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Hospitals Should Use Care in Drafting Adverse Decisions on Privileges

on Thursday, 3 August 2017 in Health Law Alert: Erin E. Busch, Editor

Whenever a hospital medical staff makes a decision that adversely affects a member’s privileges, it needs to determine whether to report the decision to the National Practitioner Data Bank (“NPDB”).  Those decisions can be surprisingly complex, as a recent Federal case highlights, and may depend on the wording of the staff decision.  Careful drafting accordingly is an important element in managing the legal risks that arise from restriction or denial of a member’s privileges.

In Walker v. Memorial Health System of East Texas (E.D. Tex. 2017), the Court enjoined a hospital against reporting to the NPDB a limitation on a physician’s privileges that required him to have “5 bowel surgery cases proctored.”  The document imposing the privileges restriction did not specify a time period within which the proctoring requirement had to be satisfied.  When it had not been satisfied after 30 days, the hospital believed it was required to report the limitation on the physician’s privileges.

The Health Care Quality Improvement Act (“HQIA”) requires healthcare entities to report “a professional review action that adversely affects the clinical privileges of a physician for a period longer than 30 days.”  Similarly, the NPDB Guidebook specifically requires reporting any restriction over 30 days that “leads to the inability of a practitioner to exercise his or her independent judgment in a professional setting.”  

When the defendant hospital decided that a proctoring arrangement in place for more than 30 days was reportable, it was taking an apparently safe position.  Proctoring arrangements are generally treated as restrictions on privileges, because the proctor is usually in a position to control a procedure if there is disagreement about how to proceed.  The hospital’s decision to report the physician in this case was apparently reasonable.

The Court, however, disagreed. Its decision considered at length what it means for a restriction to be in place for longer than 30 days.  The Court decided that the language of HQIA should be considered as analogous to the Texas Statute of Frauds.  A contract is not covered by that Statute unless on its written terms “performance necessarily takes over a year.”  When a contract has no stated term but the performance is not completed in a year, this does not bring the contract under the Statute.  

The Court held that, under the same reasoning, the hospital’s failure to state a definite term for the restriction meant that the proctoring requirement was not for longer than 30 days.  “[T]he hospital was aware of the requirements . . . [but] nevertheless decided to adopt a proctoring requirement that is silent as to duration.”  The Court pointed out that the restriction on the physician’s privileges had gone through multiple layers of review at the hospital, and there was opportunity for the hospital to state a term during which the restriction was effective.  The hospital’s failure to impose a term of restriction meant that it was not for longer than 30 days, and so was not reportable.

While this decision may well prove to be an isolated case, it highlights the importance of careful drafting of any adverse peer review decision.  Such decisions are often modified materially during a peer review committee discussion, with proctoring being a frequent compromise decision that neither the staff nor the member had in mind when the discussion commenced.  It is not uncommon for the proctoring decision to be made on the spot and then documented by the committee secretary in a relatively informal fashion.  Accordingly, it may not always be feasible to begin with a clear committee decision.

Many such proctoring requirements, however, go through multiple layers of review, as the one in Walker did.  Hospitals should use such opportunities to clarify ambiguous language in initial committee decisions.  When a restriction becomes final, both the hospital and the practitioner should be clear about all material requirements, including whether the hospital is required to report the action to the NPDB.  Involving counsel at the earliest point may spare needless litigation by ironing out points of contention before the adverse decision goes into effect.

Thomas S. Dean


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