Federal law can allow bad faith physician peer review

"Sham" reviews can be politically or economically motivated; some surgeons are calling for changes in the peer review process.

Issue: December 2004

In 1986, a set of federal laws was passed in an attempt to provide protection from libel suits for doctors initiating peer reviews of other doctors.

HCQIA was established as a response to several cases involving alleged antitrust liability related to peer review.

Unfortunately, these laws created such impenetrable immunity that a physician who is the target of a peer review often has little recourse to defend himself. This opens the door to what has been called “sham” or bad faith peer review, where political or economic motives can lead to a potentially damaging review of a physician.

The Health Care Quality Improvement Act (HCQIA) of 1986 not only provides immunity for peer reviewers and review committees, but applicable state laws generally allow the documents generated and used in the peer review process to become privileged information. This means that a physician who wishes to challenge a peer review in court cannot easily obtain the actual records of his/her review.

National Practitioner Data Bank

HCQIA also established the National Practitioner Data Bank (NPDB), a database containing information on any physician who is disciplined, subjected to a malpractice judgment or settlement or adversely judged by a hospital or health system’s governing body. A doctor who has an entry in the NPDB will often struggle to obtain hospital privileges if he/she tries to move his practice away from the site of the initial review.

HCQIA was established as a response to several cases involving alleged antitrust liability related to peer review, most directly the Patrick v. Burget case. In this decision, the Supreme Court upheld a jury’s decision to award $2.2 million to a physician who claimed he had been the victim of a bad faith peer review. Patrick, who practiced in Astoria, Ore., declined an invitation to join the Astoria Clinic, and he claimed that his decision to maintain a private practice in competition with physicians at the clinic led to the initiation of a peer review. The decision in Patrick’s favor was based on the Supreme Court’s holding that peer review did not represent state action, which would have rendered it immune to enforcement of the federal antitrust laws.

Legislators worried that this type of decision would produce a reluctance to bring up a problem with a peer’s practice record due to a fear of antitrust litigation, which carries a provision allowing treble damages to successful plaintiffs. HCQIA attempted to eliminate that fear and make peer review, when performed in good faith, a process that could raise the standards of health care across the country by facilitating the cooperation and participation of ethical professional colleagues in the process.

Likewise, the NPDB was created to prevent a bad physician from moving from state to state and practicing without the hospital knowing of his previous malpractice and/or disciplinary history.

C. William Hinnant, JD, MD, of Medicolegal Consultants LLC in Anderson, S.C., is a health care attorney whose practice includes consulting on and litigating cases of bad faith peer review. He said he reviews an average of two to four new cases per week, but only a very small percentage of peer review decisions can ever be effectively challenged.

“I saw it as an area where I felt that there was a substantial degree of inequality among the hospitals, who typically are 900-lb. gorillas, and the doctors who, by the time they reach a point where they need to litigate these cases, are usually financially destitute and extremely frustrated,” he told Orthopedics Today. “That’s not to say that some peer review cases don’t have merit from the standpoint of the hospital, but you never see those cases challenged because there simply is no leg to stand on.”

If physicians are victimized by a bad faith peer review, the NPDB can make it extremely difficult to continue practicing.

Hinnant said that physicians who believe they have been victims of a bad faith peer review have very few legal options. In order to overcome the immunity prohibitions of HCQIA, the physician being targeted needs to show that the requirements for a professional peer review as mandated by HCQIA were not followed correctly, which is often difficult, given that the documents associated with the peer review are inadmissible until a lawsuit is filed, he said.

According to an article published in the Catholic University of America’s Journal of Contemporary Health Law and Policy, “Physicians may only sue if they can demonstrate that the hospital did not provide the physician adequate due process during the peer review process, or if the physician can show bad faith was involved. Since hospitals have the ability to keep peer review proceedings strictly confidential, challenging a peer review on the basis of bad faith is very difficult.”

Hinnant added that “hospitals are almost always able to recruit the assistance of physicians who disagree with certain management decisions made by the involved practitioner. Their testimony to a peer review committee will usually nail the lid on the coffin of the accused. In this era in which hospitals frequently employ physicians and/or compensate them for administrative or professional services, the hospitals have strong leverage in influencing the opinions those physicians may render.

“Hospitals may also retain very expensive external reviewers and economic consultants so as to not only buttress their assertions as to the peer review allegations’ truly relating to quality of care issues, but also minimize the financial damages to the accused physician if his case has merit,” he said.

If physicians are victimized by a bad faith peer review, the NPDB can make it extremely difficult to continue practicing.

“They’re relegated either to an office practice, which in some specialties is possible, or they simply have to go out and seek an administrative position,” Hinnant said. “I’ve seen them to turn to the Indian Health Service, the military or the National Guard, I’ve seen them turn to insurance companies doing medical reviews, but the idea that they can go out and practice at a hospital is simply ridiculous. They have very little chance of going out in the face of a suspension or revocation of privileges and ever finding privileges anywhere.”

While the existence of sham peer reviews is a problem, other orthopedic surgeons say that the concepts behind HCQIA are very important, and the peer review process is essential.

Hinnant argued that while physician peer review is essential, changes must be made to the legislation and the process on the whole. He stressed the need to move the proceedings outside of the hospital in question, especially regarding any sort of appeal to the initial process. As it stands, there is no true appellate process for peer review outside of litigation.

A separate review board involving the state board of medical examiners or other body would provide an impartial appeals process, perhaps avoiding the number of cases that are driven by economic or political motives, he said.

Third-party option

There are also private companies such as the Texas Medical Foundation that specialize in independent peer reviews. Hospitals can send a case to these companies and have it reviewed. This is one method of keeping the review process away from those who might have a financial interest in the outcome, Hinnant said.

While Hinnant and others agree that the impetus behind HCQIA is sensible and important, changes to the system might help eliminate its shortcomings.

“[HCQIA] was meant as a shield, a shield with a very admirable purpose that I don’t think anyone would argue with,” Hinnant said. “Nonetheless, you can take a piece of legislation that has a good intent … and use it in a way it was never intended to be used. That’s what’s happening here, and until the statute is amended or until we have some meaningful appellate mechanism built into the statute, these phenomena are going to continue.”

For more information:

Van Geertruyden YHH. The fox guarding the henhouse: how the health care quality improvement act of 1986 and state peer review protection statutes have helped protect bad faith peer review in the medical community. J Contemp Health Law Policy. Winter 2001.