REVERSED, REMANDED IN PART; AFFIRMED IN PART; Opinion Filed June 22,
2000
S

In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-99-00476-CV
............................
MICHEL K. STEPHAN, M.D., Appellant
V.
BAYLOR MEDICAL CENTER AT GARLAND, Appellee
.............................................................
On Appeal from the 134th Judicial District Court
Dallas County, Texas
Trial Court Cause No. 97-03542-G
.............................................................
OPINION
Before Justices Lagarde, Morris, and O'Neill
Opinion By Justice Morris

This case involves a dispute between a doctor and a hospital
over staff privileges. The trial court granted a summary judgment in
favor of Baylor Medical Center at Garland on all claims brought against
it by Dr. Michel K. Stephan. Stephan brings this appeal challenging the
trial court's judgment as well as an order denying him discovery. We
conclude the trial court was correct in granting summary judgment for
the hospital on a number of Stephan's claims, but erred in doing so on
others. We further conclude that, to the extent Stephan sought to compel
discovery for the claims properly disposed of by summary judgment, the
trial court did not abuse its discretion in denying Stephan's discovery
requests. Accordingly, we affirm the trial court's judgment in part and
reverse it in part. We remand the cause to the trial court for further
proceedings.
I.
In September 1991, Dr. Michel K. Stephan applied for staff
privileges at Baylor Medical Center at Garland and began practicing

medicine at the hospital provisionally while his application was being
reviewed. Stephan's application was processed by the credentials
committee of the Baylor medical staff, which reviewed Stephan's
professional background. As part of its review, the committee requested
records from Stephan on eight specific cases that were the subject of an
investigation conducted by the Texas Board of Medical Examiners. These
records were reviewed by Baylor physicians, who reported their findings
to the committee.
In August 1992, the credentials committee recommended to the
hospital's staff executive committee that Stephan's application for
staff privileges be denied. The executive committee then notified
Stephan by letter that it intended to recommend to the Baylor board of
trustees that his application be denied. The letter stated that the
committee's recommendation was based on concerns about the quality of
Stephan's care and his medical record documentation. In the letter, the
executive committee also advised Stephan of his right to a hearing on
the proposed action. Stephan was told the hearing would be before an
officer appointed by Baylor and he had the right to be represented by an
attorney, to call and cross-examine witnesses, to present evidence, and
to submit a written statement. Stephan requested a hearing.
The hearing began on February 17 and concluded on March 12,
1993. Dr. Ronald C. Jones, Chief of Surgery at Baylor University
Hospital, acted as hearing officer. Stephan was represented by counsel
and presented several witnesses who testified about his skills as a

doctor, the quality of his medical record documentation, and the quality
of his care on the eight specific cases reviewed by the credentials
committee. Both Stephan and the executive committee submitted written
statements to Jones. After the hearing, Jones sent a report to Baylor's
general counsel concurring with the decision of the executive committee
and recommending that Stephan not be granted privileges at Baylor.
Jones's stated reasons for his recommendation included: (1) the number
of malpractice claims that had been made against Stephan; (2) the fact
that two insurance companies did not renew Stephan's malpractice
insurance policies because of claims against him; (3) documented medical
complications in patients following surgical procedures at other
hospitals that resulted in claims against Stephan and settlements; (4)
inaccurate information given by Stephan on his application for
privileges at Baylor, including his failure to disclose he had, on one
or more occasions, failed the American Board of Surgery Examination; and
(5) Jones's opinion that Stephan's medical record documentation was, in
many instances, below Baylor's standard.
The Baylor board of trustees denied Stephan's application for
privileges. In a letter to Stephan dated June 21, 1993, Baylor's
executive director stated the board's decision was based on the
recommendations given by the credentials and executive committees and
the information contained in Jones's report. The letter further notified
Stephan that the denial of his application would be reported to the

Texas State Board of Medical Examiners as required by the Health Care
Quality Improvement Act.
Information regarding Stephan's denial of privileges was
reported to the National Practitioner Data Bank as part of an “adverse
action report.” The report classified Stephan's denial of privileges as
being due to “incompetence / malpractice / negligence.” A notation on
the report further stated: “evidence of quality of care and medical
record documentation unacceptable to this hospital.” Despite these
reports, Stephan sought to reapply for privileges at Baylor on several
occasions beginning in December 1993. According to Stephan, Baylor has
continually refused to provide an application for him to use to reapply.

In April 1997, Stephan filed this suit against Baylor. Stephan's
original petition set forth claims for breach of contract, fraud, unfair
competition, tortious interference with contracts and prospective
contracts, intentional infliction of emotional distress, defamation,
defamation per se, business disparagement, and conspiracy. Stephan
further sought a declaratory judgment that Baylor made its report to the
Texas State Board of Medical Examiners in bad faith. In response, Baylor
answered and filed a counterclaim for costs and attorneys fees alleging
that Stephan's claims were frivolous, unreasonable, and filed in bad
faith.
Baylor moved for summary judgment on all of Stephan's claims. It
argued there was no cause of action for a denial of privileges by a
private hospital and Baylor's peer review activities were protected by

qualified immunity. Baylor also argued it had not breached any
contractual obligation to Stephan, Stephan's tort claims were barred by
the applicable statutes of limitations, and Baylor could not be liable
for defamation because it never published any statements to the National
Practitioner Data Bank. To the extent Stephan could show that Baylor
published statements to the NPDB, Baylor contended the statements were
protected by absolute immunity. Additionally, Baylor argued that there
was no evidence to support Stephan's claims for breach of contract,
fraud, unfair competition, intentional infliction of emotional distress,
and civil conspiracy. The trial court granted Baylor's motion for
summary judgment without stating its reasons and ordered Stephan take
nothing by his suit. In the judgment, the trial court also stated that
all other relief sought was denied. This appeal ensued.
II.
In his appellate brief, Stephan points to three allegedly
wrongful acts committed by Baylor as the basis for his claims against
the hospital. Those acts are: (1) Baylor's denial of his application for
staff privileges; (2) its refusal to allow him to reapply; and (3) its
publication of an allegedly false and defamatory report to the National
Practitioner Data Bank. We first address Stephan's argument that the
trial court erred in granting summary judgment in favor of Baylor
because there are material questions of fact regarding Baylor's
liability for wrongfully denying his application for staff privileges.
In making his argument that Baylor wrongfully denied him staff

privileges, Stephan states he is not asking this Court to second guess
the hospital's decision. Instead, he argues there are questions of fact
about whether Baylor failed to comply with the “standards mandated by
applicable law” in making its decision to deny him privileges. Stephan
does not specify what “applicable law” he is relying on or what
“standards” Baylor failed to meet that give rise to his causes of
action. After a review of both the common and statutory law, we conclude
there are presently no standards applicable to hospital staffing
decisions that are enforceable by a private lawsuit.
The longstanding common law in Texas has been that doctors
generally have no cause of action against a private hospital for the
denial or termination of staff privileges even where the action was
arbitrary and capricious or where rights to due process have been
violated. See Tigua Gen. Hosp., Inc. v. Feuerberg, 645 S.W.2d 575, 578
(Tex. App._El Paso 1982, writ dism'd). This unfettered ability to make
staffing decisions was statutorily limited by the Texas Legislature when
it enacted a provision in the Texas Hospital Licensing Law requiring
hospitals to afford procedural due process to each person applying for
medical staff membership and privileges. See Tex. Health & Safety Code
Ann. § 241.101 (Vernon 1992 & Supp. 2000). In addition, the legislature
set forth guidelines in the Texas Medical Practice Act for hospitals
that choose to adopt rules and regulations relating to qualifications
for medical staff appointments. See Act of May 27, 1983, 68th Leg.,

R.S., ch. 552, 1983 Tex. Gen. Laws 3207, 3209 (repealed) (current
version at Tex. Occ. Code Ann. § 151.051 (Vernon Pamph. 2000)). Under
the Act, if a hospital adopts rules for staff appointments, they must be
reasonable, without irrelevant considerations, and neither arbitrary nor
capricious. Id. These statutes, although binding on hospitals,
do not create a right of action in favor of physicians against hospitals
that fail to comply. See Cole v. Huntsville Mem'l Hosp., 920 S.W.2d 364,
372-73 (Tex. App._Houston [1st Dist.] 1996, writ denied). Instead,
enforcement is statutorily placed in the hands of the State and its
agencies. A hospital's failure to provide procedural due process to
physicians applying for privileges may be redressed solely through
actions by the attorney general, the Texas Department of Health, or the
commissioner of health. See id.; see also Tex. Health & Safety Code Ann.
§ § 241.051-.059 (Vernon 1992 & Supp. 2000). Through the State's
actions, a hospital may be enjoined, subjected to civil or
administrative penalties, or have its license revoked. Id. §§
241.051-.059 A hospital may not, however, be held liable in damages to
an individual physician for its failure to provide due process.
Similarly, the Texas Medical Practice Act, which contains the
guidelines for medical staffing rules, includes a complex enforcement
scheme. See Tex. Rev. Civ. Stat. Ann. art. 4495b (repealed) (current
version at Tex. Occ. Code Ann. §§ 165.001-.160 (Vernon Pamph. 2000)).
This scheme does not afford physicians the ability to bring private

actions against hospitals. See Cole, 920 S.W.2d at 372-73. The language
of the Act makes the adoption of rules and regulations for medical staff
appointments voluntary. See Tex. Rev. Civ. Stat. Ann. art. 4495b § 1.02
(repealed) (current version at Tex. Occ. Code Ann. § 151.051 (Vernon
Pamph. 2000). Creating a private right of action to enforce the
guidelines would discourage hospitals from adopting rules and
regulations with respect to staffing and defeat the purpose of the Act,
which is to protect the public interest. See Tex. Occ. Code Ann. §
151.003 (Vernon Pamph. 2000). Accordingly, we conclude that existing
Texas law cannot form the basis of Stephan's claim that he is entitled
to recover damages from Baylor because it violated mandated standards in
making its decision to deny him staff privileges.
The only other potential source of standards for hospitals
making medical staff appointments is the federal Health Care Quality
Improvement Act. See 42 U.S.C. §§ 11101-11152 (1995). The HCQIA sets out
standards for medical professional review actions that, if followed,
provide individuals and professional review bodies with immunity from
liability for damages. See id. §§ 11111-11112. To obtain immunity, a
professional review action must be taken:
(1) in the reasonable belief that the action was in furtherance
of quality health care,
(2) after reasonable effort to obtain the facts of the matter,
(3) after adequate notice and hearing procedures are afforded to
the physician involved or after such other procedures as are fair to the
physician under the circumstances, and

(4) in the reasonable belief that the action was warranted by
the facts known after such reasonable effort to obtain facts after
meeting the requirement of paragraph (3).
Id. § 11112. It has been consistently held, however, that these
standards, like the standards found in Texas law, do not provide a basis
for a cause of action in favor of a physician against a hospital. See
Wayne v. Genesis Med. Ctr., 140 F.3d 1145, 1148 (8th Cir. 1998); Bok v.
Mutual Assurance, Inc., 119 F.3d 927, 928-29 (11th Cir. 1997). The HCQIA
was intended to benefit the public by encouraging physicians to identify
and discipline incompetent and unprofessional behavior. See Wayne, 140
F.3d at 1148. It was not intended to benefit physicians by providing
them with the basis for a lawsuit against hospitals that attempt to
achieve this end by implementing professional review procedures but fail
to meet the enumerated standards. See id.
Because there are no privately enforceable standards relating to
hospital staffing decisions, Stephan has no right to recover against
Baylor for denying him staff privileges based on Baylor's alleged
failure to comply with any such standards. To the extent Stephan's
claims are based on Baylor's refusal to grant him staff privileges or
the violation of any standards in doing so, the trial court correctly
granted summary judgment in favor of Baylor.
The second wrongful act alleged by Stephan purportedly forms the
basis of his claim for breach of contract. Stephan contends that Baylor
refused to allow him to reapply for privileges even though it was

contractually obligated to permit him to do so 180 days after it denied
his original application. According to Stephan, this contractual
obligation arose out of the operating bylaws approved and adopted by
Baylor's medical staff and board of directors.
At the time Stephan was applying for privileges at Baylor, the
hospital had in place various bylaws regulating hospital procedures. The
bylaws addressing appointments to the medical staff, including the
application process, were part of Baylor's medical staff bylaws.
Reapplications after an adverse decision were governed by bylaw 5.4-9,
which stated:
An applicant who has received a final adverse decision regarding
appointment shall not be eligible to reapply to the medical staff for a
period of one hundred-eighty (180) days. Any such reapplication shall be
processed as an initial application, and the applicant shall submit such
additional information as the staff or the board may require in
demonstration that the basis for the earlier adverse action no longer
exists.
Because Baylor has refused to provide him with a new application,
Stephan contends it breached its “contractual obligation” under bylaw
5.4-9.
Procedural rights established in hospital bylaws can constitute
contractual rights. See Gonzalez v. San Jacinto Methodist Hosp., 880
S.W.2d 436, 438 (Tex. App._Texarkana 1994, writ denied). But rights
created by medical staff bylaws are not necessarily binding on a
hospital. See id.; see also Weary v. Baylor Univ. Hosp., 360 S.W.2d 895,
897 (Tex. Civ. App._Waco 1962, writ ref'd n.r.e.). The medical staff and

the hospital, although related, are not one and the same. The medical
staff generally consists of the physicians and other medical personnel.
The hospital is an entity governed by its board of directors. Here, the
preamble to Baylor's medical staff bylaws recognizes that the staff “is
subject to the ultimate authority of the board.” The medical staff
bylaws do not attempt to define or limit Baylor's power to act through
its board of trustees. Bylaws that do not define or limit the power of a
hospital as it acts through its governing board do not create
contractual obligations for the hospital. See Weary, 360 S.W.2d at 897.
This is true despite the fact that the board may have approved and
adopted the staff bylaws. Id.
Stephan argues that the reference to the board of directors in
bylaw 5.4-9 makes the bylaw binding upon the hospital and imposes a duty
on it to supply him with an application to reapply. We disagree. Nothing
in bylaw 5.4-9 suggests that it is intended to place any sort of duty on
the board with respect to reapplications. Mere references to a hospital
board in staff bylaws do not automatically create obligations binding on
the hospital.
Furthermore, we see nothing in the bylaw that gives a physician
a right to reapply. Bylaw 5.4-9 specifically states that reapplications
will be processed in the same manner as initial applications. Requests
for initial applications may be refused under medical staff bylaw 5.2-1,
and it follows, therefore, that requests to reapply may be refused as
well. Bylaw 5.4-9 does not create a contractual right to reapply that is

enforceable against the hospital. The trial court correctly granted
Baylor summary judgment on Stephan's contract claim and all claims that
may be based on Baylor's refusal to allow Stephan to reapply.
The third and last wrongful act alleged by Stephan is Baylor's
creation of a purportedly false and defamatory adverse action report
that was sent to the National Practitioner Data Bank. The report stated
that Stephan was denied privileges at Baylor due to “incompetence /
malpractice / negligence.” The report further noted that the denial was
based on “evidence of quality of care and medical record documentation
unacceptable to this hospital.” Baylor moved for summary judgment on all
claims relating to the report on three separate grounds: statute of
limitations, absolute immunity, and no publication by Baylor to the
NPDB. We conclude Baylor did not show itself entitled to summary
judgment on any of these grounds.
Adverse action reports are mandated by the federal Health Care
Quality Improvement Act. Under the HCQIA, a health care entity must
report to the state board of medical examiners any professional review
action that adversely affects the clinical privileges of a physician.
See 42 U.S.C. § 11133(a)(1) (1995). This information is then forwarded
by the state board to the NPDB. See id. § 11133(b). Upon request, the
NPDB must provide the adverse action information it receives to state
licensing boards, hospitals, and other organizations that have entered
into, or may be entering into, an employment or affiliation relationship

with the subject physician or to which the physician has applied for
clinical privileges or appointment to the staff. Id. § 11137(a). The
HCQIA requires this information be kept confidential by the recipient,
and any breach of confidentiality is subject to a civil monetary
penalty. Id. § 11137(b).
Baylor argues that the statute of limitations bars Stephan's
defamation and defamation related claims because he filed his suit more
than three years after the adverse action report was sent to the NPDB.
Stephan responds that because the report continues to be disseminated by
the NPDB, a new cause of action, together with a new limitations period,
arises each time the NPDB transmits the report. Whether the statute of
limitations bars Stephan's claims depends upon whether the “single
publication rule” applies to a report initially sent to the NPDB.
The single publication rule has been adopted in cases of alleged
libel in mass media. See Williamson v. New Times, Inc., 980 S.W.2d 706,
710 (Tex. App._Fort Worth 1998, no pet.); Holloway v. Butler, 662 S.W.2d
688, 692 (Tex. App._Houston [14th Dist.] 1983, writ ref'd n.r.e.). Under
the rule, a plaintiff's cause of action accrues on the last day of the
mass distribution of the printed matter containing the defamatory
statement. Holloway, 662 S.W.2d at 692. On that date, the publisher of
the statement has made the libelous matter available to his intended
audience and the tort is complete. By setting a single accrual date for
claims of mass media libel, the rule prevents continually extended

limitations periods based upon retail sales or secondary distributions
of the printed matter.
The single publication rule is limited in its application,
however. The rule does not apply to separate printings of the same
publication or to situations in which the same information appears in
different publications. Id. Under those circumstances, it is apparent
that the publisher intends to reach different audiences and this
intention justifies a new cause of action. See Hertzberg v. Wurzbach,
266 S.W. 190, 191 (Tex. Civ. App._San Antonio 1924, no writ); cf.
Schneider v. United Airlines, Inc., 256 Cal. Rptr. 71, 76 (Cal. Ct. App.
1989). In Hyde v. Hibernia National Bank, the Fifth Circuit Court of
Appeals applied the “new audience” rationale to conclude the single
publication rule did not apply to credit reports. Hyde v. Hibernia Nat'l
Bank, 861 F.2d 446, 450 (5th. Cir. 1988). The court held that each
transmission of a credit report to a new audience resulted in a separate
and distinct injury to which a separate statute of limitations applied.
Id. We conclude the same reasoning applies to adverse action reports
made to the NPDB and then disseminated by it.
Although the adverse action information provided by Baylor is
contained in a single report made available to a wide audience through
the NPDB, the confidential nature and restricted dissemination of the
report means it necessarily reaches a separate and discrete audience
with each dissemination by the NPDB. See 42 U.S.C. § 11137(b) (1995).
There is no “mass publication” as contemplated by the single publication

rule. A physician may suffer a new and distinct injury with each
republication of an allegedly defamatory report by the NPDB.
Accordingly, each transmission of the report is a new publication and a
possible separate tort.
Baylor argues that the single publication rule should apply to
it because once it made its report, it “relinquished all right of
control, title, and interest in the printed matter.” See Holloway, 662
S.W.2d at 692. It is clear the NPDB released the report at its
discretion to others and not at Baylor's direction. Baylor made its
report, however, with full knowledge of how the information would be
used and potentially disseminated by the NPDB. Although the general rule
is that one is not liable for repetition of a defamatory statement by a
third person, if a reasonable person would recognize that his actions
create an unreasonable risk that the defamatory matter will be
communicated to other parties, his conduct becomes a negligent
publication to those parties with the same consequences as a direct and
intentional communication. Cf. First State Bank v. Ake, 606 S.W.2d 696,
701 (Tex. Civ. App._Corpus Christi 1980, writ ref'd n.r.e.); S.H. Kress
& Co. v. Lindley, 46 S.W.2d 379, 381 (Tex. Civ. App._El Paso 1932, no
writ). Here, the risk that the allegedly defamatory report would
be communicated to others was almost certain. Baylor was aware by virtue
of the HCQIA that its adverse action report would be sent by the Texas
Board of Medical Examiners to the NPDB and, from there, the information

contained in the report would be transmitted to any authorized person
requesting it. Baylor presented no summary judgment evidence that the
allegedly defamatory report was not disseminated by the NPDB after the
expiration of the limitations period that it urged the trial court to
apply. Accordingly, Baylor was not entitled to summary judgment on
Stephan's defamation claims on the asserted ground of application of the
statute of limitations.
Baylor's argument that the statements in the adverse action
report are protected by absolute immunity is equally unavailing. Baylor
contends it cannot be held liable for making the allegedly defamatory
statements because they were made to governmental entities serving a
quasi-judicial function. The general rule is that communications made in
the course of judicial or quasi-judicial proceedings are protected by an
absolute privilege. See James v. Brown, 637 S.W.2d 914, 916 (Tex. 1982);
Attaya v. Shoukfeh, 962 S.W.2d 237, 238-39 (Tex. App._Amarillo 1998,
pet. denied). The privilege attaches to the proceeding, however, and not
to the parties involved in the communication. See Gallegos v. Escalon,
993 S.W.2d 422, 424 (Tex. App._Corpus Christi 1999, no pet.). The
privilege was created to allow citizens to seek redress and to encourage
witnesses to testify by allaying their fear of being sued by those made
the subject of the proceeding. Attaya, 962 S.W.2d at 239.
In this case, the adverse action report was not sent to the
Texas Board of Medical Examiners or the NPDB as a part of a judicial or

quasi-judicial proceeding. Neither the Board nor the NPDB was called
upon to investigate, exercise judgment, or impose penalties with respect
to Stephan's denial of privileges. The filing, forwarding, and
distribution of the adverse action report were simply administrative
functions carried out by virtue of federal law. See 42 U.S.C. §§ 11133,
11137 (1995). Administrative functions are not entitled to immunity even
when performed by those who have judicial or quasi-judicial powers. See
Oden v. Reader, 935 S.W.2d 470, 475-76 (Tex. App._Tyler 1996, no writ)
(prosecutor not entitled to absolute immunity for statements made as
part of administrative duties rather than quasi-judicial duties).
Because the report was not made as part of a protected proceeding,
Baylor was not entitled to summary judgment on the ground of absolute
immunity.
Finally, Baylor contends it is not liable for statements made to
the NPDB because it sent the adverse action report only to the Texas
Board of Medical Examiners. This argument fails for the reasons stated
in our above discussion about foreseeable republication. Parties who
reasonably foresee that their defamatory statements will be repeated to
third parties may be held responsible for republications. Cf. First
State Bank, 606 S.W.2d at 701; Lindley, 46 S.W.2d at 381. Baylor knew by
virtue of the applicable statutory law that its statements to the Texas
Board of Medical Examiners would be forwarded to the NPDB. Accordingly,
Baylor may be held liable in the same manner as if it had directly

published the adverse action report to the NPDB. Baylor has not shown
that Stephan's claims based on the allegedly defamatory report fail as a
matter of law.
In addition to its request for a traditional summary judgment,
Baylor also requested a “no evidence” summary judgment on Stephan's
claims for breach of contract, fraud, unfair competition, tortious
interference, intentional infliction of emotional distress, and civil
conspiracy. Cf. Tex. R. Civ. P. 166a(c), (i). It is unnecessary for us
to discuss the propriety of a no evidence summary judgment on Stephan's
claims for breach of contract and fraud because the allegations in
Stephan's petition clearly connect those claims solely to Stephan's
denied application for privileges and Baylor's refusal to allow him to
reapply. FN:1 We have already concluded that Stephan has no right to
pursue either of those actions. The allegations in the petition
supporting the remaining claims are more broadly worded, however. To the
extent the remaining claims may be based on Baylor's publication of the
allegedly defamatory adverse action report, we must determine whether
Stephan produced more than a scintilla of evidence in response to
Baylor's motion.
In reviewing a no evidence summary judgment, we apply the same
legal sufficiency standard as we apply in reviewing directed verdicts.
Moore v. K Mart Corp., 981 S.W.2d 266, 269 (Tex. App._San Antonio 1998,
pet. denied). We review the evidence in the light most favorable to the
respondent and disregard all contrary evidence and inferences. See id.

If the respondent brings forth more than a scintilla of probative
evidence to raise a genuine issue of material fact, a no evidence
summary judgment is improper. Id.
In its motion, Baylor stated there was no evidence to support
any of the essential elements of Stephan's claims for unfair competition
or conspiracy. In response, Stephan stated the record contained evidence
that physicians at Baylor acted in concert to wrongfully deny him staff
privileges. Stephan's evidence, however, relates solely to Baylor's
denial of privileges to Stephan, an action for which he has no right to
recover. Stephan does not point to any evidence connecting his claims
for conspiracy and unfair competition to Baylor's publication of the
adverse action report, the only action asserted for which he may
possibly recover. Because Stephan failed to present any probative
evidence to raise a genuine issue of material fact on his claims for
conspiracy and unfair competition, the trial court properly granted
Baylor's request for a no evidence summary judgment on those claims.
In response to Baylor's request for a no evidence summary
judgment on the claims for tortious interference, Stephan points to
evidence relating to both Baylor's denial of privileges and its
publication of the purportedly defamatory report. As discussed above,
evidence relating to the denial of privileges is insufficient to raise a
genuine issue of material fact. With respect to the publication of the
adverse action report, Stephan presented testimony showing generally

that “a negative NPDB report is viewed negatively by managed care plans
and can make it difficult for a physician to gain entry to plans.”
To prove a claim for tortious interference with contractual
relations or prospective contractual relations, a party must show there
was an existing contract subject to interference or, for the latter, a
reasonable probability that a contractual relationship would have been
created. See Holloway v. Skinner, 898 S.W.2d 793, 795-96 (Tex. 1995);
Garner v. Corpus Christi Nat'l Bank, 944 S.W.2d 469, 477 (Tex.
App._Corpus Christi 1997, writ denied). The party must also show actual
damage or loss occurred as a result of the alleged interference.
Holloway, 898 S.W.2d at 795- 96; Garner, 944 S.W.2d at 477. Although the
summary judgment record contains statements about the general effect of
negative NPDB reports, Stephan points to no summary judgment evidence of
any contracts or prospective contracts that were interfered with or
damaged in any way as a result of Baylor's publication of the adverse
action report. Baylor was entitled, therefore, to a no evidence summary
judgment on Stephan's claims for tortious interference.
Finally, Baylor requested summary judgment on Stephan's claim
for intentional infliction of emotional distress. Baylor simply contends
there was no evidence that the statements made in the adverse action
report were false or defamatory in nature. We note Baylor did not assert
that the adverse action report was “true” as part of its request for a
traditional summary judgment on Stephan's defamation claims in general.

The only grounds upon which Baylor sought summary judgment on Stephan's
claims for defamation, defamation per se, and business disparagement
were the statute of limitations, absolute immunity, and lack of
publication, which we discussed above. Baylor could not properly obtain
a traditional summary judgment on a ground not specified. See McConnell
v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993).
Baylor's argument that the report was “true” was made solely in support
of its request for a no evidence summary judgment on Stephan's claim for
intentional infliction for emotional distress. Our analysis of the
merits of the argument, therefore, necessarily focuses only on the
propriety of the trial court's decision to grant a no evidence summary
judgment on Stephan's claim for intentional infliction of emotional
distress.
Absent a false and defamatory statement, Baylor's conduct in
publishing the report could not be extreme or outrageous as required for
an intentional infliction of emotional distress claim. See Twyman v.
Twyman, 855 S.W.2d 619, 621-22 (Tex. 1993). The only summary judgment
evidence presented by Stephan to show the information in the adverse
action report was false was Stephan's own deposition testimony in which
he concluded the report did not accurately reflect the findings made by
Baylor during the application and peer review process.
In determining whether an adverse action report is true, we
examine only whether the report accurately reflects the reasons for the
adverse action, not whether the reasons themselves were accurate or

true. See Davis v. Methodist Hosp., 997 S.W.2d 788, 794 n.3 (Tex.
App._Houston [1st Dist.] 1999, pet. denied). Adverse action reports are
intended to inform others who may become associated with the subject
physician of conclusions reached and decisions made as a result of peer
review proceedings. The reports are not intended to validate or justify
those decisions and conclusions, nor do they purport to legitimize the
peer review process that may have been used. The report merely states
the actions and opinions of the makers of the report. Accordingly, in
this case we must determine whether the adverse action report accurately
reflects Baylor's actions and opinions with respect to Stephan, that is,
whether the report reflects that Stephan was denied staff privileges at
Baylor because the hospital concluded Stephan was incompetent,
negligent, or guilty of malpractice. Whether Stephan was actually
incompetent, negligent, or guilty of malpractice is irrelevant to our
determination. See id.
The summary judgment evidence shows the Baylor board of trustees
denied Stephan's application for staff privileges based on the
recommendations of the credentials and executive committees and the
findings in the hearing report created as a result of Stephan's
challenge to the recommendations. The hearing report included findings
of an increased risk to the hospital from the number of malpractice
claims filed against Stephan, below-standard medical record
documentation by Stephan, and inaccurate information on Stephan's

application for privileges. These findings correspond to the hospital's
stated conclusion that Stephan was at least incompetent or negligent, if
not actually guilty of malpractice. Accordingly, the report's
classification of Baylor's denial of privileges to Stephan as being due
to “incompetence / negligence / malpractice” was an accurate recitation
of Baylor's reasons. See id. at 795. Baylor also clarified the adverse
action report by stating specific grounds for its denial in a notation.
The notation stated: “evidence of quality of care and medical record
documentation unacceptable to this hospital.” To the extent the broad
classification in the report could be misleading, the notation narrows
the basis for the denial by stating the findings actually made by
Baylor. The summary judgment evidence demonstrates, therefore, that the
adverse action report was not false, but was an accurate recitation of
Baylor's findings and conclusions. Accordingly, we conclude the trial
court correctly granted Baylor's request for a no evidence summary
judgment on Stephan's claim for intentional infliction of emotional
distress.
As a collateral issue, Stephan challenges the trial court's
discovery order denying his motion to compel answers to interrogatories
and the production of documents. The evidence sought by Stephan
concerned the peer review and credentialing process used at Baylor
generally, as well as in Stephan's case in particular. In response to
the discovery requests, Baylor asserted that the information and

documents were privileged. Stephan claims that, to the extent any of the
evidence may have been privileged, Baylor waived its privilege under the
“offensive use doctrine” when it filed its counterclaim asserting
Stephan's suit was frivolous and brought in bad faith.
Under the offensive use doctrine, a party may waive a privilege
applicable to evidence by seeking affirmative relief on a claim for
which the privileged information is outcome determinative. See Republic
Ins. Co. v. Davis, 856 S.W.2d 158, 163 (Tex. 1993). Stephan argues the
withheld evidence relates to the merits of his claim that Baylor
improperly used its peer review and credentialing process to wrongfully
deny him privileges and, therefore, is outcome determinative of Baylor's
counterclaim that his suit is frivolous. First, we note the trial court
denied the relief requested in Baylor's counterclaim without the
evidence sought by Stephan. In its judgment, the court denied all relief
sought by either party other than that sought in Baylor's motion for
summary judgment. Second, Stephan has no right as a matter of law to
recover for a “wrongful” denial of privileges. Thus, evidence possibly
relevant to that claim could not have impacted the outcome of Baylor's
counterclaim, and Baylor did not waive any privilege with respect to
that information under the offensive use doctrine.
Stephan additionally states the withheld evidence would reveal
the falsity of the adverse action report by showing “there was no basis
for a statement that Dr. Stephan was guilty of 'incompetence /

malpractice / negligence.'” As stated above, whether Stephan was
actually negligent, incompetent, or guilty of malpractice has no bearing
on the analysis of the truth or falsity of the adverse action report.
The only relevant determination is whether the report accurately
reflected Baylor's reasons for denying him privileges. Accordingly, the
information sought by Stephan would have no bearing on his claim for
intentional infliction of emotional distress or, consequently, on
Baylor's assertion that his claim was frivolous.
We have concluded, however, that Baylor did not show itself to
be entitled to summary judgment on Stephan's other claims relating to
the adverse action report, that is, his defamation, defamation per se,
and business disparagement claims as well as his request for a
declaratory judgment. Those claims we will return to the trial court for
further proceedings. In light of our disposition of those claims, the
denial of Stephan's motion to compel evidence relating to the surviving
claims will be interlocutory, and we need not address at this time the
trial court's order as it may relate to those claims.
Based on the foregoing, we affirm the trial court's summary
judgment against Stephan with respect to any claim asserted for denial
of staff privileges. We also affirm the trial court's summary judgment
with respect to Stephan's claims for breach of contract, fraud, unfair
competition, tortious interference with contracts and prospective
contracts, intentional infliction of emotional distress, and conspiracy

as well as the trial court's order denying Stephan's motion to compel to
the extent it relates to evidence sought on those claims. We reverse the
trial court's summary judgment with respect to the remaining claims and
remand them for further proceedings.

JOSEPH B. MORRIS
JUSTICE
Publish
Tex. R. App. P. 47
-------------------
FN:1
1 In addition, Stephan stated in his response to the motion for summary
judgment, as well as on appeal, that he had insufficient evidence to
support his fraud claim and was withdrawing it.
-------------------
File Date[06/22/2000]
File Name[990476F]


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