a hospital and physician, a hospital is not liable for its credentialing decisions where the patient chooses the physician.[32]

After reviewing these decisions and the statute, the Texas Supreme Court concluded, “… we hold that the Texas Act’s immunity provisions prescribe a threshold standard of malice to state a cause of action against a hospital for its credentialing activities.”[33]

A similar conclusion was reached by the Kansas Supreme Court in McVay,[34] finding ”that a similar statute enacted to encourage hospitals to actively engage in peer review barred a claim against a medical care facility under a corporate negligence theory for its credentialing decisions involving an independent contractor physician.”[35]

In McVay, the Kansas Supreme Court concluded that regardless of the reasons favoring liability under a corporate negligence theory, it simply cannot reach the question because the clear, unambiguous language of the statute bars a patient’s claims against a hospital for credentialing or re-credentialing activities.[36]

In Tennessee, the Tennessee Supreme Court refused to even address the doctrine of corporate negligence as it applies to hospitals, however, finding  the hospital was 100 percent “at fault” in the death of its patient.[37] The patient had come to the hospital a working in the yard and experiencing pain in his arm. The facts underscore the old axiom that bad facts make bad law:

“… [Mr. Barkes] was initially seen and triaged by Jeff Jolly, a paramedic employed by River Park. Mr. Barkes complained of pain in his left forearm and wrist. Mrs. Barkes testified that she also told paramedic Jolly that Mr. Barkes was sick to his stomach, although Mr. Jolly denied receiving this information. Mr. Jolly took Mr. Barkes’ vital signs, which indicated his blood pressure was 130/70, his pulse was 100, and his respiratory rate was. 20

“After Mr. Jolly’s triage evaluation, Mr. Barkes was seen by Sherry Kinkade, a nurse practitioner. Ms. Kinkade examined Mr. Barkes’ left forearm and diagnosed a sprain due to overuse. Not observing any symptoms suggestive of a cardiac problem, Ms. Kinkade did not deem a cardiac workup necessary or appropriate. Ms. Kinkade admitted that she did not ask Mr. Barkes if he was a smoker or if he had a family history of cardiac problems. She further admitted that it was more probable than not that she did not ask Mr. Barkes about other things that she left blank on his emergency room chart, such as whether he suffered from asthma, arthritis, cancer, migraines, hepatitis, cardiac problems, tuberculosis, or drug and/or alcohol abuse.

         Ms. Kinkade then discussed Mr. Barkes’ presentation and symptoms and her diagnosis with Dr. Rosa Stone, the emergency room physician. After this consultation, Dr. Stone agreed with the diagnosis and treatment plan and signed the discharge papers for Mr. Barkes. Mr. Barkes was discharged from River Park’s emergency room at 4:45 pm, with instructions to take an over-the-counter pain reliever, to ice his forearm, and to rest the arm. He was not seen or evaluated by a physician.

        Less than two hours after leaving the hospital with a diagnosis of an arm sprain, Mr. Barkes collapsed and his wife found him unconscious on the bathroom floor of their home. At 7:27 pm, Mr. Barkes arrived by ambulance at River Park. Attempts to resuscitate him from cardiac arrest were unsuccessful, and he was pronounced dead of a myocardial infarction and sudden cardiac death.”[38]

While the hospital had emergency room policies that required each patient to be seen and evaluated by a physician, neither Dr. Stone nor Ms. Kinkade indicated that they were aware of the policy. [39]

The Tennessee court concluded, “the jury was entitled to draw the reasonable conclusion that the hospital’s failure to inform the emergency room health care providers of its policies and its failure to effectively implement a system of oversight and enforcement of its policies was negligence that caused Mr. Barkes’ death.”[40]

Perhaps the most succinct statement regarding the corporate negligence of hospitals came from the Supreme Court of Oklahoma in Strubhart, noting that ” [i]n recent years other jurisdictions deciding the question have virtually unanimously adopted some form of this theory … based on an independent duty of the institution itself owed directly to patients”[41]

Therefore, it would appear that the doctrine of corporate negligence is almost universally accepted in all states. Of these, Ohio has taken the issue one step further, recognizing the tort of negligent credentialing. Again, one could say that bad facts certainly influence courts to use their ingenuity to reach certain conclusions. In the case of Browning v. Burt,[42] in order to circumvent the one year statute of limitations for medical claims, the Ohio Supreme Court made a distinction between “hospital negligence arising out of the “care” of a patient, … defined as the prevention or alleviation of a physical or mental defect or illness” and “negligent credentialing of a physician by a hospital,” the latter not being ‘medical diagnosis, care, or treatment’ within the meaning of [the statute of limitations for medical claims].”  The court went on to declare that “An action against a hospital for bodily injury arising out of the negligent credentialing of a physician is subject to the two-year limitations period ….”  Further, the court said, “[The statute protecting peer review proceedings] does not provide a hospital with immunity from liability for the hospital’s negligence
in granting and/or continuing the staff privileges of an incompetent physician.”[43]

The facts of this case were egregious. The plaintiffs in this case were victims of the “love surgery” performed by Dr. James Burt at St. Elizabeth Medical Center in Dayton, Ohio.  In her Complaint, Plaintiff Browning alleged that “Drs. Burt and Blue [another physician defendant] negligently, willfully and wantonly performed unnecessary and experimental ‘vaginal reconstruction surgery’ upon her without her consent, restructuring her genital organs to an unnatural and bizarre anatomical configuration.”[44] The court was quite specific in its comments:

The theory of hospital liability at issue in these cases was discussed at some length in Albain.[45] In Albain, paragraph two of the syllabus, this court held that:

“In regard to staff privileges, a hospital has a direct duty to grant and to continue such privileges only to competent physicians. …In order to recover for a breach of this duty, a plaintiff injured by the negligence of a staff physician must demonstrate that but for the lack of care in the selection or the retention of the physician, the physician would not have been granted staff privileges, and the plaintiff would not have been injured. …”

            The general duty imposed upon hospitals to grant and continue staff privileges only to competent physicians was identified in Albain as an “independent” duty of care owed directly to those admitted to the hospital. One of the areas in which the hospital owes the independent and direct duty to a patient is in establishing (and adhering to) reasonable peer review procedures:

 ” …[O]nce a competent and careful physician has been granted staff privileges, the hospital will not thereafter be liable unless it had reason to know that the act of malpractice would most likely take place. That is, where a previously competent physician with staff privileges develops a pattern of incompetence, which the hospital should become aware of through its peer review process, the hospital must stand ready to answer for its retention of such physician.”

In addition, the majority in Albain quoted with approval the following statement:

 “ …[A hospital] is not required to pass upon the efficacy of [46]treatment; it may not decide for a doctor whether an operation is necessary, or, if one be necessary, the nature thereof; but it owes to every patient whom it admits the duty of saving him from an illegal operation [or] false, fraudulent, or fictitious medical treatment.

The complaints against SEMC in the cases before us allege that the hospital breached these independent duties owed directly to Browning and Mitchell as patients at SEMC. The “negligent credentialing” causes of action include allegations that SEMC failed to exercise prudence in granting or continuing staff privileges, failed to conduct reasonable peer review, failed to protect appellees Mitchell and Browning from known incompetent medical care, and otherwise failed to save appellees Mitchell and Browning from medical treatment (surgery) of an unnecessary and experimental nature.”114

The Southview decision which partially overruled Albain held that if a hospital holds itself out as providing care (in this case emergency care), it may be held liable under the doctrine of agency by estoppel for the negligence of independent medical practitioners practicing in the hospital when, in the absence of notice or knowledge to the contrary, the patient looks to the hospital, as opposed to the individual practitioner, to provide competent medical care. [47]

[Next: Abuse of the System]


[1]544 S.W.2d 216 (Ky. 1976).

[2]Id. at 217.

[3]Id.

[4]Id. at 218.

[5]461 S.W.2d 370 (Ky. 1970).

[6]Id. at 373.

[7]45 Ohio St. 2d 29, 340 N.E.2d 398 (1976).

[8]Id. at 45, 340 N.E.2d at 402.

[9]Id., 340 N.E.2d at 402.

[10]Id. at 44, 340 N.E.2d at 402 (quoting Sosa v. Board of Managers of Val Verde Memorial Hosp., 437 F.sd 173, 177(5th Cir. 1971)).

[11]50 Ill. App. 2d 253, 200 N.E.2d 149 (1964), affd, 33 Ill. 2d 326, 211 N.E.2d 253 (1965), cert. denied , 383 U.S. 946 (1966) (hospital held responsible for failure of hospital medical staff to request consultant despite worsening condition of patient and in violation of State regulations establishing accreditation standards).

[12]211 N.E.2d 253, 258 (1964).

[13] See Schloendorff v. Society of New York Hosp., 211 N.Y. 125, 131, 105 N.E. 92, 94 (1914); Moon v. Mercy Hosp., 150 Colo. 430, 373 P.2d 944 (1962); Purcell v. Poor Sisters of St. Francis Seraph, 147 Colo. 478, 364 P.2d 184 (1961); Iterman v. Baker, 214 Ind. 308, 15 N.E.2d 365 (1938).

[14] Hedgepeth, The Darling Case in Perspective and a New Court Speaks, 25 TRUSTEE 1 (1972).

[15] Blase, The Darling Case Shows a Silver Lining, 29 TRUSTEE 9 (1976).

[16] See, e.g., Pederson v. Dumouchel, 72 Wash. 2d 73, 431 P.2d 973 (1967) (hospital has independent duty to ensure that patient is not injured through hospital’s failure to supervise medical staff members); Joiner v. Mitchell County Hosp. Auth., 125 Ga. App. 1, 186 S.E.2d 307 (1971), affd, 229 Ga. 140, 189 S.E.2d 412 (1972) (when medical staff acted as hospital’s agent delegated to screen new physicians, hospital was responsible for negligence in their selection).

[17] Joiner v. Mitchell County Hosp. Auth., 189 S.E.2d at 414 (1972).

[18] Ludlam, The Impact of the Darling Decision Upon the Practice of Medicine and Hospitals, 11 FORUM 756, 759 (1976), citing a memorandum from J. Golberg from Gonzales v. Nork, 60 Cal. App. 3d 728, 131 Cal. Rptr. 717 (1976), vacated, Gonzales v. Nork, 20 Cal. 3d 500, 573 P.2d 458, 143 Cal. Rptr. 240 (1978).

[19] Purcell v. Zimbelman, 18 Ariz. App. 75, 500 P.2d 335 (1972).

[20]500 P.2d at 341.

[21] Khan v. Suburban Community Hosp., 45 Ohio St. 2d 39, 43-44, 340 N.E.2d 398, 402 (1976).

[22]Dooley v. Barberton Citizens Hosp., 11 Ohio St. 3d 216, 465 N.E.2d 58 (1984).

[23] Id. at 222, 465 N.E.2d at 64.

[24]Siegel v. St. Vincent Charity Hosp. & Health Center, 35 Ohio App. 3d 143, 520 N.E.2d 249 (1987); accord Bouquett v. St. Elizabeth Corp., 43 Ohio St. 3d 50, 538 N.E.2d 113 (1989). This position prevails in other jurisdictions. See Knapp v. Palos Community Hosp., 176 Ill. App. 3d 1012, 531 N.E.2d 989 (1989); Sibley v. Lutheran Hosp. of  Maryland, Inc., 709 F. Supp. 657 (D. Md. 1989); Smith v. Cleburne County Hosp., 870 F.2d 1375 (8th Cir. 1989).

[25] Siegel, 35 Ohio App. 3d at 143-44, 520 N.E.2d at 257.

[26] McElhinney v. William Booth Memorial Hosp., 544 S.W.2d 216, 218 (Ky. 1976).

[27]  Pedroza v. Bryant, 101 Wash. 2d 226, 677 P.2d 166 (1984).

[28] Tucson Medical Center, Inc. v. Misevch, 113 Ariz. 34, 36, 545 P.2d 958, 960 (1976).

[29]St. Luke’s Episcopal Hospital v. Agbor, 952 S.W.2d 503 (Tex. 1997)

[30] The St. Luke’s court found the pertinent part of the statute to be: “[a] cause of action does not accrue … against the health-care entity from any … determination or recommendation made … without malice, in the course of peer review as defined by this Act”; and “[a] … health-care entity … that, without malice, participates in medical peer review activity … is immune  from any civil liability arising from such an act.” Tex.Rev.Civ. Stat. Ann. art. 4495b, § 5.06(l ), (m).  The statute defines “medical peer review” to include “evaluation of the qualifications of professional health-care practitioners….” Id. § 1.03(a)(9).

[31] North Gen. Hosp. v. Hickman, 703 S.W.2d 262, 264-66 (Tex.App.–San Antonio 1985)

[32] Jeffcoat v. Phillips, 534 S.W.2d 168, 172-74 (Tex.Civ.App.—Houston 1976).

[33]952 S.W.2d at 509.

[34]McVay v. Rich, 255 Kan. 371, 874 P.2d 641 (1994).

[35] Id., citing McVay at 646 and Lemuz v. Fieser, 261 Kan. 936, 933 P.2d 134, 140, 145 (1997). The Kansas statute provides: “There shall be no liability on the part of … any licensed medical care facility because of the rendering of or failure to render professional services within such medical care facility by a person licensed to practice medicine and surgery if such person is not an employee or agent of such medical care facility.”   KAN. STAT. ANN. § 65-442(b) (1995).

[36]874 P.2d at 645.

[37] Barkes v. River Park Hosp., Inc., 328 S.W.3d 829, 833 (Tenn. 2010).

[38]Id. at 830-831.

[39] River Park’s policy in effect at the time of Mr. Barkes’ treatment stated, ” Any patient arriving at the Emergency Department will be seen by the emergency department nurse; triaged; and then seen by the appropriate physician.” It also stated, ” All patients presenting for treatment in the emergency room are assessed by an emergency physician.”  Id. at 833.

[40] Id. at 834.

[41]Strubhart v. Perry Mem’l Hosp. Trust Auth., 903 P.2d 263, 269 (Okla.1995). The court then cited the following cases: Fletcher v. S. Peninsula Hosp., 71 P.3d 833, 842 (Alaska 2003); Tucson Med. Ctr., Inc. v. Misevch, 113 Ariz. 34, 545 P.2d 958, 960 (Ariz.1976) (en banc); Elam v. College Park Hosp., 132 Cal.App.3d 332, 183 Cal.Rptr. 156, 158-65 (Cal.Ct.App.1982); Kitto v. Gilbert, 39 Colo.App. 374, 570 P.2d 544, 550 (Colo.Ct.App.1977); Insinga v. LaBella, 543 So.2d 209, 214 (Fla.1989); Mitchell County Hosp. Auth. v. Joiner, 229 Ga. 140, 189 S.E.2d 412, 414 (Ga.1972); Darling v. Charleston Cmty. Mem’l Hosp., 33 Ill.2d 326, 211 N.E.2d 253, 258 (Ill.1965); Ferguson v. Gonyaw, 64 Mich.App. 685, 236 N.W.2d 543, 550 (Mich.Ct.App.1975); Larson v. Wasemiller, 738 N.W.2d 300, 305 (Minn.2007); Gridley v. Johnson, 476 S.W.2d 475, 483-85 (Mo.1972); Foley v. Bishop Clarkson Mem’l Hosp., 185 Neb. 89, 173 N.W.2d 881, 884 (Neb.1970); Oehler v. Humana Inc., 105 Nev. 348, 775 P.2d 1271, 1272 (Nev.1989); Corleto v. Shore Mem’l Hosp., 138 N.J.Super. 302, 350 A.2d 534, 537-38 (N.J.Super. Ct. Law Div.1975); Raschel v. Rish, 110 A.D.2d 1067, 488 N.Y.S.2d 923, 925 (N.Y.App.Div.1985); Blanton v. Moses H. Cone Mem’l Hosp., Inc., 319 N.C. 372, 354 S.E.2d 455, 457-58 (N.C.1987); Benedict v. St. Luke’s Hosps., 365 N.W.2d 499, 504 (N.D.1985); Strubhart, 903 P.2d at 275-76; Thompson v. Nason Hosp., 527 Pa. 330, 591 A.2d 703, 707-08 (Pa.1991); Pedroza v. Bryant, 101 Wash.2d 226, 677 P.2d 166, 170 (Wash.1984) (en banc); Utter v. United Hosp. Ctr., Inc., 160 W.Va. 703, 236 S.E.2d 213, 215-16 (W.Va.1977); Johnson v. Misericordia Cmty. Hosp., 99 Wis.2d 708, 301 N.W.2d 156, 164 (Wis.1981).

[42] Browning v. Burt, 1993-Ohio-178, 66 Ohio St.3d 544, 613 N.E.2d 993 (Ohio 1993).

[43] 66 Ohio St.3d 544-5, 613 N.E.2d 995-6, syllabus by the court.

[44] 66 Ohio St.3d 546; 613 N.E. 2d 996-997.

[45] Albain v. Flower Hosp. 50 Ohio St.3d 251, 257-260, 553 N.E.2d 1038, 1044-1047 (1990), overruled on other grounds by Clark v. Southview Hosp. & Family Health Ctr., 68 Ohio St.3d 435, 628 N.E.2d 46 (Ohio 1994).

[46] 66 Ohio St.3d 555; 613 N.E. 2d 1002.(Citations omitted).

[47] Supra, 68 Ohio St.3d 435, 628 N.E.2d 46 (Ohio 1994), syllabus by the court.

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