FAQ On Physician Peer Review: Why You Should Take It Seriously & Burden of Proof

A decision from the California Court of Appeal, Bode v. Los Angeles Metropolitan Medical Center, (2d Dist. Cal. App., filed June 11, 2009, B207183), addressed the issue of the burden of proof placed upon a physician in a peer review hearing.

The appellate court in Bode found that LA Metro's peer review body improperly placed the burden of proof on a physician (anesthesiologist) with respect to charges of mishandling drugs. The misplaced burden of proof made the difference in whether the physician would be subject to an adverse report to the Medical Board of California.

This recent case gives us the chance to address some of the basics relating to peer review and allow physicians to understand the process. The case is addressed in detail below.

Why Should I Be Concerned With Peer Review - Isn't That Only For Physicians Who Have Medical Staff Privileges?

It is true that peer review disciplinary proceedings are triggered at medical facilities such as hospitals. Peer review discipline can arise from the initial applications, reappointment applications, patient complaints, staff complaints, standard of care issues, and other grounds.

However, many physicians have contracts with health insurance companies, HMOs, managed care entities, government health programs and related health payers. A physician can have peer review or discipline issues with these entities.

Why Should I Take Peer Review Proceedings Seriously From The Beginning?

Sometimes the peer review complaint may appear minor. However, a negative peer review decision can have collateral consequences that will extend past the hospital or health care payer. For example, the hospital or insurance company will be required to report to the Medical Report an adverse physician decision. This can then result in discipline from the Board, the loss of other insurance contracts, delisting by carriers, and other limitations that can interfere with one's right to practice and one's earning capacity.

Hospital Peer Review

Acute care hospitals must have an organized medical staff that is responsible to the hospital’s governing body for the adequacy and quality of medical care. (Cal. Code Regs., tit. 22, § 70703, subd. (b).) The medical staff must adopt written bylaws setting the procedures and criteria for evaluating applicants for staff appointments, credentials, privileges, reappointments, and other related matters. The bylaws must also contain an enforcement mechanism.

Peer Review Body Is Required To Report Discipline To Medical Board

Pursuant to Business and Professions Code ("BPC") section 805, a peer review body must submit a report to the Medical Board of California when it takes any of the following actions due to a medical disciplinary cause or reason: (1) denies or rejects a medical licensee’s application for staff membership; (2) terminates or revokes a licensee’s membership, staff privileges, or employment; or (3) imposes restrictions (or restrictions are voluntarily accepted), on staff privileges, membership, or employment for a cumulative total of 30 days or more for any 12-month period.

Burden Of Proof At Peer Review Hearing

BPC section 809.3 allocates the burden of producing evidence and of proof at hearings that fall under the reporting requirements of section 805. The peer review body always has the initial duty to present evidence which supports the charge or recommended action. Thereafter, the issue as to who bears the burden of proof as to the physician's qualifications or competence to serve on staff depends on whether or not the physician is an initial applicant. If so, the burden of proof lies with the physician. If not, the burden of proof lies with the peer review board.

Burden Of Proof For Initial Applicants Versus Established Staff Members

Thus, “initial applicants” for staff privileges have the burden of proof “by a preponderance of the evidence of their qualifications by producing information which allows for adequate evaluation and resolution of reasonable doubts concerning their current qualifications for staff privileges, membership, or employment. In cases not involving initial applicants for staff privileges ("established staff members"), the peer review body has the burden of proving its action or recommendation is reasonable and warranted by a preponderance of the evidence.

The difference in the burden of proof between initial applicants and established staff members is illustrated by the case of Bode v. Los Angeles Metropolitan Medical Center, (2d Dist. Cal. App., filed Jun. 11, 2009, B207183). As mentioned above, the Court of Appeals in Bode found that LA Metro's peer review body improperly placed the burden of proof on a physician with respect to charges of mishandling drugs. The misplaced burden of proof made the difference in whether the physician would be subject to an adverse report to the Medical Board of California.

FACTS OF THE CASE

1. LA Metro's Bylaws

LA Metro's bylaws permit an applicant for staff privileges to be granted temporary privileges for 90 days, with subsequent renewals not to exceed the period in time until appointment to the Medical Staff. Temporary privileges are granted “only when the information available reasonably supports a favorable determination regarding the requesting practitioner’s qualifications, ability, judgment and current competence to exercise the privileges requested.”

They may be terminated “[u]pon the discovery of any information or the occurrence of any event of a nature which raises questions about the practitioner’s professional qualifications or ability to exercise any or all of the temporary privileges granted.” A practitioner whose temporary privileges are denied or terminated is entitled to the procedural rights set forth elsewhere in the bylaws. The peer review is conducted by LA Metro's Judicial Review Committee. A party may challenge a Judicial Review Committee decision through an appeal to LA Metro's Appellate Review Committee.

2. The Alleged Misconduct

On January 2, 2003, Dr. Georgia Bode began work as an anesthesiologist at LA Metro with temporary privileges pending action on her application for membership on the hospital’s medical staff. The hospital had recently replaced its entire anesthesiology staff after incidents involving the mishandling of controlled narcotic substances caused an accreditation agency to award the hospital only a conditional accreditation. Dr. Bode had an unblemished record since she began practicing in 1987.

In response to the mishandled drug problem, the hospital instituted the Sure-Med computer-operated drug dispensary system. In order to return unused drugs, a physician must enter information into Sure-Med specifying whether drugs were used, disposed by an authorized method, or returned after not being used. Drug returns had to be witnessed and signed off by an authorized hospital staff member. The hospital’s pharmacy staff would confirm the return, and would also review patient records to be sure physicians properly documented the use or wastage of unreturned drugs.

Within Dr. Bode’s first three weeks at the hospital, she had problems properly documenting her use of various medications. The hospital’s surgical chief sent Dr. Bode a letter setting forth six incidents of improper documentation. The letter ended by warning that any further occurrences “may result in disciplinary action including suspension of privileges.” The hospital’s records show that Dr. Bode received training and counseling about these issues and seemed to have resolved them satisfactorily.

Thereafter, Dr. Bode withdrew medication to administer to a patient undergoing spinal surgery. Sure-Med records showed that Dr. Bode obtained one ampule of Demerol. The patient’s chart showed that the Demerol was not administered. Sure-Med records also showed that Dr. Bode entered the return of the Demerol. However, when pharmacy staff checked the machines the next day, they could not find the Demerol ampule.

3. The Peer Review Proceedings After Summary Suspension And Burden Of Proof Issues

The hospital’s surgery department held an emergency peer review meeting, where the hospital’s chief of staff summarily suspended Bode’s temporary privileges. L.A. Metro gave Dr. Bode official notice that her temporary privileges would not be renewed “because of issues surrounding the return of controlled substances,” i.e., the missing Demerol.

Dr. Bode was entitled to, and demanded, a hearing to rebut the charges. In demanding a hearing, Dr. Bode stated that she was no longer interested in applying for permanent membership on the hospital's staff, effectively withdrawing that application.

In connection with the hearing, the hospital sent Dr. Bode a notice of charges stating that its decision was based not only on the missing Demerol incident but also on the six drug documentation incidents. According to the hospital’s notice, “[T]he totality of these incidents, occurring in such a short period of time, raised questions about your professional qualifications and/or your ability to exercise the temporary privileges you had been granted.”

Regardless of who bore the burden of proof, the Judicial Review Committee found that the six drug documentation incidents were established only in part, and, although the hospital properly warned Dr. Bode that further incidents might result in discipline, the Judicial Review Committee made no finding that Dr. Bode’s care "was deficient or inappropriate.” Also without regard to the burden of proof, the Judicial Review Committee was unable to determine what happened to the missing Demerol ampule.

Otherwise, the Judicial Review Committee was unsure whether to place the burden of proof on Dr. Bode. When the burden of proof was placed on the hospital, the Judicial Review Committee found that the hospital’s decision to not renew Dr. Bode’s temporary privileges was not reasonable or warranted. When the burden of proof was placed on Dr. Bode, however, the Judicial Review Committee found that Bode had failed to produce sufficient evidence of “her qualifications for medical staff privileges” at L.A. Metro.

The Judicial Review Committee found that Dr. Bode “was involved in seven cases which raised concerns during the period of her temporary privileges . . . and did not present adequate evidence of her proficiency as an anesthesiologist.”

4. Review By The Appellate Review Committee

On review, the Appellate Review Committee found that there was substantial evidence to uphold that portion of the Judicial Review Committee’s decision which found cause to not renew Bode’s privilege when she bore the burden of proof. The Appellate Review Committee adopted the Judicial Review Committee’s findings in this regard, and concluded that Dr. Bode’s failure to “resolve all doubts” about what happened to the missing Demerol ampule meant she had failed to prove she was not responsible for its loss. The Appellate Review Committee also found that the six drug documentation incidents were, by themselves, sufficient reason to not renew Dr. Bode’s temporary privileges.

5. The Civil Action

Dr. Bode then filed a civil petition for writ of mandate is superior court, contending the Appellate Review Committee mistakenly placed the burden of proof on her and exceeded its authority by reweighing the evidence introduced before the Judicial Review Committee.

This civil lawsuit (which is essentially an appeal) can be filed only when a physician has exhausted his or her administrative remedies. in the corrective action, judicial review, and appeal processes, can he/she invoke the powers of the court. In order to win, the physician must prove there was a violation of procedural due process, substantive law, or that the decision was arbitrary and capricious.

The trial court ruled that, as a holder of temporary staff privileges, Dr. Bode was not an initial applicant and that the Appellate Review Committee therefore erred to the extent its decision was based on Bode bearing the burden of proof. The trial court also found that the Appellate Review Committee erred to the extent it alternatively relied on the six drug documentation incidents to support the hospital’s actions. This was so, the trial court found, because the only reason given to Bode at the time of her nonrenewal was an issue concerning the return of controlled substances, and none of the six documentation incidents involved the actual return of such items. The court issued a writ directing the hospital to vacate the Appellate Review Committee’s decision.

6. The Appeal

The hospital filed an appeal from the superior court's decision. The appellate court upheld the decision of the trial court. The appellate court rejected LA Metro's argument that, because Dr. Bode's temporary privileges were granted in conjunction with Dr. Bode's application for staff privileges, she was an "initial applicant" who bore the burden of proof. The appellate court found that, once LA Metro granted Dr. Bode staff privileges, it assumed the burden of proof at any hearing to justify taking action against those privileges for a medical disciplinary cause or reason.
The reason for the differing burdens of proof were explained:

In the case of a first time applicant (such as Dr. Bode), a decision to reject an application due to a medical disciplinary cause or reason must rely on reports of misconduct or other negative incidents that occurred in the past at some other health facility. The hospital cannot reasonably be expected to prove those incidents, and it therefore makes sense to place the burden on the initial applicant to produce sufficient information to disprove them.

In other situations, when a licensee is working at a health facility under some arrangement, a decision to terminate that arrangement for a medical disciplinary cause or reason in all likelihood is based on recent conduct occurring while the licensee was at that hospital pursuant to that arrangement. In such cases, the hospital can bear the burden of proof because it will have control over and access to all the relevant witnesses and information.

Considering the evidence with the proper burden of proof, the appellate court concluded that the Judicial Review Committee was justified in concluding that there was no way to apportion blame for the disappearance of the Demerol to Dr. Bode. Because Dr. Bode appeared to have corrected the behavior that led to the warnings regarding drug documentation, and because there was a failure to prove Dr. Bode was responsible for the missing Demerol, there was substantial evidence to support the Judicial Review Committee’s decision that, when the burden of proof was placed on the hospital, there was no good cause for the actions taken against Dr. Bode’s privileges. As a result, the Appellate Review Committee erred by concluding otherwise.

Can I Have Legal Counsel At Peer Review Proceedings?

In these peer review proceedings, under California law, the physician does not have the right to legal counsel at the hearing. Nevertheless, many hospitals and entities have bylaws which give this right to the physician. Other than legal counsel, bylaws must allow the physician to be assisted at the hearing by a personal representative who is a licensed physician and preferably a member of the medical staff.

Where there are bylaws that to do not grant the right to the physician to have legal counsel, the physician can request representation by counsel at the hearing. Even if that request is denied, the advantage of having the advice of legal counsel can assist the physician in preparing for the hearing and understanding the negative and potential long-lasting consequences of an adverse outcome at the hearing. The attorney can also be available outside the hearing for consultation.

The Bode case illustrates the benefit of retaining the services of an attorney experienced in administrative procedures for a peer review hearing. The proper placement of the burden of proof may make the difference whether a physician prevails at the hearing, and, ultimately, whether the physician is reported to the Medical Board.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals and businesses in civil, business, administrative and criminal proceedings, with a specialty in health care providers. Their website can be found at http://www.greenassoc.com/

Hospital Peer Review: Attorney Comments On Recent Case And Peer Review Procedures And Strategies

A recent California Supreme Court case considered whether the hearing officer appointed to preside over such hearings could summarily dismiss the proceedings due to the physician's lack of cooperation with the process. In Mileikowsky v. West Hills Hospital and Medical Center (S156986, April 6, 2009), the California Supreme Court ruled that once a hearing is requested, the hearing officer lacks authority to prevent a reviewing panel from reviewing the case by dismissing it on his or her own initiative before the hearing has been convened, and also lacks authority to terminate the hearing after it has been convened without first securing the approval of the reviewing panel.

The case is discussed at length below. A review of this case can educate a provider about the procedure of a peer review process and what health care providers can learn from Dr. Mileikowsky's case:

First, the physician's problems arose in large part from an initial failure to accurately disclose information in his application for privileges.

Second, one cannot perform procedures at a facility without privileges. This was also one of the grounds for denial.

Third, peer review hearings have their own rules which are set forth in the California Business & Professions Code statutory scheme and the hospitals' bylaws and must be followed. However the bylaws cannot be inconsistent with the California statutory scheme.

Fourth, the hearing officers cannot be arbitrary. Nevertheless, the provider must cooperate with the peer review process. Even in cases where we have gone to hearing and won we remind the provider that he or she will need to be working with the hospital administration and persons on the committee and need to keep a long-term view while fighting for privilege rights. Burning bridges is not a wise strategy in the long run.

Fifth, peer review hearings can be emotional. Providers need to have objective legal advice and not let their ego or political disputes with hospital administrators or other providers lead to a denial of privileges which can harm a career. Denial of privileges by law is reported to the Medical Board of California (MBC) and the National Practitioner Data Bank. Thus, applying for privileges needs to be an educated process.

Sixth, something that is not discussed in the case, what do you do when you know the hospital is likely to deny privileges before there is a denial in order to preclude it being reported to the National Practitioner Data Bank? In our experience, hospital administrators will let a provider's attorney know that the application is likely to be denied and allow the provider to withdraw the application to avoid any negative reporting. This needs to be evaluated on a case by case basis.

Factual and Procedural History Of The Mileikowsky Case

Dr. Gil N. Mileikowsky, a physician and surgeon board certified in obstetrics and gynecology, had staff privileges to practice gynecology at West Hills Hospital and Medical Center (West Hills), an acute care facility. Dr. Mileikowsky applied for obstetrical privileges at West Hills and for renewal of his gynecological privileges.

His applications were reviewed by a peer review committee and its executive committee, both of which recommended denial, finding:

(1) he had failed to notify the medical staff that his privileges at a second facility had been terminated;

(2) he misrepresented that he had voluntarily resigned from a third facility, when in fact he had been summarily suspended; and

(3) he attempted to perform a caesarean section on a patient at West Hills when he lacked obstetrical privileges and after the patient had requested he stay away.

Dr. Mileikowsky filed a timely request for a hearing, challenging the peer review committee’s recommendation. West Hills’ medical executive committee (the reviewing panel) appointed a hearing officer to preside over the hearing, which was to be held no later than 45 days from the date of the request for hearing pursuant to West Hills' bylaws.

California’s statutory peer review process is governed by the Business and Professions Code (BPC). BPC § 809 et seq. affords a physician with the right to a hearing for the purpose of reviewing a hospital peer review committee’s recommendation to deny the physician’s application for reappointment to staff privileges. A hearing officer may be appointed to preside at the hearing, but the officer is prohibited by statute from acting as a prosecutor or advocate or from voting on the merits. Cal. Bus. & Prof. Code § 809.2(b). The merits are determined by the trier of fact, often a panel drawn from other of the physician’s peers. Cal. Bus. & Prof. Code § 809.2(a).

In Dr. Mileikowsky’s case, however, month after month went by without a hearing, largely because Dr. Mileikowsky refused to produce documents requested by West Hills, challenged the hearing officer’s authority, and refused to comply with the officer’s directions or orders. In the interim, West Hills amended its notice of the recommendation to include an allegation that Dr. Mileikowsky had failed to cooperate in West Hills’ investigation of the actions taken against him by a fourth facility, which had reported to the MBC and to the National Practitioner Data Bank that Dr. Mileikowsky’s privileges at that facility had been suspended for actions falling into the adverse action classification of “Incompetence/ Malpractice/Negligence.”

Eventually, the hearing officer ordered Dr. Mileikowsky to produce documents relating to the fourth facility, warning he would impose terminating sanctions should Dr. Mileikowsky fail to comply. Dr. Mileikowsky did not comply with the hearing officer's order. Finally, the hearing officer issued an order dismissing Dr. Mileikowsky’s request for a hearing, finding Dr. Mileikowsky’s refusal to make the documents available prevented West Hills from prosecuting its case.

In dismissing the proceedings, the officer invoked a provision in West Hills’s bylaws providing that a physician who fails to request a hearing shall be deemed to have accepted the action involved, the action will become effective immediately, and the physician will be deemed to have waived all other rights inuring to him or her under the bylaws. The order thus declared that the dismissal constituted Dr. Mileikowsky’s voluntary acceptance of the peer review committee’s recommendation and that the recommendation therefore “shall become effective immediately.”

As a result of the order, no hearing was convened, and the matter was never submitted to the reviewing panel for decision. Dr. Mileikowsky appealed the order to West Hills’ governing board, which adopted the hearing officer’s order. Dr. Mileikowsky sought relief in the superior court by petition for a writ of administrative mandate. After losing in the trial court and prevailing in the Court of Appeal, the matter was accepted for review by the California Supreme Court.

Upon review, the Supreme Court determined that the hearing officer was without authority to dismiss the hearing on the grounds of Dr. Mileikowsky's failure to cooperate. The Court found no provision in either the BPC or West Hills’ bylaws that expressly conferred authority on a hearing officer to issue terminating sanctions, and it determined that inferring such power was inconsistent with the goal of the statutory review process. The purpose for providing a physician with a review of the peer review committee’s recommendation—to secure for the physician an independent review of that recommendation by a qualified person or entity (the reviewing panel)—is defeated if the matter is dismissed before the reviewing panel becomes involved. A hearing officer who summarily dismisses a hearing in effect "votes" on the merits by ensuring that the peer review committee’s recommendation will be the final decision of the reviewing panel, in violation of section 809.2(b).

Thus, the Court held that "once a hearing has been requested, the review process may not be concluded without the reviewing panel’s informed approval."

Even though finding in favor of the physician, the Court pointed out potential adverse consequences of a physician's refusal to cooperate in the peer review proceedings:

■ A physician’s refusal to cooperate in an investigation of reported problems may support a recommendation that the physician’s staff privileges be denied. See Webman v. Little Co. of Mary Hospital, 39 Cal.App.4th 592, 602-03 (1995). However, a physician may not be denied staff privileges merely because he or she is argumentative or has difficulty getting along with other physicians or hospital staff, if those traits do not relate to the quality of medical care the physician is able to provide. Miller v. Eisenhower Medical Center, 27 Cal.3d 614, 627-29 (1980).

■ Where a delay in proceedings may result in an imminent danger to the health of any individual, the physician’s clinical privileges can be summarily suspended. Cal. Bus. & Prof. Code § 809.5.

■ A reviewing panel reasonably could infer from a physician’s failure to provide information that the information in question is unfavorable or tends to show the physician cannot or will not cooperate with others and for that reason may be unwilling or unable to function effectively in a hospital setting.

■ Initial applicants for hospital privileges may not introduce “information not produced upon request of the peer review body during the application process, unless the initial applicant establishes that the information could not have been produced previously in the exercise of reasonable diligence.” Cal. Bus. & Prof. Code § 809.3(b)(2).

Attorney Commentary: While the physician won the battle, whether he wins the war remains to be seen. The Supreme Court decision merely puts him back where he started—before the review panel—where the merits of his applications for staff privileges will have to be considered over again.

Even if the physician ultimately obtains the staff privileges he seeks, his aggressive conduct has resulted in time consuming (and expensive!) litigation which appears wholly unnecessary. This case illustrates the need to cooperate in the peer review process even while fighting for a provider's privileges.

We can infer two scenarios from the physician's conduct: (1) he didn't take the process seriously; or (2) he was trying to avoid disclosing bad facts. As to the first scenario—failing to cooperate won't make the process go away—it just raises negative inferences on the physician's fitness or willingness to practice in cooperation with others and in compliance with the facilitity's bylaws.

As to the second scenario—facts are facts, and not cooperating will not make them disappear. What needs to be done is full disclosure, and, with respect to past deficiencies, developing a plan to prevent their reoccurrence. An attorney experienced in peer review processes can assist the physician in presenting the facts in the best light possible and devising a plan that will acknowledge and address the concerns of the reviewing committee.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. The firm focuses its practice on the representation of licensed professionals and businesses in civil, business, administrative and criminal proceedings, with a specialty in health care providers.

Posted by Tracy Green, Esq.
Phone: 213-233-2260
Email: tgreen@greenassoc.com