Application for Medical Staff Membership Leads to Attorney Fee Sanctions
By David L. Haron
Physicians considering litigation based on an adverse peer review or a credentialing dispute should exercise caution if they want to avoid the possibility of being hit with the defendant’s attorney’s fees. Recently, the U.S. District Court for the Middle District of Georgia held that a physician who unsuccessfully sued the hospital where he worked, in addition to two> staff physicians involved in the plaintiff doctor’s peer review process, was required to reimburse the hospital and its staff physicians for attorney’s fees and costs pursuant to an "Applicant's Consent and Release" (Release) he signed when he applied for medical staff privileges at the defendant hospital. The amount the plaintiff doctor must pay has yet to be determined, but with three defendants seeking fees, including the two staff physicians and their group professional corporation, it could easily turn out to be a substantial sum.
When it comes to peer review actions, attorney’s fees are available under the Health Care Quality Improvement Act if the plaintiff’s claims are found to be frivolous or otherwise without merit. 42 USC 11113. A lthough generally infrequent, courts have assessed attorney’s fees against a losing plaintiff, sometimes in the hundreds of thousands of dollars.See Sklaroff v. Allegheny Health Education Research Foundation, 1996 WL 665519 (E.D.Pa. Nov. 13, 1996) (not reported in F.Supp.) However, provisions found in medical staff privilege applications or bylaws can also be used to hold a physician responsible for costs incurred in unsuccessful legal action. This can leave physicians vulnerable when they bring meritorious cases stemming from peer review or credentialing disputes.
In the case of Adeduntan v. Hospital Auth. of Clark City, No.3:04-CV-065 (CDL)(M.D. Ga. July 31, 2008), a physician, Dr. Azeez Adeduntan, who was unsuccessful in prosecuting a peer review action against the defendant hospital and several physicians involved in the peer review process, was required to reimburse the hospital and those physicians for their attorneys fees and costs. The casearose out of the medical peer review of plaintiff's performance during an emergency abdominal aortic aneurysm procedure.Following the peer review, the plaintiff doctor asserted federal claims against the defendants for racial and national origin discrimination, antitrust violations and state law claims for negligent and intentional infliction of emotional distress.The court ultimately granted summary judgment for the defendant hospital and its staff physicians.Additionally, the court determined that “the Release and the conditions contained therein [were] valid and enforceable,” and that the plaintiff was legally obligated to reimburse all three defendants’ attorney’s fees and costs.
The language of the Release provided: "If...I [Dr. Azeez Adeduntan] institute legal action against the Hospital Athens Regional Medical Center] and/or its Medical Staff members and do not prevail, I agree to reimburse the Hospital and any Medical Staff members named in the action for any and all costs incurred in defending the legal action, including reasonable attorneys’ fees."Dr. Adeduntan was “required to execute the form in order to apply for medical staff appointment and privileges at Athens Regional Medical Center.”
This case serves as a reminder that even the most innocuously appearing document, such as a simple application, may contain provisions that operate to protect one party at the expense of the other.This is why it is important for physicians to carefully review staff privilege applications and medical staff bylaws before signing them or initiating peer review litigation, as the results could be costly.
It is important to recognize that credentialing litigation is on the rise because of numerous court decisions allowing such disputes to move into the courts.In the absence of a contractual requirement, such as those found in staff privilege applications, most American courts cannot impose attorney fee obligations on losing litigants. Therefore, it would be reasonable to expect that most staff privilege applications would be promptly amended to include language such as that found in the Release signed by Dr. Adeduntan.
When it comes to agreements between physicians and hospitals, one should never assume that there is such a thing as a standard form agreement or typical boilerplate language.These kinds of forms are drafted by one party to protect its own interests, and this is often accomplished at the expense of the other party. It is in a physician’s best interest to be proactive and take steps to protect themselves from risky release and attorney fee language hidden in staff privilege applications and medical staff bylaws.Depending on the applicant's specialty, and state law, the language may or may not be negotiable.A good healthcare attorney, however, is essential to review the application, research the issue and attempt to obtain any modifications.As always, even the most innocuously appearing document, such as a simple "application," may contain time-bombs that can lay dormant for many years.
Physicians considering litigation based on an adverse peer review or a credentialing dispute should exercise caution if they want to avoid the possibility of being hit with the defendant’s attorney’s fees. Recently, the U.S. District Court for the Middle District of Georgia held that a physician who unsuccessfully sued the hospital where he worked, in addition to two> staff physicians involved in the plaintiff doctor’s peer review process, was required to reimburse the hospital and its staff physicians for attorney’s fees and costs pursuant to an "Applicant's Consent and Release" (Release) he signed when he applied for medical staff privileges at the defendant hospital. The amount the plaintiff doctor must pay has yet to be determined, but with three defendants seeking fees, including the two staff physicians and their group professional corporation, it could easily turn out to be a substantial sum.
When it comes to peer review actions, attorney’s fees are available under the Health Care Quality Improvement Act if the plaintiff’s claims are found to be frivolous or otherwise without merit. 42 USC 11113. A lthough generally infrequent, courts have assessed attorney’s fees against a losing plaintiff, sometimes in the hundreds of thousands of dollars.See Sklaroff v. Allegheny Health Education Research Foundation, 1996 WL 665519 (E.D.Pa. Nov. 13, 1996) (not reported in F.Supp.) However, provisions found in medical staff privilege applications or bylaws can also be used to hold a physician responsible for costs incurred in unsuccessful legal action. This can leave physicians vulnerable when they bring meritorious cases stemming from peer review or credentialing disputes.
In the case of Adeduntan v. Hospital Auth. of Clark City, No.3:04-CV-065 (CDL)(M.D. Ga. July 31, 2008), a physician, Dr. Azeez Adeduntan, who was unsuccessful in prosecuting a peer review action against the defendant hospital and several physicians involved in the peer review process, was required to reimburse the hospital and those physicians for their attorneys fees and costs. The casearose out of the medical peer review of plaintiff's performance during an emergency abdominal aortic aneurysm procedure.Following the peer review, the plaintiff doctor asserted federal claims against the defendants for racial and national origin discrimination, antitrust violations and state law claims for negligent and intentional infliction of emotional distress.The court ultimately granted summary judgment for the defendant hospital and its staff physicians.Additionally, the court determined that “the Release and the conditions contained therein [were] valid and enforceable,” and that the plaintiff was legally obligated to reimburse all three defendants’ attorney’s fees and costs.
The language of the Release provided: "If...I [Dr. Azeez Adeduntan] institute legal action against the Hospital Athens Regional Medical Center] and/or its Medical Staff members and do not prevail, I agree to reimburse the Hospital and any Medical Staff members named in the action for any and all costs incurred in defending the legal action, including reasonable attorneys’ fees."Dr. Adeduntan was “required to execute the form in order to apply for medical staff appointment and privileges at Athens Regional Medical Center.”
This case serves as a reminder that even the most innocuously appearing document, such as a simple application, may contain provisions that operate to protect one party at the expense of the other.This is why it is important for physicians to carefully review staff privilege applications and medical staff bylaws before signing them or initiating peer review litigation, as the results could be costly.
It is important to recognize that credentialing litigation is on the rise because of numerous court decisions allowing such disputes to move into the courts.In the absence of a contractual requirement, such as those found in staff privilege applications, most American courts cannot impose attorney fee obligations on losing litigants. Therefore, it would be reasonable to expect that most staff privilege applications would be promptly amended to include language such as that found in the Release signed by Dr. Adeduntan.
When it comes to agreements between physicians and hospitals, one should never assume that there is such a thing as a standard form agreement or typical boilerplate language.These kinds of forms are drafted by one party to protect its own interests, and this is often accomplished at the expense of the other party. It is in a physician’s best interest to be proactive and take steps to protect themselves from risky release and attorney fee language hidden in staff privilege applications and medical staff bylaws.Depending on the applicant's specialty, and state law, the language may or may not be negotiable.A good healthcare attorney, however, is essential to review the application, research the issue and attempt to obtain any modifications.As always, even the most innocuously appearing document, such as a simple "application," may contain time-bombs that can lay dormant for many years.
David L. Haron is a principal at Frank Haron Weiner, PLC. His practice includes all aspects of health care law, complex litigation, business transactions and real estate planning and development. As a qui tam lawyer, he has recovered more than $100 million from corporations and individuals who fraudulently received funding from the taxpayers.