Diamond Post

Professional Negligence Newsletter

Immunity to Peer Review Bodies:
Guidance from the Fourth Circuit to Healthcare Facilities

   Improving the quality of healthcare is a continuous goal of healthcare facilities.  One measure implemented by healthcare facilities to improve the quality of healthcare is peer review where a professional review body investigates the competence or professional conduct of an individual physician in order to take action or make a recommendation as to that physician's clinical privileges or membership in a professional society.  If this professional review body's decision is adverse to the physician, the physician's response may be to sue the healthcare facility for monetary damages. 

    However, Congress recognizes the need for peer review and provides protection to the facilities through peer review immunity under the Health Care Quality Improvement Act of 1986 (HCQIA), 42 U.S.C. Section 11101, et seq.  HCQIA provides immunity to healthcare entities and their governing bodies or committees against claims for monetary damages arising from peer review actions if certain conditions are met.

    Recently, the Fourth Circuit Court of Appeals evaluated whether a West Virginia hospital qualified for immunity under the HCQIA, with respect to a professional review action it had taken against one of its physicians.  Wahi v. Charleston Area Med. Center, Inc., 562 F.3d 599 (4th Cir. 2009).  The Fourth Circuit ruled that the hospital met the requirements for immunity.  As a result, this decision provides some guidance which healthcare entities can utilize to protect themselves from physician claims arising out of an adverse privileges or membership decision.

    Under the HCQIA, the adverse action or recommendation as to a physician's privileges or membership by the professional review body must meet the following requirements to maintain the presumption of immunity:

(1)    in the reasonable belief that that action was in the furtherance of 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 requirement of paragraph (3).

42 U.S.C. Section 11112(a).

    Wahi involved the termination of clinical privileges of surgeon Rakesh Wahi, M.D. ("Wahi") by Charleston Area Medical Center, Inc. ("CAMC").  A brief summary of the facts leading to this action is relevant to the Court's decision.  On July 8, 1999, the Credentials Committee notified CAMC's Chief of Staff that it rescinded its recommendation to renew Wahi's provisional clinical privileges because it received information that Wahi performed an unauthorized surgery.  On July 16, 1999, Wahi was asked to respond to these allegations.  Between July 16, 1999 and July 30, 1999, Wahi had numerous discussions with the Credentials Committee regarding these allegations. 

    On July 30, 1999, CAMC formally notified Wahi that his privileges were suspended.  On September 8, 1999, Wahi requested a hearing.  Over the following months, Wahi had numerous conversations with CAMC regarding the logistics of the hearing.  Although CAMC requested dates from Wahi for a hearing, Wahi failed to respond and instead filed a lawsuit asking a West Virginia state court to intervene.  Ultimately, this lawsuit was dismissed on the grounds that the review process was still pending.  For the next several months, CAMC and Wahi continued to negotiate the parameters for the hearing.  Then, all discussions halted. 

    Three years later, Wahi filed a complaint against CAMC in the Southern District of West Virginia for terminating his clinical privileges.  The District Court found in favor of CAMC, finding that it qualified for immunity under the HCQIA.  Wahi appealed to the Fourth Circuit, challenging this ruling on the grounds that CAMC failed to meet each of the four requirements of this statute.  Despite this assertion, the Fourth Circuit only addressed Wahi's argument under subsection (a)(3) -- the notice and hearing requirement -- due to his failure to preserve all other issues for appeal.

    Several points made by the Fourth Circuit in concluding that CAMC was entitled to immunity under the HCQIA are significant to healthcare entities making professional review decisions.

1.    While not required by the HCQIA, a formal hearing is the best way to achieve compliance with its notice and hearing requirement.

    Since the determination of whether an entity's "other procedures" are fair to a physician is a case-by-case determination, there are no hard and fast rules for compliance.  As a result, the safest way to comply with subsection (a)(3) is to hold a formal hearing.  Otherwise, an entity will be left to prove its procedures were fair to the physician.

2.    Failure to comply with corporate bylaws does not defeat an entity's right to immunity under the HCQIA.

    Wahi asserted that since CAMC did not comply with some of its procedures outlined in its Bylaws and Procedures Manual, it could not satisfy subsection (a)(3).  The Court disagreed with Wahi, citing to a decision by Fifth Circuit Court of Appeals, which held that "HCQIA immunity is not coextensive with compliance with an individual hospital's bylaws."  The Fifth Circuit explained that that the HCQIA established a set of standards and if a review body complies with those standards, immunity is maintained despite failure to comply with hospital bylaws.  Poliner v. Tex. Health Sys., 537 F.3d 368, 380-81 (5th Cir. 2008).  While compliance with bylaws is always the best practice, an entity's right to immunity is not automatically defeated if it fails to comply with all bylaws.

3.    The "safe harbor" provision is still available to entities even if they fail to comply with the notice and hearing requirement under subsection (a)(3).

    The HCQIA's "safe harbor" provision provides certain hearing and notice conditions that if met with respect to a physician, automatically satisfy subsection (a)(3).  Despite Wahi's argument to the contrary, the Fourth Circuit affirmed the long-standing principle that "safe harbor" provisions in statutes are independent means of compliance with a statute.  The Court found that the failure of CAMC to meet all the requirements for "safe harbor" did not automatically render CAMC unable to meet the hearing and notice requirements under subsection (a)(3).

    In summary, healthcare entities should remember that while having a formal hearing is the surest way to comply with subsection (a)(3) to maintain immunity, a formal hearing is not required if it can prove that the procedures that were employed were fair to the physician under the circumstances.   The documentation and correspondence between the parties in Wahi, found by the Fourth Circuit to qualify as "other procedures," was significant as it spanned over a five year period and was well documented. 

    Further, healthcare entities should also be aware that noncompliance with their corporate bylaws does not preclude a finding that subsection (a)(3) was satisfied.  Finally, the HCQIA's "safe harbor" provision is an independent means to meet subsection (a)(3) and compliance with one provision does not depend on compliance with the other.  Knowing and applying these principles can aid healthcare entities through a smooth peer review process.