Hospital wins suit over surgeons and privilege

A New York surgeon must pay the legal fees and costs incurred by a hospital he sued when his medical privileges were suspended. The hospital’s attorney says the victory is a major step forward for hospitals that long feared the legal repercussions from doctors unsatisfied with the revocation of privileges.

The judge’s decision is a first for New York, says attorney Leonard M. Rosenberg, a partner with the law firm of Garfunkel Wild in Great Neck. He tells Healthcare Risk Management that the court ordered a physician to reimburse the legal fees and costs of not only the hospital, but also several doctors he sued after they recommended suspending his medical privileges.

Rosenberg says the case involved a vascular surgeon, Nedunchczian Sithian, MD. Concerns were raised about his high incidence of morbidity and mortality, leading to a review of his competency by a panel of physicians. The peer physicians recommended that Sithian not be allowed to perform complex vascular procedures anymore, and the hospital took action.

That peer review process is federally protected, of course, but risk managers still get nervous about doctors who are so upset they threaten to sue. More often than not, the threat never comes to fruition, but in this case the surgeon challenged the suspension and filed an administrative complaint with the New York State Public Health Council. The council found no justification for his complaint and said the hospital’s decision to suspend him was based on reasonable concerns for patient safety and the surgeon’s character and competence. At the same time, the surgeon initiated a lawsuit against the hospital and several doctors involved in the peer review process.

"He did take that issue to court and the courts ruled against him, so that’s the end of that matter," Rosenberg says. "But the hospital and the doctors were left holding the bag for a lot of associated legal expenses, and they didn’t think they deserved to pay."

The defendants took the surgeon back to court and won. A New York Supreme Court recently ordered the surgeon to pay a total of $215,686 to Staten Island University Hospital to cover legal fees. Additionally, Sithian must pay legal costs of $23,236 to a surgeon from a different hospital who participated in the peer review. Rosenberg represented the hospital, its chief executive officer, members of its board, and some of its physicians. The ruling was made by Justice Joseph J. Maltese, in Richmond County, Staten Island. The doctor is appealing the decision.

The court ruling obtained by HRM indicates that the judge disallowed $40,347.50 in fees submitted by Rosenberg’s law firm. A line-by-line review of the charges "shows instances of billing for the same work, numerous bills for review of prior work, and some billing items redacted so that the court cannot determine what they are for," the judge wrote. In response, the judge refused those charges and reduced the award for legal fees to $215,686.

Peer review is key

Risk managers should see the ruling as reason to stand their ground when threatened with lawsuits by spurned physicians — as long as a legitimate peer review process is used. The key to the ruling, Rosenberg says, is that the hospital followed proper procedures in denying the surgeon’s medical privileges. Agreeing with a previous court ruling, the judge determined that the hospital and its peer reviewers had complied with the federal Health Care Quality Improvement Act, which provides review participants with immunity from liability for damages if its standards are met. The act specifically allows for awarding attorneys’ fees if the court finds that the suit was brought unreasonably, frivolously, or in bad faith.

"The [act] was purposely designed to prevent the chilling effect which this type of lawsuit could have upon the participants in the peer-review process," the judge wrote. "The public is protected when there is a full and frank discussion of a physician’s abilities. The purpose of this statute is to deter groundless suits against participants in medical peer review process. In bringing a frivolous lawsuit, the defendants are entitled to reasonable attorney fees and costs."

The judge went on to say that it was "bad faith" for Sithian to sue the hospital’s medical executive committee and the doctor heading the peer review while the matter still was under consideration by the board of trustees. "Such a lawsuit sends a chilling effect to the board of trustees that any adverse action will result in personal litigation," the judge wrote. "Doctors who are sufficiently fearful of the threat of litigation will simply not do meaningful peer review. The result would be to continue the possibilities for abuse by bad doctors."

Risk managers should take heart in the ruling, Rosenberg says. Peer review can be an ugly, awkward process with an outcome that no one likes, but he says risk managers should not be overly fearful of legal action as long as proper procedure was followed. The court’s ruling indicates that the legal system understands the review process will not be effective if the participants are intimidated by threats of retaliatory lawsuits.

"When the suit is without foundation, then individuals who have been embroiled in time-consuming, expensive, aggravating litigation that otherwise would have a chilling effect on the peer-review process can recover their expenses," Rosenberg says. "The message being sent by the court in awarding these damages is that they understand that meaningful peer review can’t go forward unless the immunities and protections provided by law are enforced by the courts."