The Supreme Court of Kansas ruled on May 16, 2008 affirmed in the case of Kansas Heart Hospital, LLC and Cardiac Health of Wichita vs. Badr Idbeis, M.D. and 13 other shareholder defendants, that the Kansas Heart Hospital, LLC and Cardiac Health of Wichita were justified in forcing a mandatory redemption of the other physician's ownership interest due to investment in a competing medical facility.

Medical industry commentators were quick to compare this case to the Baptist Health case in which a hospital system is imposing non-competition or loyalty provisions as a condition for obtaining staff membership and clinical privileges, i.e. economic credentialing.

Note that the cases, although perhaps similar in impact, are quite different from a legal prospective.  The Kansas Heart Hospital case involves a determination by the Kansas Court regarding the applicability of a very technical provision of corporate law regarding the difference between redemption provisions and corporate by-laws and repurchase provisions in corporate agreements involving private shareholders.  The Court basically enforced the provisions of the corporate agreements voluntarily entered into by the physicians. 

Baptist Health is quite a different story.  It involves an attempt by a hospital to enforce economic credentialing by-law provisions which allow physicians to practice within its facilities only if they do not have competing investments.  That case involves the application of fraud and abuse rules and the community responsibilities of non-profit heath care facilities.  The Baptist Heart case has not yet been finally resolved.

A copy of the Kansas Heart Opinion appears at the link below.

www.medlawblog.com/Kansas Heart Hospital.rtf

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The U.S. District Court for the Eastern District of Tennessee concluded that a hospital's affirmative defenses pursuant to the Healthcare Quality Improvement Act (HCQIA) were not sufficient to independently establish federal jurisdiction, and therefore approved a physician's motion to remand the state court case that had been removed to federal court by the hospital defendant. 

You can view an analysis of the case by Bart Lee, Esquire (www.medlawblog.com/Breach of Contract.doc) and a copy of the opinion.  www.medlawblog.com/Opinion.pdf

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The Joint Commission announced the suspension of the planned July 2009 implementation date for the revised MS1.20 Medical Staff Standards.  The Implementation Task Force has recommended a full field review and anticipates both changes to the existing proposals and a delayed implementation date.  The full text of the news release is available at the link below.

http://www.jointcommission.org/NewsRoom/NewsReleases/nr_06_03_08.htm

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Innovative Application of Section 1981 and Medical Staff By Laws as Contracts

Ennix v. Stanton (and Alta Bates Summit Medical Center) significantly broaden the use of 42 U.S.C. §1981 in credentialing cases. In this United States District Court case for the Northern District of California, the court denies the hospital's motion for summary judgment, holding that Dr. Ennix, an African-American cardiac surgeon has satisfied the burden of pleading his contract and discrimination actions against Alta Bates Summit Medical Center. 

Medical Staff By Laws as Contracts:

Establishing a contract based upon the medical staff by laws is already an uphill fight in California. California state courts have already ruled, in O-Byrne v. Santa Monica, that the medical staff by laws do not themselves constitute a contract. However, the court ruled that Dr. Ennix has sufficiently pled that the medical staff by laws and credentialing process created a contract between the hospital and Dr. Ennix over and above the medical staff by laws themselves. The court stated that this was enough to defeat the hospital's motion for summary judgment. 

Section 1981 Discrimination:

Section 1981 provides that all persons shall have the same right to make and enforce contracts. Dr. Ennix has alleged racial discrimination based upon the contract claim. The District Court applied the McDonnell Douglas test, concluding that Dr. Ennix satisfied the initial burden of establishing a prima facie case of racial discrimination. The burden then shifted to the hospital to prove it had a legitimate non-discriminatory reason for the adverse action, in support of which the hospital asserted the decisions of the peer review committees regarding substandard care provided by Dr. Ennix. The court assumed this was sufficient to shift the burden back to Dr. Ennix to prove these allegations were a mere pretext. The court then concluded that Dr. Ennix had offered sufficient evidence regarding the disparate treatment of Dr. Ennix in the peer review process to establish genuine issues of material fact. 

The inclusion of the 1981 cause of action avoids the immunity provisions of HCQIA.

A copy of the opinion is attached.

http://op.bna.com/hl.nsf/r?Open=psts-7ecphz

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The United States District Court of the Southern  District of Indiana awarded summary judgment to a hospital claiming damages based upon a physician's breach of the employment contract. A the doctoranesthesiologist, signed an employment contract with Knox County Hospital d/b/a Good Samaritan Hospital ("Hospital"), which included a $15,000 advance. The contract required that the doctor obtain medical staff membership and clinical privileges at the hospital, but Dr. R was unable to do so. The hospital requested repayment of the advance, but the doctor refused.

The outcome of the case is based upon their credentialing decision. The medical staff voted to reject Dr. R's application based upon the omission of information from his application regarding residency program that he had not completed. The hospital's independent inquiries revealed that Dr. Richardson had received unsatisfactory grades from the program; Dr. Ron attempted to explain that the omission was inadvertent. The hospital advised Dr. R that it would reject his application, but that he had the option of withdrawing the application so that there would be no report to the National Practitioner's Data Bank. Dr. R on withdrew his application. 

The hospital's breach of contract claim is based upon Dr. R's  failure to fulfill a condition of the employment contract, i.e. medical staff membership. Dr. R's defense was that the hospital acted in bad faith by refusing to grant medical staff privileges and that he cannot be held responsible for the performance of a condition when the responsibility for that condition lies with the hospital and the hospital had a duty of acting in good faith. 

The court rejected the defense and held that the hospital was responsible for the performance of the condition, but that it acted in good faith in denying medical staff membership. The court granted summary judgment against Dr. R on the breach of contract claim. A copy of the opinion is attached below.

http://op.bna.com/hl.nsf/r?Open=psts-7edpwd

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The Kadlec case is the latest in the trend to find hospitals and physicians liable for "negligent credentialing." The theory is that hospitals are responsible if they allow incompetent physicians to operate on patients at their facilities. This first phase of negligent credentialing has been on the books for almost twenty years.

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Bipolar Physician Has ADA Standing to Sue for Medical Staff Privileges

In Haas v. Wyoming Valley Healthcare System, the U.S. District Court for the Middle District of Pennsylvania concluded that a physician had standing under Title III of the Americans with Disabilities Act (ADA) and Section 5.04 of the Rehabilitation Act concluded that an independent contractor physician had standing to sue for denial of medical staff privileges, but also concluded that the physician did not satisfy the "otherwise qualified" conditions for protection. 

In an interesting twist, the Trial Court rejected the jury decision awarding Dr. Haas $250,000.00, entered judgment as a matter of law on behalf of the hospital, and denied the physician's motion for attorney's fees based upon the jury verdict as moot.

Facts:

Dr. Haas was diagnosed with bipolar disorder in 1994 during his residency. He underwent treatment, completed his training, and obtained privileges at Wyoming Valley Health System in 2000. Dr. Haas suffered an episode during surgery in 2001 which resulted in his taking a leave of absence and seeking additional treatment. Dr. Haas applied for reinstatement, which application was granted by the hospital on the condition that Dr. Haas essentially utilize a "co-surgeon" during his operations. Dr. Haas' request that this condition be eliminated was rejected and he filed suit against he hospital. The text of the opinion appears below.

Analysis:

There are two basic legal issues, i.e. whether Dr. Haas had standing as an independent contractor to seek protection under the ADA and the Rehabilitation Act and whether Dr. Haas satisfied the conditions of those statutes.

The court concluded that Title III of the ADA and Section 5.04 of the Rehabilitation Act applied to individuals, regardless of their employee or independent contractor status, unlike Title I of the ADA which applies to employment situations.

Granting standing, the court then analyzed whether Dr. Haas was entitled to the benefits of these public accommodations because his disability could be reasonably accommodated. The court agreed with the hospital that the only reasonable accommodation would be that imposed by the hospital, i.e. a orthopedic co-surgeon to oversee and assume responsibility of the case in the event of any problem. Otherwise, the court agreed with the hospital that Dr. Haas posed a direct threat to patient care. 

Therefore, the court concluded that it was not discriminatory treatment to require Dr. Haas to satisfy the additional conditions of his appointment, which Dr. Haas was unable to do. 

http://op.bna.com/hl.nsf/id/psts-7djm83/$File/haas.pdf

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Malpractice Plaintiff Obtains Peer Review Records

A United States District Court has decided that malpractice plaintiffs seeking recovery pursuant to the Federal Tort Claims Act are entitled to obtain hospital peer review records, regardless of state immunity laws. In Vezina vs. United States of America, the Plaintiff brought suit for personal injuries, allegedly suffered while being treated by a physician employed by the Department of Health and Human Services and the Southwest Louisiana Center Health Services Clinic, and Women's and Children's Hospital. The Plaintiff sought discovery of the hospital's peer review records and the hospital filed a motion to quash. The court concluded that, since the action was founded upon the Federal Tort Claims Act and federal common law would apply, which recognizes no peer review privilege, that the requested peer review records should be produced pursuant to a protective order.

The court held that the Louisiana State peer review immunity and confidentiality statute did not apply to actions brought pursuant to the Federal Tort Claims Act.

The hospital had also asserted that confidentiality pursuant to the Healthcare Quality Improvement Act ("HCQIA") and HIPAA, the court, citing earlier decisions named in the text of the opinion, concluded that HCQIA provides immunity for production of peer review records and confidentiality protection for the reports submitted to the National Practitioners' Data Bank, but otherwise provided no additional confidentiality protection. With respect to HIPAA, a court concluded that HIPAA did not protect or prevent the production of non-party patient information so long as the information was provided in accordance with the protective order as required by HIPAA. 

Although the holding of the case is limited to malpractice claims brought pursuant to the Federal Tort Claims Act, the preemption of the state confidentiality and peer review protection acts by federal common law in federal causes of action should be meaningful in other cases founded upon federal statutes. 

http://op.bna.com/hl.nsf/id/psts-7dbmvk/$File/vez.pdf

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Georgia Peer Review Decision Exhibits Rare Common Sense

Finally, there seems to be a peer review decision that exhibits common sense. In Madonna v. Satilla Health Services, Inc., and LeFever vs. Satilla Health Services, Inc., the Georgia Court of Appeals handed a peer review decision in a case pitting exclusive contract rights against individual peer review privileges which makes common sense. Since this is the second in a series of cases involving Satilla Regional Medical Center, perhaps the courts are finally understanding the issues. 

Satilla Regional Medical Center sought an exclusive cardiology agreement with Baptist Specialty Physicians, Inc., a Georgia Professional Corporation. In entering into the exclusive cardiology agreement, the hospital sought to terminate the cardiology clinical privileges of other individual physicians, one of whom had existing clinical privileges and one of whom sought medical staff membership and clinical privileges. 

The court addressed three issues which are commonly presented in these situations, and appear to have the correct answers on all three. 

First the court ruled that both public and private hospitals are required to follow their bylaws. The court avoided the contract analysis that seems to be popular these days and the arcane issues of consideration, privity, and preexisting statutory duty. Instead, the court reasoned that, since hospitals are required to adopt bylaws in accordance to state hospital licensing regulations, they should be required to follow them once adopted. 

Second, the court held that bylaws apply as equally to existing staff members as they do to physicians submitting initial applications, unless of course the bylaws specifically provide otherwise. In Satilla, one of the physicians had lost his medical staff membership and clinical privileges when his cardiology contract was terminated, because the contract specifically provided that medical staff membership and clinical privileges were contingent upon the existence of the contract. The physician then applied for new medical staff membership and clinical privileges, and the hospital refused to process the application because of the exclusive services agreement.

Finally, the court acknowledged that hospitals can certainly enter into exclusive service agreements. However, the authority to enter into such agreements is tempered by any restrictions in the bylaws and preexisting medical staff and clinical privilege relationships. Thankfully, the court did not get mired in the ridiculous argument that clinical privileges do not necessarily give physicians with those privileges the right to use hospital equipment intrinsically necessary to exercise those privileges, which issue was discussed in the Levy v. Clinton Memorial Hospital case posted on the MedLaw Blog on February 5, 2008.

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TOO MUCH IMMUNITY IN PEER REVIEW!

An Iowa Appellate Court has reversed the earlier trial court decision in Estate of Horst G. Blume v. Marian Health Center, first reported in the MedLaw Blog on April 9, 2007. 

The trial court previously held the hospital had breached the medical staff bylaws and was therefore excluded from the benefit of Health Care Quality Improvement Act immunity because it had failed to provide the due process procedures provided in its bylaws and required by the statute. The Appellate Court has reversed that decision on the basis that there were additional immunity provisions provided in the bylaws themselves, as follows:

“The practitioner extends absolute immunity to… the hospital… for any actions… taken… by this hospital… relating to… proceedings for suspension… of clinical privileges or for… revocation of appointment, or for any other disciplinary action.”

This case illustrates the unusual outcome where the court is actually enforcing the bylaws but the hospital has immunity nonetheless. The full text of the decision is attached in the link below.

http://op.bna.com/hl.nsf/id/mapi-7bzn9q/$File/blume.pdf

This is way too much immunity! One must ask why a medical staff would adopt bylaws including specific due process rights but also include a provision that the hospital is immune from violation of those rights. At least the much-maligned immunity provided by the Healthcare Quality Improvement Act requires compliance with due process procedures in order to qualify for immunity. 

Joint Commission MS 1.20, which is subject to intense review at this point, will provide hospital medical staffs the opportunity to reevaluate their bylaws. The medical staff leaders should make sure that these unlimited immunity provisions are not included in the bylaws.

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PEER REVIEW NEWS: NEVER RESIGN PREMATURELY

Catholic Health Initiatives v. Gross is an excellent example of why premature resignations of medical staff privileges could have permanent adverse consequences. Dr. Gross was recruited by Centura Health – St. Thomas Moore Hospital, which is operated by Catholic Health Initiatives. Shortly after the commencement of the contract, Dr. Gross was involved in a peer review investigation, after which the Medical Executive Committee required Dr. Gross to obtain an evaluation of his surgical skills and requested that he voluntarily withdraw his privileges for certain surgical cases until the completion of the recommended corrective actions. MEC told Dr. Gross that he could be summarily suspended if he failed to follow those recommendations.

Dr. Gross abruptly resigned, but his first resignation specified a future effective date. The MEC responded by questioning whether Dr. Gross intended to voluntarily withdraw his privileges during the interim period, after which Dr. Gross sent a second resignation letter effective immediately. Shortly thereafter, Dr. Gross sent a third letter stating that he had not had sufficient time to consider his options and attempting to withdraw his resignation. The MEC responded by advising Dr. Gross that he could not withdraw his resignation and that he would have to reapply for medical staff privileges if he wished to continue at the hospital. Dr. Gross never submitted a new application nor did he request a hearing regarding the adverse peer review actions which had already occurred. The hospital thereafter reported Dr. Gross to the National Practitioner Data Bank for resigning while under an investigation. 

Centura Health then sued Dr. Gross for advances paid pursuant to the Recruitment Agreement, and Dr. Gross counterclaimed against the hospital and the Medical Executive Committee for denial of due process, failure to act in good faith, and tortious interference with existing and future business relationships. The United States District Court for the District of Colorado initially awarded and subsequently reaffirmed summary judgment in favor of the Medical Executive Committee, the individual members thereof, and the hospital, dismissing Dr. Gross’ claims for denial of due process and breach of implied duty of good faith and fair dealing. The hospital argued that Dr. Gross had no right to any due process under the bylaws because he resigned before any action was taken that would have entitled him to a hearing on to any of the other due process rights under the bylaws and that he had failed to exhaust his administrative remedies. The court agreed that the corrective action recommended by the hospital did not rise to the level of an adverse peer review action triggering due process rights pursuant to the bylaws, and also agreed that Dr. Gross had basically waived those rights by resigning and making himself ineligible for those protections.

The District Court also dismissed Dr. Gross’ claim that the hospital was tortiously interfering with his prospective business relationships by filing the National Data Bank Report, holding that the Data Bank Report accurately stated the facts that had occurred and was required by the Health Care Quality Improvement Act. Since the Data Bank Report was required and there was no doubt regarding the truth of the report, the immunity provisions of HCQIA protected the hospital. 

The court declined only to grant summary judgment dismissing Dr. Gross’ claims for intortious interference with existing business relationships because there was a factual issue regarding the hospital’s allegedly defamatory statements to other members of the administration and medical staff which were not immunized as part of the peer review process.

Finally, the court also granted the hospital summary judgment on its contract action to recover funds advanced to Dr. Gross pursuant to the recruitment agreement.

The case illustrates the “double-whammy” associated with premature resignations of medical staff membership and clinical privileges. First, if the resignation is made during an investigation or in order to avoid an investigation, the act generates an automatic unfavorable Data Bank Report. Second, because of the doctrine of exhaustion of administrative remedies, resignation could, as happened in the Gross case, waive any opportunity to challenge the adverse peer review actions in accordance with the medical staff bylaws. Not only does that waive the right to pursue whatever due process rights a physician might have pursuant to the bylaws, but it also forecloses recourse to the civil courts, leaving the physicians with no recourse of any kind by the hospital stand behind the shield of HCQIA immunity. The key to piercing this shield of immunity is showing that the due process rights mandated by HCQIA were not provided. When the physician waives those rights by premature resignation, that opportunity is forever lost. A copy of the opinion granting the various motions for summary judgment and the subsequent opinion denying the motions of both parties to reconsider those orders is attached at the link below.

http://op.bna.com/hl.nsf/id/mapi-79zptc/$File/catholic.pdf

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PENNSYLVANIA HOSPITAL IMPOSES MANDATORY CALL

AND TERMINATES CLINICAL PRIVILEGES

Lehigh Valley Hospital has terminated the clinical privileges of three orthopedic hand surgeons because they won’t accept every hand injury case transferred to the Cedar Crest emergency room. The story was reported in the February 17, 2008 edition of the Morning Call and the full story can be accessed at the link below.

http://www.mcall.com/news/local/all-b1_5hand.6269571feb17,0,6433912.story?track=rss

The story highlights the conflict between hospital obligations to provide 24 hour coverage, usually mandated by EMTALA, and subspecialty physicians’ increasing unwillingness to accept call coverage responsibilities without additional compensation. However, it is important to note that the orthopedic hand surgeons who are the subject of this story maintain that call compensation is not an issue in this dispute; they maintain that the call coverage conflict is simply a result of too much volume putting resource pressures on their practices. 

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Levy v. Clinton Memorial Hospital, a recent Ohio state court case, confirms the longstanding concept that hospitals may close medical staffs or departments for quality of care reasons, but also reaches the absurd legal conclusion that medical staff bylaws do not constitute contracts and that clinical privileges are equipment specific. 

FACTS

Clinton Memorial Hospital expanded its cancer care facilities by adding a linear accelerator, which is really nothing more than upgrading to current standard of care. The hospital awarded a full-time exclusive contract to Dr. Stella Ling to provide radiation oncology services. The radiology oncology services were previously provided by a group consisting of Drs. Richard Levy, Peter Fried, and Marc Mosbacher. 

The hospital took the logically absurd position that the exclusive contract did not impact the clinical privileges of Drs. Levy, Fried and Mosbacher, because they were still permitted to provide radiation oncology services at the hospital using the old equipment, but they were not entitled to use the linear accelerator. Of course, the old equipment had been removed and replaced by the linear accelerator. If widely adopted, this theory would allow hospitals to change privileges by changing equipment. Theoretically, hospitals could disenfranchise an entire group of specialists by replacing the equipment at the hospital. 

CLOSED MEDICAL STAFF

Although the headlines of the case deal with the idea of closing a medical staff or a medical staff department, that is a fairly well accepted principal and not widely contested. The issue is really what happens to the physicians with existing staff privileges. When the closing of the medical staff department does not disenfranchise the existing physicians, there is rarely a complaint about the process. However, when physicians are replaced by other physicians, those disenfranchised are quick to suggest future denial of due process. This issue of often puts physicians against physicians.

MEDICAL STAFF BYLAWS AS CONTRACTS

The majority position on this issue is that medical staff bylaws do constitute contracts, as noted by general posts on the MedLaw Blog. This Ohio court goes to absurd legal constructions to find that medical staff bylaws do not constitute a contract. Primarily, the court finds there is no mutuality of obligations, because only the hospital is required to follow the bylaws and the physicians are not required to even practice at the hospital. Of course, if the hospital had actually terminated the physicians medical staff privileges under circumstances in which the hospital desired to utilize the medical staff to process procedures, the first argument the hospital would have made had the physicians gone straight to court is that the physicians were obligated to use the administrative remedies of the bylaws. Medical staffs would do themselves a great favor if they simply stated in the bylaws that the bylaws were intended to be binding on both parties. In fact, the court stated that the medical staff bylaws were merely statements of general intent and did not reflect any meeting of the minds. 

DENIAL OF HEARING RIGHTS

The hospital denied that the physicians had medical staff due process hearing rights because, even though the change in the equipment might have been a constructive termination of their privileges, the privileges were not terminated for professional cause and the bylaws provided hearing rights only in the event of some type of professional cause termination. Ironically, the hospital is also arguing that it had the right to close the medical staff because it had the right to make improvements in quality of care, but that would not have been an issue had the physicians maintained their clinical privileges for the term of their appointments. 

The issue medical staffs must confront in dealing with these issues is whether hospitals should be permitted to constructively terminate clinical privileges by awarding exclusive contracts or changing equipment during the term of the appointment of existing medical staff members, or whether those types of changes must protect those existing rights. No dispute would be raised if the hospital simply declined to renew the medical staff privileges of the current physicians at the next renewal time. After all, if the medical staff bylaws do constitute contracts and the physicians have two year appointments, those contractual two year appointments expire at the end of two years. 

| Posted By Michael Cassidy In Credentialing | 3 Comments | Permalink

EXHAUSTION OF ADMINISTRATIVE REMEDIES CONFIRMED AGAIN

A Colorado Federal District Court has confirmed the applicability of the doctrine of exhaustion administrative remedies regarding credentialing disputes. In Catholic Health Initiatives, Colorado v. Gross, Dr. Gross terminated the hospital peer review process by resigning during the early stages of an investigation. The facts of the case indicate that a quality issue regarding Dr. Gross’ performance arose at the hospital. The hospital notified Dr. Gross of its evaluation and indicated that he should either voluntarily withdraw his privileges to perform certain surgical cases or that he continues to perform the procedures only with the assistance of a proctor under specified conditions. Rather than comply, Dr. Gross resigned. When Dr. Gross attempted to withdraw his resignation, the hospital took the position that the resignation was final and that Dr. Gross’ only recourse was to reapply for medical staff membership and clinical privileges.

Dr. Gross filed suit in District Court alleging breach of a duty of good faith, denial due process and tortious interference with contractual relationships. The District Court granted the hospital’s motion for summary judgment on the due process and breach of contract issues, but split its decision on two tortious interference claims. One claim based upon a Data Bank Report was dismissed based upon HCQIA immunity. The second, based upon the hospital’s non-peer review conduct, was not dismissed.

The Federal District Court followed the recent holding of the Colorado Supreme Court in Crow v. Penrose-St. Francis Healthcare System, which required that a physician must exhaust all peer review committee administrative remedies before seeking relief in court. This decision was featured in a Med Law Blog post on October 29, 2007.

A copy of the full opinion is available at the following link:

http://op.bna.com/hl.nsf/id/mapi-79zptc/$File/catholic.pdf

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JOINT COMMISSION ANNOUNCES MS.1.20 TASK FORCE

The Joint Commission today announced the establishment of a special fact finding task force that will examine implementation issues related to revised hospital medical staff standard MS.1.20 and address issues of concern that have been raised.   The Joint Commission expects the task force report at the Board of Commissioners meeting on February 29, 2008. The text of the Joint Commission press release can be accessed through the link below.

http://www.jointcommission.org/NewsRoom/NewsReleases/nr_1_3_08.htm

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The California Supreme Court has agreed to hear the appeal of Mileikowsky vs. West Hills Hospital and Medical Center. The question to be heard on appeal is:

“Does the presiding officer in a medical review proceeding have the authority to terminate the hearing as a sanction for a party’s failure to cooperate in discovery, or must that decision be made by the hearing committee in power to decide the case on the merits?” 

During medical staff proceedings, in which Dr. Mileikowsky was appealing the hospital’s denial of clinical privileges, the hearing officer terminated the medical staff proceeding on grounds that Dr. Mileikowsky essentially failed to cooperate during the proceedings. The termination effectively affirmed the hospital’s denial of Dr. Mileikowsky’s application, which result was affirmed by the hospital’s governing board.

Dr. Mileikowsky filed a state proceeding known as a petition for a writ of mandate, challenging the hospital board’s decision. The trial court denied the petition, again effectively affirming the denial of Dr. Mileikowsky’s application. However, on appeal, the state appellate court held that the hearing officer had exceeded his statutory authority in California and ordered a new medical staff hearing. The hospital has appealed this decision to the California Supreme Court.

This case was the subject of a Med Law Blog post on September 20, 2007.  

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HCQIA IMMUNITY DENIED FOR

HOSPITAL VIOLATIONS OF DUE PROCESS

In the case of Wilkey vs. The McCullough - Hyde Memorial Hospital , the United States District for the Southern District of Ohio denied the hospital's request for summary judgment based upon immunity under the Health Care Quality Improvement Act because the hospital allegedly used an incompetent expert, denied Dr. Wilkey the opportunity to cross-examine that expert, and withheld a second favorable external review. This is only a denial of a motion for summary judgment, so the ultimate resolution of the case might indeed be different. However, this is a case where the hospital's denial of due process in the common law sense of the word has deprived it of HCQIA immunity at this level. A link to the full case is posted below:

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PEER REVIEW LITIGATION REQUIRES PRIOR

EXHAUSTION OF ADMINISTRATIVE REMEDIES 

The Colorado Supreme Court decided that physicians must exhaust administrative remedies before seeking injunctive relief or monetary damages in court; in the case of Crow vs. Penrose-St. Francis Health Care System, the Court stated:

“Because the governing board has yet to reach its final decision on the physician’s peer review, the physician has not exhausted his administrative remedies and his case was not ripe for judicial review. Therefore, the Supreme Court orders the District Court to grant the hospital’s motion to dismiss the physician’s claims.”

Dr. Crow was summarily suspended by St. Francis Health Care System. The Court reviewed the hospital’s bylaws and concluded that it had a five-step peer review process:

1.         An ad hoc peer review committee investigates complaints and makes recommendations to the credentials committee;

2.         The credentials committee reviews the issue and makes a recommendation to the medical executive committee;

3.         The medical executive committee reviews the issue and makes a recommendation to the governing board of the hospital;

4.         The physician has the right to a medical staff hearing regarding any adverse recommendation; and

5.         The physician has an appellate hearing to an appeals committee following an adverse decision of the medical staff committee.

The Court further determined that the first three steps of the peer review process had been completed promptly, but that the hospital had attempted on eleven separate occasions to schedule the medical staff hearing but all of those had been rejected by the physician, while the physician asserted that he had a right to require the hospital to produce the medical records that were the subject of the hearing in order to properly defend himself. With respect to the last issue, the Court concluded that the physician had ample opportunity to review the medical records at the hospital at anytime.

The Colorado Supreme Court’s conclusion was based upon both specific Colorado statute and general common law. The Court concluded that a peer review process was an administrative proceeding under Colorado law and that exhaustion of administrative remedies was specifically required as a condition precedent to litigation. The Court also concluded that the general rule among the states required exhaustion of administrative remedies.

The Court also concluded that it need not decide the issue of peer review immunity pursuant to the Health Care Quality Improvement Act because that issue was not ripe for decision in the context of this case. The full text of the opinion is at the following link:

http://www.courts.state.co.us/supct/opinions/2006/06SA323.pdf

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The new Joint Commission Medical Staff standards (MS.1.20) are creating significant turmoil within the healthcare industry.  Below is a BNA Report regarding the American Health Lawyers Association teleconference on the issue, in which Mike Cassidy, one of Tucker's Pennsylvania healthcare attorneys, was a presenter:

Revised Joint Commission Standards for Medical Staff Operations Roil Industry

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California courts have been active concerning peer review issues, ruling on three major decisions in the month of August. The Court of Appeals of California and the Federal District Court for the Northern District of California issued opinions further clarifying peer review processes in the state. These decisions not only affect practitioners within California, but also will influence courts across the country faced with the similar issues.

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Although the newly adopted Joint Commission Standard MS.1.20 will compel hospitals and medical staffs to re-evaluate the provisions of the medical staff by-laws on a multitude of issues, I would like to focus just upon peer review issues from the physician’s perspective, i.e., the physician who is the “target” of the peer review investigation or process.

While some stakeholders in this process from all perspectives, i.e., hospitals, physicians, administrators, medical staff officers, reject the notion that sham peer review is a problem, there is nevertheless almost universal acknowledgment that the peer review process is a threatening process to physicians being investigated. True peer review is not designed as a threatening process; it is a process intended to correct behavior and improve the quality of care. Although summary suspension and other disciplinary acts at the later stages of the peer review process inevitably occur, and in many and even in perhaps the substantial majority of cases may be justified, disciplinary actions should be an unfortunate result of a process rather than the goal of a process.

However, since the disciplinary peer review process (as distinguished from typical morbidity and mortality conferences) is very secretive and is conducted without the participation and sometimes without the knowledge of the target physician, the perception of this process as being a secretive and punitive process is all to often supported by the facts. MS.1.20 provides the opportunity to improve this process from the physician perspective, without changing either the confidentiality of the process from the perspective of a third party or affecting the control or governance of the process by the hospital or medical staff. Confidentiality was never intended to exclude physician participation. After all, most of the gory details of the process are not only disclosed, but highlighted and emphasized, once a decision to impose adverse peer review is made. My suggestions are as follows:

1.         Knowledge and Representation on the Ad Hoc/Investigative Committee: Standard bylaws provide that an investigative committee is appointed or assigned to investigate complaints about physicians. Physicians are typically notified that this action has occurred, but we believe physicians should always be notified and should also have the opportunity to approve or appoint one member of the committee, without regard to the total number of members of the committee. The goal is not to achieve a voting balance of power or stalemate, but simply to assure the absence of secrecy and the presence of accountability.

2.         Physician Participation in the Investigated Process: Standard bylaws often provide that the physician is granted the opportunity to meet with the investigative committee and discuss the findings. However, once findings have been made, the participation of the physician is almost irrelevant. The opportunity for the committee to make a decision considering all perspectives has already been lost. Physician participation in the process must start at the inception of the process, as it would in lower level peer review not intended to result in disciplinary consequences. 

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The Oklahoma Supreme Court has decided  the Oklahoma Peer Review statute (Professional Review Bodies - Protection From Liability Act) does not provide blanket immunity to peer review bodies in Oklahoma. The statute is only a defense to liability if the peer review body meets all of the requirements of the Act. In Smith v. Deaconess Hospital, a copy of which is attached at the link below, the Oklahoma Supreme Court overruled a trial court decision granting the hospital’s motion to dismiss and remanded the case for further proceedings. Among the significant shortcomings described by the Court, was the inability of Dr. Smith to cross examine the author of a peer review report of Dr. Smith’s cases and the failure to follow the bylaw procedures. The Oklahoma statute is reproduced in the text of the opinion, and it follows the structure of the requirements of the Health Care Quality Improvement Act, i.e., it establishes four similar conditions for qualified immunity and provides for specific procedural rights.

http://op.bna.com/hl.nsf/id/thyd-73qrnv/$File/Smith%20v%20Deaconess%20Hospital.htm

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Dr. John C. Perry and his practice, Teddy Bear Obstetrics & Gynecology, P.S., sued Kadlec Medical Center (which you may recall is the hospital that obtained a negligent credentialing judgment against Lakeview Medical Center in Louisiana for failing to provide credentialing information) and several members of the medical staff alleging that his credentials at Kadlec were improperly revoked as a result of a conspiracy by the defendants in restraint of trade in violation of Section 1 of the Sherman Act. 

The defendants filed a Motion to Dismiss under Federal Rule 12(b)(6), arguing that Dr. Perry failed to state a cause of action. The court reviewed the requirements for satisfactorily pleading an antitrust action in federal court and the general antitrust requirements, which are basically that the plaintiff adequately plead  facts indicating the existence of a conspiracy to restrain trade, or an attempted conspiracy, and harm to competition.

The element of harming competition has been a problem for many physicians alleging antitrust violations,  because the general rule is that the antitrust laws are intended to protect competition and not competitors. In order to proceed, the court indicated that Dr. Perry had to reasonably plead some actual harm to competition, such as price increase or at least the absence of price decreases in the OB-GYN field, a decrease in the availability of sufficient OB-GYNs in the market adversely impacting  patient access, or a decrease in quality. The court concluded that Dr. Perry had not adequately plead any of those facts and that the presence of other physicians in the market ,and in fact other physicians within Dr. Perry's practice,  belied any market impact or injury. 

The court concluded that "Factual allegations which plaintiffs say they could plea in an amended complaint are not enough to raise the right to relief above the speculative level. Not enough factual matter is alleged which, if taken as true, suggests there was any injury to competition beyond the impact on Dr. Perry. The plaintiffs have not plead enough facts in their complaint, nor have they proposed to plead enough facts in an amended complaint to reach a reasonable expectation that discovery will reveal evidence of injury to competition". The opinion in the case of John C. Perry, M.D. and Teddy Bear Obstetrics & Gynecology, P.S. v. Thomas M. Rado, M.D., et al., is available at the following link:

http://www.healthlawyers.org/email/pg/070529antitrust/Perry_v_Rado.pdf

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Curtsinger v. HCA, Inc.

Dr. Curtsinger's case illustrates one of the traps for the unwary in medical staff privileging cases. Dr. Curtsinger was summarily suspended, but was reinstated upon agreeing to a leave of absence to fulfill certain conditions for reinstatement. Upon completion of those conditions, Dr. Curtsinger requested return from his leave of absence; the hospital agreed to the return but imposed additional conditions which, according to the Court opinion, would have waived certain of Dr. Curtsinger's due process rights under the existing bylaws. This case illustrates the unanticipated consequences of what can happen when physicians voluntarily take themselves out of the due process protections of the medical staff bylaws, which commonly occurs in connection with leaves of absence. Typical medical staff bylaws require hospital approval for the return from a leave of absence but do not include denials of applications to return from leaves of absence as adverse peer review decisions subject to the fair hearing procedures of the bylaws.

Dr. Curtsinger's complaint against the hospital was dismissed on the basis of hospital immunity pursuant to the Health Care Quality Improvement Act (HCQIA). The Court concluded that the hospital had met all four standards for immunity under the HCQIA:

1.     Dr. Curtsinger's behavior was disruptive and disruptive behavior can affect patient care, so there could be a reasonable belief that the action was taken in the furtherance of quality healthcare;

2.     The hospital conducted a reasonable investigation;

3.     The hospital provided adequate due process, i.e., notice and hearing rights, and the Court rejected Dr. Curtsinger's contention that there should have been two separate notices and two separate hearings for the initial summary suspension and the subsequent denial for return from the leave of absence; and

4.     The action was taken in the reasonable belief that it was warranted because the evidence submitted by the hospital was not "so obviously mistaken or inadequate to make reliance upon them unreasonable".

The case also contained an interesting procedural decision regarding discovery of peer review records. The Court concluded that Dr. Curtsinger was entitled to discovery regarding issues of malice or bad faith regarding the peer review process but not entitled to discovery regarding other substantive issues. The distinction was concocted by the court based on the presumption language of HCQIA, which shifts the burden of proof to the physician. Since the physician bears the burden of disproving all HCQIA elements, I cannot see the distinction between the burden of proof regarding bad faith issues and the burden of proof regarding the other medical issues. Hospitals choose to disclose whatever peer review records they wish to disclose to the physician to make the case, but withhold the rest.

The opinion is available at: http://www.tsc.slate.tn.us./opinions/tca/pdf/072/curtsingerjopn.

Braswell v. HaywoodRegionalMedicalCenter

Dr. Braswell's case involved a different issue but his breach of contract claim was still dismissed pursuant to the immunity provisions of HCQIA. Dr. Braswell claimed the peer review actions instituted against him were retaliation for protected free speech under the First Amendment. Dr. Braswell was a general surgeon at a hospital in North Carolina and a member of a hospital committee recruiting additional general surgeons into the area.  The hospital agreed to recruit and subsidize the general surgeon for Dr. Braswell's practice and for another practice in the community. Dr. Braswell wrote to the physician being recruited for the other practice and, using the information supplied to the recruiting committee, advised the other surgeon being recruited that he was concerned that there would be insufficient patient volume to support two surgeons. The other recruited surgeons subsequently chose to accept the position at a different hospital.

Shortly thereafter, Dr. Braswell's peer review problems started. There was not sufficient factual information in the case to examine whether the cases and outcomes involved in the peer review process were in any way similar to the cases and the outcomes experienced by Dr. Braswell prior to the recruiting issue.

With regard to the free speech argument, the Court concluded that Dr. Braswell was not a public employee and therefore not entitled to protection under the First Amendment, because Dr. Braswell was an independent contractor/medical staff member and not an employee of the hospital. 

The Court also dismissed Dr. Braswell's breach of contract claim on the basis of HCQIA immunity. Since it dismissed the complaint, the Court did not discuss whether the bylaws constituted a contract under North Carolina law.

One interesting aspect of the HCQIA immunity was the fact that the hearing committee for Dr. Braswell's medical staff hearing concluded that the hospital had not satisfactorily documented its investigation, despite the fact that there may have been serious quality issues. The Court's opinion presumes that these actions were in violation of the bylaws but also concludes that the due process was fair under the circumstances, therefore allowing Dr. Braswell the protection of the "good enough" clause.

The opinion is available at: http://op.bna.com/hl.nsf/r?open=psts-72rpj6.

Semmelweis National Meeting

Mike Cassidy presented to the Semmelweis Society at its National Meeting in Washington, DC on the topic, “Protecting Yourself in Peer Review; What the Bylaws Should Say and What You Shouldn’t.”  

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My last MedLaw Blog post described four rules for making the peer review process fair. Here are four rules physicians should follow to protect themselves regardless of the peer review process.

1.         Recognize peer review when it is happening to you. There is no doubt that peer review is occurring when you get a letter proposing adverse peer review actions. The more problematic cases are the peer review processes that begin with collegial counseling or intervention.

There are two types of collegial intervention, but both can be traps. The first is the meaning discussion with a well-meaning colleague who serves on the relevant peer review committee. Since most colleagues desire to avoid conflict among themselves, it is sometimes difficult to identify these conversations as actual peer review. However, these conversations can show up later as recorded attempts to correct perceived misconduct.

The second and more obvious collegial intervention is an actual meeting with somebody that is less of a colleague and more of a peer review officer. Even though these interventions are clearly peer review, physicians often perceive these somewhat informed meetings as officious intrusions and either disregard the meetings or respond inappropriately.

It is important to recognize that both of these interventions can have future consequences if they are not recognized as harbingers of precursors to potential peer review problems.

2.         Request access to peer review records. Whenever physicians are advised that someone perceives a problem with their performance or their conduct, that physician should request a copy of the complaint or record precipitating the peer review contact, even if the hospital insists upon maintaining anonymity at that point. It is important to know how many complaints there may have been and what those complaints say. It is also important that physicians create a record of this process, preferably a record that includes at least neutral and perhaps partial witnesses. Third-party witnesses are important to prevent later distortions of the facts.

3.         Resist the urge to counterattack. Most accomplished individuals, and doctors include themselves in this category, resent disparaging comments about their conduct or competence. Resist the urge to be overly defensive. Threatening whistleblower disclosures and accusing the other physicians involved in the peer review process of competitive conspiracies and jealousies polarizes the peer review process. The other physicians resent the attacks just as much the target physician resents the intrusion. The precipitous counter attack rarely reads the mutually acceptable results.

4.         Retain experienced counsel. It is amazing that physicians who seek a medical consult at the first sign of a medical problem outside the scope of their particular sub-specialty nevertheless believe they can represent themselves in the peer review process or of that counsel is not necessary until the end of the process, when the physician as legal-patient now requires emergency surgery. Seeking experienced counsel is not an indication of lack intelligence; the issue is not intelligence, but training, experience and detached analysis.

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Sham peer review is created and perpetuated by secrecy. Charles Mackay wrote in “Eternal Justice”:

“But the sunshine aye shall light the sky,

As round and round we run;

And the truth shall ever come uppermost,

And justice shall be done.”

Physicians do not need voluminous due process protections in medical staff bylaws in order to protect their interests; they merely need the opportunity to assure that the truth will come out. Here are four suggestions to let the truth be told.

1.         Notice. Physicians should receive notice and/or copies of all complaints filed against them, whether they are mere incident reports or formal complaints requesting investigation by the medical staff. Notice provide the physicians an opportunity to respond to the complaint at the time it was made, rather than allowing them to accumulate until a more serious dispute arises. Hospitals respond that effective peer review requires confidentiality and immunity. However, the confidentiality provisions were never intended to allow anonymous complaints; they were intended to prevent third parties from discovering peer review documents as part of a tort or malpractice complaint. Those people submitting valid complaints are protected by the immunity provisions of state peer review laws, so confidentiality should not be an issue.

Hospitals defended their position by arguing that they are concerned about retaliation. Retaliation should not be permitted. Retaliation should be punishable by suspension, which may or may not be reportable to the Data Bank. Once physicians understand that they cannot retaliate against hospital employees who are just trying to do their job, retaliation should not be an issue.

Physicians should receive notice of ongoing investigations. There is nothing worst than being on the “watch list” or being on “double secret probation” in an environment in which incident reports and case review are being invited.

2.         Cross examination of witnesses. All individuals who submit reports should be included within the definition of the term “witnesses” and their reports should not be accepted as true or relied upon by the medical staff hearing committee unless the physician has had the opportunity to cross examine those individuals about those complaints. Cross examination does need to be integration under harsh lights; it is simply intended to give the physician the right to question and point out errors, inconsistencies and inaccuracies in written complaints. The immunity provisions of the state peer review laws should protect those witnesses from good faith disclosures.

3.         Premature suspensions: Clinical privileges should not be suspended unless the physician has had the opportunity to respond or to explain the situation which has thought to be the problem. Medical staff bylaws should allow suspension in those situations in which patient’s safety is an immediate and significant concern. When deciding whether patient’s safety gets protected or the physician’s right to practice gets protected, obviously the hospitals must come down on the side of patient safety. However, except in those situations, which exception will always give the hospital the most leverage or upper hand in these proceedings, suspension should not be imposed before the physician has had the opportunity to defend himself.

4.         Participation in the hearing panel: The due process procedures of the medical staff peer hearing process should allow the physician to appoint a member of the hearing panel. The hospital may retain the right to appoint the majority of the members; this safeguard is not intended to deadlock the process. It is merely intended to bring the light of day into the deliberations.

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The United States District Court for the District of Iowa held that Mercy Medical Center-Sioux City was not immune from liability under the Federal Health Care Quality Improvement Act. The Court entered summary judgment to the estate of Dr. Horst G. Blume on the basis of Mercy’s breach of contract and awarded damages to Dr. Blume in the amount of $146,000.

The District Court found that Mercy was not immune under the Federal Health Care Quality Improvement Act (HCQIA) because it breached its bylaws by never providing Dr. Blume the hearing to which he was entitled under the bylaws and that it failed to conduct a reasonable investigation as required by one of the elements of the HCQIA. The key facts regarding the failure to conduct a reasonable investigation were that Dr. Blume was never provided access to incident reports allegedly supporting the hospital’s action, that there was no reasonable effort by the hospital to obtain any facts in contrast to those incident reports, and that Dr. Blume was not given a meaningful opportunity to rebut those charges.

The hospital asserted in its defense that the HCQIA merely required a procedure which was fair to the physician under the circumstances. The Court acknowledged the existence of that language, but concluded it was not applicable to the present case.

In granting summary judgment on breach of contract issues, the Iowa Court followed the majority position with regard to medical staff bylaws, finding that the medical staff bylaws constituted a contract between the hospital and the individual members of the medical staff.

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RESTRICTIVE COVENANT UNENFORCEABLE

BY SURVIVING SPOUSE 

The Virginia Supreme Court ruled that a medical practice corporation, ownership of which had transferred from the deceased sole physician shareholder to his spouse and which was converted to a business corporation by state law, could not enforce a restrictive covenant because it could not practice medicine and had no enforceable interest. This same result could apply in Pennsylvania because it has the same combination of corporate practice of medicine and professional corporation laws. The Virginia case is Parikh v. Family Care Center and the case is available at: http://op.bna.com/hl.nsf/id/psts-6z2sn8/$File/parkikh.pdf. Although liquidated damages would prejudice your injunction rights, liquidated damages would be an effective resolution for this problem.

RADIOLOGIST DENIED ANTI-TRUST RELIEF

DESPITE PROVING CONSPIRACY

Dr. Saskia V. W. Hilton failed to demonstrate that “competition in the market for pediatric radiology services” was injured despite producing evidence that would have supported finding of an anti-competitive conduct by this hospital and its existing pediatric radiologist. The classic position is that the law protects competition not competitors.

See: http://op.bna.com/hl.nsf/id/psts-6z8qrp/$File/hilton.pdf 

CALIFORNIA PHYSICIAN NOT DAMAGED

BY BOARD CERTIFICATION REQUIREMENT

A California physician lost his medical staff privileges when he failed to meet the hospital’s new board certification requirements was found not to be entitled to pursue an action in court for damages relating to the termination of his clinical privileges because the court rule that the decision of the hospital, under California law, was a quasi legislative act of general application, in the form of the adoption of minimum qualification standards for clinical privileges, which did not create an individual cause of action. See: Tran vs. MissionHospitalRegionalMedicalCenter at:

http://op.bna.com/hl.nsf/id/thyd-9prg/$File/Tran%20v%20Mission%20Hospital.pdf