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A
Potent Weapon: Federal Peer Review Immunity under HCQIA
Federal
legislation provides credentialing organizations a golden opportunity
to gain immunity for their decisions
By Michael J. Baxter
THE proliferation of managed care has
compelled all health care providers to participate. Physicians who
are not part of a practice group with managed care contracts or
who aren't preferred providers with multiple managed care organizations
are doomed to extinction. To achieve and maintain those relations,
health care providers must be in good standing with both the managed
care organizations and the acute care facilities at which they maintain
privileges. Physicians who lose hospital staff privileges for quality
of care reasons risk the immediate termination of managed care contracts.
As the stakes surrounding physician credentialing have risen, the
providers' responses to adverse credentialing actions have escalated.
These responses-usually in the form of claims of antitrust violations,
intentional torts and discrimination-have focused attention on federal
and state peer review immunity laws. When properly applied, peer
review immunity is a powerful defense for credentialing entities
and an almost insurmountable hurdle to individual health care providers.
HEALTH
CARE QUALITY IMPROVEMENT ACT
The best-known
and primary source of peer review immunity is the Health Care Quality
Improvement Act of 1986, 42 U.S.C. §§ 11101-11152 (HCQIA). Enacted
to encourage the health care industry to conduct meaningful peer
review, the statute's immunity provisions have been expansively
interpreted and applied by the courts. Simply stated, the act provides
near complete immunity to claims for monetary damages arising from
peer review actions. However, to qualify for immunity, several statutory
threshold requirements must be met.
A. Professional
Review Action
In order for
credentialing or peer review decision to qualify for immunity under
HCQIA, it must be a "professional review action," which is defined
in 42 U.S.C. § 111591(9) as:
an action or
recommendation of a professional review body which is taken or
made in the conduct of professional review activity, which is
based on the competence or professional conduct of an individual
physician (which conduct affects or could affect adversely the
health or welfare of patient or patients), and which affects (or
may affect) adversely the clinical privileges, or membership in
a professional society, of the physician.
In 42 U.S.C. § 11151(11), the statute also defines "professional
review body," as:
a health care entity and the governing body or any committee
of a health care entity which conducts professional review activity,
and includes any committee of the medical staff of such an entity
when assisting the governing body in a professional review activity.
In several recent decisions, courts have considered challenges
to the applicability of the immunity based on arguments that the
action at issue was not a professional review action.
In Burney v. East Alabama Medical Center 1,
an Alabama federal district court held that a letter sent to a credentialed
physician advising him to comply with certain peer review criteria
in his practice was a professional review activity. The court found
that preliminary investigation and fact finding that lead to professional
review actions are in fact professional review activity and therefore
eligible for immunity. The court cited Matthews
v. Lancaster General Hospital 2,
in which the Third Circuit held that "professional review activity"
includes preliminary investigative measures taken in a reasonable
effort to obtain the facts relevant to a possible change in a physician's
privileges, and Fobbs v. Holy Cross Health
System Corp. 3, in which a
California federal district court stated that "professional review
activity" means the investigative process during on which a professional
review action in based.
Conversely, in Ehlen v. St. Cloud Hospital
4 , the Minnesota Court of Appeals concluded that a hospital's
enactment of a rule requiring all of its staff urologists to be
available to treat at the hospital within 30 minutes of a request
was not "professional review activity." The court reasoned that
because the rule applied to all urologists at the hospital, not
just to the physician challenging the credentialing action, it was
not "professional review activity." Accordingly, no HCQIA immunity
applied, but the court went on to find that Minnesota state law
provided immunity for enactment of the rule.
B. Safe Harbors
Once a determination has been made that a challenged peer review
action is a professional review action, immunity under HCQIA is
available if the four safe harbor provisions set out in 42 U.S.C.
§ 11112(a) are met. These four provisions are that the professional
review action was taken:
(1) in a reasonable belief that the actions was in furtherance
of a quality health care,
(2) after a reasonable effort to obtain the facts of the matter,
(3) after adequate notice and hearing procedures are afforded
to the physician involved or after such other procedures as are
fair to the physician under the circumstances, and
(4) in the reasonable belief that the action was warranted by
the facts known after such reasonable effort to obtain facts and
after meeting the requirements of paragraph (3).
1. Reasonable Belief
The first statutory requirement or safe harbor for
immunity-reasonable belief that the action was in furtherance of
quality health care-has been interpreted broadly. Without exception,
courts have held that this provision is judged by an objective,
not subjective, standard.5
Claims that credentialing decision makers have been motivated by
personal animus or bias are insufficient by themselves to defeat
immunity under HCQIA. Allegations that business peers acted for
impropercompetitive reasons also have been roundly rejected. In
Austin v. McNamara, a California federal district court noted that
Congress initially considered and rejected a "good faith" standard
for professional review actions. Without exception, allegations
of a defendant's bad faith will not defeat immunity.
2. Reasonable Effort
The second requirement-reasonable effort to obtain
the facts-has been satisfied in the great majority of published
cases by a showing that a representative portion of a physician's
practice had been examined and that the examiners had satisfactory
expertise in the involved specialty area.
Among the facts cited by the courts affirming reasonable
efforts to obtain facts in peer review are broad practice reviews
(that is, a large number of cases extending over a reasonably long
period of time), review by committees whose members include at least
one specialist in the involved are of medicine and whose members
do not include a significant number of economic competitors, the
involvement of outside consultants (preferably with teaching experience
or experience in heading a department of the involved specialty
at another institution), and multiple levels of review of the peer
review decision.
A rare published opinion concluding that immunity
was not available because of the defendant's failure to make a reasonable
effort to obtain the facts is Brown v. Presbyterian Healthcare Services,
from the 10th Circuit. A hospital terminated a staff physician's
privileges after another staff member reviewed three cases handled
by the credentialed physician, and a three-physician panel reviewed
two of her cases. The termination was based not on quality of care
reasons but on the physician's failure to comply with a second opinion
requirement. The hospital also advised another physician that if
he affiliated with the credentialed physician, the hospital would
not recruit him for a position with it.
Holding that a reasonable jury could conclude that
the panel's review was unreasonably restrictive and not taken after
a reasonable effort to obtain the facts, the court rejected the
defendant's assertion of immunity.
3. Notice and Fair Hearing
HCQIA sets forth in detail at 42 U.S.C. § 11112(b)
and (c) the specific procedural requirements of a peer review process
that will be entitled to immunity under the third requirement. In
a nutshell, the statute requires that a physician be notified of
a proposed adverse action and the reasons for the action; the notice
must indicate that the physician has a right to a hearing, which
may be requested within not less than 30 days; and the physician
must be advised of the hearing procedure, including what witnesses
will be called. The statute also specifies who can be the decision
maker at the hearing, that the physician may be represented by counsel
at the hearing, that the hearing will be recorded, and that the
physician may call and cross-examine witnesses and present evidence.
The statute also requires a written report of the result of the
hearing.
It is peculiar that the notice and fair hearing requirements
of HCQIA are less stringent than those of the Joint Commission on
Accreditation of Health Care Organizations (JCAHO) and therefore
than most hospital medical staff bylaws. JCAHO requires, among other
things, a fair hearing procedure and an appeal process. All JCAHO-accredited
institutions include an appeal process in their medical staff bylaws.
HCQIA, on the other hand, has no appeal process requirement.
This could give rise to the anomalous situation wherein
a hospital might violate its own bylaws but still be entitled to
HCQIA immunity. In fact, this situation was commented on in Johnson
v. Greater Southeast Community Hospital Corp.10
As a practical matter, if a hospital complies with HCQIA but violates
its own bylaws, a cause of action for breach of contract may arise,
and this could entitle the credentialed physician to injunctive
relief.
Although HCQIA's notice and fair hearing requirements
are straightforward and less rigorous than those of JCAHO, there
have been several credentialing cases in which hospitals were denied
the immunity defense prior to trial for failing to comply with this
HCQIA requirement. For example, in Islami v.
Covenant Medical Center, Inc.11,
the federal district court found that a peer review proceeding did
not comply with either the hospital's bylaws or HCQIA in that evidence
was presented in the credentialing hearing without the physician's
being present and without a record being made. In Brader
v. Alleghany General Hospital12,
the Third Circuit ruled that HCQIA immunity would not be available
to a defendant hospital if it had denied the plaintiff physician
an opportunity to cross-examine witnesses that testified against
him, as he had alleged.
Although HCQIA does not require significant advance
notice of a proposed credentialing action, summary actions are permitted
under the statute in the case of emergencies involving "imminent
danger to the health of any individual," and none of the notice
and hearing provisions apply to privileges restrictions shorter
than 14 days. 42 U.S.C. § 11112(c).
4. Reasonable Belief Action
Warranted by Facts
The final safe harbor for HCQIA immunity is that there
be a reasonable belief that the action taken was warranted by the
facts known. Again, an objective standard is applied. Bad faith
is immaterial, with the sole consideration being the sufficiency
of the basis for the hospital's actions13.
Generally, as long as the other three safe harbors
have been met and the final action is supported by the majority
opinion of the reviewers, the courts will conclude that the credentialing
action was reasonably warranted by the facts. The courts do not
view their role as being one to substitute their judgment for that
of the hospital's governing board or to reweigh the evidence regarding
the termination of medical staff privileges. 14
PRESUMPTION OF IMMUNITY UNDER HCQIA
Although the immunity provisions of HCQIA
are broad, they are of significant impact only if they can be applied
prior to trial-that is, by motion. In fact, Congress intended the
defense of immunity to be raised as early as possible in the litigation
process15.
To facilitate the early consideration of immunity "unless the presumption
is rebutted by a preponderance of the evidence." This statutory
presumption alters basic summary judgment motion practice in federal
and most state courts in that it essentially places the burden of
production or proof on the party opposing the motion raising the
immunity defense16.
On court has noted:
… the rebuttal presumption of HCQIA… creates an unusual summary
judgment standard than can best be expressed as follows: "Might
a reasonable jury viewing the facts in the best light for [the
plaintiff] conclude that he has shown, by a preponderance of the
evidence, that the defendant's actions are outside the scope of
§ 11112(a)."… the plaintiff bears the burden of proving that the
peer review process was not reasonable17.
In essence, once the defendant shows that the credentialing action
was a professional review action, the burden of proof to defeat
immunity-that is, that at lease one of the safe harbors was not
met-rests with the plaintiff. In most instances, that burden cannot
be satisfied.
EXCEPTIONS TO IMMUNITY AND ATTORNEY'S
FEES
While the immunity defense afforded under
HCQIA is, without a doubt, formidable, it is not absolute. There
are several statutory exceptions. First HCQIA immunity does not
apply to civil rights claims brought under 42 U.S.C. § 2000 et seq.
and § 1981 et seq. Second, although the immunity will attach to
a private antitrust claim, it does not apply to governmental antitrust
prosecutions. Third, the immunity covers only claims for monetary
damages. It is not a bar to claims for injunctive relief18.
However, the courts uniformly have found that HCQIA does not create
a private cause of action for injunctive relief when physicians
have sought to rely on it to secure and injunction prohibiting certain
reports to the National Practitioner Data Bank or halting various
adverse credentialing actions.
Last, if immunity is deemed applicable,
HCQIA provides in 42 U.S.C. § 11113 for the award of attorney's
fees to the prevailing party if the safe harbor provisions of Section
1112(a) are met and the plaintiff's claims were frivolous or otherwise
without merit. While courts generally are reluctant to assess attorney's
fees against a losing party, there have been several published opinions
doing just that. In Sklaroff v. Allegheny Health
Education Research Foundation19,
a federal district court in Pennsylvania assessed attorney's fees
and costs of approximately $145,000 against a physician who had
challenged the suspension of his hospital admitting privileges.
In Addis v. Holy Cross Health System Corp.20,
the Seventh Circuit reversed a district court decision that denied
the recovery of attorney's fees, holding that the award of fees
was not dependent on securing HCQIA immunity.
CONCLUSION
The immunity provisions of HCQIA are
easily attainable by a credentialing entity, assuming it acts reasonably
in its peer review process. The statutory requirements for immunity
are clear and often consistent with a hospital's own internal bylaws.
HCQIA creates a rebuttable presumption in favor of immunity, which
allows the issue to be resolved before trial and creates a substantial
evidentiary burden for parties attempting to avoid immunity.
IADC
member Michael J. Baxter is an owner of the law firm of Baxter,
Baker, Sidle, Conn & Jones, P.A. in Baltimore and can be reached
at mbaxter@bbsclaw.com.
He engages in a variety of health care law and litigation matters.
He is a graduate of the University of Maryland (B.A. 1977) and the
George Washington University National Law Center (J.D. 1980)
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