The terms of the contract serve as eligibility criteria for medical staff membership and privileges

A California Court of Appeal has provided additional guidance on how hospital decision-making and contracting services with medical groups influence or affect medical staff operations and fair hearing rights. The court has more effectively opened the door for medical staff and hospitals to consider eligibility requirements related to providers’ prior disciplinary record.

Kime v. Dignity Health, Inc., held that the terms of an emergency department services agreement between the hospital and a medical group related to representations and warranties about prior disciplinary actions of the group’s physicians constitute eligibility criteria for the membership and privileges of the medical staff As such, the court found that the hospital and medical staff’s decision to stop processing Dr. Kimes for membership of the medical staff and privileges for failure to meet minimum eligibility requirements was an administrative or quasi-legislative process. The decision was not based on an assessment of the clinical and professional competence of Dr. Kimes neither was done for medical cause or disciplinary reason.

It should be noted that the court distinguished the facts of this case from Economy v. Sutter East Bay Hospitals a case which at first sight seemed to extend the scope of the rights of audience. The scope of application of the Economy The case has narrowed further Asiryan v. Medical Staff of Glendale Adventist Medical Center and now for the court Kime v. Dignity Health, Inc.

Dr. Kime was subject to corrective action, specifically summary suspension, by the medical staff at Clearlake Hospital. A Business and Professions Code 805 report was filed with the Medical Board of California for waiver of privileges while under investigation for being summarily suspended. The medical group Valley Emergency Physicians offered Dr. Kime a position as an emergency physician at Mercy Hospital and Mercy Southwest Hospital (collectively Mercy Hospital), both hospitals owned by Dignity Health. As a condition of the offer, Dr. Kime had to apply for and receive privileges at Mercy Hospital. Dr. Kime applied for membership and medical staff privileges at Mercy Hospital.

Dignity Health had a closed contract with the medical group Valley Emergency Physicians to provide emergency department services at Mercy Hospital. The contract contained a provision representing and warranting, (b) [no] The Group Provider has never been reprimanded, sanctioned or disciplined by any licensing board, certifying authority or medical specialty board; … (e) no member of the Group Provider’s medical staff or clinical privileges in any hospital or healthcare facility has ever been suspended, limited or revoked for a medical disciplinary cause or reason. Dignity Health characterized this section as eligibility requirements for physicians applying for emergency department privileges.

When the hospital learned of the corrective action taken at Clearlake Hospital, Mercy Hospital’s medical director ordered the medical staff to stop processing Dr. Kimes. The medical staff stopped processing it and did not send the application to the credentialing committee for review. Dr. Kime later sued Dignity Health, claiming he was entitled to a fair hearing. Dignity Health responded to the claim by arguing that it was an administrative or quasi-legislative decision and not a decision related to Dr. Kimes (that is, it does not involve a decision made for a medical disciplinary reason or reason). Dignity Health argued that the terms of the service agreement with the medical group Valley Emergency Physicians constituted eligibility requirements or criteria for medical staff membership and privileges. Dr. Kime did not meet the eligibility requirements as a result of the prior summary suspension and therefore his application could not be processed. As an administrative decision, medical staff were not required to provide fair hearing rights. The court agreed with Dignitat Salut.

The court also distinguished the facts of this case from the facts of the Economy case noting that a Economy suspension and termination of the anesthesiologist was based on medical disciplinary cause or reason under section 805, where plaintiff’s documentation of pharmaceutical use at the hospital was completely unacceptable to that physician after ‘extensive training and the hospital was not comfortable with the quality of care provided by [plaintiff] and cannot approve anesthesia coverage schedules that contain it. While, in the kim In this case, neither Mercy Hospital nor the medical staff took into consideration the clinical and professional skills of Dr. Kimes. Rather, it was administratively determined not to meet the minimum qualifications and criteria for medical staff membership and privileges.

Additionally, the court reasoned that this finding did not violate the public policy reasons for Section 805 reporting, since the Medical Board of California was already aware of the underlying incidents that gave rise to the concern with the practice of Dr. Kimes. In other words, the prior conduct that gave rise to the summary suspension, which the Medical Board of California wishes to notify for the safety of the public and which disqualified Dr. Kime of the membership and privileges of the medical staff at Mercy Hospital, had already been reported to the Medical Board of California. In other words, the public safety component had already been satisfied by the Section 805 report submitted by the medical staff at Clearlake Hospital.

Thus, the court found, [w]We fail to see what purpose would be served by requiring Dignity and all other hospitals that may have denied privileges to Kime because of Clearlake Hospital’s suspension to submit reports to the Medical Board that Kime had been denied privileges because of this suspension (which was the subject of Report 805) and the subsequent reprimand from the Medical Board. In sum, Kime has not persuaded us that public policy is violated by an eligibility requirement that bars a physician from staff privileges because of the physician’s disciplinary history.

Although the courts’ findings relate to the terms of the emergency department’s sealed contract, the court’s analysis and reasoning provide for broader application to the processing of medical staff privilege and membership applications. Indeed, in this opinion, the court has effectively opened the door for medical staff and hospitals to consider how they can establish eligibility requirements related to prior reported incidents of corrective action and disciplinary conduct.