The U.S. District Court for the District of New Jersey has held that a hospital’s Medical Executive Committee can be sued for violations of the federal antitrust statute1, as well as various other state law claims.
The lawsuit which gave rise to this decision is Frederick Nahas, M.D. v. Shore Medical Center et al. Dr. Nahas filed suit against Shore Medical Center (‘SMC”) and its Medical Executive Committee in 2013, after his privileges to perform endovascular surgery at SMC were adversely affected.
SMC had argued that its Medical Executive Committee did not have the capacity to sue or be sued. The Court disagreed, concluded that the Medical Executive Committee is an unincorporated association for purposes of New Jersey law2, and, as such, could be sued.
To the court, whether the SMC’s Medical Executive Committee could be sued depended on two criteria: (1) whether the MEC is voluntarily organized for a common purpose; and (2) whether the MEC is separate and distinct from another entity or its own members. The parties did not dispute the first component, so the matter turned on whether a Medical Executive Committee is distinct from other entities and/or its own members.
The court found that the SMC’s Medical Executive Committee is indeed distinct from SMC, but actually began its analysis with a consideration of medical staffs as a whole. The court found two facts in particular important:
1. Medical staff members pay dues, which is indicative of an association with a “defined membership and defined boundaries;” and
2. SMC’s Bylaws stated they are a contract to which SMC’s Medical Staff is a party with SMC. (The principle here is that if the Medical Staff was not separate or distinct from SMC itself, then the Medical Staff could not have entered into an agreement [the Bylaws] with SMC, because a party cannot contract with itself. Other courts have reached a different conclusion, i.e., that a medical staff is not distinct from the hospital which it serves.)
On these facts, the court concluded that a medical staff is an unincorporated association which can be sued.
To get from that determination to its ultimate determination - that SMC’s Medical Executive Committee, a component of the Medical Staff, was also an unincorporated association which could be sued – the court relied on the provisions of the (federal) Health Care Quality Improvement Act (“HCQIA”). 42 U.S.C. §11101 et seq.
HCQIA is the federal statute which provides immunity from civil money damages for participants in health care professional peer review actions. Specifically, HCQIA declares that “the professional review body” of a hospital, and “any person acting as a member or staff to the professional review body,” cannot be held liable for damages as long as they are engaging in protected3 peer review actions. 42 U.S.C. § 11111. The statute defines a “professional review body” to include “any committee of a health care entity which conducts professional review activity,” and “any committee of the medical staff of such an entity when assisting the governing body in a professional review activity,” e.g., medical executive committees. 42 U.S.C. § 11151. The court reasoned that because Congress decided to immunize professional review bodies like medical executive committees, Congress obviously contemplated that medical executive committees could be sued in the first place. After all, if medical executive committees could not be sued, it would not have been necessary for Congress to provide them any immunity under HCQIA. Thus, the court found that SMC’s medical executive committee could be sued.
The court concluded by “express[ing] no opinion whatsoever on what claims may be brought against [the medical executive committee].” That is indeed an interesting question: what claims may be brought against a medical executive committee? The way most hospital peer review proceedings are structured, medical executive committees merely “recommend” measures; any actual “action” is typically taken by a hospital’s board.
Moreover, suppose the medical executive committee is found liable on a certain claim (or claims), and that its conduct does not qualify for the immunity provided for by the HCQIA, referenced above. Then what? A medical executive committee generally has no assets with which to satisfy a judgment. While the Nahas opinion might lead to more hospital committees being named as defendants in lawsuits stemming from peer review proceedings, it seems that any victory a plaintiff obtains over such committees may be financially meaningless, unless the Committee has assets or the plaintiff has a valid way to reach the assets of the individual members of the Committee.
1 Antitrust laws relate to the conduct and organization of business entities; they are designed to promote fair competition in the marketplace, for the benefit of consumers.