A Practical Guide To Concurrent Retaliation Litigation And Peer Review Hearings

Whether you represent a doctor or a hospital and its medical staff, simultaneous retaliation lawsuits and administrative peer review hearings present special challenges. Unlike a typical employment case, actions suspending or otherwise affecting a physician's hospital privileges can spawn a complex series of rights and protections for both sides.

Peer Review Process Overview

With limited exceptions, California hospitals do not employ doctors. Rather, doctors seeking to practice at a hospital apply to become members of an organized medical staff. The medical staff bears the initial responsibility of ensuring patients receive quality medical care. If a doctor's care is substandard or dangerous, medical staff leaders can apply a wide variety of tools to remediate or prevent inadequate care. If patient safety concerns dictate, the medical staff can suspend or recommend revocation of a doctor's patient care privileges. Because such actions must be reported to the Medical Board of California and the National Practitioner Data Bank, these actions typically afford the affected doctor with administrative hearing rights.

Business & Professions Code Sections 809 et seq. govern peer review hearings. These administrative proceedings can feature an arbitrator or a physician panel that acts like a type of expert jury, finding facts and voting on the merits. If such a physician panel convenes, a hearing officer presides over the hearing much like a judge, but is not entitled to vote and has no part in decision-making. A court reporter records and provides transcripts of voir dire sessions, the evidentiary sessions, and certain motions.

In peer review hearings, as in litigation, parties exchange documents, call and cross-examine witnesses, and submit briefs. But there are critical differences. Rather than seeking justice in the form of damages or punishment to a wrongdoer, peer review hearings are focused on patient safety. Consequently they are less formal, more collegial, and more cost-effective. The hearing process does not include a broad documentary discovery right. There are no depositions, and no subpoena power - any witness appearing at a peer review hearing does so voluntarily. Unlike in litigation, the jury-like panel of doctors can question witnesses as well as the affected doctor.

Peer Review Hearings and Court Litigation May Proceed Simultaneously.

It had long been California law that damages claims would be dismissed until the physician exhausted the peer review process, under the "exhaustion of administrative remedies" doctrine. This means that before suing in court, the doctor must pursue both administrative and judicial remedies. Those include the evidentiary portion of the hearing, and any appeal to the hospital's governing body, which holds the ultimate authority to decide whether a physician can practice at the hospital. If the physician loses at the administrative hearing phase, he or she must petition the court for a writ of mandate pursuant to Code of Civil Procedure Section 1094.5. Prior to 2014, only if the physician prevailed at some point along the way could they file damages claims in court.

The decision of Fahlen v. Sutter Central Valley Hospitals, 58 Cal.4th 655 (2014), altered the peer review litigation landscape by creating an exhaustion exception for retaliation claims brought pursuant to Section 1278.5 of the Health & Safety Code. Although other claims for damages are still subject to exhaustion challenges, a retaliation claim can now co-exist with an active peer review hearing.

Practical Considerations for Attorneys

Attorneys involved in these dueling proceedings face thorny issues, and should ask these questions:

• What action is at stake? If a termination recommendation is involved, anti-SLAPP may be available to the defendant hospital/medical staff in a Section 1278.5 case under recently published decisions. If the defendant prevails in the motion, the anti-SLAPP statute mandates recovery of attorneys' fees.
• Are other damages causes of action pled in the complaint? Damages claims apart from those brought under Section 1278.5 remain subject to exhaustion challenges made on demurrer or via anti-SLAPP.
• Has the plaintiff launched discovery in court that would interfere with the pending administrative hearing? Section 1278.5(h) allows a medical staff to ask the court for a discovery stay. In a proper case, the entire case may be stayed until the evidentiary portion of the hearing concludes.
• Did the medical staff initiate an investigation? Most medical staff bylaws provide for an investigation pending action taken against a medical staff member. Several privileges and protections apply to such investigations, which may involve retaliation issues.
• Is retaliation an issue raised in the hearing? Physician panels and board appellate committees must issue written decisions. The findings in those decisions may be used to challenge retaliation claims made in court.
• Have the parties explored mediation? With peer review hearings becoming more litigation-like, early mediation may avert cost and disruption.

Think Before You File

Asserting or defending a retaliation claim in litigation during a peer review hearing presents special legal twists. Peer review's patient protection goal presents a critical counterweight to physicians' right to practice at any particular hospital, and elevates these matters beyond the typical employment law realm.