Will South Dakota be the Next State to Recognize Common Law Tort of Negligent Credentialing?

In Larson v. Wasemiller, the Minnesota Supreme Court held that Minnesota does recognize the common law tort of negligent credentialing. Even though Minnesota’s peer review statute does provide confidentiality and limited liability to peer review committees, the court found that these provisions did not preclude a claim of negligent credentialing. In choosing to recognize this tort, Minnesota joined a majority of states that have already done so. South Dakota has not yet addressed this issue. This article will analyze South Dakota’s peer review statutes, and, by employing the rationale used by the Minnesota court in Larson v. Wasemiller, will consider whether South Dakota’s peer review statutes would preclude a claim of negligent credentialing in South Dakota.

Between 44,000-98,000 patients die in hospitals each year due to medical mistakes.[1] In fact, “[h]ospitals across the country are relying on a variety of extraordinary vague standards as measures of clinical competence.”[2] As a result, hospitals have carelessly and negligently granted privileges to unqualified physicians.[3] Thus, to combat this problem, plaintiffs began attacking the hospitals on the common law tort of negligent credentialing. “Negligent credentialing does not rest upon one single theory.”[4] Its legal foundation has been based on negligent hiring, negligent entrustment, corporate negligence and even the common law tort of negligence.[5]

Historically, hospitals have not been held accountable for the acts of physicians, who hold the status of independent contractors.[6] Thus, they “could not control the details of the method by which physicians practiced medicine, and consequently, could not be held liable when a physician committed a negligent act within the boundaries of the hospital.”[7] However, [h]ospitals are no longer viewed as a mere facility in which various independent contractors perform services.” [8] Instead, patients have begun to “view physicians, who in law remain independent contractors, as the employees of the hospital and to demand that the hospital take responsibility for the physicians’ actions.”[9] Thus, if a patient is injured by a physician, he may decide to bring a claim of negligent credentialing against the hospital itself, asserting that the hospital was negligent in allowing the physician to perform services. Not all states have chosen to recognize the common law tort of negligent credentialing; however, several have, including Minnesota, whose Supreme Court recently held in Larson v. Wasemiller[10] that its peer review statutes do not preclude negligent credentialing as a cause of action.

This paper will first discuss the Minnesota Supreme Court’s decision in Larson v. Wasemiller. It will then examine some of the issues in that case, particularly the concept of peer review credentialing and the effect that peer review statutes have on the existence of the common law tort of negligent credentialing. Finally, it will analyze South Dakota’s peer review statutes and conclude that they would be interpreted in the same way that Minnesota’s statutes were interpreted and thus would not preclude a claim of negligent credentialing.

Whether South Dakota’s peer review statutes would preclude recognition of the common law tort of negligent credentialing?

James P. Wasemiller and Paul S. Wasemiller are physicians licensed in Minnesota, who hold themselves out as surgery specialists.[11] St. Francis Medical Center is a Minnesota corporation that granted both doctors privileges to perform surgical procedures on patients.[12] “In April 2002, Dr. James Wasemiller, with the assistance of his brother Dr. Paul Wasemiller, performed gastric bypass surgery on Mary Larson at St. Francis Medical Center in Breckenridge, Minnesota.”[13] Unfortunately, complications arose from the first operation and a second operation had to be performed by Dr. Paul Wasemiller on April 12^th, 2007.[14] After the second operation, Larson was moved to a long-term care facility.[15] She was then transferred to MeritCare Hospital for emergency surgery where she remained until June of 2002.[16]

Larson brought a medical malpractice claim against both doctors; additionally, she brought a claim against St. Francis Hospital for granting surgery privileges to Dr. James Wasemiller.[17] This complaint asserted that the hospital knew, or should have known before the Larson surgery, that Dr. James Wasemiller posed an unreasonable danger of harm to surgery patients at the hospital and that the hospital breached its duty to Ms. Larson by granting him the privilege to perform surgery at the hospital, causing respondents to suffer damages.[18]

St. Francis Medical Center moved to dismiss under Minn. R. Civ. P. 12.02(e).[19] It argued that

(1) Minnesota does not recognize legal claims of “negligent credentialing” or “negligent privileging” against a hospital; (2) Minn.Stat. § 145.63, subd. 1, limits liability for review organizations; (3) the peer-review privilege, as codified in Minn.Stat. § 145.63, impliedly rejects such claims against hospitals; and (4) respondents have failed to state a claim against the hospital for liability based on joint enterprise with Dr. James Wasemiller.[20]

The district court held that Minnesota does recognize a common-law cause of action of negligent credentialing or privileging of a physician against a hospital or other review organization.[21] The district court further held that Minn.Stat. §§ 145.63-.64 does not grant immunity from or otherwise limit liability of a hospital or other review organization for a claim of negligent credentialing or privileging of a physician.[22] In reaching its holding, “[t]he district court found the action of creating a peer review committee for purposes of making credentialing decisions created a duty to use reasonable care in its actions.”[23] The district court also found it convincing that a majority of states have also used the standard of reasonable care in regards to granting credentials and privileges to physicians to practice at a hospital.[24]

The Minnesota Court of Appeals reversed the district court’s ruling and held that Minnesota does not recognize a common-law cause of action for negligent credentialing of a physician by a hospital or other review organization.[25] Since Minnesota had not previously recognized this common law tort, the appellate court found that it “was more appropriate for the Minnesota Supreme Court or the Minnesota Legislature, as it is proper for those groups to exhaustively consider and examine the complex policy concerns of creating new law.”[26]

The Minnesota Supreme Court reversed the Minnesota Court of Appeals and held that Minnesota does recognize the common law tort of negligent credentialing.[27] In analyzing the effect of Minnesota’s peer review statute on the tort of negligent credentialing, the court stated “at the very least, the [peer review] statute does not negate or abrogate this cause of action.”[28] The court did, however, find that Minnesota recognizes this cause of action by looking at these four elements:

(1) whether the tort is inherent in, or the natural extension of, a well-established common law right, (2) whether the tort has been recognized in other common law states, (3) whether the recognition of a cause of action will create tension with other applicable laws, and (4) whether such tension is out-weighed by the importance of the additional protections that recognition of the claim would provide to injured persons.[29]

In reaching its holding, based on these elements, the court held that the confidentiality and limited liability provisions of Minnesota’s peer review statutes did not preclude a claim of negligent credentialing.[30]

The system of credentialing is “a process by which members of a hospital’s medical staff review the qualifications, medical outcomes and professional conduct of other physician members and medical staff applicants to determine whether the reviewed physicians may practice in the hospital and, if so, to determine the parameters of their practice.”[31] This system is also known as peer review.[32]

Peer review is usually a two-pronged process.[33] First, it “involves considering and establishing the professional training, experience, and other requirements for medical staff membership. Second, [it] involves obtaining and evaluating evidence of the qualifications of individual applicants.”[34] These evaluations are typically conducted by peer review committees “composed of physicians and other health care providers who have knowledge in the area subject to the committee’s review authority.”[35] These committees determine “whether a professional shall be granted staff privileges in a medical institution . . . or whether a professional’s staff privileges . . . should be limited, suspended or revoked.”[36] In making these determinations, peer review committees analyze the physician’s qualifications and background, considering “information about the applicant’s licensure, training, experience, competence, ability, professional ethics, reputation, and health status.”[37] Essentially, the peer review committee “determines if the physician is competent to give care in a particular area.”[38]

Peer review and credentialing committees also consider whether a current physician should be reappointed.[39] In doing so, the committees consider the physician’s “pattern of performance by analyzing claims filed against the physician, data dealing with utilization, quality, and risk, a review of clinical skills, adherence to hospital bylaws, policies and procedures, compliance with continuing education requirements, and mental and physical status.”[40] Thus, in reviewing the competence of current physicians, the peer review committee “determines whether his or her skills were applied in an appropriate fashion.”[41] In reviewing either a first-time applicant or a current physician, the peer review committee must “request a report from the National Practitioners Data Bank[42] on [the particular] physician.”[43]

These peer review committees “are created by health care entities . . . for the purpose of increasing patient safety, deciding on applications for physician credentialing, and determining whether a professional’s staff privileges shall be revoked, limited, or suspended.”[44] Because of the important function of peer review committees and the nature of the evidence they consider, many states, including Minnesota and South Dakota, have statutes that protect the information considered by the peer review committees in making these determinations. [45] These statutes are commonly known as “peer review statutes,” and they grant two types of privileges: “The first type protects the individual peer review participant from suits arising out of the grant or retention of hospital privileges, that is, suits for negligent credentialing.”[46] This protection is known as the limited liability provision. The second type of privilege protects documents used and promulgated by hospital peer review committees from discovery.”[47] This provision is commonly referred to as the confidentiality provision, for it protects “records created or reviewed by peer review committees and prevent[s] access to such records, even by discovery or subpoenas.”[48]

The underlying rationale for the protections afforded by peer review statutes “is that the greater good is served by the facilitation of candid communications and that this can best be accomplished by ensuring the confidentiality of such communications.”[49] Proponents of these protections argue that peer review statutes serve the greater good in two ways: “(1) that exacting a critical analysis of the competence and performance of physicians and other health care providers by their peers will result in better medical care; and (2) that confidentiality will facilitate candid communication and analysis.”[50] Further, they argue that the protections of limited liability and confidentiality will “ensure [that] the discussions necessary to the goals of the peer review committee are carried on with confidence.”[51] Thus, they argue that the confidential nature of this information should be highly protected, because:

Physicians are obviously reluctant to participate in good faith peer review if they are exposed to liability for their actions. Physicians are similarly reluctant to participate if the documents memorializing their participation are subject to discovery. Their reluctance arises, in large part, out of fear of involvement in lawsuits relative to adverse decisions affecting credentialing.[52]

Proponents argue that liability shall be limited because “[f]ree uninhibited communication of information to and within the peer review committee is imperative to the professed goal of critical analysis of professional conduct.”[53] Thus, health care organizations argue that the peer review privilege should be firmly protected in order to maintain an environment for critical analysis, even if this privilege will “substantially detract from a litigant’s access to relevant information.”[54]

However, critics assert that, in some instances, notably in claims of negligent credentialing, it is necessary for the plaintiff to access some of the information considered by peer review committees. They argue that

The duty of the hospital – to protect its patients against incompetent physicians, especially when patients cannot protect themselves – should not be mitigated by a statute enacted with a goal of improving patients’ safety. . . It would be in conflict with the goal of improving patients’ safety if a hospital is able to use the peer review confidentiality statute as a shield against taking responsibility for exposing its patients to inept physicians. A hospital has a duty to select and retain competent physicians seeking staff privileged. A hospital should be found negligent if it granted credentials and privileges to an incompetent physician, either by failing to perform an adequate and required investigation or by simply ignoring unfavorable facts exposed by its investigation.[55]

Essentially, critics contend that “[t]he legislature’s intention was not to allow peer review committees to use [the peer review statute] as a shield[.]”[56] These conflicting arguments become increasingly apparent when plaintiffs allege that peer review committees were negligent in making credentialing decisions. This claim is commonly called “negligent credentialing.”

Claims of negligent credentialing arise out of allegations that “a hospital unreasonably exposed its patients to harm by granting staff privileges to a physician with a demonstrable history of questionable conduct or inadequate training.”[57]

To date, at least 27 states have recognized the common law tort of negligent credentialing.[58] In doing so, some courts have found that two other common law torts support recognition of the tort of negligent credentialing.[59] First, “[t]he claim of negligent credentialing is analogous to a claim of negligent hiring of an employee . . . Some jurisdictions that recognize the tort of negligent credentialing do so as a natural extension of the tort of negligent hiring.”[60] Second, some courts have found that the tort of negligent credentialing is directly related to the tort of negligent selection of an independent contractor.[61] Other courts have recognized that negligent credentialing may be encompassed by the broader theory of corporate negligence[62] or that it may be an extension of the duty of care for patient safety.[63]

In alleging a claim of negligent credentialing, the plaintiff must establish four elements: (1) that the hospital had a duty to select and retain competent physicians seeking staff privileges; (2) that the hospital was negligent in granting staff privileges to the physician, by either failing to perform an adequate investigation or simply ignoring facts uncovered by its investigation; (3) that the incompetent physician was negligent in treating the patient and cause his or her injury; and (4) that the incompetent physician’s negligent took place at the hospital.[64] The second element is often the most difficult to establish because defendant hospitals argue that the information is blocked from discovery by the confidentiality provision in peer review statutes.[65] However, so far, only two courts have refused to recognize the claim of negligent credentialing on the basis that such a cause of action is precluded by peer review statutes.[66]

In recognizing the claim of negligent credentialing, courts have found various ways to “let in” the information discussed by the peer review committees. Some states have determined that their peer review statutes feature exceptions by which this information can be discovered. Notably, the confidentiality provision[67] of typical peer review statutes has been bypassed if it features either the “original source” exception or the “matters within a person’s knowledge” exception.[68]

Under the “original source” exception, courts may admit information that was considered by the peer review committee “so long as it could be obtained from original sources,” such as information contained in the National Practitioners Data Bank.[69] This information could then be submitted to experts for a determination of whether negligent credentialing occurred.[70] Then,

The expert could opine based upon the evidence received from original sources, which would be presumed to have been available to the peer review committee, whether the hospital acted with reasonable belief upon the information it is presumed to have had. In addition, an expert can testify that a ‘reasonable effort’ to ascertain the relevant facts would have revealed such information. If the hospital did not undertake a reasonable effort to ascertain the facts, the hospital would be liable even if the decision made was based upon ‘reasonable belief’ of the facts it did have in its possession. Therefore, the expert may testify to the ‘reasonable belief’ element in addition to the ‘reasonable effort’ element.[71]

The confidentiality provision may also be circumvented by the “matters within a person’s knowledge” exception. Under this exception, a witness may testify as to matters within his or her own personal knowledge, without making any statements regarding peer review proceedings or discussing any opinions that were formed as a result of the peer review proceedings.[72]

The liability provision of peer review statutes may also be circumvented.[73] The exact wording of this provision may determine the extent of liability that physicians may actually face. For example, Minnesota’s limited liability provision precludes liability “when the person acts in the reasonable belief that the action or recommendation is warranted by facts known to the person or the review organization after reasonable efforts to ascertain the facts upon which the review organization’s action or recommendation is made.”[74] Thus, this provision protects a hospital from liability “if it acted reasonably based on information that the hospital actually knew or had reason to know.”[75]

The Minnesota court compared its liability provision to that found in Delaware’s peer review statute, which “provides immunity from suit so long as the person ‘acted in good faith and without gross or wanton negligence.’”[76] The Minnesota court observed that Delaware’s limited liability provision elevates the standard of proof to a higher level than the common law standard of ordinary negligence found in Minnesota’s statute.[77] Accordingly, Delaware is one of the two states that has refused to recognize the tort of negligent credentialing, holding that the wording of its limited liability statute “makes it ‘nearly impossible to assert negligent credentialing claims.’”[78]

Thus, in Larson v. Wasemiller, the Minnesota Supreme Court determined that the limited liability provision of its peer review statutes does not alter the common law standard of care and that the confidentiality provision does not preclude a claim of negligent credentialing. Although many other states have also chosen to recognize negligent credentialing, the decision to do so depends on each state’s own peer review statutes. Thus, in order to predict whether the common law tort of negligent credentialing could be recognized in South Dakota, it is necessary to analyze South Dakota’s peer review statutes in light of the criterion discussed by the Minnesota Supreme Court in Larson v. Wasemiller.

Under the Minnesota Supreme Court’s reasoning in Larson v. Wasemiller, South Dakota could recognize the common law tort of negligent credentialing if its peer review statutes feature one of the exceptions to the confidentiality provision or if its liability provision enables a plaintiff to proceed on a claim of negligent credentialing.

South Dakota and Minnesota both prohibit discovery or disclosure of any information relating to or acquired by peer review committees.[79] However, Minnesota’s statute further states that “no person . . . shall disclose what transpired at a meeting of a review organization except to the extent necessary to carry out one or more of the purposes of a review organization.”[80] The statute then clearly provides an “matters within a person’s knowledge” exception that reads, “nor shall any person who testified before a review organization or who is a member of it be prevented from testifying as to matters within the person’s knowledge, but a witness cannot be asked about the witness’ testimony before a review organization or opinions formed by the witness as a result of its hearings.”[81] Thus, Minnesota’s statute clearly provides a prohibition against any person voluntarily disclosing the information from a peer review committee and then follows that prohibition with a noted exception.

South Dakota’s peer review statute is not as clear. Like Minnesota, it first broadly prohibits the discovery or disclosure of any information from peer review committee meetings. South Dakota’s statute states, “proceedings, records, statements, minutes, or any other data whatsoever, of any [peer review] committee . . . relating to peer review activities . . . are not subject to discovery or disclosure . . . in any action of any kind in any court or arbitration forum, except as hereinafter provided.”[82] The statute then provides that “[n]o person in attendance at any meeting of any [peer review] committee . . . is required to testify as to what transpired at such meeting.”[83] Thus, South Dakota’s peer review statute features neither a clear prohibition against voluntary disclosure nor an obvious exception. However, the word choice of this provision is curious.

Unlike Minnesota’s statute, which expressly prohibits disclosure from any person about what transpired at a meeting, South Dakota merely states that no person is “required” to testify as to what was discussed at the peer review meeting. Therefore, it does not clearly indicate whether an individual may choose to testify. Arguably, voluntary testimony could be precluded from the “not subject to discovery or disclosure under . . . any . . . provision of law” prohibition. Under this interpretation, the statement that no one is required to testify would not constitute an exception to the confidentiality provision. However, unlike Minnesota’s statute, which is expressly clear on this matter, South Dakota’s version is open to either interpretation.

South Dakota’s peer review statute does not mention whether an individual may testify as to “matters within a person’s knowledge.” However, again, the statute merely says that no person in attendance at a peer review committee meeting is required to testify. It does not expressly prohibit these individuals from choosing to testify about matters that are within the person’s knowledge. Thus, it is feasible that a South Dakota court would hold that information may still come in under the “matters within a person’s knowledge” exception.

Minnesota and South Dakota’s peer review statutes have similar language regarding the liability for members of peer review organizations. In both statutes, there is no liability if the committee member acts without malice, has made a reasonable effort to obtain the facts of the matter, and acts in a reasonable belief that the action is warranted by those facts.[84] Since this language is virtually identical, it is likely that South Dakota would hold, as Minnesota did, that the liability provisions do not materially alter the common law standard of care and that although the confidentially provisions may present obstacles in bringing a claim of negligent credentialing, the statutes do not expressly preclude such a claim.[85]

Peer review statutes were created to further the goal of protecting public safety and improving patients’ health care. In fact, when peer review is properly conducted, it can serve that purpose. However, it is not always conducted properly, and sometimes, physicians are allowed staff privileges that they should not receive. “If hospitals are allowed to use statutes created to further the goal of patient safety as a shield against any liability for its decisions, patients will be placed in greater danger, because there is not oversight to ensure hospitals fulfill their duty to their patients.”[86] Thus, if South Dakota is ever faced with a claim of negligent credentialing, it should follow the example of Minnesota and 27 other states, and choose to recognize the common law tort of negligent credentialing.

[1] Katharine Van Tassell, Hospital Peer Review Standards And Due Process: Moving From Tort Doctrine Toward Contract Principles Based on Clinical Practice Guidelines, 36 Seaton Hall L. Rev. 1179, 1180-81 (2006). “These figures are equal to the number of casualties that would occur if one jumbo jet crashed in this country every day for a whole year.” Id. at 1181.

[2] Id. at 1183.

[3] Carol R. M. Moss, You Do Know What You’re Doing? Right, Doc? Minnesota Supreme Court Contemplates Negligent Credentialing And Privileging, 30 Hamline L. Rev. 125, 127-28(2007. Moss gave several examples including:

[A] hospital knew one of its physicians sexually assaulted three prior female patients, but allowed him to continue practicing at the hospital. He later drugged a female patient and raped her. After a 3 day course in Hawaii, an orthopedic surgeon, advertised himself as an expert in complex bone-graft spine surgery. During a surgery, he performed the procedure on the wrong hip of his patient. Beyond his history of malpractice, the orthopedist purchased bone grafts from a morgue without screening donors for diseases, “washed them in his backyard with a garden hose, and kept them in his kitchen freezer.” He was sanctioned by the state licensing board and carried no malpractice insurance. Prior to granting surgical privileges, a different hospital failed to do any background checks, verify any of the provided (mis)information, or contact the references an orthopedic surgeon. Somehow, the applying *128 orthopedic surgeon was the one who approved his own appointment. The surgeon later botched a surgery he was not qualified to perform. Another doctor had a known history of mistreating patients during childbirth and post-delivery. A baby boy died because the unqualified physician failed to recognize and treat the baby's injury from the traumatic delivery. The worst example, however, may be when a 68 year old patient was admitted to a Miami hospital under the care of a person “masquerading as a medical doctor.” The patient died while in the hospital as a result of the “physician's” negligence. Not only was he not a medical doctor, but rather he was a fugitive from Canada, where he was under indictment for the manufacture and sale of illegal drugs. He fraudulently obtained a medical license from the State of Florida and staff privileges at the hospital using the name of a deceased Italian physician.

Id.

[4] Id. at 145.

[5] Id. See infra notes 59-63 and accompanying text.

[6] Richard L. Griffith & Jordan M. Parker, With Malice Toward None: The Metamorphosis of Statutory and Common Law Protections for Physicians and Hospitals in Negligent Credentialing Litigation, 22 Tex. Tech. L. Rev. 157, 161 (1991). See Arthur F. Southwick, The Hospital as an Institution: Expanding Responsibilities Change its Relationship with the Staff Physician, 9 Cal W. L. Rev. 429, 434 (1973) (noting that “the hospital was viewed as simply a ‘workshop’ for the doctor.”).

[7] Griffith, supra note 6, at 161.

[8] Id. at 162. See Moss, supra note 3, at 137 (“Hospitals are traditionally viewed as being mere venues where independent-contractor physicians practice, and therefore, cannot be liable for the acts of independent physicians. Such entitlement has been ‘eroding away’ because of negligent credentialing.”).

[9] Griffith, supra note 6, at 162.

[10] Larson v. Wasemiller, 738 N.W.2d 300 (Minn. 2007).

[11] Larson v. Wasemiller, 718 N.W.2d 461, 464 (Minn. 2006).

[12] Id.

[13] Larson, 738 N.W.2d, at 301. See Moss, supra note 3, at 140 (noting that Ms. Larson suffered from morbid obesity).

[14] Larson, 738 N.W.2d, at 301. See Moss, supra note 3, at 130-31 (“Within seven days of completing the surgery, Ms. Larson began exhibiting the classic signs of severe complication.”).

[15] Larson, 738 N.W.2d, at 301. See Moss, supra note 3, at 131 (“Ms. Larson eventually underwent multiple surgeries and remained hospitalized for months.”).

[16] Larson, 738 N.W.2d, at 301.

[17] Id. See Moss, supra note 3, at 132 (“In addition to bringing a claim for medical malpractice against Dr. James Wasemiller and Dr. Paul Wasemiller, Ms. Larson and her husband asserted a claim against St. Francis for negligent credentialing and privileging.”).

[18] Larson, 738 N.W.2d, at 301. See Moss, supra note 3, at 131-32. Moss noted:

Before Ms. Larson’s surgery, Dr. James Wasemiller had a long and insalubrious history of serious practice deficiencies, medical malpractice claims, inability to obtain malpractice insurance and other serious issues. Dr. Wasemiller’s medical training was piecemealed between multiple hospitals with years gapping between residency programs. He failed the oral exams for board certification through the American Board of Surgery three years in a row and failed to complete the additional training required before reapplying for complex gastric bypass surgeries. There were at least ten malpractice claims against Dr. Wasemiller between 1979 and 2000, most of which were settled. St. Francis placed several restrictions upon Dr. Wasemiller’s privileges, requiring additional training and obtaining consultations with a certified or well-trained practitioner on many categories of patients

Id.

[19] Larson v. Wasemiller, 718 N.W.2d 461, 463 (Minn. 2006).

[20] Id.

[21] Id.

[22] Id.

[23] Moss, supra note 3, at 133.

[24] Id.

[25] Larson, 718 N.W.2d, at 463.

[26] Moss, supra note 3, at 136. The court also stated:

The flexibility of the legislative process was seen as a more appropriate governing body to evaluate the effects of this question, and the Minnesota Supreme Court could determine, as it had in past situations, that the decision should be left to the legislature instead of the judiciary. In addition to giving deference to the legislative process or the Minnesota Supreme Court’s finding for such common law development, the court did not find it persuasive that a majority of states have found a duty upon the part of a hospital to exercise reasonable care in its granting of credentials and privileges to physicians.

Id.

[27] Larson v. Wasemiller, 738 N.W.2d 300 (Minn. 2007).

[28] Id. at 304.

[29] Id.

[30] Id. at 312.

[31] Craig W. Dallon, Understanding Judicial Review of Hospitals’ Physician Credentialing and Peer Review Decisions, 73 Temp. L. Rev. 597, 625 (2000). Dallon further stated:

Congress, in enacting the Health Care Quality Improvement Act expressly found that effective professional peer review would improve the quality of medical care by discouraging medical malpractice and exposing incompetent physicians. To this end, Congress extended qualified immunity to physicians engaged in peer review to encourage their participation in the process.

Id. See Rodney H. Lawson & Charles Josef Blanchard, The Peer Review and Self-Evaluation Privileges and Immunities: Has the Pendulum Swung too Far?, 3 Sedona Conf. J. 123, 123 (2002) (“The peer review and self-evaluation privileges and immunities are well-recognized and frequently relied upon in the health care arena. They are loved by hospital and physician defendants in medical malpractice lawsuits and despised by the plaintiffs’ bar.”); James P. Frickleton, HMO Liability for Corporate Negligence Claims Arising from Negligent Credentialing and Utilization Review Procedures, 2002 ATLA – CLE 2065 (2002) (“Credentialing is the process of appointment, reappointment, and evaluation of physician staff privileges at health care facilities.”).

[32] See Griffith, supra note 6, at 158. Griffith noted that:

Peer review developed in response to public demand for quality care . . . [P]hysicians are most competent to evaluate the qualifications and performance of their peers because they possess superior medical knowledge. . . Physicians have a duty to protect the public from the few, isolated members of the profession who fail to maintain a reasonable standard of care. Peer review participants are, as members of their profession in good standing, cloaked with a strong element of public interest.”

Id. See also Larson, 738 N.W.2d, at 302 (noting that hospitals may determine “which physicians are granted hospital privileges and what specific procedures they can perform in the hospital.”); Dallon, supra note 20, at 598 (“Credentialing decisions determine who is granted or retains staff membership and the level of practice privileges the staff member enjoys.”).

[33] Sandra DiFranco, Denying Medical Staff Privileges Based on Economic Credentials, 15 J. L. & HEalth 247, 250-51 (2000-01).

[34] Id.

[35] Griffith, supra note 6, at 158. Peer review committees are created by the hospital medical staff in effort “to evaluate the quality of care in a particular department or function. Therefore, members of the medical staff are responsible for both individual delivery of quality medical care and ongoing monitoring of the general quality of care provided by the hospital.” Id. at 169-70. See Larson, 738 N.W.2d at 302 (noting that while the decision to grant or deny staff privileges is actually made by the hospital’s governing body and its medical staff, it is based on recommendations made by a peer review committee); Dallon, supra note 30, at 609-10. Dallon stated:

Although the governing body of the hospital also participates in the credentialing process, the medical staff largely defines and controls the process . . . [T]he final decision to grant or deny staff membership or clinical privileges is made by the governing body of the hospitals, but the governing body bases its decision on the recommendation of the medical staff.

Id.; DiFranco, supra note 32, at 250-51 (“Based on medical staff recommendations and the hospital bylaws, the governing body has the final decision in staff privilege decisions.”).

[36] Moss, supra note 3, at 140. In making this determination, “[m]ost hospitals follow the credentialing criteria established by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).” Id.

[37] Dallon, supra note 30, at 598. See DiFranco, supra note 32, at 247-48 (“The hospital administration, governing body, and peer review committee are qualified to determine whether a physician should be denied medical staff privileges. These three entities are able to consider the qualifications of the physicians, the need for additional medical staff at the facility, and whether another staff member is in the hospital’s best ‘business’ interest.”)

[38] Dallon, supra note 30, at 598.

[39] Id. at 611 (noting that the medical staff has a “responsibility to continuously review and monitor the professional performance of individual staff members . . . [through] ongoing utilization review and quality assurance mechanisms whereby the medical staff, through its committees or departments, reviews outcomes and specific cases to determine appropriateness of patient care.”). See Moss, supra note 3, at 140 (“[P]eer review committees must evaluate the qualifications of physicians even after initial credentialing to ensure that a once competent physician does not develop a pattern of incompetence without coming to the attention of the hospitals.”); Frickleton, supra note 30, at 2065. Frickleton stated that hospitals have

[A] duty to investigate and review the general competence of all physicians who might use hospital facilities. This duty mandates that all hospitals must exercise reasonable care in the granting of hospital privileges. It also requires hospitals, through its staff, to monitor physicians who hold staff privileges and terminate or limit those staff privileges once a physician has been identified as incompetent.

Id.

[40] Dallon, supra note 30, at 611.

[41] Griffith, supra note 6, at 158.

[42] See Moss, supra note 3, at 140-41. “The National Practitioners Data Bank contains specific information on each licensed physician as required by federal regulations.” Id. This includes information from hospitals, medical malpractice carriers, and governmental agencies, including medical boards, which “are required to report investigations, adverse actions, malpractice verdicts or settlements and any other information deemed fit by the Secretary of Health and Human Services.” Id.

[43] Id.

[44] Moss, supra note 3, at 142.

[45] James W. Gustafson Jr. & Thomas D. Masterson, Challenging Hospitals that Tolerate Incompetent Doctors, 39 May Trial 18, 23 (2003) (noting that these statutes particularly protect “the hospital’s screening, evaluation, and review of job applicants and members of the medical staff.”). See Lawson, supra note 30, at 125 (“At least forty-eight states and the District of Columbia have enacted privilege statutes, almost all of which contain immunity provisions.”). See, e.g., S.D. Codified Laws § 36-4-26.1; Minn. Stat. § 145.63.

[46] Griffith, supra note 6, at 160.

[47] Id. See Lawson, supra note 30, at 124 (noting that peer review statutes seek to protect “the proceedings, records, and materials considered by a peer review committee from disclosure and affording immunity from liability for committee members participating in the peer review process in good faith.”).

[48] Moss, supra note 3, at 142.

[49] Lawson, supra note 30, at 123

[50] Id. See Gustafson, supra note 45, at 23 (noting that proponents of these statutes argue that such confidentiality “facilitates meaningful peer review without fear of reprisal in the form of lawsuits brought by patients who claim to have been injured by malpractice.”); Moss, supra note 3, at 142-43 (“The purpose of the confidential peer review statute is to ensure the discussions necessary to the goals of the peer review committee are carried on with confidence.”).

[51] Moss, supra note 3, at 142-43.

[52] Griffith, supra note 6, at 160. See Moss, supra note 3, at 142-43 (“Professionals will be reluctant to participate freely in peer reviews if there is a possibility of being compelled to testify against a colleague in a subsequent medical malpractice action or of being subjected to a defamation suit by another individual.”); Lawson, supra note 30, at 130-31. Lawson noted that:

If peer review material were readily discoverable, the process, in effect, would become little more than a source of highly prejudicial evidence of a physician’s past instances of negligence and impropriety for use by a plaintiff in developing his or her case. . . . hospitals and health care professionals would quickly realize that their efforts to ensure quality care were creating a paper trial of the most valuable sort of evidence for plaintiffs. The collapse of meaningful self-policing within the medical community would follow shortly thereafter. . . . Logic and common sense suggest that taking a sledgehammer to these privileges and immunities could, and probably would, result in a worse situation than the one we’re now in.”

Id.

[53] Griffith, supra note 6, at 158. “The function of peer review is an exacting critical analysis of the competence and performance of physicians and other health care providers. Effective critical analysis requires an environment conducive to candor by the peer review participants.” Id.

[54] Id. See Lawson, supra note 30, at 130. “While one can certainly make a case that a given injured plaintiff’s case would be made stronger if he had access to a credential or investigation file, these short-term benefits are far outweighed by the long-term problems which permitting such discovery would cause.” Id.

[55] Moss, supra note 3, at 150. “Hospitals and peer review committees clearly have a duty to retain and hire competent physicians to practice medicine. It would be preposterous for an entity to undergo such a review process, and then claim that it does not have a responsibility or duty to use due care in carrying out its actions.” Id. at 156.

[56] Id. Moss cites the Minnesota peer review statute which specifies that “information, documents, or records otherwise available from original sources shall not be immune from discovery or use in any civil action merely because they were presented during proceedings of a review committee.” Id. (citing Minn. Stat. § 145.64(1) (1998)).

[57] Gustafson, supra note 45, at 22.

[58] Larson, 738 N.W.2d 300, 306 (Minn. 2007). See Domingo v. Doe, 985 F.Supp. 1241, 1244-45 (D.Haw.1997); Crumley v. Mem’l Hosp., Inc., 509 F.Supp. 531, 535 (E.D.Tenn. 1978); Humana Med. Corp. of Ala. v. Traffanstedt, 597 So.2d 667, 668-69 (Ala. 1992); Fletcher v. S. Peninsula Hosp., 71 P.3d 833, 842 (Alaska 2003); Tucson Med. Ctr., Inc., v. Misevch, 545 P.2d 958, 960 (Ariz. 1976); Elam v. College Park Hosp., 183 Cal. Rptr. 156, 160 (Cal. App. 1982); Kitto v. Gilbert, 570 P.2d 544, 550 (Colo. App. 1977); Insinga v. LaBella, 543 So.2d 209, 214 (Fla. 1989); Mitchell County Hosp. Auth. v. Joiner, 189 S.E.2d 412, 414 (Ga. 1972); May v. Wood River Twp. Hosp., 629 N.E.2d 170, 171 (Ill. 1994); Winona Mem'l Hosp., Ltd. P'ship v. Kuester, 737 N.E.2d 824, 828 (Ind. Ct. App.2000); Ferguson v. Gonyaw, 236 N.W.2d 543, 550 (Mich. Ct. App. 1975); Taylor v. Singing River Hosp. Sys., 704 So.2d 75, 78 (Miss. 1997); Corleto, 350 A.2d 534, 537-38 (N.J. Super. 1975); Diaz v. Feil, 881 P.2d 745, 749 (N.M. 1994); Sledziewski v. Cioffi, 528 N.Y.S.2d 913, 915 (N.Y. App. Div.1988); Blanton v. Moses H. Cone Mem'l Hosp., Inc., 354 S.E.2d 455, 458 (1987); Albain, 553 N.E.2d 1038, 1045 (Ohio 1990); Strubhart v. Perry Mem'l Hosp. Trust Auth., 903 P.2d 263, 276 (Okla. 1995); Welsh v. Bulger, 698 A.2d 581, 586 (Pa. 1997); Rodrigues v. Miriam Hosp., 623 A.2d 456, 462-63 (R.I.1993); Garland Cmty. Hosp. v. Rose, 156 S.W.3d 541, 545-46 (Tex. 2004); Wheeler v. Cent. Vt. Med. Ctr. Inc., 582 A.2d 165, 166 (Vt. 1989); Pedroza v. Bryant, 677 P.2d 166, 168-70 (Wash. 1984); Roberts v. Stevens Clinic Hosp., Inc., 345 S.E.2d 791, 798 (W. Va. 1986); Johnson v. Misericordia Cmty. Hosp., 301 N.W.2d 156, 164 (Wis. 1981); Greenwood v. Wierdsma, 741 P.2d 1079, 1088 (Wyo. 1987).

[59] Larson, 738 N.W.2d, at 305.

[60] Id. at 305-06. See Domingo v. Doe, 985 F. Supp. 1241, 12244-45 (D. Haw. 1997); Taylor v. Singing River Hosp. Sys., 704 So.2d 75, 78 n.3 (Miss. 1997); Rodrigues v. Miriam Hosp., 623 A.2d 456, 462-63 (R.I. 1993).

[61] Larson, 738 N.W.2d, at 306. See Albain v. Flower Hosp., 553 N.E.2d 1038, 1045 (Ohio 1990); Corleto v. Shore Memorial Hosp., 350 A.2d 534, 537-38 (N.J. Super. 1975); Browning v. Burt, 613 N.E.2d 993, 1003 (Ohio 1993).

[62] Larson, 738 N.W.2d, at 307. See Gridley v. Johnson, 476 S.W.2d 475, 484-85 (Mo. 1972); Benedict v. St. Luke's Hosp., 365 N.W.2d 499, 504 (N.D. 1985); Simmons v. Toumey Reg. Med. Cr., 498 S.E.2d 408, 410 (S.C. 1998); Johnson v. Misericordia Cmty. Hosp., 301 N.W.2d 156, 163-64 (Wis. 1981); Blanton v. Moses H. Cone Mem’l Hosp., Inc., 354 S.E.2d 455, 457 (N.C. 1987); Elam v. College Park Hosp., 183 Cal. Rptr. 156, 160 (Cal. App. 1982); Pedroza v. Bryant, 677 P.2d. 166, 169 (Wash. 1984).

[63] Larson, 738 N.W.2d, at 308. See Strubhart v. Perry Mem’l Hosp. Trust Auth., 903 P.2d 263, 276 (Okla. 1995); Garland Cmty. Hosp. v. Rose, 156 S.W.2d 541, 545-46 (Tex. 2004); Elam v. College Park Hosp., 183 Cal. Rptr. 156, 160 (Cal. App. 1982).

[64] Gustafson, supra note 45, at 18.

[65] Id. at 19 (noting that defense efforts to block discovery via the peer-review privilege poses an obstacle to a negligent credentialing lawsuit).

[66] Larson, 738 N.W.2d, at 307. See Svinland v. A.I. DuPont Hosp. for Children of Nemours Found., No. 05-0417, 2006 WL 3209953, at *3-4 (E.D. Pa. Nov. 3, 2006) (holding that a claim of negligent credentialing is barred by the peer review statute); McVay v. Rich, 874 P.2d 641, 645 (Kan. 1994) (holding that a claim of negligent credentialing is barred by the peer review statute).

[67] Typical peer review statutes, including Minnesota’s and South Dakota’s, feature a confidentiality provision which specifies that all information acquired by a peer review organization shall be held in confidence and is not open to disclosure. See Minn. Stat. § 145.64; S.D. Codified Laws § 36-4-26.1.

[68] Larson, 738 N.W.2d, at 310. See Browning v. Burt, 613 N.E.2d 993, 1007 (Ohio 1993); Greenwood v. Weirdsma, 741 P.2d 1079, 1088 (Wyo. 1987).

[69] Larson, 738 N.W.2d, at 310. See Moss, supra note 3, at 158. Moss noted that

Even though the hospital cannot directly disclose what information was evaluated during the decision making, federal regulations reveal what information hospitals know. Federal regulations specifically require medical entities, governmental organizations and malpractice insurers to report certain information to the National Practitioners Data Bank. . . . Plaintiffs’ experts may opine that information recovered from original sources demonstrate that the hospital did not use ‘reasonable beliefs’ or that it did not undertake ‘reasonable efforts’ because negative information existed. . . . Hospitals are required to disclose whether they requested a report from the National Practitioners Data Bank.

Id.

[70] Moss, supra note 3, at 160.

[71] Id.

[72] Larson, 738 N.W.2d, at 310. See Browning, 613 N.E.2d, at 1007.

[73] See, e.g., Minn. Stat. § 145.63; S.D. Codified Laws § 36-4-25.

[74] Minn. Stat. § 145.63.

[75] Larson, 738 N.W.2d, at 311.

[76] Id. (quoting Del. Code. Ann. title 24 § 1768(a) (2006)).

[77] Id.

[78] Id. See Svinland, 2006 WL 3209952, at *3-4.

[79] See Larson, 738 N.W.2d, at 311; S.D. Codified Laws § 36-4-26.1.

[80] Larson, 738 N.W.2d, at 311.

[81] Minn. Stat. § 145.64

[82] S.D. Codified Laws § 36-4-26.1

[83] Id.

[84] Compare Minn. Stat. § 145.63, which directly states that there is no liability for individuals

[U]nless the performance of such duty, function or activity was motivated by malice toward the person affected thereby . . . when the person acts in the reasonable belief that the action or recommendation is warranted by facts known to the person or the review organization aft reasonable efforts to ascertain the facts upon which the review organization’s action or recommendation is made.

Id. with S.D. Codified Laws § 36-4-25. South Dakota’s statute states that there is no liability if the committee member “acts without malice, has made a reasonable effort to obtain the facts of the matter under consideration, and acts in reasonable belief that the action taken is warranted by those facts.” Id.

[85] Larson, 738 N.W.2d, at 312.

[86] Moss, supra note 3, at 130.