Insight Idaho’s Peer Review Privilege — Lessons Learned

In two opinions issued late last year, the Idaho Supreme Court clarified and strengthened the protections afforded by Idaho’s statutory peer review privilege. In Verska v. St. Alphonsus Regional Medical Center (SARMC)1 and Montalbano v. SARMC,2 the Court held that the peer review privilege applies to lawsuits initiated by physicians challenging adverse credentialing decisions and that it contains no exceptions for credentialing  decisions motivated by bad faith or economic considerations. The Court made clear that the privilege applies broadly, beyond the medical malpractice context. And by refusing to find exceptions for bad faith credentialing, the Court deepened the peer review protections and signaled that the only exceptions to the privilege are those expressly stated in the statute itself.

Why peer review is protected

Hospital peer review is the process by which a hospital’s organized medical staff evaluates, critiques, and sometimes disciplines other staff physicians. Peer review includes, among other things, the peer evaluation of a physician’s application for initial appointment to the medical staff, evaluation of a physician’s application for reappointment, and, if warranted, the suspension or termination of a physician’s privileges to practice at the hospital (sometimes referred to as “adverse credentialing decisions”). Peer review also includes physician review of bad patient outcomes undertaken with an eye toward reducing similar outcomes in the future.

Regular peer review has become so entrenched in this country that it is required in every state.3 Protections from discovery for peer review proceedings are similarly widespread. In fact, just as all  fifty states require hospital peer review, so too has each state created an evidentiary privilege for peer review materials, in recognition of the need for frank and candid discussion and the potential chilling effect on peer review posed by the threat that such materials might be discovered during litigation.4 The United States Congress has also recognized an “overriding national need to provide incentive and protection for physicians engaging in effective professional peer review.”5 

Idaho’s peer review statute, Idaho Code § 39-1392 et seq., was passed to:

encourage research, discipline and medical study by certain health care organizations for the purposes of reducing morbidity and mortality, enforcing and improving the standards of medical practice in the state of Idaho, certain records of such health care organizations shall be confidential and privileged as set forth in this chapter.6

The statute provides two different but related protections for peer review participants: it includes provisions for both peer review privilege and peer review immunity. The peer review privilege protects peer review materials from discovery in legal proceedings. Peer review immunity, in contrast, protects the peer review participants from lawsuits based on their peer review activities.7

The language of the privilege portion of the peer review statute is particularly broad. Idaho Code § 39-1392b protects “all peer review records” from subpoena or discovery “in any action of any kind in any court or before any administrative body, agency or person for any purpose whatsoever[.]” The statute broadly defines “peer review records” as “all evidence of interviews, reports, statements, minutes, memoranda, notes, investigative graphs and compilations and the contents thereof, and all physical materials relating to peer review of any health care organization.”8 The statute also broadly defines “peer review” to include, among other things, “credentialing, privileging or affiliation of health care providers,” quality assurance and improvement, and any “professional review action.” As a result, the scope of what “relates to” peer review – and thus, what constitutes “peer review records” under the statute – is expansive.

The Physicians’ Challenge to the Peer Review Statute

Drs. Montalbano and Verska were each spine surgeons with privileges at SARMC. After concerns arose about Dr. Montalbano and Dr. Verska, the Medical Executive Committee at SARMC took adverse action against the credentials of each doctor, suspending Montalbano’s privileges and revoking Verska’s.10

Each doctor filed his own lawsuit against SARMC and various individuals; both alleged, among other things, conspiracy, defamation, and violation of due process.11 In essence, each doctor claimed that SARMC’s decisions to take adverse action against his credentials were motivated by economic considerations rather than patient care. In particular, the physicians alleged that SARMC acted as it did because it wanted to reduce competition for spinal care.12

During discovery, each doctor sought documents related to the processes and activities in connection with SARMC’s adverse credentialing decisions – documents that constituted peer review records. After SARMC objected, the district court, relying on I.C. § 39-1392b, held that records were protected from discovery. 13

The Idaho Supreme Court granted interlocutory appeals to both physicians on grounds that the application of the peer review statute to physician disciplinary proceedings was a matter of first impression. 14

The Court Rejects the Challenges

On appeal, the physicians argued that section 39-1392b was meant to apply in medical malpractice cases, not where a physician challenges a credentialing decision. In support, the physicians relied upon the legislative statement of purpose. Both physicians also argued that section 39-1392b does not – or should not – operate to shield credentialing decisions made for economic reasons or otherwise made in bad faith, and that allowing health care organizations to shield credentialing decisions would eviscerate the ability of health care providers to mount a meaningful court challenge to an adverse decision and would, therefore, effectively deprive them of their day in court.15

The Court held otherwise. Although the issues in each case were essentially identical, the Court kept the two cases separate and issued two opinions, neither of which acknowledged the other. And although the two opinions took different paths, both arrived at the same result, essentially based on the same rationale: the plain language of the statute and the lack of any exception therein for bad faith or economic credentialing. 16

In Montalbano, Chief Justice Burdick, writing for the majority, disposed of the issue quickly:

As I.C. § 39-1392b states clearly that “all peer review records shall be confidential and privileged” and provides that the records are not subject to subpoena or discovery in proceedings such as the one in this case, the statute applies to the questions before this Court.17

And the lack of any language in the statute limiting its protections to medical malpractice actions or providing for an exception for credentialing decisions motivated by economic considerations or otherwise taken in bad faith doomed the plaintiffs’ public policy arguments. As Justice Eismann wrote for the majority in Verska,

[t]he statute does not create an exception for this type of litigation, and we cannot create such an exception under the rubric of public policy. The creation of such an exception is an issue within the province of the legislature…. There is no wording in section 39 1392b that limits its scope to peer review records sought in a medical malpractice action. In that respect, the legislation is unambiguous.18

Justice Jim Jones concurred in both decisions because he took issue with the majority’s conclusion that the statutory privilege shields credentialing decisions made in bad faith. In particular, in Justice Jones’s view, the privilege does not apply where plaintiff makes a “credible showing that the Hospital was using the peer review proceedings for an improper purpose.”19 Nevertheless, Justice Jones agreed with the result in each case because he felt that the physicians had failed to make such a showing. In his view, the evidence in both cases demonstrated that the relevant peer review proceeding “was initiated and pursued in ‘furtherance of quality health care.’”20

Impact of the Decisions

The direct impact of the Court’s decisions in Verska and Montalbano is obvious: physicians who challenge adverse credentialing decisions will be unable to access peer review records, even if they can make a credible showing that such decisions were motivated by considerations other than the best interest of the patients. The decisions also have, potentially, a much broader impact: given the Court’s unwillingness to read into the statute any exceptions or limitations not expressly stated therein, plaintiffs who seek to invoke policy or equity considerations in support of efforts to obtain peer review records in other situations are unlikely to meet with success.

As a result, the affirmation of the breadth and strength of the statutory peer review privilege may apply beyond the particular circumstances of the cases and the general setting of physician credentialing actions. Nevertheless, health care organizations that wish to use the privilege to shield peer review records must still take care to ensure that the privilege will apply if challenged. For no matter how broad and strong the privilege, it remains applicable only to peer review materials, so organizations must ensure that the documents they wish to protect are appropriately created and maintained as such.

Moreover, like any other privilege, the protections for peer review materials can be waived if not strictly monitored. The contours of waiver are not well defined, however. In particular, the Montalbano and Verska opinions appear to point in different directions regarding whether a hospital may use privileged information in its defense without waiving the privilege. In Montalbano, the Court stated that hospital waives peer review protection if it chooses to disclose that information as part of its defense. But in Verska, the Court stated that a hospital does not waive peer review protection by “rely[ing] upon privileged information in defense of the lawsuit.”22 Moreover, in his concurring opinion in Montalbano, Justice Jim Jones raised the possibility that SARMC’s privilege might be waived pursuant to I.R.E. 510 because information was allegedly improperly disclosed by at least one individual involved in the peer review proceedings.23

As a result, it remains advisable for health care organizations to carefully follow statutes as well as the procedures set forth in their applicable bylaws to help ensure that they preserve the viability of their peer review privilege.

For more information please contact a member of our Health Care group or call 208.344.6000
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1. *Article published in the June/July 2012 edition of The Advocate.
2.  151 Idaho 889, 265 P.3d 502 (2011).
3. 151 Idaho 837, 264 P.3d 944 (2011).
4. See George E. Newton II, Maintaining the Balance: Reconciling the Social and Judicial Costs of Medical Peer Review Protection, 52 Ala. L. Rev. 723, 726 (2001).
5. See KD v. United States, 715 F. Supp. 2d 587, 594 (D. Del. 2010).
6. 42 U.S.C. § 11101(5).
7. Idaho Code § 39-1392 et seq.
8. Although SARMC raised peer review immunity under Idaho Code § 39-1932c as a defense in the district court in both Montalbano and Verka, that court did not issue a ruling as to immunity, and, as a result, the Idaho Supreme Court did not address section 39-1392c. Montalbano, 264 P.3d at 950; Verska, 265 P.3d at 510-11.
9. Idaho Code § 39-1392a(12).
10. Idaho Code § 39-1392a(11).
11. Montalbano, 264 P.3d at 946; Verska, 265 P.3d at 504.
12. Montalbano, 264 P.3d at 946; Verska, 265 P.3d at 504.
13. Montalbano, 264 P.3d at 949; Verska, 265 P.3d at 505.
14. Montalbano, 264 P.3d at 947; Verska, 265 P.3d at 504.
15. Montalbano, 264 P.3d at 947; Verska, 265 P.3d at 505.
16. Montalbano, 264 P.3d at 949; Verska, 265 P.3d at 505.
17. Montalbano, 264 P.3d at 949; Verska, 265 P.3d at 505-06.
18. Montalbano, 264 P.3d at 949.
19. Verska, 265 P.3d at 505.
20. Montalbano, 264 P.3d at 951-52 (Jones, J., concurring); Verska, 265 P.3d at 512-13 (Jones, J., concurring).
21. Verska,265 P.3d at 513 (Jones, J. concurring).
22. Montalbano, 264 P.3d at 950.
23. Verska, 265 P.3d at 510.
24. Montalbano, 264 P.3d at 953 (Jones, J., concurring).