Negligent Credentialing Poses Major Risks to Hospitals
September 1, 2018
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Credentialing of physicians is a fundamental responsibility of hospitals, with failure leading to both personal tragedies and tremendous liability.
One example is the story of a fugitive spinal surgeon who is the subject of lawsuits from 500 plaintiffs in Ohio. They alleged malpractice — specifically, that he performed unnecessary procedures, used improper treatments and devices, and failed to obtain informed consent. They also claimed the hospitals and health systems were liable for negligent credentialing.
Many of the claims were in two class-action lawsuits. The patients sued a health system and two hospitals. Individual hospital executives also were named in the lawsuits.
In 2013, the surgeon was indicted on 46 federal charges, including False Claims Act allegations that he had another surgeon operate in his name, allowed employees to write oxycodone prescriptions on presigned orders, and submitted fraudulent bills. He pled not guilty and fled to Pakistan, where he is currently living and working, according to the U.S. Attorney in Ohio.
Lawsuits Continue
The lawsuits against him are proceeding, and one plaintiff’s case recently went to a jury, which awarded $350,000 for actual damages and an undisclosed amount for punitive damages, according to local media reports. The same jury was set to hear testimony in a new medical malpractice trial accusing the health system and a hospital of negligent credentialing, but unconfirmed media reports said those cases were settled.
At any rate, the story illustrates several lessons for hospital peer review professionals, says Stephanie Russo, JD, partner with the law firm of Nelson Mullins Broad and Cassel in Miami.
The hospital governing body has the final say on who is granted privileges and who is allowed to continue practicing in the hospital, and with this authority comes the ultimate responsibility for ensuring only competent physicians practice there, she explains.
That means the hospital also is liable for any harm suffered by a patient if the governing body was negligent in fulfilling this responsibility.
Hospitals must be diligent in making the initial decision whether to appoint a physician, in deciding whether to reappoint a physician (which must be done at least every two years), and at all times in between, acting swiftly in the face of concerns, Russo says.
Liability Not Automatic
Hospitals take on enormous responsibility with credentialing physicians, says Karen Owens, JD, an attorney with Coppersmith Brockelman in Phoenix. When a physician is not employed by a hospital, a medical malpractice case against the physician does not automatically implicate the hospital or subject it to liability, she notes, but an aggrieved patient may seek to sweep the hospital into the case by claiming that the physician acted as the hospital’s agent.
That type of allegation often does not work, Owens explains, because hospitals take numerous steps to differentiate themselves from their nonemployed medical staff members.
For example, a hospital’s conditions of admission document typically states that the patient understands the physicians treating him or her in the hospital may not be employees or agents of the hospital, Owens notes.
“So, in order to bring the hospital into the lawsuit and access the hospital’s deep insurance reserves, the patient may claim that the hospital negligently allowed the physician to even belong to the medical staff to begin with,” Owens says. In the Ohio class action cases, “this type of allegation must have been a no-brainer,” she says.
Competence at Issue
But Owens says it is not a foregone conclusion that the hospital improperly or negligently allowed the physician to belong to the hospital’s medical staff just because a physician committed malpractice in a hospital.
While the legal elements of negligent credentialing vary from state to state, generally to prove such a claim Owens says the plaintiff must prove these points:
• malpractice occurred;
• the hospital owed the patient a duty to perform reasonable credentialing and ongoing peer review sufficient to keep the patient safe;
• the hospital breached its duty by granting privileges or failing to adequately oversee the physician’s practice in the hospital;
• the breach caused harm to the patient.
“In other words, the malpractice plaintiff must prove that the hospital knew or should have known the physician was not competent to treat the patient — and that but for the hospital’s negligent credentialing or peer review, the physician would not have negligently treated the patient,” Owens says.
In the Ohio case, the plaintiff class needed to show that if the hospital had properly performed its job in credentialing the surgeon and peer reviewing his work, the surgeon would not have been a medical staff member or had privileges to treat members of the class, Owens explains.
Confidentiality Can Backfire
Courts have long held that a hospital must have its organized medical staff undertake credentialing and peer review activities through an organized process which provides that only professionally competent physicians receive and maintain privileges, Owens explains. (For one example of case law supporting this view, see Purcell v. Zimbelman, 18 Ariz. App. 75 500 P.2d 335 [App. 1972.]) But on the plus side, most states have statutory peer review confidentiality laws that shroud the credentialing and review process in hospitals. Those laws help protect hospitals and physicians from liability for actions, or inaction, in the peer review process, Owens says.
“However, confidentiality can be a hindrance to hospitals defending themselves against a negligent credentialing claim,” she says. “It is difficult for a hospital to show that it took appropriate actions under its organized process without revealing the inner workings of medical staff review of physician colleagues. Even if a hospital chooses to take this course, not all states even allow a hospital to waive the confidentiality requirements.”
That can leave hospitals with few options. They can share non-confidential information to the jury about the doctor’s education, training, prior employment, awards, society membership, publications, and specialty board certification, Owens explains, hoping that information helps establish that the initial credentialing process was sound.
Of course, that will not help if the doctor had a poor history before ever joining the hospital’s medical staff, she notes.
“They can explain to the jury how the ongoing peer review process works and provide meeting dates to show that the medical staff was paying attention, and the ultimate outcome of the review process,” she says. “Credentialing experts are often engaged to examine these facts and processes and try to deduce, working around the edges of peer review confidentiality, whether the hospital’s approach met the standard of care.”
Malpractice History Matters
When plaintiffs allege negligent credentialing, juries may be swayed by certain facts more than others, Owens says. They may be especially interested in prior malpractice cases, a category of information sometimes discounted in credentialing. Hospitals and health systems may look at malpractice history from the perspective of insiders who know that good doctors still get sued, but jurors are more likely to think a malpractice case indicates fault with the physician’s knowledge or performance.
Juries also may find timing issues very persuasive, Owens says. What looks to hospital leaders like a deliberate, thoughtful inquiry into concerns about a physician may seem different to a jury.
“A hospital may be able to show that meetings about a physician took place over many months, but to a jury, this information may prove that the hospital negligently failed to take prompt action,” Owens says.
Sensational cases that garner media attention show how a hospital can be vulnerable to negligent credentialing claims, but the same claim can arise in less egregious circumstances, Owens says. Plaintiffs and their attorneys are on the lookout for opportunities to assert negligent credentialing claims, especially when a physician has a history of publicly accessible malpractice cases or professional board actions, she says.
Punitive Damages Possible
The potential liability in such a case includes damages for the harm suffered by patients, such as past and future medical expenses, loss of enjoyment of life, physical and mental pain and suffering, lost earnings, and loss of future earnings, Russo explains.
“In some instances, punitive damages may be awarded as punishment for intentional or grossly reckless conduct — for instance, if the hospital knew the procedures performed by the physician were medically unnecessary, but continued to allow the physician to perform the procedures anyway to enhance its own profit,” Russo says.
She notes that many states set a cap on the maximum amount of damages a patient can recover. The amount of the cap and the categories of damages capped vary by state. In addition to this potential liability is the hospital’s consequent loss of reputation in the community, Russo says. That can be significant if the allegations against the physician are sensational and garner wide media attention.
Insiders May Blow Whistle
Hospitals and health systems can be subjected to claims of negligent credentialing in several ways, Russo explains. Allegations of performance of unnecessary surgical procedures often are made by insiders like competitors, including other physicians on staff in the same specialty but not part of the same physician group practice, she says.
The claims also may come from internal whistleblowers such as physician leaders, medical directors, and hospital-employed staff such as nurses.
Russo notes that a qui tam lawsuit in the name of the United States may be filed by the whistleblower for alleged fraud against a government program like Medicare or Medicaid. The complaint is unsealed and becomes public record after the Department of Justice decides whether it will intervene in the suit.
The hospital may enter into a corporate integrity agreement with the Office of Inspector General as part of a settlement of a federal healthcare program investigation involving alleged false claims.
Such agreements also are public record, so plaintiffs’ attorneys can use that information to launch lawsuits alleging negligent credentialing.
There are two common mistakes that lead to negligent credentialing charges, Russo says. The first is when physicians take action, but the action is not timely. Physicians are often reluctant to take corrective action against their peers except in the most egregious circumstances, Russo says.
The second is when hospitals adopt criteria for privileges, but do not apply the criteria or do not document that the physician meets the criteria.
“For example, the written criteria for open heart surgery privileges require the physician perform a minimum of at least 100 open heart surgery procedures each year to be granted privileges,” Russo says.
“However, there is no documentation in the credentials file showing the number of procedures he performed, or the documentation shows he did not perform 100 procedures.”
SOURCES
- Karen Owens, JD, Coppersmith Brockelman, Phoenix. Phone: (602) 381-5463. Email: [email protected].
- Stephanie A. Russo, JD, Partner, Nelson Mullins Broad and Cassel, Miami. Phone: (305) 373-9400. Email: [email protected].
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