In re Otero Cnty. Hosp. Ass’n. – March 2015 (Summary)

CREDENTIALING & PEER REVIEW DISASTER

In re Otero Cnty. Hosp. Ass’n., Case No. 11-11-13686 JL (Bankr. D. N.M. Mar. 18, 2015)

NOTE:  The court’s first opinion was issued February 27, 2015.  Then, on March 18, 2015, the court issued this amended opinion, effectively replacing the earlier February 27 opinion.

The United States Bankruptcy Court for the District of New Mexico held that a hospital management company breached a duty of care when its CEO received notification from an external physician regarding the experimental nature of the surgeries being performed by one of the hospital’s physicians, yet failed to request an investigation by the hospital MEC.

This case arose because a number of patients suffered damages as a result of being unwittingly subjected to experimental spinal procedures by an anesthesiologist trained in pain management. Due to the large number of lawsuits, the hospital filed for Chapter 11 bankruptcy. After settling with other defendants, the lawsuit of the 47 united patient plaintiffs remains pending against the hospital management company alone. The hospital management company argued that it should not be held liable because its CEO was not responsible for any medical or credentialing decisions at the hospital, did not have the authority to provide medical services to patients of the hospital, and was not directly involved in any clinical decisions.

The Bankruptcy Court disagreed. In a lengthy opinion that discusses in detail the various roles of hospital board, management and medical staff leadership, the court noted that even though the CEO did not have responsibility for directing the medical judgment of employees, the CEO did have the duty to appropriately involve the medical staff in evaluating medical issues and to inform the board and the medical staff about issues relating to patient safety that were known or should have been known.

The court noted that soon after the anesthesiologist began working at the hospital, his proctor accused him of performing experimental surgeries on unknowing patients. The CEO considered the matter, but merely accepted the opinions of the anesthesiologist himself and another physician who had adopted the anesthesiologist’s experimental methods, rather than referring the matter for further review by the medical staff leadership.

The court concluded that the hospital management company breached its duty on two occasions, first, when the CEO circumvented the process for granting temporary privileges to initial applicants (granting those privileges prior to the application being considered by the Credentials Committee). A second breach of duty occurred when the CEO failed to inform the Medical Executive Committee of the proctor’s accusations regarding the experimental nature of the anesthesiologist’s procedures.