Federal legislation provides credentialing organizations a golden opportunity to gain immunity for their decisions

A Potent Weapon: Federal Peer Review Immunity under HCQIA

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.


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


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.


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.


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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1 939 F.Supp. 1514 (M.D. Ala., 1996).

2 87 F.3d 624 (3rd Cir. 1996).

3 789 F. Supp. 1054 (E.D. Cal. 1992).

4 1996 WL 589042 (Minn.App. Oct. 10, 1996) (not reported in N.W. 2d).

5 Menon v. Stouder Mem. Hosp., No. 96-CA-27, 1997 WL 71778 (Ohio App. Feb. 21, 1997). Not reported in N.E.2d.

6 731 F.Supp. 934 (C.D. Cal 1990), quoting H.R. REP. No. 903, 1986 U.S.C.C.A.N. at 6392-93. See also Bryan v. Holmes Regional Med. Ctr., 33 F.3d 1318 (11th Cir. 1994).

7 Burney v. East Alabama Med. Ctr., 939 F.Supp. 1514 (M.D. Ala. 1996) (outside consultant employing "two well-qualified neurosurgeons); Johnson v. Greater Southeast Community Hosp., 1996 WL 377147 (D. D.C.) (not reported in F.Supp.) (plaintiff's practice reviewed by both medical staff executive committee and ad hoc peer review committee); Mathews v. Lancaster Gen. Hosp., 87 F.2d 624 (3d Cir. 1996) (two-year investigation involving review of 208 cases by internal committee and independent board-certified outside reviewer); Babcock v. St. Francis Medical Center, 543 N.W. 2d 749 (Neb.App. 1996) (plaintiff's privileges termination reviewed by four different review panels).

8 See e.g., Imperial v. Suburban Hosp., 37 F.3d 1026 (4th Cir. 1994)

9 101 F.3d 1324 (10th Cir. 1996).

10 1996 WL 377147 (D. D.C. June 24, 1996) (not reported in F.Supp.)

11 822 F. Supp. 1361 (N.D. Iowa 1992).

12 64 F.3d 869 (3d Cir. 1995).

13 Mathews, 87 F.3d 624, citing Smith v. Riks, 31 F.3d 1478 (9th Cir. 1994); Bryan v. Holmes Med. Ctr., 33 F.3d 1318 (11th Cir. 1994); and Austin v. McNamara, 979 F.2d 728 (9th Cir. 1992).

14 Babcock, 543 N.W.2d 749.

15 Bryan, 33 F.3d at 1332.

16 Goodwich v. Sinai Hosp. of Baltimore, 680 A.2d 1067 (Md. 1996).

17 Bryan, 33 F.3d at 1333.

18 See Bigman v. Med. Liab. Mut. Ins. Co., 1996 WL 79330 (S.D. N.Y. Feb. 22, 1996) (not reported in F.Supp.); Janes v. Centegra Health Sys., 1996 WL 210018 (N.D. Ill. April 18, 1996) (not reported in F.Supp.).

19 1996 WL 665519 (E.D.Pa. Nov. 13, 1996) (not reported in F.Supp.).

20 88 F.3d 482 (7th Cir. 1996).