Petition for Writ of Certiorari — Kwoun v. Southeast Missouri Professional Standards Review Organization

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(\) Supreme Court, U.S.

R6 19 44 5% eS eb

SUN—S- 1987

In THE JOSEPH F. SPANIUL, UR.

OLERK

Supreme Court of the United States

Ocroser Term, 1986

Soune O. Kwouy, et al.,

Petitioners,

vs.

SoutHeEast Missourrt ProFessionaL STANDARDS

Review OrGAnizaTIon, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Louis GmpENn*

NoraH J. Ryan

317 North 11th Street

Suite 1220

St. Louis, Missouri 63101

(314) 241-6607

Juurus LEVonneE CHAMBERS

Cuartes STEPHEN RatstTon

99 Hudson Street

New York, New York 10013

(212) 219-1900

Attorneys for Petitioners

*Counsel of Record

UESTION RESENTED

1. Are private physicians’ and

other employees of a Medicare peer review

organization operating under’ contract

with the United States Department of

Health and Human Services entitled to

absolute immunity from claims of race

discrimination and other constitutional

viclations as well as from common-law

tort claims even though Congress, by

statute, has extended only qualified

immunity?

2. Are non-attorney' federal

officials entitled to absolute immunity

from the constitutional tort and race

discrimination claims of a physician

excluded from Medicare reimbursement,

where the exclusion is by a non-judicial

administrative decision made without a

hearing and in the absence of minimal due

process?

3. Are Medicare peer reviewers and

federal Medicare administrators entitled

to absolute immunity on policy grounds

arising from the importance of the

Medicare peer review scheme, without

regard to the countervailing importance

of eradicating racial discrimination?

Parties in the Court Below

oo The petitioners, Soung 0.

Kwoun, Henrickson Clinic, Inc.,

Henrickson Clinic Pharmacy, Inc., and

Henrickson Clinic Laboratory, Inc., were

plaintiffs below.

26 The following are respondents

here and were defendants’) below:

Southeast Missouri Professional Standards

Review Organization; Missouri Statewide

Professional Standards Review Council;

Robert M. Kepner; Raymond A. Ritter; Sue

Legaspi; James Armantrout; Larry Baker;

William V. Booth; Jean A. Chapman; V. D.

Delles; R. F. Dettmer; Gordon Eller; Jose

H. Gonzales; T. O. Honaas; Robert C.

Hoye; W. W. Hutton; Christopher Jung; G.

H. Ladyman; John kK. lLegan; Gene UH.

Leroux; R. E. Marts; A. G. Miranda; Jesse

Page; Pin Pu; Vinai Raksakulthai; Ben

Till; A. T. Tuma; Austin Tinsley; Joseph

Blanton; D. E. Edwards; Terry Guiley; Tom

iii

Henderson; Berry B. White; Randall Huss;

George McAnelly; Robert Robbins; Eugene

Ruff; C. F. Sparger; Michael K. Blank;

James Conant; A. N. Sandler; Allen

Spitler; Kirby Turner; E. kK. Buford;

David Clark; Fuad H. Kandalaft; Earl

Kennedy; Martha Reed; Clifford Talbert;

Charles P. McGinty; W. E. Hendrickson;

Robert E. Bregant; Katherine Rosenfeld;

Frank Kram; Don Nicholson; Ralph Ak.

momnant..

3 No review is sought here as to

the following defendants in the courts

below: General American Life Insurance

Company; Tom Zorumski; Clifford A.

Kinnunen; W. F. Montgomery; and Gary

Clark.

A CONTENTS

Page

Questions Preéqgegeead <<. <« « sa i

Parties in the Court Below... . iii

Tone os Geneon «-é¢ «& w & es 8 8 iv

Tabie GE Reese wc « 6 2 6 vii

CITATIONS TO OPINION BELOWS. ... 2

JUL 6 64 Meo es Ys 8) Ue le 3

CONSTITUTIONAL PROVISION, STATUTES,

AND REGULATIONS INVOLVED ..-... 3

Semaeeeees GF Dee GARE « « « «6 * 4

REASONS FOR GRANTING THE WRIT... 16

Be THIS CASE PRESENTS

QUESTIONS OF NATIONAL

IMPORTANCE THAT SHOULD

BE RESOLVED BY THIS

COURT e* s s a e - - se _ = 1 6

II. THE DECISION BELOW CON-

FLICTS WITH PRIOR

DECISIONS OF THIS COURT AND

WITH DECISIONS OF OTHER

CIRCUITS REGARDING THE

CIRCUMSTANCES UNDER WHICH

ABSOLUTE IMMUNITY IS

PX. , 8 5 Ee 21

A. The Decision Below

Conflicts With

Decisions of This

ns. ose ae «se Oe

|” a 5 |

III. THE DECISION BELOW CON-

FLICTS WITH THE DECISIONS

OF OTHER CIRCUITS AS TO

WHETHER PHYSICIANS ENGAGED

IN MEDICARE PEER REVIEW ARE

FEDERAL OFFICIALS AND WITH

STATE COURTS AS TO THEIR

IMMUNITY FROM SUIT... . 32

IV. THE DECISION BELOW RAISES

IMPORTANT ISSUES RELATED

TO THOSE PRESENTED BY A

PENDING CASE, Patrick v.

CONCLUS ION o . *. . . . . . . . . . . 4 3

Table of Authorities

Cases: Page

Association of American Physicians

and Surgeons v. Weinberger,

395 F. Supp. 125 (N.D. Ill.

1975), affirmed

opinion, 423 U.S. 975 (1975) . 34

Austin Municipal Securities, Inc. v.

National Association of

Securities Dealers, Inc., 757

F.2d 676 (5th Cir. 1985) 19, 27, 28

Barr v. Mattec, 360 U.S. 564

(1959) . « « «© o « « AL, 123, 14, 35

Bishop v. Tice, 622 F.2d 349

ee eee ee ee ee

Board of Regents v. Roth, 408 U.S. 564

(1972) * > . . . . * . . . . . 7 26

Bothke v. Fluor Engineers &

Constructors, Inc., 713 F.2d 1405

(9th Cir. 1983), vacated on another

ground, 468 U.S. 1201 (1984),

order on remand, 739 F.2d 484 (9th

cir. 1984) . >. . 7 2 . > 19, 20, 31

Buckner v. Lower Florida Keys Hosp.

Dist., 403 Se.2d 1025 (Fla.

App. 1981) . . . . oa - — . > 325 41

Bushman v. Seiler, 755 F.2d 653

[eam Gal. BOGR) « 6 « © 2 © ce oe tS

Butz v. Economou, 438 U.S. 478

(1978)11,12,14,21,22,23,24,28,29,35

vii

Page

Cameron v. IRS, 773 F.2d 126 (7th Cir.

1985) . + 7 . * > * . 7 oo 19, 31

Case v. Weinberger, 523 F.2d 602

Cleavinger v. Saxner, 474 U.S. , 88

a ee Ue ee eee) |

Clulow v. State of Oklahoma, 700 F.2d

1291 (10th Cir. 1983) ... 19, 26

Denton v. Mr. Swiss of Missouri, 564 F.2d

396. (000 Gees 200th oc ce ce tt it 2

Doe v. St. Joseph’s Hospital of Fort

Wayne, 788 F.2d 411

fou Gees Be) « « «6 « « «@ 38, 42

Dretar v. Smith, 752 F.2d 1015 (5th

Cir. 1985) . . +. aa . © = o .* 7 21

Economou v. Butz, 466 F. Supp. 1351

(S.D.N.Y. 1979) . . . . . . . . 23

England v. Rockefeller, 739 F.2d 140

(60h Gis. 3O66) « 6 6 « 8 0 t@ e 19

Franco v. District Court of Denver, 641

P.2d 922 (Colo. 1982) ... 35, 41

Freeman v. Blair, 793 F.2d 166 (8th

Cir. 1986) o . _ . * 7 . . - _ 19

Gray v. Bell, 712 F.2d 490 (D.C. Cir.

1983) . all > . * 7 * . . > - 20

Hackenthal v. Weissbein, 592 P.2d 1175,

154 Cal. Rptr. 423, 24 C.3d 55

(1979). . 7: . . . . 7 * . . * 36

viii

Harlow v. Fitzgerald, 457 U.S.

a ee

Harper v. Jeffries, 808 F.2d 281 (3rd

ON ee |

Hayden v. Foryt, 407 So.2d 535

(Miss. 1982) . + . . . 7 o s e 35

Imbler v. Pachtman, 424 U.S.

SOD (2976) «§ « « «© © @ B38, 22, 29

Johnson v. Rhode Island Parole Bd.

Members, 815 F.2d 5

(ae Cars BOGT) ss 2 2 2 « « 38, 20

Kompare v. Stein, 801 F.2d 883

(7th Cir. 1986) . a — * * * i . 20

LeClair v. Saunders, 627 F.2d 606

(1980) . 7. . * + - a . . o 19

McKinney v. Whitfield, 736 F.2d 766

pees Gaps Bee) 2. « 2 0 0 ee «C6

McSurley v. McClellan, 753 F.2d 88

.@. Caes 29GB) 6 ss eo ow ew we 8D

Malley v. Briggs, 475 U.S. ‘

89 L.Ed. 2d 271 (1986) .... 25

Matviuw v. Johnson, 26 Ill. Dec.

794, 388 N.E.2d 795, 70 Ill.

App. 3d 481 (1979), aff’d,

67 Ill. Dec. 370, 444 N.E.2d

606, 111 Ill. App. 3d 629

PSE ce hag 4 6 « @ 4. « 36

Mitchell v. Forsyth, 472 U.S. _, 86

L.Ed.2d 411 (1985) . . 12, 24, 25

Page

Nixon v. Fitzgerald, 457 U.S. 731

(aeUek 3 sé se 0 &, eee BE

Patchogue Nursing Center v. Bowen,

797 F.2d 1137 (2nd Cir. 1986) .26

Patrick v. Burget, 800 F.2d 1498 (9th

Cir. 1986), pet. for cert.

pending, No. 86-1145 . . 38, 39, 41

Public Citizen Health Research

Group v. ‘Department of Health,

Education, and Welfare,

668 F.2d 537 (D.C. Cir.

SOR ss x er eee Se Soc Be. 045: 36

Schware v. Board of Bar Examiners,

SES Ui, BO Oe a en oe: ow 8

Sellars v. Procunier, 641 F.2d 1295

(9th cir. 1981) s* * * = - _ 18, 20

Simons v. Bellinger, 643 F.2d 774 (D.C.

(1980) . om o = * * * . . * . a9, 27

Smith v. North Louisiana Medical

Review Association, 735 F.2d

168 (5th Cir. BPeGs 6 eee 6 « 3

State ex rel. Chandra v. Sprinkle,

678 S.W.2d 804 (Mo. en

banc 1984) ° . o . s . . - - . 41

Taylor v. Flint Osteopathic Hospital,

561 Supp. 1152 (E.D. Mich. 1983),

vacated and remanded for trial,

765 F.2d 146 (6th Cir. 1985) . .37

Tripati v. U.S.I.N.S., 784 F2d 345 (10th

Cin. 2966) «. « « 0 « «1 29, Be

Page

Twin City Federal Savings & Loan

Association v. Transamerica

Ins. Co., 491 F.2d 1122

(Oth Gi. BRN. eres ce i 8

U.S. v. University Hospital, 729 F.2d 144

(2nd Civ. 1984) ~ s s * * o 7 . 34

Weiss v. Lehman, 642 F.2d 265 (9th Cir.

1981), vacated on other oranas.

454 U.S. 807 (1981) ... ° 19

Williams v. City of St. Louis, 783 F.2d

334 “Oth Giei 1966) VP. Sw eo! 88

Windsor v. The Tennessean, 719 F.2d 155,

reh. denied, 726 F.2d 277 (6th

Gen. eee 2S PN Ee SS, 31

Statutes and Regulations:

42 co emé § 474.3 a * 7 * . * . = o 4

ee ee Pee ee eee

42 C.F ele § 474.7 . * 7. e* . 7 ae * — 4

SS Cie 6 MR ise SSG

42 €.0.E. §.476.080%. 3 6 ou « 4S, 20

<2 Ties eC 4 6 tk sk ct tt ke S

42 0.02.9 G2eees.. sss ss) 47S, 4

43 U8. 3 A ww ee aS, 6

43 U.8.G.. BAe Se os os YB, 20

42 U.S.C. § 1320c-16(b) . . . 15, 30, 41

42 Weekes § 1981 7 - *. * - 7 . . . 3» 10

42 UcaGe § 1985(3) * = . - o . a Ze 10

PERO Program Memiel . «2 « 6 & es 6 34

Public Law No. 99-660 ........ 40

Other Authorities:

Davis, K., Adequate Health Care

they Morally Compatible?

Winter Daedalus, 227 (1986) .. 16

Gregory, D., Immunity for Physicians

in Peer-Review Committees

’

11 Legal Aspects of Med.

Practice No. 9, 1 (Sept. 1983) . 36

Keith, S., R. Bell, A. Swanson, A.

Williams, Effects of Affirmative

Action in Medical Schools:

Vol. 313, No. 24, The New

England Journal of Medicine

1519 (1985) 7 . * . © . * . . ° 17

J. C. Norman, So-Called Physician

Immunity of Peer-Review

Legal Aspects of Med.

Practice No. 2 (Feb. 1983) .. 36

Note, The Legal Liability of Medical

Peer Review Participants For

Revocation of Hospital Staff

, 28 Drake L. Rev.

Goa TEeTTTes 2 2 4 te 2 ke 35

’

»- a

Note, Medical Peer Review Protection In

the Health Care Industry,

52 Temple L.Q. 552 (1979) ... 35

S. Rep. No. 1230, 92nd Cong., 2d

Sees. (1972) .«. « « «© «© © © « « 30

xii

Page

Southwick and Slee, Quality Assurance

in Health Care

, 5 J. Legal Med.

343 (1984) t > + e e e e e e e 36

132 Cong. Rec. H. 9906 (daily ed.

Oct. 24, 1986) > eo o s o eo e e * 40

xiii

;

NO. 86-

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1986

SOUNG O. KWOUN, et al.,

Petitioners,

Vs.

SOUTHEAST MISSOURI PROFESSIONAL

STANDARDS REVIEW ORGANIZATION,

Ge @i:3,

spon ts.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE EIGHTH CIRCUIT

The petitioner, Soung 0. kwoun,1

respectfully prays that a writ of

certiorari issue to review the judgment

and opinion of the United States Court of

Appeals for the Eighth Circuit entered in

this proceeding on February 4, 1987.

lpr. Kwuon and the_ professional

corporations through which he practices

are plaintiffs-petitioners.

CITATIONS TO OPINIONS BELOW

The opinion of the court of appeals

is reported at 811 F.2d 401 (8th Cir.

1987) and is set out in the separate

Appendix to this petition at pp. 1la-55a.

The orders of the court of appeals

affirming the district court and denying

rehearing are set out in the Appendix at

pp. 145a- 148a. The opinions of the

district court are reported at 622 F.

Supp. 520 (E.D. Mo. 1985) and 632 F.

Supp. 1091 (E.D. Mo. 1986) and are set

out in the Appendix at pp. 76a-123a and

124a-139a, respectively. The decision of

the district court denying plaintiffs’

motion to alter or amend the judgment is

unreported and is set out in the Appendix

at pp. 140a-143a. An earlier decision of

the district court in a related case,

entitled Kwoun v. Schweiker, is reported

at 528 F. Supp. 1004 (E.D. Mo. 1981) and

is set out in the Appendix at pp. 5é6a-

;

75a.

JURISDICTION

The judgment of the court of appeals

affirming the district court’s dismissal

of the case in its orders of March 27,

1986, and June 3, 1986, was entered on

February 4, 1987. (A. 145a-146a) The

court of appeals entered an order denying

a timely petition for rehearing en banc,

or, in the alternative, for rehearing by

the panel, on March 9, 1987, and this

petition for certiorari is filed within

90 days of that date. (A. 147a-148a.)

The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISION, STATUTES,

____AND REGULATIONS INVOLVED

This case involves a constitutional

claim of denial of due process under the

Fifth Amendment, and claims of racial

discrimination and conspiracy under 42

U.S.C. § 1981 and § 1985(3), which are

set out in relevant part in the Appendix

at pp.156a-157a.

Other statutes involved are the

Medicare Peer Review Act, as amended, 42

U.S.C. § 1320cC et seqg., including: 42

U.S.C. § 1320c-16(b) (1977), now 42 U.S.C.

§ 1320c-6(1982), § 1320c-5, § 1320c-8,

and § 1320c-9 which are set forth, in

relevant part, in the Appendix at pp.

149a-156a.

Regulations involved are 42

C.F.R. §§ 474.3, 474.4, 474.7, 474.8, and

474.10, along with the PSRO Program

Manual, all of which are set forth in

relevant part in the Appendix at pp.-

158a-167a.

STATEMENT OF THE CASE

The petitioner, Soung 0. kKwoun,

M.D., is a surgeon who was excluded from

eligibility for Medicare reimbursement

for services rendered to his patients by

a ten year sanction decision of the

Health Care Financing Administration

;

(H.C.F.A.) of the Department of Health

and Human Services (HHS), in 1980.

The H.C.F.A. was acting on a

recommendation based upon alleged quality

of care issues issued by the Southeast

Missouri Professional Standards Review

Organization (the SEMO PSRO) which had

been forwarded to the H.C.F.A. by the

Missouri Statewide Professional Standards

Review Council (the Statewide Council).

The SEMO PSRO and the Statewide Council

are non-volunteer peer review

organizations operating under contract

with HHS, pursuant to 42 U.S.C. § 1320c,

et seg., which are incorporated as non-

profit corporations under Missouri law,

and which pay their participants in

accordance with the directives of HHS.

Pursuant to statute and the

implementing regulations, the sanction

decision against Dr. Kwuon was imposed

and a notice of his exclusion from

eligibility for Medicare reimbursement

for quality of care reasons was published

in newspapers in the area in which

he practiced prior to a hearing.? He was

required to take an administrative appeal

in order to obtain a hearing before an

adjudicative officer.

Dr. Kwoun appealed the sanction

decision under 42 U.S.C. § 1320c-8(b).

In 1983, after a hearing on the record

before a federal Administrative Law

Judge, Dr. Kwoun was’ restored to

eligibility for Medicare reimbursement. ?

242 U.S.C. § 1320c-9(b) (2); 42

C.F.R. § 474.10(e).

3as a result of information provided

by the HCFA to the Missouri State Board

of Registration For The Healing Arts and

the Missouri Department of Social

Services which administers state Medicaid

payments, Dr. Kwoun was also threatened

with exclusion from eligibility for

Medicaid payments and with revocation of

his medical license. Dr. Kwoun was

cleared of the charges brought by the

Board of Healing Arts on May 18, 1984,

and of the charges made by the Department

of Social Services in the attempt to

The Administrative Law Judge, in a

lengthy opinion,* reversed the sanction

decision of the HCFA and held that the

HCFA had failed to establish any

violation of any obligation or any

professional neglect under the Medicare

Act by Dr. Kwoun. (Court of Appeals

Appendix, hereinafter "C.A. App.," 519.)

The ALJ found that the SEMO PSRO,

the Statewide Council, and the HCFA had

excluded Dr. Kwoun from eligibility

without ever having developed

Professional Standards of Health Care

as required by 42 U.S.C. § 1320c-5(a)

against which to compare Dr. Kwoun (C.A.

App. 516-17, 520). The ALJ further found

that the SEMO PSRO and the HCFA had

exclude him from Medicaid payments on

November 7, 1983, after two separate

hearings before the Missouri

Administrative Hearing Commission.

4The opinion is 183 pages, excluding

exhibits, and was based on more than

2,100 pages of transcript.

Tsithettaei er teneeaeaeeuellll

totally failed to comply with the notice

and opportunity to respond provisions of

42 C.F.R. Part 474, and that ". .. by

reason of the Health Care Financing

Administration’s failure from the onset

of the prosecution of this case to

rectify the procedural errors of the SEMO

PSRO by stating clearly the factual and

legal issues, the respondent did not

receive substantive due process in

accordance with the Social Security Act

and Regulations and the policy of the

Department of Health and Human Services."

(C.A. App. 506) The ALJ found that the

medical records upon which the HCFA based

its sanction decision had been

rearranged, the sanction report had been

tailored, and that at least one document

purportedly found in a patient file had

been contrived. (C.A. App. 528)

In strong language, the ALJ called

the HCFA’s pursuit of sanctions against

we,

co oe

Dr. Kwoun "despicable" and conduct not

worthy of professional people, and stated

that there may have been some motive

other than a concern over the quality of

Dr. Kwoun’s care of patients behind the

sanction decision. (C. A. App. 513, 509)

Indeed, at a non-due process

administrative review before an HCFA

official, one of Dr. Kwoun’s witnesses

testified under oath that he had heard a

member of the SEMO PSRO publicly state

that they wanted to get rid of "those

damn Koreans" and that they just about

"had Dr. Kwoun where they wanted hin,"

and that then they were going to start on

another Korean doctor in the area. (C.A.

App. 305.) Although the original

investigation was of the entire hospital

at which Dr. Kwuon practiced, Dr. Kwuon

was the only physician against whom

sanctions were sought.

After the sanction decision was

reversed,” Dr. Kwoun brought suit against

four employees of HCFA, in their

individual capacities, fifty-one

physicians and staff persons who were

members and employees of the SEMO PSRO

and of the Statewide Council, the SEMO

PSRO and the Statewide Council

themselves, and certain other defendants

who are not respondents here.©® The suit

alleged claims of discrimination on

account of race (Korean) in violation of

42 U.S.C. § 1981 and 42 U.S.C. § 1985(3),

due process violations under the Fifth

5A prior injunction action, brought

by Dr. Kwoun, Kwoun v. Schweiker, 528 F.

Supp. 1004 (E.D. Mo. 1981), was dismissed

without prejudice by the U.S. District

Court, Eastern District of Missouri, for

failure to exhaust administrative

remedies, and was not appealed. A. 56a-

75a.

6Ppetitioners do not seek review of

the district court’s dismissal of the

General Life Insurance Company or of the

court of- appeals’ decision with regard to

the state employee defendants, Montgomery

and Clark.

Amendment, and state law claims of

malicious prosecution and _ intentional

infliction of severe emotional distress,

and other claims not relevant here. The

jurisdiction of the district court was

invoked under 28 U.S.C. § 1331 and §

1343, and pendent jurisdiction. Damage

allegations were based upon loss of

income, damage to Dr. Kwoun’s practice

and reputation, and emotional distress.

In an order dated September 19,

1985, the district court denied the

federal defendants’ motion to dismiss on

grounds of absolute immunity under Butz

v. Economou, 438 U.S. 478 (1978) and

official immunity under Barr v. Matteo,

360 U.S. 564 (1959). The federal

defendants took an immediate appeal.’

7Plaintiffs argued in the court of

appeals that the denial of the federal

defendants’ motion to dismiss on grounds

of official immunity under Barr was not

an immediately appealable order under

, 472 U.S. » 86

L.Ed.2ad 411 (1985) and Nixon v.

The SEMO PSRO defendants’ motions based

on official immunity under Bushman _ v.

Seiler, 755 F.2d 653 (8th Cir. 1985) and

on other grounds were denied by the

district court. A. 76a-123a.

However, on March 27, 1986, the

district court sua sponte entered an

order dismissing the entire case on the

grounds that the peer review defendants

were entitled to what was later described

as “qualified immunity,"® a claim they

had never raised. In so ruling, the

court stated that it would “correct"

Fitzgerald, 457 U.S. 731 (1982).

Although the court of appeals addressed

the question of official immunity under

Barr before it reached the question of

absolute immunity under Butz, the court

did not address the procedural and

jurisdictional question of appealability

anywhere in its opinion.

8tn its March 27 order the district

court did not describe the immunity it

was granting as qualified, but discussed

it in terms appropriate to a grant of

absolute immunity. It was only in its

later June 3 order that the district

court used the term "qualified immunity."

Pw...

Congress’ failure to grant Medicare peer

reviewers immunity. A. 124a-139a. In an

order dated June 3, 1986, the district

court held that its dismissal extended to

all defendants, and that it intended to

overrule its September 19, 1985 order

with respect to the federal defendants. ?

A. 140a-143a. Dr. Kwoun appealed from

the latter two orders of the district

court to the Court of Appeals for the

Eighth Circuit. The three appeals were

consolidated for argument and decision.

The court of appeals held that all

of the sixty-some defendants in the case,

9The question of the procedural

unfairness of a sua sponte dismissal of

the case on grounds barring later

litigation on the merits was presented to

the court of appeals but was not

addressed by that court even though the

Eighth Circuit has consistently held that

sua sponte grants of summary judgment are

improper and require reversal. Williams

. 983 #.34 114, 116

(8th Cir. 1986), v . Swi °

Missouri, 564 F.2d 236, 242 (8th Cir.

1977), Twin City Federal Savings & Loan

Association v. Transamerica Ins. Co.

O., 491

F.2d 1122 (8th Cir. 1974).

including the peer review physicians,

were entitled to absolute immunity under

Butz _v. Economou, 438 U.S. 478 (1978),

and to the immunity of federal officials

from common-law tort claims under Barr v.

Matteo, 360 U.S. 564 (1959). Therefore,

Dr. Kwuon’s claims’ of racial

discrimination and denial of due process

must be dismissed in their entirety. At

oral argument before the appeals court,

government counsel had expressed the

opinion that the peer review

organizations could claim qualified but

not absolute immunity. Since it held

that all defendants were entitled to

absolute immunity, the court of appeals

did not reach the issue of the

correctness of the district court’s

dismissal purportedly based on qualified

immunity.

Judge Heaney, in a dissenting

opinion, objected to the court of appeals

Boeeb nny

{

;

ordering the case dismissed. Instead, he

urged, the court should have remanded for

a determination by the district court of

the functions performed by the federal

defendants, as this Court did in Butz.

He further urged that the peer review

defendants were not entitled to absolute

immunity in light of the clear language

of 42 U.S.C. § 1320c-16 (1977), which

expressly provides such persons with only

good faith immunity. A. 43a-55a.

A petition for rehearing or for

rehearing en banc was denied, thus

occasioning this petition for a writ of

certiorari.

REASONS FOR GRANTING THE WRIT

I. THIS CASE PRESENTS QUESTIONS OF

NATIONAL IMPORTANCE THAT SHOULD BE

RESOLVED BY THIS COURT

The present case raises significant

questions concerning the _ scope ‘of

immunity to which state and federal

officials responsible for carrying out

portions of the Medicare program are

entitled. At issue is not only the

immunity doctrine as developed by

decisions of this Court but also the

intent of Congress when it enacted an

immunity provision as part of the

Medicare Act.

The Medicare program is nationwide

in scope and is one of the primary means

of providing low cost medical care to the

poor and elderly.?° Its administration

depends to a significant degree on the

10x, Davis, “Adequate Health Care

and an Aging Society: Are they Morally

Compatible?" Winter Daedalus, 227, 229-

230 (1986).

states and on private physicians, both as

providers of care and as regulators. For

the minority poor, often the only source

of medical care is minority physicians

who are willing to establish practices in

their communities.11 Racial discrimi-

nation in the administration of the

program can have a devastating effect,

therefore, not only on the rights of

minority physicians who are excluded as a

result of prejudice but also on those

persons for whose ultimate benefit the

Medicare program is intended.

Physicians excluded from Medicare

payments because of their race or

ancestry not only suffer the immediate

consequence of suspension from

eligibility for reimbursement but suffer

11s, Keith, R. Bell, A. Swanson, A.

Williams, "Effects of Affirmative Action

in Medical Schools: A Study of the Class

of 3975." Vel. 313,. No. 24, The New

England Journal of Medicine 1519, 1524

(1985).

serious damage to their reputations and

practices that restoration to eligibility

is inadequate to correct. The only

effective remedy for, and deterrent to,

racial discrimination in this situation

is the availability of damages against

those who violate the civil and

constitutional rights of physicians.

The importance of the issues

presented here are not confined to the

operation of the Medicare program. In

recent years there have been dozens of

reported decisions by both the federal

appellate and district courts that have

grappled with the issue of when and to

what degree particular officials should

be granted immunity from actions for

damages. The results have been

divergent, with courts —— absolute

immunity to some officials,12 and

12p.qg., Johnson _v. Rhode Island

Parole Bd. Members, 815 F.2d 5 (ist Cir.

1987); Sellars v. Procunier, 641 F.2d

qualified immunity to others.1}%

1295 (9th Cir. 1981) (parole board

members); Tripati_ v. U.S.I.N.S., 784 F.2d

345 (10th Cir. 1986) (federal probation

officer); Harper _v. Jeffries, 808 F.2d

281 (3rd Cir. 1986) (parole board hearing

officer absolutely immune; probation

officer only entitled to qualified

immunity); Clulow_v. State of Oklahoma,

700 F.2d 1291 (10th Cir. 1983) and Simons

v. Bellinger, 643 F.2d 774 (D.C. Cir.

1980) (attorney disciplinary committees) ;

Austin Municipal Securities Inc. v. Nat’l

Ass’n_ of Securities Dealers, Inc., 757

F.2d 676 (5th Cir. 1985) (securities

dealers’ association).

13E.g., LeClair v. Saunders, 627

F.2d 606 (1980) (dairy farm inspector);

England v. Rockefeller, 739 F.2d 140 (4th

Cir. 1984) (governor not entitled to

absolute legislative immunity); McSurley

v. McClellan, 753 F.2d 88 (D.C. Cir.

1985) (congressional staff member);

, 793 F.2d 166 (8th Cir.

1986) (department of health inspectors) ;

Bothke v. Fluor Engineers & Constructors,

Inc., 713 F.2d 1405 (9th Cir. 1983),

vacated on another ground, 468 U.S. 1201

(1984), order on remand, 739 F.2d 484

(9th Cir. 1984) (IRS official entitled

only to qualified immunity); accord,

Cameron _v. IRS, 773 F.2d 126 (7th Cir.

1985); Tripati v. U.S.I.N.S., supra

(immigration official entitled only to

qualified immunity); Weiss v. Lehman, 642

F.2d 265 (9th Cir. 1981), vacated on

other grounds, 454 U.S. 807 (1981)

(Forest Service employee); Windsor v. The

, 719 F.2d 155, xeh. denied,

726 F.2d 277 (6th Cir. 1983) (U.S.

Attorney acting as employer only entitled

The decisions conflict both in terms

of the results and the standards used.

In the present case the court below

decided as a matter of policy that

certain types of officials should have

absolute immunity without requiring a

particularized showing of the functions

performed by the officials. Other courts

have followed the admonition of this

Court in Nixon v. Fitzgerald, 457 U.S.

731 (1982) and have required a rigorous

showing of need and function before

extending absolute immunity.14

to qualified immunity); Kompare v. Stein,

801 F.2d 883 (7th Cir. 1986) (medical

examiner).

14Ssee, e.g., Gray v. Bell, 712 F.2d

490 (D.C. Cir. 1983);

Sellars _v.

Procunier, 641 F.2d 1295 (9th Cir. 1981),

followed, Johnson v. Rhode Island Parole

Bd. Members, 815 F.2d 5 (list Cir. 1987).

Inc., supra (under functional analysis,

IRS official had only qualified

immunity); Tripati_v. U.S.I.N.S., supra

(immigration official who reported alien

to INS had qualified immunity, probation

officers who prepared reports had

absolute immunity); Harper v. Jeffries,

Wane ETA oe Ther tale be.

’

weld

Na ee. Reet of

Petitioners urge that this case

provides the opportunity for the Court to

resolve a number of issues that have

divided the lower courts and to provide

guidance that will permit them to decide

in particularized cases the degree of

immunity to which an official should be

entitled.

II. THE DECISION BELOW CONFLICTS WITH

PRIOR DECISIONS OF THIS COURT AND

WITH DECISIONS OF OTHER CIRCUITS

REGARDING THE CIRCUMSTANCES UNDER

WHICH ABSOLUTE IMMUNITY IS

APPROPRIATE.

A. The Decision Below Conflicts

With Decisions of This Court

The court below has misconstrued the

scope of absolute immunity delineated in

this Court’s decisions in JImbler v.

Pachtman, 424 U.S. 409 (1976), and Butz

Supra (parole board member has absolute

immunity, probation officer only

qualified immunity). See also

» 736 F.2€ 766 (D.C. Cir.

1984) (functional analysis used to deny

immunity to common-law torts to federal

official acting outside the scope of

authority). Contra Dretar v. Smith, 752

F.2d 1015 (5th Cir, 1985).

v. Economou, and has granted absolute

immunity based upon points expressly left

undecided by prior decisions of this

Court.

The decision of the court of appeals

takes the doctrine of prosecutorial and

judicial immunity laid out in Imbler and

extended in Butz, and expands it beyond

all recognition, in holding that all of

the participants in Medicare peer review,

whatever their role, are entitled to the

absolute immunity of prosecuting

attorneys. The result is to completely

bar a physician who claims that his

wrongful exclusion from Medicare

reimbursement was motivated by racial

considerations from recovering for any

part of his loss under common law,

statutory, or constitutional theories.

In Imbler, this Court expressly left

undecided the question whether a

prosecutor performing investigative or

administrative tasks would be entitled to

absolute immunity. In Butz, the Court

held that federal hearing examiners or

administrative law judges, agency

attorneys arranging for the presentation

of evidence on the record, and agency

officials responsible for initiating or

continuing a proceeding subject to agency

adjudication were entitled to absolute

immunity because their roles were

analogous to those of judges and

prosecuting attorneys. On the other

hand, officials not performing such

functions would be entitled to only

qualified immunity, and that the actual

functions performed would be determined

by the district court on remand.15

The Court has denied absolute

immunity to the Attorney General of the

15 on remand, Economou v. Butz, 466

F. Supp. 1351 (S.D.N.Y. 1979), the

district court held that two of the

defendants in Butz were not entitled to

absolute immunity.

United States, j Vv. S ». 472

U.S. _—, 86 L.Ed.2d 411 (1985), where

the claim to absolute immunity was

asserted based upon policy

considerations. The Court has also

indicated that the "public policy" to be

considered in connection with claims for

absolute immunity has to do with "the

‘inherent’ or ‘structural’ assumptions of

our scheme of government," Nixon v.

Fitzgerald, 457 U.S. 731, 748 xn. 26

(1982), rather than with policy

considerations per se.

In Cleavinger_v. Saxner, 474 U.S.

__, 88 L.Ed.2d 507 (1985), this Court

declined to grant members of a federal

prison discipline committee absolute

immunity, holding that the discipline

committee’s function was not a classic

adjudicatory one. An important factor in

the decision was the unavailability in

the proceedings at issue of the

procedural safeguards present in Butz

under the Administrative Procedure Act.

88 L.Ed.2d at 517.

In the present case, both the

district court and the court of appeals

determined that the peer review

physicians and federal officials were

entitled to immunity because of the

importance of Medicare peer review to the

Medicare system. The district court

stated, "Immunity has consistently been

provided for groups and individuals who

by legal mandate, are charged with

undertaking unpopular tasks," (A. 134a)

relying on Malley _v. Briggs, 475 U.S.

, 89 L.Ed.2a 271 42(1986).16 The

1l6~fhe district court, by relying on

Malley, s , apparently intended to

grant the peer review defendants

qualified immunity and to dismiss on that

basis, although it did not so state. The

court did not, in its March 27, 1986

order, apply the analysis set forth in

Harlow v. Fitzgerald, 457 U.S. 800 (1982)

or in Mitchell _v. Forsyth, 472 U.S. __,

86 L.Ed.2dad 411 (1985) to determine

whether the defendants were alleged to

district court further stated that

although Congress had "determined that

comprehensive review of government funded

health care is in the public interest,"

Congress had "not specifically provided

immunity to encourage PSROs to vigorously

pursue their appointed task," and "[(t)jhe

Court will correct Congress’ oversight

with its ruling today." (A. 138a-139a.)

have violated rights which were clearly

established at the time of the alleged

conduct. However, in the district

court’s earlier order of September 19,

1985, the court had held that Dr. Kwoun’s

Claim of entitlement to Medicare

reimbursement, provided he complied with

the conditions and requirements of the

Medicare statutes, was within the type of

property interests recognized in Board of

» 406 U.8. 564, 5877

(1972), that his claim of damage to his

practice was recognized in

, 353 U.S. 232, 238

(1957), and that other claimed

deprivations had been recognized by the

Eighth Circuit in Bishop v. Tice, 622

F.2d 349, 357 (8th Cir. 1980). Other

courts have held that physicians have

liberty and property interests in

connection with Medicare reimbursement.

Patchoque Nursing Center v. Bowen, 797

F.2d 1137 (2nd Cir. 1986); Case v.

Weinberger, 523 F.2d €02 (2nd Cir. 1975).

The court of appeals granted

absolute immunity to the peer review

defendants, analogizing Medicare peer

review to attorney disciplinary

committees!? and to the disciplinary

committee of a securities dealers’

association,1% to which other circuits

have granted absolute immunity. The

court stated, "we are convinced that

absolute immunity is ‘essential for the

conduct of the public business,’ Butz,

438 U.S. at 507, .. . in this critical

health care area." A. 362.

In affording the federal defendants

absolute immunity, the court of appeals

held that the federal officials’ actions

were at all relevant times prosecutorial

17 Citiag Giniaos._»...S

Oklahoma, 700 F.2d 1291, 1298 (10th Cir.

1983) and Simons v. Bellinger, 643 F.2d

774, 782 (D.C. Cir. 1980).

18 citing Austin Municipal

, 757 F.2d

676, 689 (Sth Cir. 1985).

in nature. A. 21a. The court ignored

the differences between the statutory

scheme at issue in Butz under the

Commodities Exchange Act and the

Administrative Procedure Act, and in

Austin, under the Securities and Exchange

Act, where the initial action taken by

the agency is a formal charge that is

followed immediately by a judicial-type

hearing on the record at which a charged

party has the right to counsel and cross-

examination, and the proceedings under

the peer review statute here. The

sanctioned provider is excluded from

reimbursement by an administrative

decision and a publication of the

Medicare denial in a local newspaper long

prior to any opportunity for an

adjudicatory hearing. 42 U.S.C. § 1320c-

9(b) (2), 42 C.F.R. § 474.10(e).

The court of appeals’ logic would

grant absolute immunity to any official,

; Lacs a hoe So is ant Ale a ae ae da ies St SE ae hale uaa aoe Gn 5 a a ae a Sie ee ubiee sg get ae Leese, ee at ab wre ip ti a a abs

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;

regardless of his or her actual

functions, if the action taken is

eventually reviewed or subject to an

adjudicatory hearing. Such a result is

wholly at odds with the fundamental

proposition that absolute immunity is the

exception rather than the rule and is to

be granted only to a narrow class of

officials whose duties and functions

particularly require immunization from

the threat of suit. Harlow v.

Fitzgerald, 457 U.S. 800, 807 (1982);

Butz v. Economou, 438 U. S. at 506.

In sum, this case provides the Court

the opportunity to resolve, for the

guidance of the lower courts, two issues

left undecided by Imbler and Butz: (1)

what is the scope of the administrative

and investigatory exception to absolute

prosecutorial immunity; and (2) what are

the limits of the policy considerations

for granting absolute immunity that were

discussed in Butz? The issues in this

case are presented in a context in which

Congress has expressly provided that only

limited immunity, of a hybrid variety,

would be available to peer review

participants. 42 U.S.C. § 1320c-16

(1977).49 Although the case does not

present the issue of a Congressional

attempt to abrogate an already

established application of immunity,2° it

does present issues concerning the limits

of Imbler and Butz in the context of an

explicit Congressional determination that

public policy does not require absolute

immunity. 21

19the present statutory section is

42 U.S.C. § 1320C-6(1982).

20Ssee Nixon v. Fitzgerald, 456 U.S.

at 748, n. 27.

2ltfhe legislative history of the

Senate Committee on peer review appears

at S. Rep. No. 1230, 92nd Cong. 2d Sess.

256-58 (1972) and with regard to PSRO

liability states:

The amendment provides

With Decisions Of Other

As can be seen from the text and

cases cited above at nn. 12-14, other

circuits have begun with the proposition

that absolute immunity is the exception,

not the norn. E.g., Windsor v. The

Tennessean, 719 F.2d 155, 163-4 (6th Cir.

1983); Cameron v. I-R-S., 773 F.2d 126,

128 (7th Cir. 1985); Bothke v. Fluor

Engineers and Constructors, Inc., 713

F.2d 1405 (9th Cir. 1983). Thus, other

courts of appeals have engaged in a

particularized analysis of the functions

protection from civil liability for

those engaged in required review

activities, or who provide

information to PSROs in good faith,

for actions taken in the proper

performance of these duties.

Activities taken with malice toward

a practitioner or institution, or

group of practitioners would not be

considered action taken in the

proper performance of these duties.

S. Rep., supra, at 266-67.

of each of the officials involved to

determine whether absolute or qualified

immunity was appropriate. See, e.gG.,

Tripati v. U.S.I.N.S., 784 F.2d 345 (10th

Cir. 1986); Harper v. Jeffries, 808 F.2d

281 (3rd Cir. 1986).

The court below, on the other hand,

extended absolute immunity to every level

and type of official involved in the peer

review process because of policy

considerations it derived from an

overview of the statutory scheme

involved. The absence of any functional

analysis places the decision in square

conflict with at least five other

circuits.

III. THE DECISION BELOW CONFLICTS WITH

THE DECISIONS OF OTHER CIRCUITS AS

TO WHETHER PHYSICIANS ENGAGED IN

MEDICARE PEER REVIEW ARE FEDERAL

OFFICIALS AND WITH STATE COURTS AS

TO THE SCOPE OF THEIR IMMUNITY FROM

SUIT.

The court of appeals held that

Medicare peer reviewers are federal

officials, ignoring both the clear

Congressional intent that Medicare peer

review be placed in the private sector, 2?

227The legislative history of the

Professional Standards Review statute is

set forth in detail in Public Citizen

Health Research Group v. Department of

W , 668 F.2d

537, 542-43 (D.C. Cir. 1981). From its

review of the legislative history the

court concluded:

We begin with the Report of the

Senate Committee on Finance on the

Social Security Amendments of 1972,

S. Rep. No. 92-1230, 92d Cong., 2d

Sess. (1972). It was the 1972

amendments which authorized the

establishment of PSROs. Reading the

Report, we are struck by the strong

and recurrent theme, that the review

process must be conducted by

practicing physicians, not by the

government or government employees.

This theme is sounded over and over

in the report.

= * * .

We think these expressions

demonstrate the fixed purpose of

Congress that PSROs should be

independent medical organizations

operated by practicing physicians in

the private sector, and not

government agencies run by

government employees. Government,

said the committee, should not

undertake to review the

appropriateness and quality of

and the decisions of other circuits that

are to the contrary. Public citizen

Health Research Group _v. Department of

Health, Education, and Welfare, 668 F.2d

$37, 844 (D.C. Cir. 1981) U,8.. Wa.

University Hospital, 729 F.2d 144 (2nd

Cir. 1984).

The court of appeals determined that

the peer review defendants were federal

officials in order to reach the further

holding that they were therefore entitled

medical services. A holding that

the Foundation, an organization of

private physicians, constitutes a

government agency would be

inconsistent with the congressional

purpose.