Austin v. McNamara

PREGERSON, Circuit Judge,

dissenting:

BACKGROUND

On November 19, 1986, the Cottage Hospital Medical Executive Committee *740 (“MEC”) recommended that the hospital privileges of Dr. George Austin, a neurosurgeon, be revoked. Dr. Austin then brought an action in federal district court against five physicians, four of them neurosurgeons, and Cottage Hospital. The suit alleged that the physicians and the hospital had violated the Sherman Antitrust Act, 15 U.S.C. §§ 1 , 2 (1988), by conspiring or acting in concert to shut down Dr. Austin’s neurosurgery practice in the Santa Barbara area.

Defendants moved for summary judgment on the grounds that (1) their actions were immune under the Health Care Quality Improvement Act of 1986 (“HCQIA”), 42 U.S.C. §§ 11101-11152 (1988) and (2) there was no genuine issue of fact whether a conspiracy existed or whether any injury to competition had occurred.

HCQIA came into effect three days before Dr. Austin’s actual suspension and nearly ten months after the beginning of the investigation into Dr. Austin’s practice. The district court, nonetheless, granted defendants’ motion for summary judgment. It held that the decision to suspend and revoke Dr. Austin’s hospital privileges was immune under HCQIA.

On appeal, Dr. Austin contends that the district court erred in applying HCQIA’s immunity provisions because the review process involving Dr. Austin was initiated and essentially completed before the effective date of the statute, November 14, 1986. Dr. Austin also argues that the district court erred in finding that HCQIA’s fairness standards ( 42 U.S.C. § 11112 (a)) were met.

The majority agrees with the district court that immunity applies to the decision to suspend and revoke Dr. Austin’s hospital privileges. The district court never considered whether the immunity provisions applied retroactively to the review process that was conducted before the statute’s effective date. The majority opinion therefore goes beyond the district court’s decision by applying HCQIA’s immunity provisions retroactively to cover investigations of Dr. Austin’s practice occurring before the effective date of the statute. The majority also deals with the merits of Dr. Austin’s antitrust claim which the district court did not reach.

I dissent for the following reasons. First, I disagree with the majority’s application of the immunity provisions of HCQIA. The investigation of Dr. Austin’s practice was essentially completed before November 14, 1986, the effective date of the statute. Only the decision to suspend Dr. Austin’s hospital privileges occurred after the effective date. I believe that none of the defendants’ activities regarding the investigation of Dr. Austin’s practice or his ultimate suspension are immune under HCQIA.

Second, the majority concludes that HCQIA’s fairness provisions, 42 U.S.C. § 11112 (a), were satisfied in this case. I disagree. In particular, I believe that the decision to suspend and revoke Dr. Austin’s hospital privileges was not reasonably warranted by the facts, and therefore violates the requirements set forth in 42 U.S.C. § 11112 (a)(4).

Finally, I disagree with the majority’s decision to reach the merits of Dr. Austin’s antitrust claim. The district court did not reach this issue, and thus conducted no factfinding that would support the majority’s decision. The issues raised by Dr. Austin’s antitrust claim are fact-intensive and should be resolved in the first instance in the district court.

I.

The majority concludes that the actual decision to suspend and revoke Dr. Austin’s hospital privileges is immune under HCQIA. The majority further concludes that the investigatory and review activities preceding that decision are immune as well even though those activities were completed before the effective date of HCQIA. I disagree.

I do not believe that the statutory language and legislative history of HCQIA support the majority’s conclusion that both the investigatory activities and the actual decision to suspend Dr. Austin are immune under the statute.

*741 In Dr. Austin’s case, the record shows that several committees conducted extensive investigations of Dr. Austin’s medical practice from January to November 1986. Only the decision to suspend and revoke privileges took place after November 14, 1986, HCQIA’s effective date. Though this decision took place three days after HCQIA took effect, it is part of extensive review activity that occurred entirely before the effective date of the statute.

The decision to suspend Austin was merely the culmination of peer review which began months before HCQIA’s effective date. HCQIA, therefore, provided no “incentive” for professional peer review in this context because that review was essentially completed before HCQIA’s effective date. 1 The defendants who conducted the peer review were simply not looking to HCQIA for “protection.” There is no reason to apply the statute in the context of this case.

II.

Even if immunity could apply to the revocation decision, I do not believe that it should apply in this case. Immunity applies only where the fairness standards of 42 U.S.C. § 11112 (a) are met. 2 HCQIA creates a rebuttable presumption that section 11112(a) is satisfied absent a contrary showing by a preponderance of evidence.

Based on the record before us, I believe that sufficient evidence exists to rebut the presumption of fairness. ,

Congress enacted the fairness standards out of a concern that limited immunity under the Act “might be abused and serve as a shield for anti-competitive economic actions under the guise of quality con-trols_” H.R.Rép. No. 903, 99th Cong., 2d Sess. 9, reprinted in 1986 U.S.Code Cong. & Admin.News 6391. Section 11112(a) reflects Congress’s intent “to encourage good faith professional review activities of health care entities.... ” Id. at 6384 .

Section 11112(a)(4) provides that, an action is immune only if it is taken “in the reasonable belief that the action was warranted by .the facts known...,” 3 Contrary to the majority opinion, I do not believe that the district court properly determined that section 11112(a)(4) was satisfied. As I see it, there is sufficient information in the record that could arguably demonstrate that a reasonable jury could conclude that the revocation of Dr. Austin’s hospital privileges was not warranted by facts known to the defendants.

On appeal, Dr. Austin relies heavily upon the findings of the Judicial Review Committee (“JRC”). 4 This committee extensively *742 reviewed the evidence considered by the defendants when they suspended Dr. Austin’s hospital privileges. Dr. Austin argues that the JRC’s conclusions support his contention that the defendants failed to satisfy section 11112(a)(4).

I agree. An examination of the JRC’s findings satisfies me that if a jury were presented with the information garnered by the defendants, it could reasonably conclude that Dr. Austin’s suspension was not warranted by a preponderance of the evidence.

The JRC concluded in its June 1987 report that it “was persuaded that the preponderance of the evidence favors Dr. Austin and ... that the recommendation of the Medical Executive Committee was not reasonable and warranted and that the clinical privileges of Dr. Austin should not be revoked.” (Emphasis added.) The JRC went on to recommend that certain conditions be attached to Dr. Austin’s staff privileges.

The majority opinion acknowledges the significance of the JRC's finding that the suspension of Dr. Austin’s privileges was unreasonable. The majority nonetheless accepts the district court’s conclusion that the conditions suggested by the JRC for Dr. Austin’s reinstatement and the JRC’s expressed concern for some of Dr. Austin’s work somehow vitiate the significance of the JRC’s major conclusion that Dr. Austin’s suspension was unreasonable. 5 The majority agrees with the district court that the JRC recommendation was “far short of complete vindication for the Plaintiff.” Austin v. McNamara, 731 F.Supp. at 937. The majority thus accepts the district court’s conclusion that the JRC’s lack of complete vindication of Dr. Austin constitutes sufficient evidence that the defendants reasonably believed that the revocation was warranted by the facts known.

I disagree with this analysis. The JRC believed by a preponderance of evidence that the revocation was unreasonable and not warranted by the facts known. This conclusion belies the district court’s view that section 11112(a)(4) was satisfied. The district court and the majority are saying in effect that a jury could not reasonably arrive at the same conclusion reached by the JRC, namely that the suspension of Dr. Austin’s hospital privileges was unreasonable.

I believe that if a jury had before it information examined by the JRC, it reasonably could conclude that the conduct of the defendants did not comply with section 11112(a)(4). For example, the JRC found only one instance where Dr. Austin’s performance fell below the applicable standard of care. The JRC expressed concern about three other cases but found that the proof was evenly balanced. The JRC had concern about a fifth case but concluded that Dr. Austin’s conduct was not below the applicable standard.

In all other respects, the JRC found that Dr. Austin’s professional conduct was not below the applicable standard for all cases reviewed. This is a far cry from the 103 instances of substandard conduct allegedly relied upon by the defendants. The JRC attributed some of the discrepancy between its findings and those of the defendants to the fact that the neurosurgeons could not objectively monitor Dr. Austin’s neurosurgical practice.

The findings of the JRC also indicate that the suspension was unreasonable because the defendants ignored the recommendation of the external committee. In *743 August 1986, this committee suggested that the hospital monitor Dr. Austin’s work for six more months. However, the six-month period of monitoring was cut short when, just three months later in November, the hospital revoked Dr. Austin’s privileges. Between August and November the only review that took place consisted of five case reviews of Dr. Austin’s work by some of his fellow neurosurgeons.

Based on the foregoing, I dissent from the majority’s opinion.

. Congress passed HCQIA to meet' "an overriding national need to provide incentive and protection for physicians engaging in effective professional peer review.” 42 U.S.C. § 11101 (5) (emphasis added).

. Section 11112(a) provides, in pertinent part, For purposes of the [immunity] protection ..., a professional review action must be taken—

(1) in the reasonable belief that the action was in the furtherance of quality health care,

(2) after a reasonable effort to obtain the facts of the matter,

(3) after adequate notice and hearing procedures are afforded to the physician involved or after such other procedures as are-fair to the physician under the circumstances, and

(4) in the reasonable belief that the action was warranted by the facts known after such reasonable effort to obtain facts and after meeting the requirement of paragraph (3)....

. Congress has interpreted the "reasonable belief’ standard to mean a “more objective reasonable belief standard.” See 1986 U.S.Code Cong. & Admin.News 6392-93.

The majority opinion concludes that Dr. Austin’s proffer of. evidence to show defendants’ harmful intent or motive is irrelevant because of this objective standard. I disagree. Evidence of motive and intent is relevant to show whether the defendants possessed a reasonable belief that the final revocation was warranted by the facts known.

Moreover, the . legislative history discussing the due process, requirements of section 11112 makes clear that it is essential that "physicians receive fair and unbiased review to protect their reputation and medical practices.” 1986 Code Cong. & Admin.News at 6393. Any inquiry into the reasonableness of the reviewers’ beliefs should at least consider any evidence of bias or ulterior motive even though an objective standard ultimately applies.

.After his suspension, Dr. Austin requested a hearing pursuant to hospital policy before the JRC which was comprised of six' impartial doctors.

. The district court held that even though the ■ JRC found Dr. Austin’s suspension to be. unreasonable, a jury could find that the defendants had a reasonable belief that their decision was warranted. The district court relied in part on the fact that the JRC did in fact impose "significant restrictions” on the reinstatement of Dr. Austin’s privileges.

There is some question, however, whether these conditions were significant restrictions on Dr. Austin’s practice. The district court found that the conditions imposed were "significant restrictions that are out of the ordinary for a surgeon of Plaintiffs experience." Austin v. McNamara, 731 F.Supp. 934, 938 (C.D.Cal.1990). Dr. Austin, produced the testimony of Dr. Henry W. Dodge who questioned the severity of the conditions. Dr. Dodge believed the conditions were to "be expected of any other physician practicing medicine and surgery in the state of California.”