Fair hearings often fail to live up to their name when hospitals try to suspend physicians

Over the past five years, there has been an alarming trend in the United States health care system: an increase in the number of physicians in private practice whose medical staff privileges in hospitals have been suspended without proper due process.

Hospitals operate under certain accrediting agencies, most commonly The Joint Commission, which, along with state laws, require them to adopt medical staff bylaws that provide for a fair hearing process consistent with “due process” if they intend to take a negative action such as trying to limit or revoke a physician’s medical staff privileges. Due process requires that legal matters be resolved according to established rules and principles which, in the context of curtailing a physician’s privileges, includes a fair hearing.

A fair hearing can help prevent physicians from being unfairly suspended or terminated, causing financial loss to the physician and a disruption of her or his relationships with patients. The damage to a physician from a suspension or termination of medical staff privileges cannot be overstated. Not only is the action reportable to the National Practitioner Data Bank, a publicly available record of disciplinary proceedings against physicians, but it can destroy a practice by preventing a physician from admitting patients to the only hospital in the local area. The action is also likely to become an issue when the physician applies for malpractice insurance, seeks to be re-credentialed by insurers, or applies for privileges at another hospital or ambulatory care facility.

Suspension or termination from a medical staff is a permanent stain on a physician’s record, which is why the law requires due process to uphold such an action.

Most medical staff bylaws have hospital-centric due-process provisions, and hospitals generally have the ability to appoint a hearing officer to oversee the proceedings. Because this individual is typically appointed and paid by the hospital, this may create a conflict of interest in which the hearing officer is inclined to render decisions likely to result in her or his reappointment in future matters — namely those in favor of the hospital, rather than the physician.

Several years ago, a hospital appointed me as a hearing officer for a complex case in which a physician was charged with various infractions, none of which individually would have resulted in disciplinary action but which the hospital believed in the aggregate justified termination. At the end of the months-long proceeding, the independent hearing committee, which consisted of several private-practice physicians, found in favor of the physician. The hospital’s general counsel believed the physician should have been terminated and made her opinion known. I explained that I had overseen the process essentially as the judge, and did not make the ultimate decision. If my goal had been to make a career as a hearing officer for this hospital, I had certainly failed.

Medical staff bylaws are often vague and ambiguous when it comes to the fair hearing process, leaving important questions unanswered. These include: What type of evidence can be admitted against a physician? How quickly must the hearing be scheduled to avoid unnecessarily extending a summary suspension? Who has the burden of proof, the medical executive committee that prosecutes these cases on behalf of the hospital or the physician defendant?

When such questions are not addressed by a hospital’s medical staff bylaws, hospital-appointed hearing officers are left to make decisions on the fly. An additional complicating factor is the fact that every medical staff has its own unique set of bylaws, so physicians on the staff of several hospitals must comply with different requirements and processes at each facility.

At some hospitals, physicians can be summarily and unilaterally suspended by their department chair. This is understandable in extreme circumstances, such as where a physician’s conduct poses an immediate threat of harm to patients or hospital employees. But in some hospitals, summary suspension has become the primary way to discipline physicians, even for non-egregious conduct. What’s worse, the accused may need to exercise their right to a hearing to remove the summary suspension, and yet another hearing to avoid a permanent suspension, resulting in a long and costly process.

The ambiguity and inequity in the fair hearing process usually affect private-practice physicians more than those employed by hospitals, perhaps because hospitals may see private-practice physicians who send their patients to competing facilities as threats. And many department chairs who make the decision to take action against a physician are either employees of the hospital or have their loyalties bound to it.

Given the increasing competition among hospitals, and between hospitals and mega-practices owned and financed by private equity or insurance companies, hospitals will likely continue to aggressively seek to minimize the power of private-practice physicians, particularly when the process for doing so meets little resistance. The solution to this power imbalance is to apply basic principles of justice and fairness to medical staff fair hearing processes. These would make it difficult for hospitals to terminate a physician’s staff privileges without adequate proof.

Justice can be reliably applied only if guided by rules, not the whims of individuals.

Using well-established arbitration standards implemented by the American Arbitration Association or the American Health Lawyers Association, for example, would make sense in these cases. Under these organizations’ standards, both parties would choose the arbitrator, so neither is the victim of inherent bias. The entire process would be uniform and predictable.

The fair hearing process should be well defined. While the rules of evidence are generally lax in both arbitrations and fair hearings, only relevant evidence relating to the charges against the physician should be permitted. Many medical staff bylaws do not have any evidentiary rules, which allows a hospital to introduce evidence that may not be related to the charges levied against the physician, and for which the physician did not receive notice and an opportunity to refute.

It is also important that hearing committees not consist entirely of physicians employed by the hospital, which is often the case today. It is difficult for a hospital-employed physician, whose livelihood depends on being in the hospital’s good graces, to be fair and unbiased. The outcomes of such hearings are essentially predetermined.

Even when a fairing hearing occurs, the hospital’s governing body — generally its board of trustees — can unilaterally, and without giving a reason, overrule a hearing committee. If a hearing committee finds favorably for the physician, the board can effectively nullify its conclusions.

The notion that a hospital’s board should be able to unilaterally overrule the determination of a hearing committee arose during a time when medical staffs were independent entities, controlled entirely by private-practice physicians, with the hospital serving as a neutral arbiter. This no longer reflects the political or business structure of most hospitals, which may employ hundreds of physicians who compete with private-practice physicians, and where hospital-employed physicians may comprise not only the medical executive committee that initiates proceedings against a physician but also the membership of the hearing committee. A hearing process cannot be deemed “fair” if it can be overruled by a board that likely views the defendant as a competitor.

The solution to these injustices is a streamlined system, resembling the arbitration process, that promotes a fair result with appropriate appeals processes for both sides.

Hospitals and physicians need each other. In recent years, however, there has been a disturbing tendency of hospitals to exert their largely unchecked power against individual physicians, with a particular ferocity aimed at private practitioners who have declined offers of employment from the hospital or who refer their patients to multiple hospitals. This arguably anti-competitive conduct by hospitals can wreak havoc on physicians’ careers and may ultimately raise the cost of health care.

Hospitals have little or no incentive to reform the fair hearing process, leaving it up to physicians to insist on legitimate due process in all disciplinary matters. Where due process has been withheld, physicians must report the hospital’s conduct to The Joint Commission, other applicable accreditation agency, or the state department of health or other regulatory body. In certain instances, it may be necessary to deploy the tools of litigation.

A fairer approach would be for both the hospital and the defendant physician to agree on a hearing officer, much as happens in arbitration processes. This would enable physicians (and their counsel) to reject serial hearing officers who have worked for the hospital in prior cases. Separately, physicians should mobilize to advocate for a streamlined medical staff fair hearing process that is based on existing arbitration standards, which would reduce the capriciousness and inequity besetting the current landscape.

Daniel B. Frier is a founding partner of Frier Levitt, a national health care and life sciences law firm headquartered in Pine Brook, New Jersey.