California Supreme Court Delivers Key Peer Review Ruling

by Nossaman LLP

The California Supreme Court, on June 6, 2013, ruled unanimously in El-Attar v. Hollywood Presbyterian Medical Center, that the delegation of a peer review matter to the hospital's governing board did not violate a physician's common law right of fair procedure.  The El-Attar case includes valuable lessons for both hospitals and physicians.

Nossaman played a role in this significant case, authoring an amicus curiae brief on behalf of the California Hospital Association (CHA) in support of the Hollywood Presbyterian Medical Center (HPMC) position in this case.  Nossaman's brief argued that numerous authorities, from state corporations and licensing laws to Medicare conditions of participation to accrediting agencies' standards, support the broad authority of a hospital's governing board to resolve quality assurance issues. 

The California Supreme Court agreed that while a hospital's Governing Board must give great weight to the actions of the medical staff, it may take unilateral action if warranted.  It also clarified that the standard by which any bylaws deviations would be reviewed is "fairness," and importantly found that it is not inherently unfair for the governing body to appoint a hearing committee.

The central issues in the case arose more than ten years ago when Dr. El-Attar sought re-appointment to the HPMC's medical staff, only for the HPMC governing board to deny the re-appointment, overruling the HPMC medical executive committee (MEC).  When Dr. El-Attar, pursuant to HPMC's medical staff bylaws, requested a hearing on the denial, the HPMC MEC ceded hearing arrangements to the governing board, noting in its minutes that "since the MEC did not summarily suspend [Dr. El-Attar‘s] privileges, did not recommend any adverse action relating to [Dr. El-Attar] . . . and since the requested hearing would be to review actions by the Governing Board; it should be the Governing Board and not the MEC which arranges and prosecutes the requested hearing."

The governing board then impaneled a judicial review committee (JRC) comprised of six medical staff physicians and held a hearing at which the JRC determined that the denial of Dr. El-Attar's reappointment was reasonable and warranted because his medical skills were dangerously substandard and he had behaved inappropriately with HPMC staff members.  On appeal, the governing board concurred with the JRC's findings.

Dr. El-Attar next sought relief in state court, losing at trial but prevailing in the California Court of Appeals.  The case then reached the California Supreme Court.  In the Court's view,  the relevant issue was solely  whether the HPMC MEC's delegation of arranging Dr. El-Attar's peer review hearing to the governing board had violated his rights to fair procedure.  As the Court noted, in many similar contexts, it is not uncommon to rely on "an adjudicator's impartiality in reviewing the propriety of an adverse action taken by an agency... even if the adjudicator is chosen by, and is a member of, the agency prosecuting the matter."  The Court was also bound by the trial court's determination that the MEC had willingly delegated its peer review role to the HPMC governing board.

The California Supreme Court thus determined that, because there were no facts demonstrating the unfairness of the process, and because the governing board has ultimate responsibility for the health and safety of hospital patients, HPMC did not violate Dr. El-Attar's fair procedure rights by permitting the governing board direct control of the peer review process.

The Court's ruling was not a total defeat for the affected physician, however.  The Court ruled only on the narrow question of delegation, and remanded much of the case to the Court of Appeal for further consideration.  Nevertheless, the El-Attar case is good news for California hospitals and medical staffs.  The decision concludes that no provision of California's peer review statutes (Cal. Bus. & Prof. Code 805 et seq.) prohibits the delegation of a peer review hearing to a hospital governing board, or indeed any designee of the medical staff.  More importantly, the decision re-affirms that "[n]ot every violation of a hospital's internal procedures provides grounds for judicial intervention." 

El-Attar also reminds us that the primary purpose of the peer review process is to protect patients, and reaffirms California's longstanding policy that hospital governing boards have the ultimate authority to ensure that substandard physicians are removed from hospital staffs.

The Court, however, left hospitals with a warning: the mere fact that state law does not specifically mandate a given medical staff bylaw provision does not mean that a hospital can violate such a provision with impunity.  To the contrary, "the violating entity's decision to depart from procedures delineated in the bylaws may constitute evidence of that entity's bad intent, and it may bolster a claim that the entity has taken other action that deprived a physician of his or her right to a fair proceeding."  In other words, it remains essential for California medical staffs to have carefully drafted bylaws—and whenever possible to strictly follow them—to safeguard both fair procedure and patient safety.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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