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.