Federal Court Denies HCQIA Immunity for Failure to Provide Due Process

In Osuagwu v. Gila Regional Medical Center (2012 U.S. LEXIS U3225), the United States District Court for the District of New Mexico denied HCQIA immunity to the hospital and the individual defendants on the basis that the hospital failed to satisfy the due process requirements of the Healthcare Quality Improvement Act (HCQIA). Since the denial of immunity is a relatively rare occasion, I thought it meaningful to point out some key findings:

  • The Court found that there was no reasonable effort to obtain the facts
  • The Court found that the hearing process itself was tainted because a physician who acted as the primary accuser and investigator was also a member of the panel
  • The Court found that Dr. Osuagwa was denied the opportunity to cross-examine witnesses when statements of physicians treated as “experts” for purposes of the investigation were not produced as witnesses
  • Finally, and perhaps most meaningfully, the Court found that the action could not have been taken in the reasonable belief that the action was warranted by the facts with all of these procedural deficiencies

With respect to the failure to make a reasonable effort to obtain the facts, the Court found that Dr. Osuagwa was not given the chance to present his defense to the Investigating Committee in violation of the bylaws. The Court had no problem with summary suspensions prior to an investigation, and most medical staff bylaws provide for that procedure, but thereafter, the Court found that the hospital did not make an effort to get the doctor’s side of the story before taking further action.

There were a number of factors relied upon the Court to come to this conclusion, but I think the importance of this case is that the Court recognized the need to get both sides of the story in the investigatory process, before the hearing.

The Court also acknowledged the hearing deficiencies of allowing one of the key participants in the investigation to serve on the hearing panel and not providing the physician the opportunity to cross-examine witnesses.

The witness issue is also an involving development in medical staff hearings. The HCQIA proceedings and most bylaws relax the rules of evidence and allow hearsay. Some believe that this allowance of hearsay allows the statements, whether written or oral, of other physicians who have opined regarding the quality of care to be admitted into evidence, regardless of the objections. 

Since the target physician rarely has any subpoena power in medical staff hearings, they typically have no means of attacking this testimony, other than presenting their own different opinions. If this position is universally adopted, the lack of subpoena power will not be so much of an issue because the use of those opinions without providing the opportunity of cross-examination will provide a basis for challenging the immunity, proceeding to a real court, and then using the subpoena power to cross-examine those witnesses.