Synergy - September/October 2013 - 13

industry feature

and	it	would	impose	an	obligation	that,	
if	required	by	the	credentialing	facility’s	
medical	staff	bylaws	and	not	discharged,	
could	conceivably	be	its	own	basis	for	
corrective	action	under	Webman.	Further,	
requesting	that	the	physician	provides	
his	own	copies	of	records	and	materials	
related	to	the	peer	review	proceeding	
avoids	the	problem	of	facilities	refusing	to	
provide	information	in	those	jurisdictions	
where	facilities’	peer	review	information	is	
statutorily	protected	from	disclosure.

Impact of Other Facilities’
Actions
Generally,	a	facility	may	use	the	information	
provided	about	other	facilities’	peer	review	
actions	in	considering	what	actions	to	take	
with	regard	to	a	practitioner’s	privileges	
at	its	own	facility.	For	example,	Rao v.
Auburn Gen. Hosp.	involved	a	physician	
whose	application	for	privileges	was	denied	
because	of	information	received	from	five	
other	facilities	at	which	she	previously	
had	privileges.25	Her	privileges	had	been	
terminated	at	one,	had	been	substantially	
restricted	at	two	others,	and	she	had	
been	released	from	her	contract	at	two	
others.	The	court	stated	that	“in	view	of	
the	showing	made,	we	cannot	say	that	
the	Auburn	General	Hospital	abused	its	
discretion	in	denying	staff	privileges	to	Dr.	
Rao.”26	The	court	ultimately	deferred	to	the	
credentialing	hospital’s	evaluation	of	the	
physician	and	noted	with	approval	the	fact	
that	the	credentialing	hospital	contacted	
other	facilities	and	received	and	reviewed	
reports	related	to	the	physician	from	those	
facilities.27	The	court	did	not	identify	what	
specific	documents	or	evidence	Auburn	
used	in	its	review	of	the	other	hospitals’	
actions,	but	the	court	did	quote	from	some	
of	the	reports	provided	by	these	facilities.	
While	information	from	other	facilities	is	
properly	considered	by	the	credentialing	
facility,	the	simple	fact	that	another	facility	
has	taken	an	adverse	action	may	not	be	
independently	sufficient	to	warrant	adverse	
action	at	the	credentialing	facility.	The	key	
case	on	the	extent	to	which	one	facility	
can	rely	solely	on	peer	review	information	
from	another	facility	when	making	its	own	
credentialing	or	peer	review	determinations	
is	Smith v. Selma Community Hosp.,28	in	
which	the	court	upheld	a	hospital’s	judicial	

review	committee’s	finding	that,	in	the	
circumstances	of	that	case,	peer	review	
actions	taken	at	the	other	hospitals	were	
not	independently	sufficient	to	warrant	
termination	of	a	physician’s	privileges	and	
staff	membership.29	However,	the	court	
emphasized	“that	this	decision	does	not	
stand	for	the	proposition	that	an	acute	
care	hospital	may	never	rely	solely	on	
the	results	of	peer	review	proceedings	at	
another	hospital	when	reaching	a	decision	
to	terminate	a	physician’s	privileges	and	staff	
membership.”30
Dr.	Smith	was	on	staff	at	Selma	Community	
Hospital	(Selma),	Hanford	Community	
Medical	Center	(Hanford),	and	Central	
Valley	General	Hospital	(Central).31	He	was	
suspended	from	Hanford	and	Central	for	
a	variety	of	reasons	and	filed	suit	against	
these	two	facilities.32	While	judicial	review	
was	pending,	Selma’s	Medical	Executive	
Committee	(MEC)	recommended	Smith’s	
privileges	be	terminated,	based	solely	on	the	
actions	of	the	other	two	hospitals.33	Selma’s	
judicial	review	committee	(JRC),	sitting	as	a	
trier	of	fact	at	the	fair	hearing,	decided	that	
Selma	must	conduct	its	own	investigation	
of	Smith.	The	hospital	did	ask	for,	receive,	
and	review	documents	regarding	the	cases	
that	led	to	the	other	facilities’	adverse	
actions.	After	its	investigation,	the	JRC	
concluded	that:	(1)	the	MEC	did	not	prove	
that	its	recommendation	to	terminate	
Smith’s	medical	staff	membership	and	
clinical	privileges	was	reasonable;	(2)	
the	information	from	the	other	hospitals	
“may	be	used	as	a	part	of	a	reason	to	
monitor	Dr.	Smith	by	accepted	peer	review	
mechanisms”;	but	(3)	such	information	
alone,	in	light	of	testimony	provided	that	
Smith’s	history	at	Selma	was	within	clinical	
1	 See Jack W. Shaw, Jr., Annotation,
Hospital’s Liability for Negligence in
Selection or Appointment of Staff Physician
or Surgeon, 51 A.L.R.3d 981 (1973).
2	 Johnson v. Misericordia Comm. Hosp.,
301 N.W.2d 156 (Wis. 1981).
3	 MS.06.01.05, EP 9.
4	 301 N.W.2d at 172.
5	 Id.
6	 Id. at 174.
7	 Id. at 160.
8	 Id. at 164.
9	 2006 WL 1328872 (E.D. La., 2006), rev’d
527 F.3d 412 (5th Cir. 2008), cert. denied,
555 U.S. 1046 (Dec. 1, 2008).

standards,	was	not	enough	to	support	the	
recommended	suspension.34 The	governing	
body	reversed	this	decision	on	appeal,	
concluding	that	the	findings	of	the	other	
hospitals	had to be accepted as true,	
regardless	of	the	JRC’s	review	of	the	matter.	
Ultimately,	the	court	overturned	the	
decision	of	the	governing	body,	held	
that	the	JRC’s	decision	was	supported	
by	substantial	evidence,	and	held	that	
the	MEC’s	recommendation	to	terminate	
Smith’s	medical	staff	membership	and	
clinical	privileges	was	not	reasonable	or	
warranted,	as	the	MEC’s	recommendation	
was	based	on	the	findings	of	the	other	
hospitals	“accepted	as	true”	and	was	
contrary	to	findings	of	the	JRC,	which	
independently	reviewed	these	matters.35	
The	court	rejected	the	governing	body’s	
conclusions	that	the	factual	findings	of	the	
other	hospitals	could	not	be	challenged	in	
the	fair	hearing	at	Selma.36	
When	evaluating	a	physician	applicant’s	
competence	and	qualifications	for	
appointment	to	the	medical	staff	or	grant	of	
clinical	privileges,	hospitals	should	exercise	
care	and	caution.	If	other	facilities	refuse	
to	provide	information,	information	should	
be	requested	from	the	physician	and	other	
possible	sources.	All	information	received	
should	be	thoroughly	reviewed	and	verified.	
The	information	received	should	not	
automatically	be	accepted	as	true,	and	any	
information	that	may	become	the	basis	for	
adverse	action	should	be	investigated	and	
confirmed	to	ensure	that	the	credentialing	
facility	fulfills	its	duty	to	exercise	due	care	
and	to	ensure	that	the	physician	is	afforded	
the	opportunity	to	contribute	meaningfully	
to	the	evaluation	of	his	qualifications.	■

13 Id.

21 Id.

14 T. Leatherbury, et al., Kadlec v. Lakeview
Anesthesia Associates: Fifth Circuit Finds
No Affirmative Duty to Disclose Between
Health Care Providers under Louisiana
Law, prepared for the 2009 American
Health Lawyers Association Annual
Meeting, available at: www.healthlawyers.
org/Events/Programs/Materials/Documents/
AM09/strama_kadlec.pdf.

22 301 N.W.2d at 159.

15 S. Sanford, Candor after Kadlec:
Why, Despite the Fifth Circuit’s Decision,
Hospitals Should Anticipate an Expanded
Obligation to Disclose Risky Physician
Behavior, 1 Drexel Law Rev., 383 (2009).

23 Id.
24 Leatherbury, supra note 14, at 5.
25 573 P.2d 834 (Wash. Ct. App. 1978).
26 Id. at 837.
27 Id.
28 164 Cal. App. 4th 1478, 1504 ( 2008).
29 Id.
30 Id. at 1482.
31 Id. at 1491.

16 39 Cal. App. 4th 592 (1996).

32 Id.

17 Id. at 601.

33 Id. at 1495.

10 Kadlec, 527 F.3d at 416.

18 Id. at 602.

34 Id.

11 Id.

19 Id. at 600-01.

35 Id. at 1519.

12 Id.

20 Id. at 602.

36 Id. at 1506.

September/Oct Ober 2013 SYNERGY

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http://www.healthlawyers.org/Events/Programs/Materials/Documents/AM09/strama_kadlec.pdf http://www.healthlawyers.org/Events/Programs/Materials/Documents/AM09/strama_kadlec.pdf http://www.healthlawyers.org/Events/Programs/Materials/Documents/AM09/strama_kadlec.pdf
Synergy - September/October 2013

Table of Contents for the Digital Edition of Synergy - September/October 2013
