Part I
Several years ago, as part of preparing an opening statement before a hospital “peer review” hearing in Wyoming, I tried to define the objective indicia of sham peer review that I had observed over many cases that appeared and reappeared with some frequency in hospital privileges cases where the prosecution of charges seemed to motivated by factors other than quality of patient care. These motivators sometimes included hospital politics, jealousy, retaliation, turf wars, achievement of competitive advantage or just run away egos. Some entrenched medical staffs have a reputation for “eating their young.” I developed a list of twelve tell tale signs, which taken individually or collectively may suggest the presence of “sham peer review-” that is bad faith peer review manipulated against a physician for a purpose other than the protection of patient safety. See Twelve Signs of Sham Peer Review, posted on May 22, 2006.
Prior to 1982 there was relatively little antitrust action in the health care field, with many believing in an informal “professional exemption” form antitrust scrutiny. In 1982, the U.S. Supreme Court, through the medical profession into a turmoil by finding that the Maricopa County Medical Society had engaged in illegal antitrust conduct by imposing a “maximum fee” schedule that its members would charge health plans. The case, Arizona v. Maricipa County Medical Society, 457 U.S. 332(1982), clearly established the application of antitrust laws to the medical profession.
The history of modern peer review relates back to the Supreme Courts decision six years later in Patrick v. Burget, 486 U.S. 94 (1988). Dr. Patrick was a general and vascular surgeon in the small North Oregon Coastal town of Astoria. The Astoria Clinic dominated the only hospital in Astoria, Columbia Memorial Hospital. A majority of the hospital’s medical staff were employees or partners at the Astoria Clinic. The Clinic invited Dr. Patrick to join them, but he chose to remain and independent practitioner and to compete with them.
Dr. Patrick immediately began to experience problems with the clinic, which essentially shunned him. He received virtually no referrals from the clinic even though the clinic did not always have a surgeon available, but preferred to refer patients to surgeons over 50 miles away rather than to send them to Dr. Patrick. Members of the group commenced a peer review investigation reviewing what they asserted was quality of care below the professional standard.
Dr. Patrick filed suit in federal court alleging that the defendants had violated Section 1 (combination in restraint of trade) and Section 2(monopolization) of the Sherman Antitrust Act by using the hospital peer review process to reduce competition rather than to improve patient care. The court entered judgment against the defendants in the amount of $650,000.00 (then tripled under the Sherman Statute). The Court of Appeals reversed the judgment on the grounds that the defendants were immune from antitrust liability under the “state action” doctrine of Parker v. Brown, 317 U.S. 341, because Oregon had articulated a policy in favor of peer review and actively supervised it to the extent that the peer review process was the action of the state, which was not subject to peer review scrutiny.
On further appeal, the Supreme Court disagreed, finding that Oregon failed to meet the “ active supervision” requirement because there was no evidence that state officials reviewed or could review private decisions regarding hospital privileges. The defendants and various “amici” or “friends of the court,” participants like the American Medical Association argued that peer review immunity is essential to the provision of quality medical care and that the ominous threat of antitrust liability would chill physicians open and active participation in peer review. Justice Marshall for the court noted that that argument “essentially challenges the wisdom of applying the antitrust laws to the sphere of medical care, which he opined should be best directed to the legislature. There followed a hue and cry for legislative and other protection for the peer review process to protect the integrity (or some would argue the lack of integrity) in the medical peer review system.
(To be continued in Part II)
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