Peer Review Teams That Censure Doctors Can Be Sued for Damages, Justices Hold

The Supreme Court said Monday that doctors who take tough action against a colleague as part of a hospital’s peer review system can be forced to pay millions in damages under federal antitrust laws, a ruling that the court conceded could dissuade doctors from weeding out incompetents in their midst.

On an 8-0 vote, the justices reinstated a $2.2-million damage award won by a small-town surgeon in Oregon who said that his practice was nearly ruined by vindictive competitors. According to lawyers for the surgeon, Dr. Timothy Patrick, his fellow physicians had conspired to drive him out of town because he had refused to join their clinic.

A federal appellate court had thrown out the jury verdict won by Patrick on grounds that the doctors on a hospital peer review panel acted as state regulators and, therefore, were immune from antitrust suits.

But the justices overturned that conclusion Monday. The peer review panels operate on their own and are not “state actors,” the high court said in the case (Patrick vs. Burget, 86-1145).

For the medical Establishment, this case raises the specter of crushing damage awards against doctors who vote to deny hospital privileges to a potential competitor while serving as a volunteer on a peer review panel.

In briefs urging the high court to block Patrick’s damage award, the American Medical Assn., the California Medical Assn. and the California Assn. of Hospitals and Health Systems said that quality health care could be threatened if doctors become unwilling to take proper disciplinary action against colleagues.

The court ruling may “make doctors think twice” about serving on a review panel or voting to take a strong action against an alleged incompetent, Kirk B. Johnson, AMA general counsel, said.

Doctors Not Insured

The two doctors in Astoria, Ore., who were found guilty in the Patrick case will have to pay the damages out of their own pockets, Johnson said, because they--along with most doctors--do not have insurance that would cover such liability.

However, he and other lawyers contend that most peer review teams can prevail in such a suit by showing that their disciplinary actions were justified in the interest of good medical practice. Moreover, a newly enacted federal law, plus strengthened state statutes, can give doctors broad immunity from antitrust suits, they said.

In 1986, Congress passed the Health Care Quality Improvement Act, which, beginning in October, provides that doctors who serve on peer review teams will be immune from liability if their action is taken “in the reasonable belief that (it) was in the furtherance of quality health care.” In addition, the law assures that doctors like Patrick will get a fair hearing.

But the federal law will not give doctors blanket immunity, according to Johnson and Catherine Hanson, legal counsel for the California Medical Assn. in San Francisco. If a jury concluded that a peer review team had disciplined a doctor not to improve medical practice but rather to get rid of a competitor, they said, it could still award antitrust damages.

Hanson added that the state association is urging the California Legislature to take further action to protect doctors on peer review panels. A pending bill backed by the association would assure physicians fair treatment from peer review teams while protecting team members from antitrust liability, she said.

“We believe the peer review system is critical to quality patient care, and we need to provide adequate protection to everyone involved,” Hanson said.

In the Patrick case, several doctors in Astoria, a town of 10,000 in the northwest corner of Oregon, refused to refer patients to him after he refused to join their clinic. Instead, they sent patients to a hospital 50 miles away.

Later, they compiled reports of lapses in Patrick’s care of patients, such as his leaving town for a weekend without ensuring that a patient would be properly monitored. Based on such evidence, the doctors, who also served on the peer review team of Astoria’s one hospital, moved to revoke his right to practice there.