Disadvantaged Physicians: The Ill-fated Connection between Hospital Immunity and Sham Peer Review

An important responsibility of hospitals is to assure the quality of the medical care they provide. One of the key pillars of quality assurance is a committee of local peers to determine the professional competence of physicians. On occasion, incompetence or disruptive behavior of a clinician is found to have caused patient harm. The peer review committee holds the deficient physician accountable and the hospital uses their authority to impose swift corrective action ranging from remedial education, proctoring or the restriction or revocation of hospital privileges [1].

Absent a serious patient safety concern, physicians have a legal right to maintain their privilege to work at a hospital. There are important reasons that most hospitals have never deprived a physician of that right [2]. First, most hospitals and their peer review committees know that their priority should be to improve underperforming peers and avoid recidivism. Revoking privileges fails that duty by “canceling” the accused physician through shaming, loss of status and removing them from the control of those who should be helping. Second, it is “cruel and unusual” to revoke a physician’s hospital privileges when less severe action might be effective [3]. Finally, factors other than physician performance are often more important contributors to patient harm such as chronically unsafe systems of care [4].

In many ways, hospitals efforts to self-police are analogous to those of actual police. Police officers act on incomplete information and make quick decisions to protect the public. An arrest requires depriving a suspect of their right to freedom. Like hospitals, police face legal claims based on the 14th and 8th amendments that they punished capriciously, without due process or in a “cruel and unusual” way [3]. It is not feasible to make such decisions and protect the public in a way that always comports with abstract legal concepts, so police and hospitals are given the benefit of the doubt. Both are granted immunity against lawsuits, qualified by the assumption that no clearly established right was violated. Both are indemnified, meaning the costs of liability are borne by their organizations and not them personally.

Hospital qualified immunity is established by a 1986 law called the Healthcare Quality Improvement Act (HCQIA). Because many low-quality physicians were being ignored at the time, Congress passed HCQIA with the explicit goal to protect physician peer reviewers from retaliatory litigation after speaking up against poor quality colleagues. The law makes peer review proceedings privileged and confidential to avoid ever having to defend against a frivolous lawsuit from a disgruntled “bad apple”. Hospitals argued that these protections are critical for avoiding unnecessary costs and for performing legitimate peer review. When HCQIA was first implemented, hospitals and their review committees were staffed by independent physicians who directly competed in private practice. Negative comments about a competitor could be seen as anti-competitive and justify anti-trust litigation, thereby chilling a physician’s desire to speak up against colleagues. In that context, immunity effectively encouraged legitimate peer review.

The last four decades changed the context. Physicians have left private practice for hospital employment, which means both those taking part in a professional review action and the targets of their investigations are employed by the hospital [5]. According to the principles of anti-trust law, co-employees cannot be in direct financial competition. That leave hospitals as the primary beneficiaries of immunity. Like any employer, hospitals have the right to fire an employee, even one that is highly competent but considered to be “difficult”, “outspoken” or “inconvenient”. Hospitals can use “sham” peer review to terminate employment and coopt immunity to avoid a wrongful termination lawsuit or severance pay. A physician might see this as unfair, but an administrator sees it as a smart way to circumvent risk. It is also an axiom of systems thinking: today’s problems come from yesterday’s solutions.

Poor performance and poor evaluation of performance are both serious threats to public safety. Both hospitals and police have the power to self-evaluate and can abuse that power without appropriate checks being in place. When police use excessive force, their behavior is captured on the video of police body cameras or the ubiquitous recorders within the public domain [6]. Credible recordings of abuse or eyewitness reports receive massive attention from the media, prompting rouge police to be fired by their departments and/or face civil and even criminal courts. In stark contrast, evidence of abuse of power of the peer review process by hospitals is confidential, privileged from discovery and rarely public. In addition, widespread hospital employment created a conflict of interest that was unforeseen when HCQIA immunity was first granted. Every stage of a peer review action involves hospital employees that are implicitly (and sometimes explicitly) required to act according to the expectations of their employer. Even the witnesses that an accused physician would call to defend him/herself are hospital employed and prohibited from testifying without quitting their job [7].

Judgments of physician quality can be unduly influenced by ulterior hospital motives. The appropriate check on these motives is due process; an impartial tribunal that hears both sides of the argument. Medical licensing boards guarantee due process prior to imposing disciplinary action on a physician. Similarly, hospitals become “state actors” as soon as they report an adverse peer review action to HHS, the government agency that administers the national practitioner databank. This entails an ethical (and perhaps legal) duty to confirm adequate due process before making a report. Evidence suggests this duty is widely ignored. A comprehensive review of peer review in California found the hospital peer review process to be plagued by inconsistencies, variations, and conflicts of interest [8]. Privileges are revoked sporadically in some hospitals and not others. This notoriously high base rate of randomness and inconsistency suggests the time has come to qualify the qualified immunity: any hospital facing credible evidence of a due process violation should be required to forgo immunity and obtain corrective feedback from the courts. No social policy is advanced by denying this oversight.

There is one more finger on the scale: physicians have limited financial resources to fund a defense. In contrast, hospitals fully indemnify the decisions of peer reviewers and administrators with a policy called Directors and Officer’s insurance. Even though hospitals provide all employed physicians with medical malpractice insurance, those policies curiously exclude litigation costs related to peer review. The limited financial resources available to a physician without hospital privileges adds further to the ironclad advantages of the hospital. All these advantages explain why only 15% of physician plaintiffs are successful at overcoming the presumption of hospital immunity. In contrast, the greater transparency of police work allows plaintiff to overcome police immunity in nearly half of civil court cases [9].

These huge advantages of peer review invite them to act with impunity. While abuse of power is rare, it has an outsized and profoundly negative impact on the culture of safety. Hospitals accept the occasional mistake of falsely accusing a high-quality physician based on the premise that ignoring a low-quality physician is the more significant safety hazard. This tradeoff fails to recognize these two (in) actions as different sides of the same coin. Either false accusations against a quality physician or failure to act against a low-quality physician are a sign of a hospital entangled in poorly conducted investigations untethered from the truth. An organization that carries out flawed investigations is unable to learn the proper lessons from adverse clinical events, putting future patients at risk. In addition, the risk of being falsely accused has a chilling effect on the willingness of physicians to act as a whistleblower and speak up about safety problems [10]. Evidence shows the main reason physicians are reluctant to participate in peer review committees is not from fear of lawsuits by an accused peer, but from lack of trust in the process, particularly when they learn of a peer falsely accused based on ulterior motives [7,8].

Considering all the safety, quality assurance, legal and ethical goals served by a properly functioning peer review process, hospitals have a strong (if underappreciated) interest in turning to the courts to help them improve due process. In the short run, physicians accused of incompetence might file more lawsuits if qualified immunity of hospitals was curtailed. Yet those suits should expect to have no greater chance of success than in the past. A variety of legal safeguards against frivolous lawsuits would remain (e.g. attorney’s fees awarded to the winning party, sanctions against a lawyer who files a frivolous suit). Physicians would not be able to turn to the courts without having exhausted all administrative remedies in the hospital (informal MEC meeting, formal Fair Hearing, appeals). Courts would continue to presume good faith in how hospitals define physician quality as they have with legal injunctions and other declarative relief where immunity has never been applied. None of these massive advantages would change.

The main change from limiting qualified immunity is that more cases would survive pre-trial motions to dismiss and be adjudicated by a jury. This, in turn, would create a more symmetric balance of power in the physician-hospital relationship. Game theory suggests that this would force mutual accountability to each other’s long-term interests and steer both parties towards reconciliation and improvement, rather than punishment [11]. Hospitals have argued successfully to the courts that they little legal expertise in due process. A lawsuit is often the best way to engage external reviewers needed to clarify physician performance. Physicians falling below accepted standards will gain a transparent understanding of the evidence against them and make realistic decisions about their future. Those wrongly accused will use the courts to speak up about potential problems with the peer review investigation, ultimately providing valuable feedback to the hospital. An early rise in the cost of indemnification will eventually fall over time as physicians start to perceive the peer review system as being fair and stop turning to the courts. Hospitals wanting to improve perceptions of fairness will pay greater attention to integrity, accountability, reconciliation, process improvement and transparency. Coincidentally, all the same ingredients of a safe culture.

Hospitals begin the journey towards a sustainable safety culture by making the first move: 1) provide employed physicians with insurance that covers peer review and 2) forgo their immunity when there is credible evidence of a due process violation. The past 30 years have proven that changing the patient safety culture requires a different approach. Hospitals looking for a high leverage way for culture change should uproot the inherently unfair legal advantages provided by peer review immunity. This gesture of vulnerability would prove that the hospital truly wants high-quality investigations that encourage employees to speak up about problems. Other hazardous fields have established the road to a safe culture is not paved with immunity.

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