A federal district court has denied immunity under the Health Care Quality Improvement Act (HCQIA) to a hospital, individual members of its Board of Trustees, Peer Review Committee (PRC), Medical Executive Committee (MEC), Fair Hearing Committee FEC, and the hospital’s Chief Medical Officer, in a lawsuit brought by a physician challenging a number of adverse decisions, including a final decision to indefinitely suspend the physician’s privileges. 

The HCQIA was enacted in 1986 to encourage hospital peer review activities “to improve the quality of medical care by encouraging physicians to identify and discipline physicians who are incompetent and who engage in unprofessional behavior.” To qualify for immunity from liability under the Act, the hospital must establish that the action was taken:

1. In the reasonable belief that the action was in furtherance of quality health care;
2. After a reasonable effort to obtain the facts of the matter;
3. After adequate notice and a hearing that was 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 efforts to obtain facts and after the hearing specified above.

In Osuagwu v. Gila Regional Medical Center, the New Mexico federal district court noted that the Eleventh, Sixth, and Fifth Circuits “have explicitly held that a physician has a constitutionally-protected property interest in medical-staff privileges where the hospital's bylaws detail an extensive procedure to be followed when corrective action or suspension or reduction of these privileges is going to be taken.” Thus, in addition to the “minimum procedural process” due under the HCQIA, the court held that the actions taken by the hospital “must also be adjudged in light of constitutional due-process protections,” which the court found to be “immutable in our jurisprudence.” Examining the hospital’s medical staff bylaws, the court described a detailed three-part decisional process that it found “provided fair procedures for determining the reasonableness and propriety of imposing severe sanctions that will negatively affect [a physician] for the rest of [his] career.” However, the court concluded, there were numerous flaws in how the procedure was applied in the case before it, which resulted in the denial of “minimum standards of constitutional due process.” 

The court found that the evidence was “compelling and undisputed” that the MEC and PRC failed to give notice to the physician of the cases they were investigating and did not make “a reasonable effort to obtain the facts” regarding those cases. Neither the MEC nor the PRC interviewed or questioned the physician about the cases before or during the initial seven-day suspension or during the subsequent indefinite extension and expansion of his suspension.

The court further concluded that the suspension hearing also violated the physician’s due process rights. At the hearing, the Fair Hearing Committee did not obtain testimony from the PRC physician-reviewers or the other physicians who informed the MEC and PRC of the alleged errors. The court stated that, “[a]s a matter of law,” the committee’s failure to call these witnesses “violated [the physician’s] rights of cross-examination under both the Bylaws and the minimum standards of constitutional due process.” In addition, the court concluded the Fair Hearing Committee panel was not impartial because the hospital’s Chief Medical Officer, “who holds a position of power over all of the physicians who participated in the disciplinary proceedings,” was the accuser, investigator, prosecutor, and one of  the judges. The court also concluded that the discipline MEC took was not based on a “reasonable belief that the action was warranted by the facts known,” because the discipline it imposed was much harsher than that recommended by the Fair Hearing Committee, which had heard the evidence, and the MEC had no explanation for ignoring the committee’s recommendation. Finally, when the findings and recommendation were presented to the Board of Trustees, it considered additional evidence and heard new testimony that the physician was not permitted to refute.         

As a result of the hospital’s failure to follow and apply all of the procedural safeguards afforded by its medical staff bylaws, the institution and all of the individuals involved in the peer review and physician disciplinary process were left unprotected by the HCQIA and exposed to a potentially large suit for damages. This case provides a dramatic illustration of the importance of not only carefully crafting medical staff bylaws to comply with the procedural requirements of the HCQIA, but also adhering to those procedures. Hospitals are encouraged to consult with their in-house experts and knowledgeable outside counsel when drafting medical staff bylaws and conducting peer review sessions and disciplinary proceedings.

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