Legal Review & Commentary-Jury finds hospital acted with malice in granting physician privileges: $40.6 million in damages set

By Mark K. Delegal, Esq., and Jan Gorrie, Esq.

Pennington, Moore, Wilkinson, Bell and Dunbar, PA

Tallahassee, FL

News: The jury found that Columbia/HCA Health Care Corp. acted with actual malice in granting surgical privileges to a doctor who had been sued 11 times before the case at hand. Punitive damages were set at $12 million. In addition, the jury held that the physicians and hospital had been negligent and committed
medical malpractice. Damages were set at
$28.6 million.

Background: On July 15, 1998, a 40-year-old dock worker was admitted to the hospital for a routine repair of a herniated disk. During the procedure, he lost 6,800 cubic centimeters of blood, went into cardiac arrest, and suffered severe brain damage.

In addition to the hospital, the plaintiff brought suit against the surgeon, anesthesiologist, and the nurse anesthetist. The specific negligence charge against the orthopedic surgeon was that he caused the excessive bleeding and did not respond appropriately to mitigate the bleeding, which may have prevented or lessened the patient's permanent disability. As for the anesthesiologist, the charge was negligence in failing to properly respond to the bleeding. Both the physicians settled before trial for a combined total $2.2 million. At trial, the nurse anesthetist who was an employee of the anesthesiologist's medical group was found not to have been negligent.

Based upon the hospital staff's alleged failure to deliver sufficient blood in a timely fashion, there was a charge against the hospital for simple negligence. The more unusual claim against the hospital was for actual malice in allowing the surgeon to practice at the facility. In this jurisdiction, the standard for malice is a show-ing of actual subjective awareness of the act in question.

A surgeon with a past

The orthopedic surgeon had been placed on the active staff of the hospital two years prior
to this incident, at which time he had been sued for medical malpractice at least 11 times. Two months prior to the incident, the surgeon's privileges at another hospital in town had been suspended and, despite the fact that the surgeon had obtained a temporary restraining order against the hospital that had suspended him in order to prevent it from communicating the suspension to the National Practitioners Data Bank, the plaintiff said it should not have prevented the hospital in question's ability to obtain the information through its peer review function.

In addition, evidence was brought to trial that suggested that the surgeon was addicted to prescription pain medications as attested to by his former wife, a former girlfriend, and staff from his medical office. While there was no indication that the surgeon was impaired on the day of surgery, it was brought to light because it demonstrated the potential for a lack of judgment and lack of appropriate response despite its potential prejudicial impact.

Finally, the hospital's own policies and procedures for credentialing were used against it in that the standard professed to be used in assessing a person applying for privileges was "of utmost integrity," which implied that the hospital had reviewed and assessed the surgeon's moral character and fitness.

What's admissible?

In its defense, the hospital claimed that bleeding from back surgery was a known complication, regardless of the amount of bleeding. At trial, no evidence regarding specifics in this
case were presented to the jury because the
local jurisdiction requires that peer review and credentialing be kept confidential. The credentialing information was reviewed by the court
in camera, and the judge ruled that none of the material was admissible.

Hospital officials stated that the orthopedic surgeon's credentials were in order, that the number of previous malpractice cases was not abnormal, and that all had been settled prior to trial. Also, given the number of surgeries the doctor had performed (in excess of 5,000) and the fact he was in a high-risk orthopedics specialty, hospital administration said it believed that the situation was not remarkable. The hospital claimed no knowledge of illicit drug use.

The plaintiff introduced extraneous evidence regarding the surgeon, including testimony of those who knew the physician personally and did not particularly care for him, as well as the fact that he had been denied a license to practice in Mississippi because information on the application had been forged.

The $40.6 million verdict included $12 million in punitive damages against the hospital. As for the negligence claims, here is how liability was distributed among the defendant parties: orthopedic surgeon, 40%; anesthesiologist, 20%; and hospital, 40%. The compensatory award from the hospital totaled $23.2 million.

What this means to you: Most of the 35-year history of credentialing case law has focused
on findings of negligent credentialing, explains Beckie Watson, director of risk management at St. Vincent's Hospital in Jacksonville, FL. These cases were the impetus for implementing the generally rigorous credentialing process found in the hospital setting. "This process should have been in place at the hospital that granted this physician privileges," Watson says.

The central issue in this case is the adequacy and sufficiency of the hospital's credentialing process, Watson adds. Only the hospital's blank credentialing form was obtained by the plaintiff during the pendency of this suit and trial, so there are questions about whether the form was completely and accurately filled out in light of evidence presented at trial.

There are several issues at hand in this situation and some unknowns. For instance, while evidence was shown that the physician had been found to have been sued 11 times, it seems that the cases had been settled prior to trial, and it is not known how many of the cases were nuisance cases.

"From the credentialing standpoint, we see many, many nuisance cases, particularly in orthopedics because of the high-volume/high-risk nature of the specialty. These suits are generally settled by professional liability carriers with little or no input from the practitioner. Many carriers prefer to settle than incur the expense of prolonged litigation with an emotion-driven jury verdict," Watson says.

Credentials, confidentiality

As part of the credentialing process, those 11 cases should have been reviewed (and may well have been) by the chief of orthopedics and/or surgery, the credentials committee, the executive committee, and the hospital's board of directors, Watson says. Their review should determine if the suits were simply nuisance items or constituted a competence problem.

It seems the facts of the case would have led to an assigned proctor or monitor for a certain time had the issue been one of competence. Alternatively, if the cases had not been scrutinized, then that may lead a jury to a finding of negligent credentialing or, as in this instance, malicious credentialing.

The orthopedic surgeon's competency or incompetency is unknown because the hospi-tal's peer review and credentialing information remained confidential. Federal law requires the reporting of adverse incidents against a physician's privileges to the National Practitioners Data Bank. The hospital is also required by law to query the Data Bank both at the time of initial application for staff privileges and at two-year intervals afterward as part of the reappointment process.

"If no issues were reported and the hospital actually queried the Bank, then the hospital should not be faulted for allowing him on staff,
at least as it related to competence," adds Watson.

As for the suspension of privileges at another hospital in town, there would have been no reason for the hospital to ask the other facility about any such actions outside of the two-year cycle for the routine reappointment. The reappointment process should include contacting other hospitals regarding any competency and disciplinary actions.

However, unless actions were final at the time of the query, there may have been nothing to report because adverse incidents are not reported until final action has been taken by the board of directors and all appeals have been exhausted.

What the jury thought

"Should the hospital not have contacted other hospitals regarding any adverse incidents, then a claim of negligent credentialing, and perhaps malicious credentialing, could be made. However, in this instance, it does not seem that they had necessarily failed in this regard. However, it seems the jury felt otherwise," notes Watson.

"Finally, as for the alleged drug abuse, if no one had reported their suspicions to the licensing board or the hospital, then the hospital was probably innocently ignorant and should not have been liable despite the testimony to the contrary," she says.

While there are many unknowns about how the hospital handled the matter, the jury believed the hospital failed in its duty to adequately and appropriately credential its medical staff.

In light of this decision, it is interesting to note that at least 10 states have enacted or discussed the concept of institutionalization of standardized, centralized, state-administered credentialing systems. In those jurisdictions, it may be advisable to carefully review the statutory provisions relating to liability for use of the information.


Romero v. Columbia/HCA Healthcare Corp., Harris County (TX) District Court, Case No. 98-48856.