In the 1980s, peer review of physicians for hospital medical staff privileges was the central legal battle ground for professional review. Physicians who were denied privileges or removed from hospital medical staffs sued, claiming unfair or illegal treatment. Physicians who conducted the reviews demanded legal protection because of the potential liability and costs associated with defending an action brought by a physician denied privileges. The federal government responded with sweeping immunity from damages in peer review–related lawsuits, effectively limiting the legal review of these decisions, if the peer review committee complied with the due process standards of the federal law. This has made peer review for hospital privileges less important as a legal issue, just as deselection by managed care organizations (MCOs) rises in importance.

Deselection is the process by which an MCO terminates a physician’s contract to provide services. The term deselection is used, rather than peer review, because deselection is usually done for reasons that do not implicate preserving or improving the quality of medical care. This section reviews the law on traditional peer review, then discusses deselection and the laws that are applicable to deselection decisions.