Healthcare entities that diligently monitor medical staff members and take timely actions to protect patients from substandard care are entitled to immunity from frivolous and retaliatory claims if the healthcare entity engaged in a good faith peer review pursuant to the Health Care Quality Improvement Act of 1986 (HCQIA). The HCQIA was enacted to encourage good faith peer review activities because healthcare entities, and medical staff members, are vulnerable to certain risks of liability when participating in peer reviews that adversely affect medical staff membership or clinical privileges.

The HCQIA established the National Practitioner Data Bank (NPDB) as a means of accumulating and disseminating information related to adverse peer review actions that impact clinical privileges. Adverse actions include reducing, restricting, suspending, revoking, or denying the clinical privileges of a physician or dentist.

Pursuant to the HCQIA, healthcare entities must report adverse actions in three situations. First, there is an obligation to report any “professional review action” that adversely affects clinical privileges for more than thirty days based on professional competence or conduct that impacts the health or welfare of a patient. Second, a healthcare entity must report a physician or dentist’s surrender of clinical privileges while under investigation for incompetence or improper professional conduct, or to avoid investigation. Third, healthcare entities must report any revisions to the above-referenced actions previously reported. 

In these instances, if the healthcare entity submitted a report, the HCQIA will provide immunity if the physician who was adversely affected files suit unless the report was false, and the healthcare entity knew it was false. To improve the quality of healthcare and protect patients, the immunity is given to encourage good faith peer review because a failure to report can result in a healthcare provider losing its immunity under the HCQIA for three years and/or becoming the subject of an investigation by the U.S. Department of Health and Human Services (HHS).

However, the immunity is not absolute and certain aspects of its application lack clarity. Most recently, the California Third District Court of Appeal provided some clarity by dismissing a case against a healthcare entity that properly filed a report with the NPDB when a surgeon, who resigned while under investigation (the second scenario listed above) filed suit against it. In Wisner v. Dignity Health, the healthcare entity filed a motion to dismiss because the complaint arose out of a protected activity under the HCQIA. The surgeon argued that he was not under investigation and that he resigned in good standing. Therefore, the case hinged on the term “investigation” because it was undefined by state and federal law. Relying on guidance published by HHS in the NPDB Guidebook, the court defined an investigation as the result of “a formal, targeted process” that “is used when issues related to a specific practitioner’s professional competence or conduct are identified” and that a “routine review of a particular practitioner is not an investigation.” In Wisner, the court found that the healthcare entity had engaged in a targeted review of a specific provider, the surgeon/plaintiff, and that it was a precursor to an adverse action against the surgeon’s clinical privileges. Therefore, the court held that the surgeon was under investigation and that his resignation triggered a duty to report him to the NPDB.

This case demonstrates the legal mechanism available to a healthcare entity for a good faith peer review reporting to the NPDB because of the protections afforded by the HCQIA. In other words, a good faith peer review report to the NPDB can dispose of frivolous and retaliatory claims.  Additionally, in highlighting a gap in the reporting requirements where the term “investigation” is undefined, hospitals should consider defining “investigation” in its medical staff bylaws. While the definition of “investigation” in the medical staff bylaws will not control the analysis, and is not a determinative factor, to the extent the term remains undefined – and inasmuch as the court sought guidance from another source – a definition in the bylaws could be the guidance the court uses to ultimately dismiss a case because the report is a protected action entitled to immunity.