Peer review is vital for ensuring quality care and compliance with standards, but it also brings a wide range of legal liability risks. Adopting the right peer review policies and procedures is only a start; one also must ensure that all parties are following them to the letter.
Every state has statutes mandating that hospitals take responsibility for the quality of care they provide, notes Karen Owens, JD, an attorney with Coppersmith Brockelman in Phoenix. Typically, that obligation is to be met by the hospital’s organized medical staff. For example, Arizona’s peer review statute tells hospitals to “require that physicians admitted to practice in the hospital … organize into committees or other organizational structures to review the professional practices within the hospital … for the purposes of reducing morbidity and mortality and for the improvement of the care of patients provided in the institution …”
CMS, through its Conditions of Participation for hospitals in Medicare, similarly mandates peer review, as does The Joint Commission. Most states provide protection for the hospitals and physicians who must perform this difficult work of peer review by also mandating that the review work be confidential and that those who perform it (and sometimes the hospital itself) receive immunity.
“Peer review work tends to be difficult to the point that confidentiality and immunity are needed to make sure it gets done at all,” Owens says. “Peer review can cause the reviewers to suffer disruptions in referral patterns and generally cause unpopularity and discomfort. This is particularly true because medical staff leadership committees, often called medical executive committees, have the authority and obligation to recommend disciplinary actions against physicians whose quality of care poses risks to patients.”
The fact that some disciplinary actions require reporting both to state medical boards and the federal National Practitioner Data Bank (NPDB) makes physicians whose quality is questioned much more likely to fight back, Owens says.
All state peer review statutes are different, she says. Some are very broad in scope, such as those in Arizona and Colorado, while others are so narrow as to be more or less unhelpful to the hospitals and doctors performing the reviews, as in Florida and Alaska, she says. Depending on the specific state statute involved, participating in peer review can expose a physician to defamation and other business tort claims, with potential damages commensurate with the unhappy physician’s income and more.
Hospitals bear litigation risks as well, Owens says. Even in states with broad immunity provisions, a physician may sue for reinstatement of privileges.
“Beyond the business tort exposure, hospitals and physician peer review participants also are exposed to potential liability in two other expensive areas: antitrust and discrimination,” Owens says.
HCQIA Provides Immunity
The federal Health Care Quality Improvement Act of 1986 (HCQIA) provides peer review participants qualified immunity from antitrust and business tort claims if they provide certain procedural protections for the physician who is the subject of the peer review, Owens explains. But HCQIA expressly declines immunity for discrimination claims.
“In any event, HCQIA does not include a confidentiality provision, so in the absence of a state law confidentiality requirement or privilege, peer review information can be obtained in a medical malpractice suit,” Owens says. “In such cases, a patient’s lawyer can turn the in-hospital peer review activities and materials against the physician who provided the care being examined in peer review, as well as against the hospital that is required to examine that care. Claims against the hospital typically allege negligent supervision and peer review.”
As hospitals employ increasing numbers of physicians, human resources departments want access to peer review information or to supplant the peer review process in favor of sometimes quicker, more efficient employment termination actions, Owens says.
“This kind of cross-pollination is understandable, but fraught with potential liability. Depending on the state, sharing peer review information with a non-peer review process in the hospital might be considered a waiver of peer review confidentiality and/or immunity. Conversely, a refusal to share concerns about physician quality with HR could subject a hospital to negligence claims.”
Substantive Review Pitfalls
The two critical components of peer review activities in hospitals are the substantive reviews themselves, and the procedures followed in reviewing and acting on concerns about a physician’s quality of care, Owens says, and there are significant opportunities for pitfalls in both areas. On the substantive review side, a medical staff committee’s failure to use qualified personnel to conduct medical records reviews can lead to misunderstandings and incorrect judgments about the quality of a physician’s care, she says.
“Similarly, substantive reviewers should pay attention to the physician’s total number of cases. If disciplinary action is being considered based on only a very small percentage of the total cases, the reason why should be explained,” Owens says. “The same is true when cases are thinly spread over time. These and other factors should be taken into account when addressing not only whether, but how, to discipline proportionally so that patients are protected and the physician has a chance to improve his or her practice.”
Courts tend to be reluctant to overturn medical staff disciplinary actions based on substantive medical or even professional conduct issues, Owens says. Many courts have made clear that they do not have the expertise to second-guess professional opinions by the hospital reviewers, she says.
“On the other hand, judges are extremely comfortable examining and second-guessing procedures and whether they have been followed,” Owens says. “So it is not surprising that most court opinions overturning peer review disciplinary actions do so based on faulty compliance with the procedures set forth in the medical staff bylaws, rules and regulations, and related policies that govern how medical staffs do peer review.”
This is particularly true in HCQIA cases, Owens says, where the focus is on whether the hospital and medical staff have substantially complied with the due process guidelines in the federal act. In these cases, if the court finds that the physician was offered fair procedure, the hospital and its peer reviewers have immunity from all state and federal claims except discrimination claims, she explains.
“If the court finds that the physician was not afforded fair procedure, all bets are off, so to speak,” Owens says. “Unless a robust state immunity provision provides a cushion, the hospital and peer review participants are then exposed to potential defamation and even antitrust liability.”
Write Good Policies, Follow Them
The keys to successful peer review are well-written, consistently implemented policies and a disciplined adherence to those, says John C. Ivins Jr., JD, partner with the Hirschler Fleischer law firm in Richmond, VA.
“Well-written, specific hospital bylaws and related policies on issues like fair hearing plans and disruptive behavior are critical so that all physicians whose actions are the subject of peer review, and any possible adverse action concerning his or her privileges, know what is expected,” Ivins says. “They also are key to helping the physicians believe, as the process is unfolding regarding them, that they are being fairly administered.”
Many disputes arise when physicians on a medical staff believe that the peer review process is too subjective, too punitive, and unfair as it is being administered relative to them, Ivins notes. Often, these issues arise because the expectations of the medical staff are not clearly set forth in the hospital’s bylaws and related policies.
Also, if peer review is not a constant process that is pursued within the hospital as to all medical staff, then when adverse action is taken as to one physician — who is aware of similar actions not being pursued against colleagues — the process appears to be unfair, Ivins says.
“It is like 10 people speeding on the highway. All 10 may be guilty of breaking the law and creating unsafe driving conditions for those around them, but only one person’s speeding can be addressed at a time,” he says. “If the rules are well understood and the application of the rules is applied as consistently as possible, any perceived inequities in the process can be minimized.”
Understand Peer Review Roles
Those involved in peer review must clearly understand the scope of their responsibilities and strictly follow the bylaws and related policies, Ivins says. This is important from both the legal standpoint of contract law and adhering to the established contractual requirements governing medical staff privileges, and from the practical standpoint of the process appearing to be and actually being fair, he says.
There are two critical legal compliance issues, Ivins says. First, peer review must be structured to comply with the HCQIA, which provides hospitals with significant immunities from claims for damages arising out of the peer review process and professional review actions.
In addition to HCQIA, Ivins says hospital peer review should be structured and handled so as to best protect from discovery by a plaintiff’s attorney in personal injury or medical malpractice litigation against the subject physician and/or the hospital. The information gathered in investigations, the details of discussions concerning such information and the information or processes that derive from those may ultimately serve as the basis for an adverse action taken with regard to a physician’s medical staff privileges.
“This means following strictly the state law requirements of the applicable peer review statute. Most, if not all, states have some form of statute that protects from discovery certain of the information learned through peer review,” Ivins says. “Those statutes have different requirements and the courts within those states are constantly being asked to rule upon the coverage of those. Hospital counsel should be engaged to help structure the peer review process around these issues.”
Throughout the peer review process, keep in mind the community and competitive relationship between those involved on the hospital side and the practitioner whose conduct is being reviewed, Ivins advises. Major issues can arise if physicians actively involved on the hospital side are direct competitors of the subject physician.
“These types of actual or perceived conflicts need to be avoided at all cost,” he says. “Failure to consider those can ultimately taint the entire process with allegations of bias and perceived bad motives.”
Many hospitals could make better use of informal resolution options, Ivins notes.
“Obviously, every situation is different, and at the end of the day peer review is about patient safety. So, if there is a threat that requires summary suspension and that is the level of intervention that is required, then that is what must be done,” he says. “However, much of peer review pertains to nuances in clinical care and behavior that can be addressed through informal measures.”
If the hospital can develop a culture of trust among its staff and can use informal measures effectively, Ivins says it can productively address issues with its physician staff that can make the practitioner and the hospital collectively better and can save thousands of dollars that otherwise would have to be spent in the fair hearing process, defending lawsuits, and hiring.
Comply With Own Processes
The most common error in peer review is failing to comply with the hospital’s own process, says Callan Stein, JD, partner in the Boston office of Barrett & Singal.
“The proceedings are quasi-judicial proceedings, and they should be treated as such. Strict compliance with the bylaws is critical, especially as it pertains to deadlines, notice requirements, and burdens of proof,” Stein says. “A second common pitfall I have seen is a failure to sufficiently vet peer review committee members and eliminate any individuals who have an actual or even apparent conflict of interest, such as a competitor with the same specialty.”
Always err on the side of caution when evaluating whether a committee member should be recused based on a conflict of interest, Stein says. Hospitals and medical staffs should include peer review processes in their bylaws that clearly delineate all appeal rights and all deadlines to ensure the physician in question has the right to be heard, he says.
Hospitals also should consider clear policies delineating which committees are peer review committees and which are not. (For more on structuring processes, including fair hearings, see the sidebar story on page 41.)
“In my experience, hospitals typically do a pretty good job adhering to the peer review process. This, however, does not always spare them from litigation if the physician against whom disciplinary action was taken feels wronged,” Stein says. “A disciplined physician can fairly easily bring colorable civil claims against a hospital simply by alleging that the process was undertaken in bad faith or with ulterior motive. That is usually sufficient to overcome a motion to dismiss, though it may be disproved during discovery, resulting in dismissal at the summary judgment phase.”
In the worst litigation involving peer review, the real fault often lies not in the immediate instance of reviewing a physician’s performance, but in years of failing to consistently adjudicate and punish similar, or even identical, conduct, Stein says.
“When a physician is disciplined for conduct he or she has been doing for months or even years, it can lead the physician to feel singled out such that litigation is appropriate,” Stein says.
Notify Practitioners Promptly
Hospitals can run into trouble with peer review by failing to follow the medical staff bylaws, particularly regarding notifying the practitioner of potential adverse action, says Christopher Metzler, PhD, chief growth officer and CEO of FHWFit, a global healthcare conglomerate in Washington, DC.
Metzler often works with hospitals and peer review committees to improve their processes.
“I’m surprised over and over by the number of peer review committee members who have never read or who have not recently reviewed the medical staff bylaws,” Metzler says. “The problems arise with issues as simple as giving the practitioner advance notice of a hearing or a meeting, or failing to notify them of their rights after an adverse action. That is extremely dangerous from a liability standpoint.”
Metzler also points out that disclosing a potential conflict of interest is not enough to avoid peer review litigation when a physician feels the process resulted in an adverse economic effect.
“I’ve seen cases where the chair of the committee was a direct competitor. You just can’t do that,” Metzler says.
- John C. Ivins Jr., JD, Partner, Hirschler Fleischer, Richmond, VA. Phone: (804) 771-9587. Email: firstname.lastname@example.org.
- Christopher Metzler, PhD, Chief Growth Officer and CEO of FHWFit, Washington, DC. Website: http://drchristophermetzler.com.
- Karen Owens, JD, Coppersmith Brockelman, Phoenix, AZ. Phone: (602) 381-5463. Email: email@example.com.
- Callan Stein, JD, Partner, Barrett & Singal, Boston. Phone: (617) 720-5090. Email: firstname.lastname@example.org.