HCQIA Preemption of State Physician Whistleblower Statutes

Medical professionals who are subject to adverse actions following peer review often seek to sue the peer review participants (including the individual peer-reviewing physicians, medical staff leadership and the hospital), casting themselves as quality-of-care advocates that have been mistreated or retaliated against for advocating for their patients or complaining about substandard care. Some states have enacted whistleblower protection statutes under which physicians can bring such cases and seek monetary damages. While few courts have addressed the issue, such statutes appear to be preempted, at least in part, by the federal physician peer review statute, known as the Health Care Quality Improvement Act of 1986 (HCQIA), 42 U.S.C. § 11101 et seq. This statute immunizes peer review participants from money damages stemming from peer review actions and proceedings unless the physician can establish that certain enumerated conditions have not been met. 42 U.S.C. §§ 11111, 11115(a).

HCQIA presumptively immunizes peer review participants and hospitals from damages claims stemming from objectively reasonable peer review actions1 in which the affected physician received or was offered an internal administrative hearing that meets certain fair hearing standards. HCQIA provides, in pertinent part:

If a professional review action (as defined in section 11151(9) of this title)2 of a professional review body meets all of the standards specified in section 11112(a) of this title3. . . :

(A) the professional review body,

(B) any person acting as a member or staff to the body,

(C) any person under a contract or other formal agreement with the body, and

(D) any person who participates with or assists the body with respect to the action,

shall not be liable in damages under any law of the United States or of any State (or political subdivision thereof) with respect to the action.

42 U.S.C. § 11111(a)(1) (emphasis added).

Congress enacted HCQIA in 1986 with the expressed intent to protect the public by improving the quality of professional peer review by (a) limiting money damage awards against peer reviewers; (b) providing incentives and other protections to peer reviewers; and (c) preempting any state law that provided fewer or lesser protections, incentives or immunities:

(1) The increasing occurrence of medical malpractice and the need to improve the quality of medical care have become nationwide problems that warrant greater efforts than those that can be undertaken by any individual State. (2) There is a national need to restrict the ability of incompetent physicians to move from State to State without disclosure or discovery of the physician's previous damaging or incompetent performance. (3) This nationwide problem can be remedied through effective professional peer review. (4) The threat of private money damage liability under Federal law . . . unreasonably discourages physicians from participating in effective professional peer review. (5) There is an overriding national need to provide incentive and protection for physicians engaging in effective professional peer review.

42 U.S.C. § 11101 (emphasis added).

HCQIA Balances Competing Interests

Consistent with this purpose, HCQIA provides that States may enact laws that provide the same or greater protections as HCQIA, but not lesser protections: "[N]othing in this subchapter shall be construed as changing the liabilities or immunities under law or as preempting or overriding any State law which provides incentives, immunities, or protection for those engaged in a professional review action that is in addition to or greater than that provided by this subchapter." 42 U.S.C. § 11115(a) (emphasis added). See also Patrick v. Burget, 486 U.S. 94, 105, fn. 8 (1988) (noting that HCQIA "allow[s] States to immunize peer-review action that does not meet the federal standard").

Courts have consistently held that state peer review immunity laws that provide less protections than HCQIA, or that impose more stringent requirements in order to receive the same protections, are preempted by HCQIA. See Wood v. Archbold Medical Center, Inc., No. 6:05-CV-53 (HL), 2006 WL 1805729, at *3 (M.D. Ga. June 29, 2006) ("Georgia Law generally provides immunity from criminal and civil liability unless the health care provider was motivated by malice. Georgia courts have consistently held, however, that 'to the extent that peer review immunity . . . is conditional upon the absence of motivating malice, it is preempted by the HCQIA.'"), quotingPatrick v. Floyd Medical Center, 255 Ga.App. 435, 444 (2002); see also; Goodwich v. Sinai Hosp. of Baltimore, Inc., 103 Md.App. 341, 354 (1995) (Maryland peer review immunity statute, Md.Code, Health Occ. art., § 15–402, "is preempted by [HCQIA] only to the extent that it provides less immunity than [HCQIA]" in requiring that a review committee member act in good faith) (emphasis in original).

Recent Case Examples From California

Outside the context of state peer review immunity statutes, however, the issue of HCQIA preemption has received far less attention.4 Two recent cases from California have acknowledged, without directly addressing, the issue of HCQIA preemption within the context of medical professional whistleblower protection statutes. The statute in question in both decisions, California Health and Safety Code Section 1278.5 ("Section 1278.5"), authorizes a physician to sue a hospital or medical staff for monetary damages5 stemming from the hospital or medical staff's "discriminatory treatment"6 of the physician. Cal. Health & Safety Code § 1278.5(b)(1), (g), (i). In Fahlen v. Sutter Central Valley Hospitals, 58 Cal.4th 655, 685–686 (2013), the California Supreme Court acknowledged the issue of possible preemption of Section 1278.5 by HCQIA, but it declined to address the issue "in detail" because it had not been raised in the lower courts. Instead, the California Supreme Court noted only that HCQIA does not "absolutely foreclose a state tort suit alleging that a peer review decision constituted improper retaliation against a whistleblower" because HCQIA does not preclude non-monetary remedies such as reinstatement and injunctive relief, and also because the presumption of immunity under HCQIA is rebuttable. Id. at 686. But whether HCQIA "absolutely foreclose[s]" tort claims against a peer review participant under Section 1278.5 is a separate question from whether Section 1278.5's authorization of monetary damages against a peer review participant is preempted by HCQIA—a question the California Supreme Court did not answer because the issue had not been raised by the parties in the lower courts.7

More recently, in Armin v. Riverside Community Hospital, 5 Cal.App.5th 810, 831–832 (Dec. 15, 2016), a California Court of Appeal similarly sidestepped the issue of HCQIA preemption of claims for money damages under Section 1278.5 arising out of hospital peer review proceedings. Like in Fahlen, Armin framed the question as whether the hospital was immunized from any claims brought under Section 1278.5. Id. at 831. This broad framing of the issue allowed the court to avoid confronting the preemption question directly; instead, the court simply followed in Fahlen's footsteps, stating that "HCQIA cannot provide blanket immunity to a hospital in a section 1278.5 action because even if HCQIA applies to a given peer review proceeding, 'at a minimum' it still allows 'such remedies as reinstatement and injunctive relief." Id. at 832, quoting Fahlen, 58 Cal.4th at 686. Whether California courts will continue to sidestep this question for damages claims brought under Section 1278.5 remains to be seen. It is an issue that courts must eventually decide, because many physicians suing under Section 1278.5 seek damages, not reinstatement of their privileges or merely equitable relief.

Whistleblower Protection in Other States

Looking beyond California, several other states also have whistleblower protection statutes for healthcare employees. For example, the Maryland Health Care Worker Whistleblower Protection Act, MD Code, Health Occupations, § 1-501 et seq., allows an employee physician to bring an action for money damages against a hospital if the hospital takes "any personnel action" against the physician as a result of the physician's whistleblowing. Id., § 1-502, 1-505(5), (6). Other states with similar healthcare employee whistleblower statues that authorize money damages in actions brought by an employee physician against a hospital include (but are not necessarily limited to): Illinois (210 ILCS 86/35, 86/40); New York (N.Y. Labor Law §§ 740, 741); and Texas (Health & Safety Code § 161.134). No court has addressed HCQIA preemption of any of these particular statutes, but there is a reasonable argument to be made that these statutes are preempted by HCQIA at least to the extent they authorize monetary damages against hospitals or physicians for claims stemming from peer review proceedings.

Conclusion

Although the issue of HCQIA preemption of physician whistleblower statutes has received very little attention by the courts, any state law that allows hospitals or physicians to be sued for monetary damages based on their participation in peer review proceedings is directly contrary to the express purpose of HCQIA and cannot reasonably be said to provide incentives, immunities or protections "in addition to or greater than" those provided under HCQIA. Accordingly, defense counsel should be prepared to make an HCQIA preemption argument in any case against a physician whistleblower claim under state law that seeks monetary damages against a hospital or other peer review participant.

1. The case law applying HCQIA is virtually uniform that the statutory immunity from damages arising from peer review action is governed by a purely objective standard: Did the hospital and peer review committees reasonably investigate before acting, was the action taken reasonably in furtherance of patient care, and did the hospital provide fair hearing or other fair procedure to the physician? See 42 U.S.C. § 11113(a)(1)–(4). As such, the motive for taking corrective peer review action is irrelevant as a matter of law. See Austin v. McNamara, 979 F.2d 728, 734 (9th Cir. 1992) ("alleged animosity" and "assertions of hostility" by a physician "are irrelevant to the reasonableness standards of § 1111(a)); Fox v. Good Samaritan L.P., 801 F.Supp.2d 883, 890 ("Importantly, evidence of bad faith or hostility towards Fox on the part of the actual decision-makers is simply irrelevant and cannot serve to create a material issue of fact on this point."); Poliner v. Texas Health Sys., 537 F.3d 368, 379-80 (5th Cir. 2008) ("Our sister circuits have roundly rejected the argument that such subjective motivations overcome HCQIA immunity, as do we."); Wood v. Archbold Medical Center, Inc., 738 F.Supp.2d 1298, 1350 (M.D. Ga. 2010) ("courts all over the country have held that a plaintiff's 'urging of purported bad motives or evil intent or that some hospital officials did not like him provides no succor,'" as the inquiry under HCQIA is an objective one) (quoting Poliner); Brader v. Allegheny General Hosp., 167 F.3d 832, 840 (3d Cir. 1999) ("Like other circuits, we have adopted an objective standard of reasonableness in this context. Therefore, the good or bad faith of the reviewers is irrelevant."); Manzett v. Mercy Hosp. of Pittsburgh, 776 A.2d 938, 934 (Pa. 2001) ("In an HCQIA action, plaintiffs are not permitted to introduce evidence of bad faith of the participants in the peer review process.").

2. "Professional review action" is defined, in pertinent part, as "an action or recommendation of a professional review body which is taken or made in the conduct of professional review activity, which is based on the competence or professional conduct of an individual physician (which conduct affects or could affect adversely the health or welfare of a patient or patients), and which affects (or my affect) adversely the clinical privileges, or membership in a professional society, of the physician." 42 U.S.C. § 11151(9).

3. To qualify for immunity under Section 11111(a), the "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)." 42 U.S.C. § 11112(a). These standards are presumed to have been met unless rebutted by a preponderance of the evidence.

4. But see Diaz v. Provena Hospitals, 817 N.E.2d 206, 212–213 (Ill.App.Ct. 2004) (HCQIA impliedly preempts state court order (1) preventing a hospital from submitting a HCQIA-required report and (2) holding hospital in contempt for having submitted it: "the substantial monetary penalty the court imposed on the Hospital as a result of its contempt finding qualifies as 'liability under state common law.' . . . Because it was impossible for the Hospital to comply with the HCQIA without being fined and held in contempt of court, the doctrine of implied preemption applies.").

5. Section 1278.5 also authorizes non-monetary remedies, including reinstatement or, broadly, "any remedy deemed warranted by the court" under California law. Cal. Health & Safety Code § 1278.5(g).

6. "Discriminatory treatment" for the purposes of the statute "includes, but is not limited to, discharge, demotion, suspension, or any unfavorable changes in, or breach of, the terms or conditions of a contract, employment, or privileges of the . . . member of the medical staff, . . . or the threat of any of these actions." Cal. Health & Safety Code § 1278.5(d)(2).

7. That HCQIA immunity is limited to damages and does not preclude equitable relief is well established in federal courts across the country. See, e.g., Imperial v. Suburban Hosp. Ass'n, Inc., 37 F.3d 1026, 1031 (4th Cir. 1994) ("[T]he actual protection given by [HCQIA] is limited to damages liability. . . . [D]isciplined doctors [can] continue to bring 'private causes of action for injunctive or declaratory relief.'") quoting H.R. Rep. No. 903, 99th Cong., 2d Sess. 2, reprinted in 1986 U.S.C.C.A.N. at 6391; Sugarbaker v. SSM Health Care, 190 F.3d 905, 918 (8th Cir. 1999) ("HCQIA immunity is limited to suits for damages; there is no immunity from suits seeking injunctive or declaratory relief."); Cohlmia v. St. John Medical Center, 693 F.3d 1269, 1279 (10th Cir. 2012) (same); Gordon v. Lewiston Hosp., 423 F.3d 184, 191 fn. 1 (3d Cir. 2005) (same).