In re Otero County Hosp. Ass’n, Inc. (Summary)

NEGLIGENT CREDENTIALING

In re Otero County Hosp. Ass’n, Inc.
No. 11-11-13686 JL, et al. (Bankr. D.N.M. July 25, 2014)

The United States Bankruptcy Court for the District of New Mexico denied cross-motions for summary judgment and held that there were issues of disputed fact in a case brought by a group of tort claimants alleging that a hospital management company was negligent in credentialing and supervising a physician who was performing experimental back surgeries.

The management company entered into an administrative services agreement with a hospital. The agreement required the management company to provide key executives, including a Chief Executive Officer (“CEO”), to the hospital. Under the agreement, the hospital retained responsibility for all matters requiring professional medical judgment, including credentialing of physicians. The hospital entered into an employment agreement with a physician to provide medical services in the specialty of anesthesia and pain management. The physician was also granted temporary privileges. The letter sent to the physician informing him of the grant of temporary privileges was signed by the CEO. During the physician’s tenure, his proctor accused him of performing “experimental surgery,” and an insurer suspended his participation in its plan because of questions about whether he was credentialed to perform back surgery. Despite these concerns, the physician was allowed to continue to perform these surgeries at the hospital.

The plaintiffs, a group of patients who apparently had spine surgery performed on them by the physician, brought suit alleging that the management company was negligent “in the hiring, privileging, and supervision” of the physician. The management company argued that it had no right or responsibility to engage in these activities under the agreement with the hospital and, therefore, owed no duty to the plaintiffs.

The court disagreed with the hospital and held, among other things, that the agreement between the management company and the hospital did not limit the company’s duty to the plaintiffs. Further, because there were factual disputes regarding whether the management company undertook actions related to privileging and supervising the physician, including granting him temporary privileges, the court held that summary judgment was inappropriate.