Expanding Risks from Medical Staff Peer Review of Employed Physicians

A recent federal court decision in Ohio highlights one of several “new” risks arising from direct employment of physicians by health care facilities. In Nathan v. Ohio State University, a cardiac anesthesiologist sued her former employer, a university medical center and its physician practice group, after her termination of employment, alleging discrimination and retaliation under Title VII of the Civil Rights Act, the Age Discrimination in Employment Act and the Family and Medical Leave Act. The employer based the termination on a number of performance issues, including disruption of the department, poor teaching evaluations, and complaints regarding availability, timeliness and professionalism, some of which had subjected the physician to peer review evaluation by the medical staff. As part of the litigation discovery process, Dr. Nathan requested a large quantity of employment and peer review records of other medical center physicians, including such things as:

“all personnel files” concerning every employed anesthesiologist over 5 years
“all documents reflecting average anesthesia and/or surgery ready times” for the entire department and each employed anesthesiologist over 6 years
“all documents” including all peer review files and all job performance documents for all physicians in the department
a complete description, with names, dates and dispositions, of all patient complaints about any anesthesiologist at the medical center
Physician Executive Committee documents, incident event reports, and correspondence threatening to revoke or revoking privileges, again for the entire anesthesiology department

The medical center refused to comply, the plaintiff sought a motion to compel this discovery, and with very few exceptions the court granted the motion and ordered the medical center to produce all of the requested information. The court rejected the argument that this was just a “fishing expedition” and not relevant to the doctor’s claims, noting that employment discrimination cases “frequently turn on whether plaintiff can identify one or more comparators who are similarly situated in all relevant respects.” The court also rejected the argument that the request was so broad as to be unduly burdensome. With the exception of highly personal information in the other doctors’ personnel files unrelated to their performance, the court ordered the employer to turn over all of the requested information.

How is this something new? With respect to personnel files it really is not, because the discovery process in discrimination cases regularly involves disclosure of performance and other personnel file information of similarly situated co-workers (“comparitors”) to the plaintiff. But when the termination is based in part on conduct which is the subject of medical staff peer review, and when the employer initiating the termination is also the health care facility, the pool of “comparitor information” easily expands to the medical staff records – data previously thought to be relevant and available only for peer review purposes. This creates additional administrative burdens in responding to discovery, but also creates potentially serious issues regarding the scope of confidentiality of peer review records, the quality of those records, and possibly the impact of poorly conducted peer review in a case alleging discriminatory treatment compared to other doctors.

There are other new issues as well. For starters, the Health Care Quality Improvement Act (“HCQIA”) provides significant legal protection against liability for damages resulting from adverse peer review action, if the peer review action is conducted properly in accordance with the standards set forth in the HCQIA. However, those protections do not apply to claims arising under the federal discrimination laws, and particularly do not apply to claims resulting from loss of employment versus loss of clinical privileges only. Further, under a rapidly expanding concept in employment litigation known as the “cat’s paw” theory, an employer can be liable for unlawful discrimination even where the employer itself did not act with discriminatory motives, if it can be shown that the employer’s action was the inevitable result of actions by another person with discriminatory motives (i.e., the employer is merely the “cat’s paw” for the other person). Where the employer is the administrative arm of a health care facility, and the ”other person” is the medical staff arm of the same facility, this could be a short leap, and if the medical staff’s records do not reflect a pattern of consistent treatment of medical staff members, free of bias due to age, disability, gender, national origin or the like, discovery of the type ordered by the court in the Ohio State case could be very damaging to the employer.

What can be done? Organizations which both employ and grant medical staff privileges to practitioners can do at least a few things to improve their protection in these situations:

First, be aware that reduction or revocation of clinical privileges can have collateral consequences for the practitioner, including potential loss of employment. Considering this early in the process may simply help you prepare in ways unique to the case. For example, if your medical staff arm is negotiating with an employed physician to voluntarily suspend or relinquish clinical privileges, will that affect his or her employment or productivity-based compensation? If so, should you get that issue on the table before finalizing an agreement?
Second, where practitioner problems are severe enough that you may want to terminate employment, there may be an inclination to assume that if you address medical staff privileges first, the termination of privileges will give you an “easy out” to terminate employment. For all of the reasons discussed above, that is not a good assumption.
Third, if your medical staff peer review activities could be pulled into discovery in an employment case, you may need to reconsider how your processes are conducted. Is there a process in place during peer review to compare and consider similarly situated practitioners and monitor for unexpected bias due to age, disability, gender and so forth? Human resource officials do this every day, but peer reviewers are inclined to look at the specific practitioner before them under the unique facts and circumstances presented, and to do what they believe is in the best interest of that practitioner’s patients, and not worry about “others.” Are peer reviewers even the right people to look at whether the physician’s “comparitors” have been similarly treated, or should that be an administrative function in support of the medical staff? While peer review cases are, indeed, heavily dependent on individual facts and circumstances, it will be increasingly important to try as much as possible to control for overall fairness, consistency and absence of bias.
Finally, how good are your peer review records? If they have never been written or maintained with the expectation that they could be turned over in court proceedings or even have a major influence in an employment case, it is time to reconsider.

Jonathan R. Breuning

Read the Full Newsletter: Health Law Advisory January 31, 2013