THE CASE OF THE MISSING ARBITRATORS [DRAFT]
-- Fixing Physician Peer Review in California,
-- by Bartholomew Lee (copyright 2009, all rights reserved)
-- This is a work in progress, correspondence is invited: blee@slksf.com
ABSTRACT: A distemper of the present California physician's peer review statute, as disciplinary practice under it has evolved by way of "regulatory capture," is that it permits a corps of repetitive adjudicators to face the temptation of pleasing their healthcare industry paymasters. An available cure for the disorder is the accused physician's participation in the selection of adjudicators once peer review has become discipline. The prescription is to afford the physician some say in the adjudicative process by way of effecting existing provisions for mutually selected arbitrators, and providing a comparable voice in the selection of other adjudicators.
INTRODUCTION: THE PROGRESS OF MEDICINE INTO THE
REALMS OF LAW
"Peer Review" of a physician's medical practices by other
physicians has as its primary purpose the improvement of the practice of
medicine. The process is, however, now as much a matter of law as it is
of medicine. Peer review in hospital departments usually results in:
"Go then and sin no more." The process, however, often morphs into
discipline as its last stage, all too often for reasons having little to do
with the quality of medical care, but a great deal to do with personality
and power. A hospital disciplinary proceeding can threaten (and
impose) a professional death sentence on a physician or other licentiate.
Severe professional consequences follow hospital discipline
because adverse hospital actions by law must be reported to the Medical
Board of California for publication and public access, and to the
National Practitioner Data Bank for professional access. Adverse
actions by a hospital avalanche into professional pariah status. Other
hospitals where the physician has privileges may begin proceedings,
considering themselves duty-bound in the name of public protection, and
with an eye on their putative civil liability. The state licensing agency,
the Medical Board of California may investigate and then prosecute a
physician licentiate already facing expensive and distracting hospital
discipline litigation. Private medical societies such as the American
College of Surgeons may do the same. Insurance companies and
government agencies such as Medi-Cal may blacklist the physician.
Even military services may not accept applications from a thus tainted
doctor. And, of course, the private plaintiffs' bar may pile on with
malpractice lawsuits triggered not so much by negligent harm as by
hospital reporting. This is especially so for hospitals not reporting until
the culmination of ongoing discipline during which the physician usually
continues to practice.
Public concerns with physicians' abilities go back at least to
Hippocrates if not Asclepius. The primary role of a physician in
cultures ancestral to ours was to predict the time of death of a sick man
of substance whose family could afford to engage a physician. It is
reputed that, in the absence of antibiotic therapies and the like, it was
not until about 1910 that a patient had a better chance of being helped
rather than harmed by a visit from or to the doctor. For example, 19th century
physicians in Europe centralized birthing into hospitals. They then
proceeded to kill vast numbers of new mothers with childbirth fever
(puerperal fever). These infections arose from the germ-bearing hands
of the physicians and caregivers themselves.
Antisepsis and anesthesia vastly advanced medicine and the
public's trust in physicians. So, too, did material advances in medical
technology such as the x-ray, and "miracle drugs" such as penicillin. On
the other hand, more than occasional physician incompetence,
impairment and sometimes malevolence worked the other way. Such
publicized "horribles" led to state regulation and the growth of medical
malpractice litigation.
PEER REVIEW AND FAIRNESS OF PROCESS.
Medicine is an art and a science, well beyond the capabilities of
mere judges and lawyers. Hence deference is paid to the learned
profession, as it is to many complex realms of endeavor and to their
specialists. Specialized administrative tribunals often come into play in
such circumstances, to resolve the inevitable professional disputes that
may arise.
Physicians alone are in the best position to judge the medical
practices of other physicians. The public may doubt that physicians
will do so with diligence, having perhaps heard of the "conspiracy of
silence" once said to preclude acquisition of expert testimony from
physicians in malpractice cases. Physicians compete with each other as
well, leading accused physicians often to believe that economic and
personal issues and not medical issues led to discipline. As racial and
other minorities have come to practice medicine, discrimination issues
have arisen in physician discipline manifesting the essential tension
between due process of law and equal protection of the laws.
Many years of litigation involving physicians, hospitals, regulators
and occasionally patients have given rise to a system of "peer review"
for physicians, now largely governed by statutes. The ostensible
purpose of peer review is to promote better medical care by helping
physicians practice better medicine. Like mediation of civil disputes, it
may work best because the price for failure is litigation.
A physician subject to a peer review dispute often ends up in
hospital disciplinary proceedings. Sometimes no lawyers are allowed.
Sometimes the prosecutor's lawyer is the judges' counsel. This sort of
thing can make for a kind of Alice-in-Wonderland subspecies of
administrative law. Moreover, these hearings are now controlled by
lawyers appointed by the hospitals largely from the heathcare (hospital)
bar. Then, stung and sanctioned by the hospital, the physician can
stagger into a real court. There he or she must seek to rebut deep
presumptions of regularity accorded to hospital peer review proceedings
by both statutes and courts. The courts also treat the healthcare entity as
a deference-deserving adjudicative body in reviewing physician
discipline in the adversary process after what was supposed to be the
collegial processes of peer review.
On the other hand, a physician performing the admirable public
and professional service of peer review can end up a defendant in one
or another kind of distracting, expensive, interminable and risky lawsuit,
particularly a discrimination case, sometimes a defamation case, and
possibly an antitrust case. The hospitals bear simultaneous obligations
to patients, physicians and the public. They are culturally and
structurally ill-suited to adjudication as opposed to collaboration. In the
end, hospitals can find that their lawyers are their most valuable vendors,
and judges their best friends (or not).
Congress entertained the petitions for redress of grievances and
enacted the Health Care Quality Improvement Act of 1986 (HCQIA).
Now, physicians in peer review enjoy certain immunities from civil
liability, with exceptions. Physicians subject to peer review enjoy
certain procedural and due process rights. The states, at least initially,
could modify some of this Congressional intent with legislative
enactments. California did so, in order to "opt out" of a Congressional
scheme with what its legislature deems a better state system of
adjudication of physician discipline. The continuing viability of such an
"opt-out" is problematic. Physician peer review has become at least as
much a legal process as a medical process.
FUNDAMENTAL FAIRNESS IN ADJUDICATION: CONTEXT AND
CONTENT
Irrespective of medicine, the law has evolved some processes to
save society from the untoward consequences of legal proceedings.
The purpose of litigation is to arrive not at the truth, but a resolution of a
specific and justiciable dispute by generally accepted rules. If truth
alone were the goal, no communicative or other privileges would bar
relevant evidence. This would include the Fifth Amendment's privilege
not to be a witness against oneself, and for that matter, the physician
and patient communications privilege. If and only if the rules are
generally regarded as fair, and the disputes actually resolved, does the
law work well.
The Constitution mandates fair and impartial adjudications, as the
Supreme Court has occasionally had to remind even the judiciary.
Rules of adjudication are more often felt to be fair when they provide to
litigants some say in who shall judge them. Judges of law are sometimes
elected and usually appointed, but by elected executives. In California,
election (or not) follows appointment, with the added extra attraction of
an occasional recall election, such as that of the "Rose Bird Court" in
1986. Statutes by elected legislatures provide for litigant disqualification
of judges, with or without cause. Judges of fact in trial courts are
juries drawn primarily from voting rolls and similar lists. Litigants
participate more or less in the selection of juries by voir dire
examination by the court (and in state court, by counsel), and consequent
challenges for cause or peremptorily.
Facing the prospect of litigation, disputants often seek or agree to
some form of "alternate dispute resolution" ("ADR"), often mediation or
arbitration. Mediation is the facilitated voluntary resolution of the
dispute by the parties themselves, and the first agreement of the parties is
the person of the mediator. When ADR is arbitration, it is an
adjudication, however informal. Here too both the forum and the
arbitrator are often first agreed upon seriatum, or the procedures for
appointment are agreed (such as each one pick one, the two arbitrators
then pick the third).
When Congress set the rules for physician peer review in HCQIA,
it provided its immunities if and only if matters proceeded in good faith,
and the peer review adjudicators were either mutually selected
arbitrators, or hospital- appointed physicians free of conflicts, or a
hearing officer, at the option of the hospital. California, in opting-out of
the federal statute, changed the rules. It expanded protections extended
to physicians, at the behest of the California Medical Association. It
inserted a condition for fact finding that is not explicit in HCQIA. The
peer review disciplinary proceeding can involve finding facts, as does a
jury trial, or an arbitration, or a judge sitting as a judge of fact in a bench
trial. But in California peer review discipline, the fact finding is to be
done by mutually selected arbitrators, not panel members who have
been appointed by the adversary hospital.
Yet this statutory right to a specified trier of fact is only much
honored in the breach. Furthermore, the breach is now destructive and
corrosive. This is so because the limited alternative of the use of a
hearing-officer-managed panel has been enlarged and co-opted by the
hospital industry as a result of which such adjudications are often
perceived as biased at best and rigged at worst. The statute's alternative
of arbitration where fact finding is required, is premised on an initial
mutuality. This arbitration has, however, for all practical purposes been
written out of the administrative and judge-made law of the state. Its
deletion from the law is effected largely by means of its omission from
the hospital bylaws (with the notable exception of some Kaiser
Foundation Hospitals) which control adjudications. Ironically,
hospitals may well face more and more expensive litigation from seeking
to control the disciplinary process for initial advantage. But how the
statutory arbitration disappeared is a perplexing "whodunit?". Yet in
this Case of the Missing Arbitrators, there are some likely suspects: cuo
bono?
THE CONTROLLING STATUTE REQUIRES ARBITRATORS FOR
PEER REVIEW PHYSICIAN DISCIPLINARY FACT FINDING.
Physician discipline generally starts as a last phase of peer review
in which a hospital serves a notice of charges against a physician. If the
operative facts were agreed and stipulated, what then would be at stake
in the proceeding would be the appropriate consequence. For example,
it could be a reprimand or a short (perhaps seven day) suspension of
hospital privileges. On the other hand, it could be a longer one
triggering public reporting (e.g., 30 days or more), or even termination
of privileges at the hospital. Such facts are rarely, if ever, stipulated,
with so much at stake. Hence, the disciplinary proceeding must find and
determine the facts first.
The charges are generally preferred against the physician by the
hospital's medical staff. The medical staff is a more or less
independent unincorporated association of the physicians enjoying
privileges at the hospital. It is governed by a (usually) elected
executive committee of physicians. The hospital is then responsible for
mounting and managing the proceeding in accord with state (and
federal) law and its medical staff bylaws. The bylaws may or may not be
a contract among the physicians and with the hospital and may or may
not be an administrative regulation, and may or may not be consistent
with either state or federal law.
The charging body generally bears the burden of proof and it is
generally the Medical Executive Committee ("MEC") of the medical
staff. Fact-finding is necessary for the MEC to sustain its burden to
prove its charges and sustain its demanded sanction, which must be both
reasonable and warranted.
Any physician facing such charges would naturally want to have a
say in the selection of the adjudicators of fact, consistent with hundreds
of years of Anglo-American law. Such a physician would ask for
appointment of fact-finders in his or her hearing by means of a mutually-
agreed selection process, agreed between the defending physician and
the prosecuting MEC. The physician would invoke California Business
& Professions Code ("B & P C") 809.2 Civil Rights Act 42 U.S.C. 1983Civil Rights Act 42 U.S.C. 1983 which provides this
mutuality.
In schematic form (with emphasis in CAPS) the statute B & P C
809.2. provides:
(a) The hearing shall be held, as determined by the peer
review body,
BEFORE A TRIER OF FACT,
which shall be an arbitrator or arbitrators selected
by a process mutually acceptable to the licentiate
and the peer review body,
OR BEFORE A PANEL of unbiased individuals
who shall gain no direct financial benefit from the
outcome, who have not acted as an accuser,
investigator, factfinder, or initial decisionmaker in
the same matter, and which shall include, where
feasible, an individual practicing the same
specialty as the licentiate.
(emphasis added). Thus a fair reading of the controlling statute holds
that where disciplinary charges require findings of fact, the trier of fact
must be one or more arbitrators appointed by a process to which the
physician and the peer review body (MEC) have agreed.
The legislative history makes it clear that the statute was enacted to
guarantee due process of law protections to physicians facing charges.
No appellate case (or other reported case) comes to a holding on this
arbitrators issue, nor do any commentators point to it. There are cases
that say in dicta that peer review bodies have the choice set forth in the
statute, as indeed they do. But the only choice under the California
statute that they have is either to provide for an adjudication that finds
facts, or to provide for an adjudication that comes to a result without
having to find facts, for example, an appropriate sanction or exoneration
based on stipulated facts.
FINDINGS OF FACT AGAINST PHYSICIANS ARE PRECLUDED
OTHER THAN BY ARBITRATORS.
A physician facing a hospital-appointed panel determined to find
facts has few options. Administrative law doctrines of exhaustion of
remedies likely preclude immediate resort to a court of general
jurisdiction. In the event the hospital has appointed a hearing officer,
that officer has jurisdiction to hear and determine procedural disputes.
Yet that hospital-paid hearing officer has an immediate, pecuniary and
disabling conflict of interest in deciding that fact-finding arbitrators are
required, because then he or she has ruled him- or herself out of a highly
paid job.
Still, a MEC-appointed panel cannot make findings of fact,
because this is beyond their competence under the statute: to do so
would be to act in excess of jurisdiction by reason of the violation of the
statute. Inasmuch as a MEC -appointed panel is unable to make
findings of fact under the statute, therefore the MEC as the prosecuting
body is unable, as a matter of law, to meet its burden of proof that its
action is reasonable and warranted.
The hospital or its MEC may make a choice under the statute to
appoint its own panel. So be it, but the consequence of that choice is that
an appointed panel cannot make findings of fact. Then, the MEC must as
a matter of law fail to carry its burden if findings are required. It is the
all too usual circumstance that a hospital writes its bylaws to provide
only for panel proceedings without an arbitrator for fact finding selected
by a mutually agreed process. This choice undercuts the validity of the
proceedings, subjecting both the hospital and the physician to costly and
damaging litigation. The choice also frustrates the purposes of peer
review to improve the quality of medicine. This is so because no
findings of fact may be made that support any assessed disciplinary
sanctions, or for that matter, any exoneration.
THE INTERPLAY OF STATUTORY CONSTRUCTION AND
LEGISLATIVE HISTORY
The due process component of the California peer review statute,
protecting physicians in their livelihoods, is important because such a
statute should be construed to obviate any constitutional difficulties.
This is the rule: "[W]hen faced with an ambiguous statute that raises
serious constitutional questions, [we] should endeavor to construe the
statute in a manner which avoids any doubt concerning its validity."
Hence, the proper way to read the statute, on its face, is that a physician
is entitled to mutually agreed arbitrators, because that provides that
physician with the due process of law intended by the legislature. To do
otherwise would be to violate the specific due process rights that the
legislature sought to protect.
The statute intends that its provisions be incorporated in hospital
bylaws. Many hospitals' bylaws violate the statute because they do not
set forth its two modes of dispute resolution. Rather, the bylaws often
provide only for use of MEC- appointed or hospital- appointed panels.
The material part of the statute reads:
(809(a)(8)): Sections 809 to 809.8, inclusive, shall not affect
the respective responsibilities of the organized medical staff
or the governing body of an acute care hospital with respect
to peer review in the acute care hospital setting. It is the
intent of the Legislature that written provisions implementing
Sections 809 to 809.8, inclusive, in the acute care hospital
setting shall be included in medical staff bylaws which shall
be adopted by a vote of the members of the organized
medical staff and which shall be subject to governing body
approval, which approval shall not be withheld unreasonably.
[Emphasis added]
Statutory construction is a matter of law to implement the purpose
of the law; so says Mr. Witkin, with whom the United States Court of
Appeals for the Ninth Circuit has recently agreed. An instructive
California appellate case deals in detail with the applicable rules of
statutory construction as well as an analogous statutory provision
requiring an agreement:
"We follow well-settled rules of statutory construction. First, a
court should examine the actual language of the statute.... Judges,
lawyers and laypeople all have far readier access to the actual laws
enacted by the Legislature than the various and sometimes
fragmentary documents shedding light on legislative intent. More
significantly, it is the language of the statute itself that has
successfully braved the legislative gauntlet. It is that language
which has been lobbied for, lobbied against, studied, proposed,
drafted, restudied, redrafted, voted on in committee, amended,
reamended, analyzed, reanalyzed, voted on by two houses of the
Legislature, sent to a conference committee, and, after perhaps
more lobbying, debate and analysis, finally signed 'into law' by the
Governor. The same care and scrutiny does not befall the
committee reports . . . and other documents which make up a
statute's "legislative history." [] In examining the language, the
courts should give to the words of the statute their ordinary,
everyday meaning ... unless, of course, the statute itself specifically
defines those words to give them a special meaning.... [] If the
meaning is without ambiguity, doubt, or uncertainty, then the
language controls.... There is nothing to 'interpret' or 'construe.' ...."
" But if the meaning of the words is not clear, courts must
take the second step and refer to the legislative history.... [] The
final step and one which we believe should only be taken when the
first two steps have failed to reveal clear meaning is to apply
reason, practicality, and common sense to the language at hand. If
possible, the words should be interpreted to make them workable
and reasonable ... practical ..., in accord with common sense and
justice, and to avoid an absurd result ....'...."
***
A statutory requirement comparable to that for a "process mutually
acceptable" in B & P C 809.2(a), gave rise to the case:
"The actual language ... states: No later than July 1, 1990, hiring
criteria, policies, and procedures for new faculty members shall be
developed and agreed upon jointly by representatives of the
governing board, [etc.] ....' Agreed upon jointly' means what it
says - joint agreement - not merely the opportunity to recommend
or to participate in the process." *** "Thus, between the plain
language of [the] section ... and the legislative history of the
statutory scheme, we conclude that the Legislature intended the
faculty, through the academic senates, to have an ongoing role in
developing and consenting to faculty hiring policies and
procedures...."
This case shows that a statute such as B&P C 809.2(a) must be
read for the plain sense of its enacted language: a charged physician,
facing such serious sanctions as termination, is entitled to arbitrators
chosen by a mutually acceptable process, if there is to be fact finding.
The converse is also therefore true: if the MEC or the hospital chooses to
proceed by way of an appointed hearing panel, that panel cannot engage
in fact-finding, but only in sanction (if any) determination based on
undisputed facts.
THE LEGISLATIVE HISTORY OF B&P C 809.2 WITH RESPECT
TO THE ARBITRATION ISSUE SHOWS THE INTENT TO
PROTECT CHARGED PHYSICIANS BY PROVISION OF A SAY IN
THE FACT FINDERS:
The legislative history material of all of the documents in the
legislature's file, can illumine the legislature's purpose. The pertinent
part of the statute as enacted (and which is set forth schematically above)
reads:
"(a) The hearing shall be held, as determined by the peer review
body, before a trier of fact, which shall be an arbitrator or
arbitrators selected by a process mutually acceptable to the
licentiate and the peer review body, or before a panel of unbiased
individuals who shall gain no direct financial benefit from the
outcome, who have not acted as an accuser, investigator,
factfinder, or initial decisionmaker in the same matter, and which
shall include, where feasible, an individual practicing the same
specialty as the licentiate." (B&P C 809.2(a)).
The statute sets forth California's 1989 opt-out of the federal peer
review system. The California statute enacted in 1989 to effect this opt-
out was sponsored by the California Medical Association (CMA), after
the Governor vetoed a 1988 enactment opposed by the California
Hospital Association (CHA). The CHA also opposed the 1989 statute,
which was enacted and signed into law over its objections. According to
the CMA, the purpose of the statute it sponsored was two-fold and
balanced: to provide immunity for physicians conducting fair peer
review and to provide due process of law protections for physicians
subject to peer review.
Some of the issues that had arisen regarding peer review included
competitors eliminating competing doctors, with many "horror stories"
recited in the legislative history materials. Another issue was the length
that proceedings could go on; as the Chairman of the Assembly
Committee wrote on August 30, 1988: "Prolonged and unnecessarily
contentious peer review proceedings do not promote quality patient
care." A "White Paper of Peer Review" makes the point:
"There are several problem areas we have determined where the
review process may be misused: [] D. Racial Discrimination.
There is also continuing vigilance that the peer review process not
be implemented for improper motives, such as racial
discrimination."
The Third Reading Legislative Digest of July, 1989, sets forth:
"This bill, with regard to due process rights afforded practitioners
who are the subject of peer review proceedings, provides the
following:
***
3) The due process' rights granted to licentiates include the
following:
a) Written notice of the proposed adverse action.
b) The right to a hearing before either an arbitrator (selected by a
process agreeable to both the licentiate and the peer review body)
or a panel of unbiased individuals who shall gain no direct
economic benefit from the outcome.
***
10) Bylaws and contracts or agreements, other than bylaws, may
provide for additional procedures in so far as they are not
inconsistent with the provisions of this bill. The provisions of this
bill may not be waived, however."
The bill's due process protections, which include a mutually-
selected arbitrator, is thus set forth in the context of known abuses of
peer review. In the federal Act (HCQIA), the hearing provisions have
the purpose of providing that minimum fairness which necessary, in the
view of Congress, to justify anti-trust immunity. As Justice Mosk and
Justice Brennan pointed out, a state such as California could enact
greater constitutional protections for its citizens. The federal Health
Care Quality Improvement Act (HCQIA), according to the legislative
history materials for SB2111, and which does not provide for mutuality
in the selection of all fact finders, is to be read thus:
"The HCQIA section establishing the safe harbor's requirements is
set forth in its entirety below and has been annotated [in italicized
bracketed statements] for clarity
Section 412. Standards for Professional Review Actions.
[Section (a) sets forth requirements for good faith peer review]
(a) In General. For purposes of the protection set forth in section
411(a) [the immunity from federal liability], a professional review
action must be taken[:]
(A) subject to subparagraph (B), the hearing shall be held (as
determined by the health care entity)
(I) before an arbitrator mutually acceptable to the
physician and the health care entity,
(ii) before a hearing officer who is appointed by the
entity and who is not in direct economic competition with the
physician involved, or
(iii) before a panel of individuals who are appointed by
the entity and are not in direct, economic competition with the
physician involved[.]"
These three alternate sorts of hearings are the tripartite foundation
of available processes upon which California built its more extensive
due process protections for physicians. The federal statute provides for
a determination by the health care entity of which one of three
procedures it will use, any one of which will provide antitrust immunity
to the participants and implicitly, any one of which can engage in fact
finding. The draft 1989 California statute that became SB2111,
however, reads in this regard:
"1989 Draft Legislation on HCQIA and Due Process
***
"809.2 All the following are applicable if a licentiate timely
requests a hearing concerning a final proposed action which could
mandate reporting under Business and Professions Code Section
805:
***
"(a) The hearing shall be held, as determined by the peer review
body, before the trier of fact, which shall be an arbitrator or
arbitrators selected by a process mutually acceptable to the
licentiate and the peer review body; or before a panel of unbiased
individuals who shall gain no direct financial benefit from the
outcome, and who have not acted as an accuser, investigator, fact -
finder, or initial decisionmaker in the same matter."
This is the first time the "trier of fact" condition appears. The proposed
enactment first inserts a condition for the choice to be made by the
health care entity (which became "the peer review body"). That choice
is a hearing in which findings of fact are made, which must be conducted
by mutually-selected arbitrators, or a hearing which does not involve
finding of fact, which is conducted before a panel not subject to mutual
selection. Such a panel would be called upon, for example, to determine
an appropriate discipline on already adjudicated and therefore binding
facts. Most importantly, such a panel could determine if discipline
required a suspension of more or fewer days; if few enough it is not
nationally reported but if more it is, with serious consequences.
California enlarged the federal immunity protections into
California due process protections, by way of fact-finding by mutually
selected arbitrators. This is consistent with the avowed purpose of the
bill to protect physicians' due process rights in peer review disciplinary
hearings. According to an appellate case in the legislative history
materials, unless the body before which a physician can adduce evidence
has the power to find facts, the physician is denied due process:
"And the body before which he [the charged physician] had the
right to appear, to present evidence and cross examine opposing
witnesses, had no authority to determine the facts. This violates the
due process rights accorded [the physician] under the common law
applicable to medical associations."
This case in the materials supports the inference that the legislature
intended to afford due process to physicians by providing a specific fact-
finding mechanism. That mechanism is the arbitration the appearance of
which follows the "trier of fact" as its definition.
By the structure of the then proposed and later enacted California
statute, only the mutually-selected arbitrators are finders of fact. This
bifurcation is borne out by the printed text of April 11, 1989:
(a) The hearing shall be held, as determined by the peer review
body, either before a trier of fact, which shall be an arbitrator or
arbitrators selected by a process mutually acceptable to the
licentiate and the peer review body, or before a panel of unbiased
individuals who shall gain no direct financial benefit from the
outcome and who have not acted as an accuser, investigator,
factfinder, or initial decisionmaker in the same matter. [Emphasis
added].
But here is a subtle issue of legislative history interpretation,
giving rise to the "whodunit?" question. The word "either" in the bill's
proposed text makes the bifurcation clear: the peer review body may
proceed either before a trier of fact, and get findings of fact and
consequences for the physician following from them, or before a panel
and get no findings but a determination of consequence for the physician
on uncontested facts. That crucial word "either" is in the printed text of
the amendments, but it has a handwritten line through it, and "either"
does not appear in the statute as enacted. By the rules generally
understood to govern a substantive change to a draft statute at this stage,
this omission of "either" can only have been a scrivener's stylistic
change that does not change legislative intent. This is so because the
printed version is the text that staff puts before the legislators for their
consideration.
Between the bill's introduction on March 8, 1989, the text of April
11, 1989 and then the enacted text after unrelated amendments through
July 20, 1989, the word "either" is omitted, but the bifurcation remains:
"(a) The hearing shall be held, as determined by the peer review
body, before a trier of fact, which shall be an arbitrator or
arbitrators selected by a process mutually acceptable to the
licentiate and the peer review body, or before a panel of unbiased
individuals..." [Emphasis added].
If a hospital's bylaws omit any reference to mutually-selected arbitrators,
they then, in this regard, violate the legislature's expressed intent:
"It is the intent of the Legislature that written provisions
implementing Sections 809 to 809.8, inclusive, ... shall be included
in medical staff bylaws..." (B&P C 809(a)(8)).
Otherwise, the legislature's insertion of the trier-of-fact language is
wholly frustrated by its omission from administrative or contractual
bylaws. Such strong-arming of a statute may be an occasional
prerogative of appellate courts. It is not, however, a prerogative of self-
interested hospitals.
When hospital bylaws do not give a charged physician the
statutory say in arbitration, the bylaws are thus of dubious validity under
B&P C 809(a)(8), whether or not physicians create them by contract
among themselves and with their hospital. Almost all hospital bylaws
are also a contract of adhesion for the physician who joins an existing
staff. This also undercuts the validity of their denial of statutory
arbitration to physicians (although adhesion raises a counter-issue of
compulsory binding arbitration). To the extent that bylaws are an
administrative enactment (e.g., by a state, district or a county public
hospital), bylaws that deny the physician the right to have a say in
arbitrators are ultra vires in excess of jurisdiction. Such deficient bylaws
also deny due process of law by reason of the violation of the statute
specifically enacted to protect due process of law.
The legislative history materials include several appellate decisions
that the legislature arguably considered, that assist in construing the
statute in its intent to protect physicians, and which declared the relevant
law at the time of SB2111. One is Hackethal v. California Medical Assn.
(1982). This case holds that no later or higher level of administrative
proceedings can cure a due process violation in the initial proceedings,
relying on Supreme Court and California authority. Recent federal
authority derives from this: a biased and not-neutral administrative
adjudicator denies due process requiring reversal, because "a neutral
judge is one of the most basic due process protections."Reyes-Melendez
v. Immigration and Naturalization Service, 342 F.3d 1001 (9th Cir., 2003);
Castro-Cortez v. Immigration and Naturalization Service, 239 F. 3d 1037,
1049 (9th Cir.,2001)
Another reported case in the legislative materials deals with the
timing and forum for contesting disciplinary procedures. Anton v. San
Antonio Community Hospital suggests that a physician must, in the
disciplinary proceeding itself, challenge a choice by a prosecuting peer
review body to use an appointed panel, rather than mutually selected
arbitrators, where the bylaws make the two processes available to the
peer review body. The basis of such a challenge under Anton would be
that such a choice by the peer review body denies the physician's right
to participate in the selection of adjudicators, which is needed for fact
finding. Failure to assert the challenge early would be a waiver. This
was found to be so because the final stage of the disciplinary proceeding,
the hospital board of directors' proceeding or appeal, is to rule upon any
appeal grounded on "any failure to comply with relevant bylaws so as
to deny due process and a fair hearing.'" This case points up the
importance of the appellate stage of the disciplinary proceeding, in
which the hospital board of directors or its equivalent makes the final
decision.
DOCTOR BONHAM'S CASE, UPON WHICH LORD EDWARD
COKE RULED IN 1610, CHALLENGES TODAY'S HOSPITAL
ADMINISTRATORS
Once disciplinary proceedings begin, the hospital has a financial
interest in making sure that the physician cannot later win a judicial
challenge to the discipline. Such a success in a writ proceeding opens the
door to California judicial remedies including damages. Hospitals also
often face damages litigation as a result of physician discipline with
respect to which equal protection or racial discrimination issues may
arise. They may occasionally face such litigation on denial of due
process grounds. This is a more difficult case to make by reason of the
internal administrative proceedings in which such a claim can sometimes
be made. Congressionally enacted immunities do not, however, extend
so far as to preclude such civil rights claims.
Sitting as an appellate body under its own bylaws, a hospital board
may, for example, uphold bylaws that deprive physicians of a say in
their adjudicators. It may affirm or re-find de novo adverse purported
findings of fact. It may uphold a summary disposition by a hearing
officer even before a panel hearing begins. But any such hospital, and
the individual members of its board of directors, always have a direct
pecuniary interest in defeating the physician in the administrative
proceedings in which that board sits as judges. To that board's ruling
great judicial deference will be paid in the writ proceedings. From this
shield, the hospital can forge a sword to defeat the accused physician in
the putative consequent state or federal damages action. The res judicata
effect of a denied writ can provide the weapon to defeat a physician's
claims, as opposed to contest on the merits.
The hospital's power to prevent the adjudication of damages
claims against it by its own administrative judgment challenges the
integrity of this administrative process. This is so because of the
fundamental rule that an adjudicator may not have an interest in a case
before him. In Gibson v. Berryhill (U.S., 1973), abstention was the
issue in litigation involving a state board of optometrists. The Supreme
Court held:
"[T]he court [below] found as a fact that . . . a serious
question of a personal financial stake in the matter in
controversy was raised. . . . Here the predicate for a Younger
v. Harris [abstention] dismissal was lacking, for the appellees
alleged, and the District Court concluded, that the State
Board of Optometry was incompetent by reason of bias to
adjudicate the issues pending before it."
A hospital's unilateral appointment of the discipline hearing officer
and purported fact-finders by whose rulings the hospital is protected
from damages claims may well be a violation of due process of law
under the Berryhill case rule. The hospital may be incompetent by
reason of bias. So too, the hospital determining the physician's
administrative appeal in such a way as to protect itself from later
damages claims implicates the Berryhill case rule.
The ancestor of this rule is Dr. Bonham's Case in which Lord
Edward Coke, as Chief Justice of England's Court of Common Pleas in
1610 invalidated an Act of Parliament as being against the common law
and reason. A medical society's "censors," pursuant to the Act,
adjudged Dr. Bonham to have violated its rules because he practiced
medicine in London without being a member. It then sanctioned him
with a fine, but as permitted by the statute kept the money. Lord Coke
found the statute beyond the power of Parliament because it was
contrary to right as well as precedent. It would be, in American
jurisprudence, unconstitutional as a denial of substantive due process of
law. Lord Coke explained the only proper roles of the participants in
litigation, first with reference to the administrators of the medical
society: "The censors cannot be judges, ministers, and parties; judges to
give sentence or judgment; ministers to make summons; and parties to
have the moiety [share] of the forfeiture, quia aliquis non debit esse
judex in pro-pria causa, imo iniquum est aliquen qui rei esse judicem
(Law-Latin, roughly: inasmuch as anyone must forebear judging in his
own case, lest a partial and interested person become the judge in
lawsuits') and one cannot be judge and attorney for any of the parties."
The prohibition on a judge having a pecuniary interest in a dispute
derives from this case. The U. S. Supreme Court restates the
prohibition in 1955: "To this end no man can be a judge in his own
case and no man is permitted to try cases where he has an interest in the
outcome."
Thus, a hospital, even pursuant to its bylaws, that employs a panel
and a hearing officer all appointed by it to adjudicate physician
discipline by way of fact finding creates two distinct due process
violations. The hearing officer, on the physician's motion, would have
to decide the applicability of the statute requiring arbitrators. But the
hearing officer is disabled by the hospital's statutory and due process
violation in appointing him or her in the first place, denying the
physician arbitration. And when faced with a motion to proceed by
arbitrators mutually selected, it is a due process violation that he or she
is paid to sit in this hearing to make the decision that ends the hearing
officer's own compensation. This is so because the hearing officer has a
pecuniary interest in sitting as a hearing officer with a panel rather than
deciding he or she cannot so sit because arbitration is required. Due
process of law, under the Haas and Yaqub cases, is thereby violated.
The hearing officer's financial interest renders that adjudicator
incompetent.
At least a financial conflict of interest appears, and therefore
impropriety appears. A hospital would be appointing unilaterally an
adjudicator to decide if his or her own appointment, by which he or she
earns potentially thousands of dollars a day, for potentially many days, at
some market rate between $100 and $500 an hour, is valid. This is only
to set up a fundamentally unfair process in the name of fairness.
Moreover, denying the motion for arbitration positions the compliant
hearing officer for re-appointment in future hearings, which will not be
arbitrations.
Then, a third due process violation appears. In reviewing this and
the rest of the issues arising in the disciplinary proceeding, the hospital
board itself has a pecuniary interest in sustaining purported findings
against the physician. These will in the usual course be findings of at
least bad medicine by the physician. The findings may well also include
that there was no discrimination against the physician. These findings, if
binding, then immunize the hospital and its board members from a
federal damages action against it and them, both practically and probably
legally.
This fault in most bylaws and hospital disciplinary proceedings
may have a remedy: a writ of prohibition in Superior Court to preclude
application of bylaws that themselves preclude arbitration. The
alternative is risk of waiver by proceeding, in a post-discipline court
challenge of presumptions of regularity on a very ambiguous and often
messy set of medical records. People bleed and die in hospitals all the
time, but they rarely do in court. When those sanguinary circumstances
are imported into a court, the charged physician, found guilty by the
hospital's hand-picked panel, with the findings sustained by the
hospital's board sitting in appeal, is in a poor position to argue due
process in the face of purportedly expert findings of medical malpractice
and worse, all too often presented in a voluminous record of due process
run amok.
The way to slash this Gordian Knot is to wield the legislature's
existing provision of "a process mutually acceptable" in court by way of
writ of mandate. The legislature intended more, not fewer, protections
for physicians. The physicians' adversaries, their own hospitals, have
trapped the physicians in bylaws that omit the most fundamental
protection an accused physician can enjoy, due process of law
manifested in neutral judges, fostered by a say in who his or her judges
of fact will be. The very purpose of physician peer review in California
as contemplated by its legislature, the improvement of medical practice,
is frustrated by the appearance and the fact of impropriety in
adjudication, because some hospitals believe themselves above the law
that requires implementation of all of the legislature's intent.
Yet even in the absence of implementation of the arbitration
provision, the disciplinary system can be saved by mutuality, and fixed
by giving physicians the same say in the choice of hearing officers as
they ought to have in the process by which arbitrators are to be selected.
In this way, the physicians can protect themselves from the pervasive
bias of a hospital-selected corps of hospital-paid hospital-lawfirm
adjudicators. Physicians could guard against the hearing officer bias
arising from anticipated additional appointments because potential
hearing officers would agree not to take such future appointments in
order to secure a present appointment. Lawyers other than hospital
lawyers would make themselves available to these adjudications,
knowing that physicians would prefer not to have hospital industry
attorneys as the only adjudicators.
THE NEW PROPOSED SECTION 809, TO PROTECT HOSPITALS
AS WELL AS PHYSICIANS:
It is entirely appropriate to save the legislature's 1989 intent to
provide additional due process protection to physicians. To fail to do so
is to risk California's self-carved exclusion from the federal statute
(HCQIA) and its immunities from judicial remedies including damages
actions. This is so because the customs and practice of the hospital
industry and its often distinguished and always seasoned counsel have
come together in such a way as to make fair hearings for physicians
problematic at best, and perhaps rare in fact. This, however, puts the
immunity of physicians conducting peer review discipline at risk, by
raising the issue of the good faith of the participants.
What has happened to physician discipline is a species of
"regulatory capture" as known to economists. First some regulation
meets some "felt need." But then, its evolving administration requires
knowledgeable staff and policy makers, who, naturally enough come
from the industry. Next, these industry people become the regulators
themselves, and the industry owns the process.
In California, the hearing officers all too often come from the
medical industry bar; they are the hospital lawyers. Sometimes they
prosecute for their clients and sometimes they adjudicate, when hired by
other industry lawyers. The industry in California is one of highly
concentrated capital (Tenet, HCA, Humana, etc.), dominating hospital
chains, and a bar well acquainted with itself. Physicians, on the other
hand, are dispersed, face discipline individually, and must surmount high
transaction costs to unify against abuse.
A revision of the statute can alleviate this situation. This is so
because the legislature with minimal amendment can provide balance by
reaffirming the choice of fact finders by a process mutually agreeable to
the physician and peer review body. The present statute so provides for
arbitrators, who are its only designated finders of fact. The hospitals
much prefer to pick and pay hearing officers.
The remedial amendment proposes to return the mutuality of
arbitration to primacy and to strengthen the hearing officer selection
process with comparable mutuality; (new text in small caps and bold
emphasizes existing text):
(a) The hearing shall be held before a trier of fact
selected by a process mutually acceptable to the
licentiate and the peer review body, which TRIER OF
FACT shall be, as determined by the peer review body,
either
(1) in advance according to its bylaws, an arbitrator
or arbitrators, or
(2) in connection with a particular hearing, and only
if mutually acceptable to the licentiate and the peer
review body, a panel of unbiased individual
licentiates, SELECTED BY A PROCESS mutually
acceptable to the licentiate and the peer review
body
(A) who shall gain no direct financial benefit from the
outcome, and
(B) who shall have not acted as an accuser,
investigator, factfinder, or initial decisionmaker in the
same or a related matter, and
( C ) which shall include, where feasible, an individual
practicing the same specialty as the licentiate, and
(D) which shall not include other members of the
licensed staff from which the peer review body is
drawn unless mutually agreed by the licentiate and
the peer review body.
(b) If the peer review body
(1) either by its bylaws in advance provides that a
hearing officer is to be selected to preside at each
hearing held before a panel, or
(2) if in connection with a particular hearing it is
mutually acceptable to the licentiate and the peer
review body that a hearing officer shall so preside
over the hearing, or that a hearing officer shall
preside at an arbitration,
then the hearing officer
(A) shall be selected by a process mutually
acceptable to the licentiate and the peer review
body, and
(B) shall not act as a trier of fact or make any final
disposition, and
( C ) shall gain no direct financial benefit from the
outcome, and
(D) shall not act or have acted as a prosecuting officer
or advocate for the peer review body, or as counsel
for the entity with which the peer review body is
affiliated, and,
(E) shall not be entitled to vote, and
(F) shall not again be selected by the peer review
body within the next seven years after conclusion
of the hearing or arbitration.
This amendment sets forth a series of nested choices (sections
(a)(2) and (b)(2)) to a physician facing allegations of incompetence or
worse. A the same time, it provides the peer review body the
opportunity, consistent with the present statute, to use arbitrators, as long
as it does so by its bylaws promulgated in advance of the hearing. If it
fails to exercise make that choice in advance, it can proceed with
discipline if and only if the physician agrees to use of a panel and a
hearing officer. The peer review body must in advance provide that a
hearing officer will preside if and when it elects to seek to proceed by a
panel upon physician agreement to that process. If it does not so provide
in advance, then the physician must agree or the panel must proceed
without a hearing officer. Similarly the physician must agree if the peer
review body seeks to have a hearing officer preside at an arbitration.
Once a physician has agreed to proceed by panel rather than by the
arbitration that the bylaws must make available, and once he or she has
agreed that a hearing officer shall preside, then several existing and new
due process protections come into play (sections (b) (2) (A through F)).
Most importantly, the prospect of another paid re-appointment by a
satisfied peer review body, is obviated. This is done by a seven year
period of ineligibility for that hearing officer and that peer review body.
Seven years is a common law term of oblivion, for example, the
availability of a declaration of legal death after a seven year's
disappearance. Such ineligibility is appropriate even though a physician
has a say in the selection of a hearing officer, because the prospect of
future employment at the nomination of the hospital looms large in the
due process calculus. On the other hand, if in fact an accused physician
has as much information about a potential hearing officer as does a
hospital, the long ineligibility is less important.
Moreover, any such hearing officer is denied the power to act as a
trier of fact and any power to make any final disposition (section (b) (2)
(B) because of California's policy that peer review is to be done by
peers and implicitly not by lawyers. In the event of a panel proceeding,
the power of adjudication lies entirely with the panel of physicians.
It may well be that hearing officers may be called upon by panels
for recommendations. In this regard, the proceedings of the Medical
Board of California in determination of petitions to end probation
provide a model. An Administrative Law Judge is appointed. He or
she makes a reasoned and detailed recommendation to the Board. The
Board may accept or reject it or remand as it thinks appropriate. Such a
recommendation could be appropriate for a procedural default, such as
failure to appear, as opposed to a substantive determination about
medicine best made by other physicians.
The present statute has made all hospitals, private as well as public,
into de facto government agencies in disciplining physicians. This is so
in that they act under at least color of law, and in such a regulated
manner as to suggest the "state action" defense is the underlying
rationale to HCQIA's antitrust immunity. Not only have judicial
powers been delegated to private as well as public hospitals as
administrative agencies, but also administrative and legislative powers
have been delegated to private health care entities. Their results are
reviewable by the administrative writ of mandate, a writ that runs only to
official entities. Recent law makes the hospital medical staff into a
legal entity operating as part of the government agency of the hospital
administration. All concerned in physician discipline act under "color of
law" as contemplated by the Civil Rights Act.
The new statute's protections, for hospitals as well as physicians,
derive from the fact that the physician has a voice both in the nature of
the proceedings and in the people who stand in judgment on him or her.
It is the absence of a neutral body of adjudicators, such as administrative
law judges, that makes this voice so important as to become a
constitutional as well as a statutory mandate. It is the legislature that has
already "governmentalized" the hospitals' disciplinary proceedings and
"legalized" their nature into adversary proceedings managed by lawyers.
With the fairness of mutually selected arbitrators, and the finality as
well as the speed of arbitration, hospitals will benefit, in particular from
less litigation. Now hospitals suffer both in their budgets and their
reputations. Hospitals suffer as much, institutionally, from the present
hearing process and the subsequent litigation as do physicians
individually.
In the absence of effective arbitration provisions, it would be
entirely appropriate for the legislature to provide a body of neutral
adjudicators to function as hearing officers and to otherwise promote
neutrality. Each county may have a system of administrative law judges,
as does the state itself. They are ideal candidates. The lawyers of the
healthcare bar bring knowledge of the healthcare industry to their
hearing officer roles. This benefit is, however, more than offset by the
appearance, if not the fact, of incestuous impropriety in their repetitive
re-appointments by their brothers at the bar. This is one of the baneful
effects of regulatory capture.
The equivalent of administrative law judges have not yet become
available in peer review disciplinary proceedings. Hence, only the
structure of the governing statute can protect physicians from unfair
process as well as protect hospitals from all of the consequent litigation.
Administrative law judges are seen to be free of the possible vices of
appointed hearing officers, primarily because they are protected against
retaliation. ALJs by inference are thereby untempted to render
decisions favorable to their paymasters. The vice of the present
statute, as practice under it has evolved, is that it permits a corps of
repetitive adjudicators to face that temptation, creating at least the
appearance of impropriety. The cure for the vice is the accused
physician's participation in the selection of adjudicators. The
prescription is to afford the physician some say in his or her judges of
fact by way of effected provisions for mutually selected arbitrators, and
other adjudicators, especially hearing officers. ##