Health Law Committee 2021 Appellate Litigation Update
| Publication year | 2022 |
| Author | Written by H. Thomas Watson |
Written by H. Thomas Watson
Natarajan v. Dignity Health, 11 Cal. 5th 1095 (2021) (Peer review hearing officer is not automatically disqualified by the prospect of future engagements at the same hospital).
Following an investigation, the medical staff's executive committee revoked the privileges of Dr. Sundar Natarajan, a hospitalist at St. Joseph's Medical Center of Stockton (a Dignity facility), due to record keeping problems, untimely responses while on call, and the length of his patients' hospitalizations. Dr. Natarajan appealed to the hospital's peer review committee. The medical staff delegated the authority to appoint a peer review hearing officer to the hospital's president, who appointed Robert Singer—a semiretired attorney who worked exclusively as a medical peer review hearing officer at various hospitals. Singer required that his contract bar St. Joseph's from appointing him in another peer review proceeding for three years. Singer had served as the hearing officer in eight peer review proceedings at other Dignity Health hospitals and was appointed to two more after Dr. Natarajan's proceeding, none involving St. Joseph's. Singer served as the hearing officer for a similar number of hearings at entities affiliated with Sutter Health, and worked as a hearing officer for other health facilities as well. Singer denied Dr. Natarajan's request that he recuse himself. After a year of evidentiary hearings, the review committee adopted the executive committee's decision to revoke Dr. Natarajan's privileges. Dr. Natarajan appealed that decision to St. Joseph's governing board, which affirmed.
Dr. Natarajan filed a petition for a writ of administrative mandate, arguing he was denied due process because (1) Singer's relationship with Dignity created an unacceptable risk of bias based on his pecuniary interest in future employment, and (2) the decision to revoke his privileges was not based on objective standards. The trial court denied the petition and Dr. Natarajan appealed. The court of appeal affirmed. Expressly disagreeing with Yaqub v. Salinas Valley Memorial Healthcare System,1 the court of appeal rejected Dr. Natarajan's contention that Singer's relationship with Dignity hospitals created an unacceptable and disqualifying risk of possible bias. The court of appeal affirmed the trial court's judgment because there was no evidence that Singer had a direct financial interest in the peer review proceeding, and the hospital had based its disciplinary decision on sufficiently objective criteria that were uniformly applied. The supreme court granted review.
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The supreme court disapproved Yaqub and affirmed the result (but not the reasoning) of the court of appeal's decision. The court explained that the prospect of future employment was not categorically non-disqualifying; instead, a peer review hearing officer may be disqualified based on a direct financial benefit that creates an intolerable risk of actual bias under the circumstances—a context-sensitive inquiry. But such a risk does not arise simply because a hearing officer has been hired by a hospital on an ad hoc basis and may be hired again by the same hospital at some point in the future.
In determining whether a hearing officer is disqualified, courts must consider two factors: (1) which entity exercises control over the hearing officer selection process, and (2) the extent and likelihood of future financial opportunities the hearing officer may receive from the same entity. Here, the three-year ban on serving as a hearing officer for the same hospital eliminated any significant risk of Singer harboring a financial temptation to favor the hospital during the proceedings. Moreover, Dignity Health did not control the hearing officer selection process at any of its hospitals; rather, hearing officers are selected by the medical staff or their designees. Thus, the lower courts had properly ruled that the circumstances of Singer's appointment did not create an intolerable risk of bias in favor of the hospital.
Bonni v. St. Joseph Health System, 11 Cal. 5th 995 (2021) (Anti-SLAPP statute applies to some (but not all) aspects of peer review proceedings).
Dr. Aram Bonni sued two hospitals under Health and Safety Code section 1278.5, which prohibits health facilities from retaliating against medical staff members for presenting grievances, complaints, or reports to the facility or its medical staff. Dr. Bonni alleged the hospitals retaliated against him by summarily suspending his medical staff privileges and initiating peer review proceedings against him after he reported safety concerns; he had experienced patient complications in successive surgeries involving robotic equipment. The hospitals moved to strike the retaliation causes of action under the anti-SLAPP statute,2 arguing that the claims arose from protected peer review proceedings. The trial court granted the hospitals' motion, ruling that the gravamen of the retaliation claims were based on protected peer review activities. The court of appeal reversed. Applying Park v. Board of Trustees of California State University,3 the court held that the anti-SLAPP statute does not protect actions undertaken with retaliatory motive. The supreme court granted review.
The California Supreme Court agreed in part with the court of appeal. The supreme court explained that, for anti-SLAPP purposes, each act or set of acts alleged in a complaint must be analyzed separately to determine whether protected activity forms the basis of the claim, or is merely incidental or collateral to that claim. The court agreed that medical peer review is a protected activity under Kibler v. Northern Inyo County Local Hospital District,4 but only up to a point. The court clarified that, under Park, the anti-SLAPP statute protects only speech and petitioning activity taken in connection with peer review that is the alleged wrongdoing. Thus, while the anti-SLAPP statute applies to alleged statements made in a peer review proceeding, and to hospitals' required reporting of any decision to the medical board and a national database, the anti-SLAPP statute does not apply to final disciplinary decisions. Without addressing Evidence Code section 1157, the supreme court stated that Dr. Bonni could rely on protected statements made during peer review proceedings as evidence of the hospitals' alleged improper motive for imposing discipline. Having determined that the hospitals could not prevail entirely under the first step of anti-SLAPP analysis, the supreme court remanded for further analysis under the second step—whether Dr. Bonni had established "minimal merit" regarding his surviving claims.
Bichai v. Dignity Health, 61 Cal. App. 5th 869 (2021) (Medical staff credentialing recommendations cannot support a physician's action against a hospital, a separate legal entity).
Coast Hematology-Oncology Associates Medical Group, Inc. v. Long Beach Memorial Medical Center, 58 Cal. App. 5th 748 (2020) (Medical group's proprietary "Relative Value Unit" assessment of physician performance and productivity may be protected as a trade secret).
California v. Texas, 141 S. Ct. 2104 (2021) (States and individuals lacked standing to challenge the Affordable Care Act's individual mandate in an effort to strike down the Act).
The Patient Protection and Affordable Care Act ("ACA") required most...
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