The peer review process can lead to litigation when physicians challenge the validity of disciplinary hearings or are denied privileges. Strict adherence to good processes can reduce the risks.

  • Patients also can sue for negligent credentialing.
  • Conflicts of interest must be avoided.
  • Educate participants about issues that can cast doubt on the legitimacy of the process.

The hospital peer review process can be contentious, with physicians fighting to defend their reputations and careers, while others are just as passionate about protecting patients. Disagreements can spill over into court but good processes can minimize that risk.

Usually, the credentialing process at most facilities usually is robust and well-designed, but problems can occur when a facility must discipline a physician or revoke privileges, says Callan G. Stein, JD, partner with Pepper Hamilton in Boston. Medical staff bylaws will detail a process for these reviews, but even when the review is conducted to the highest standards the targeted physician still may respond poorly. That type of proceeding represents the biggest liability risk related to peer review, Stein says.

“When physicians have their privileges terminated, it is a very significant event in their careers. They have the means, the fortitude, and the motivation to pursue legal action against the facility,” Stein explains. “It often leads to some knock-down, drag-out litigation that airs the facility’s business in open court. Not only does the hospital face damages, which given what many physicians make could be extremely high, but they also face some potential damage in the court of public opinion as well.”

The Health Care Quality Improvement Act of 1986 (HCQIA) was intended to promote quality in healthcare by providing immunity to some participants in the peer review process, Stein notes. The act does help, but does not eliminate all liability risks, he says.

“Where it can go off the rails is if the facility does not provide a real, fair process to the physician. If there are things in the process that a physician can credibly claim were not fair, they will often bring a lawsuit and challenge the immunity that is presumed to exist under that statute,” Stein says. “If they are able to overturn that immunity, there can be some real problems for everyone involved.”

To enjoy immunity under the HCQIA, a facility must meet four requirements with its peer review process, Stein says. First, the action against the physician must have been taken in reasonable belief that it was in the furtherance of providing quality healthcare. That point often is not contested, Stein says.

The second requirement is that there must have been a reasonable effort to obtain the facts of the matter. Due process as found in the judicial system is not required, but the healthcare organization is obligated to conduct a genuine investigation of the matter before issuing any punishment, Stein explains.

“One way I’ve seen hospitals get in trouble is by jumping the gun with summary suspension before they’ve had an opportunity to really figure out what’s going on,” Stein says. “There definitely are situations where summary suspension is warranted, as when patients are at imminent risk of harm, but if it is overused that opens the possibility for the physician to claim that factor was not met.”

There also must be adequate notice of hearing procedures to the physician. This perhaps is the most important requirement, Stein says. The medical staff should set forth the hearing procedures in bylaws. Then, the hospital must strictly adhere to those procedures, he says. Any deviation will give the physician an opening to claim there was not adequate notice, and the peer review decision must be voided, he explains.

The last requirement for immunity is that, after the facts of the case are known, whatever action was taken was warranted. Stein notes that this is a backward-looking requirement that seems to give an opening for judges to simply make their own assessment rather than relying on the judgment of the peer review participants. But they usually do not.

“It sounds like this would allow the judge to go back and reweigh the evidence, but courts typically will give a lot of deference to the peer review committee,” Stein explains. “You can get into trouble if the evidence presented was either tainted or biased, or just so insufficient to justify the action that it can’t be ignored. There is the opportunity for the physician who has had his or her privileges terminated or suspended to go to court and have the evidence reassessed.”

Patients Also Can Sue

Patients can sue for negligent credentialing, alleging that their injuries were the result of the hospital granting privileges to an unqualified physician, but Stein says that risk is much lower than the risk of being sued by a disciplined physician. Most hospitals in his area use such robust credentialing programs that they verge on overkill, he says. That lowers the chance of a patient claiming they let a poorly qualified doctor harm a patient.

Nonetheless, it is important to ensure the credentialing process is tightly controlled to avoid any appearance of impropriety, he says. It is paramount that there are no conflicts of interest among the physicians participating in the credentialing process.

Not only could a physician argue that he or she was denied credentials because of a peer review participant who had a conflict of interest, but a patient also could argue in the other direction: that a relationship with a committee member resulted in an unqualified applicant receiving privileges.

“It would be a mistake to have a physician contribute to a key decision to credential someone else that they have a pre-existing relationship with, whether that relationship is familial, mentor/mentee, or a longstanding friendship. The safest course of action would be to have that person recuse himself or herself,” Stein says. “On the discipline side, you wouldn’t want someone participating in the peer review process who has longstanding issues with the physician being reviewed, or is a competitor with that physician. Often, it’s not about just eliminating actual conflicts, but it’s about eliminating even apparent conflicts that could call into question what may have actually been a very legitimate decision. It can be tainted later by the appearance of impropriety.”

Process Challenged

Physicians who challenge a peer review process in court often will allege that it was a sham to justify a decision that already had been made, Stein says. The doctor may allege conflicts of interest and cite comments from peer review participants before, during, and after the process, often taking the comments out of context to try to prove a bias, he says.

“That underscores the importance of really crossing your T’s and dotting your I’s, not only when you’re conducting the peer review process, but when you’re making assignments and putting together your committee,” Stein says. “It’s important that whoever is leading that process should remind everyone to keep an open mind. That person has to be on the lookout to prevent the appearance of impropriety or the procedure being a sham.”

Stein cautions that peer review litigation can get ugly. He once represented a hospital that was sued by a physician who had been terminated for a long history of insubordination. The doctor argued that the insubordination was just a pretext, and he really was dismissed for speaking out against the hospital’s practice of trying to keep patients in-network.

“As you can imagine, the plaintiff was able to get some traction in the news media with that allegation, and it caused all kinds of problems for this medical facility,” Stein says. “In that one, you had a physician who had been dismissed for bad behavior but he was positioning himself as the victim of some grand retaliation scheme. It can be very difficult for a hospital to deal with.”

NPDB Report Questioned

Stein also has seen a case in which the physician alleged a report to the National Practitioner Data Bank (NPDB) was improper because the investigation and peer review process were tainted. The physician alleged the report was defamatory.

Those cases are especially difficult because the hospital is obligated to make those reports, and the physician is never going to be happy with the decision to report, he says.

Stein says hospitals should employ someone who is charged with not only knowing the proper process for peer review but also how to protect the findings of the process when they are challenged. That person could be the risk manager, in-house counsel, or an outside attorney, he says.

“These hearings are quasi-judicial proceedings conducted by physicians and hospital personnel who may not be as experienced as they need to be in these areas to keep peer review proceedings from ending in litigation, or preserving the legitimacy of the outcome when they do have to go to court,” Stein says. “It is a process that is vital to the healthcare organization, and has to be protected.”


  • Callan G. Stein, JD, Partner, Pepper Hamilton, Boston. Phone: (617) 204-5103. Email: steinc@pepperlaw.com.