Legal Climate for Peer Review
Although the law grants professionals substantial latitude in self-governance, under some circumstances their decisions are reviewable in court. If peer review decisions are based on fair criteria, fairly applied, they will be legally defensible. Legally defensible is not enough, however, because the cost of defending a peer review decision can be overwhelming for a small hospital or individual committee member. It is critical that peer review actions incorporate preventive law strategies to prevent lawsuits or reduce the cost of defending those that are brought.
Adverse peer review decisions damage and destroy careers. The termination of medical staff privileges can deprive a physician of the ability to continue to practice in his or her chosen community. More seriously, it can hamper his or her ability to obtain privileges at other hospitals. If professionals undertake private peer review activities (as opposed to state governmental activities), they should not be surprised when they are sued. There is a substantial penalty for being your brother’s keeper.
The corporatization of medicine makes defensible peer review problematic. There is increasing pressure to expand peer review to include cost control matters. Hospitals and MCOs want to eliminate physicians who do not comply with managed care guidelines, a controversial legal issue because the legal authority to do peer review does not obviate the laws governing anticompetitive conduct. Traditionally, allegedly anticompetitive actions have been attacked as violations of the antitrust laws. Increasingly, however, they are being seen as potential violations of business fraud laws such as RICO. A peer review action that violates RICO will subject the medical staff committee members to individual liability for treble damages, attorney’s fees, and potential jail time. It is not a crime to deny physicians medical staff privileges wrongfully, but it may be a crime if it is done as part of a conspiracy to eliminate competition or to compromise the rights of patients.
Although it is understandable that an aggrieved physician would sue after an adverse peer review decision, many physicians are baffled by the ready acceptance of these lawsuits by the courts and the public. This is easily explained. Average citizens (jurors) do not believe that there should be special legal protections for professionals. From a juror’s perspective, peer review is obviously biased in favor of the medical establishment. It is only to be expected that established practitioners will use it against physicians they do not like or who pose a competitive threat.
Litigation arising out of peer review decisions is so dangerous because the potential damages are large. A physician wrongly deprived of his or her livelihood can sue for the cash value of that livelihood. Even if only his or her reputation is injured, the traditional rules for libel and slander place a high value on the reputation of a professional. High damages attract attorneys. If the physician has been in practice for a substantial period, he or she is usually willing and able to pay to defend that practice. If the physician is young, with good prospects, an attorney may be willing to take the case on a contingent basis. If either the conspiracy or the antitrust laws have been violated, the plaintiff may recover treble damages and attorney’s fees. It is these multiplied damages that drive attorneys to sue for antitrust and RICO violations. This makes it critical that peer review be conducted so as to trigger the federal grant of immunity from damages.