Steptoe & Johnson PLLC: Physicians in Whistleblower Suits Need Not Exhaust Peer Review Remedies

Steptoe & Johnson PLLC: Physicians in Whistleblower Suits Need Not Exhaust Peer Review Remedies

A recent decision of the California Supreme Court removed a long-standing procedural limitation on physician suits against hospitals arising from peer review actions.  In the recent decision, the California Supreme Court held that a physician need not exhaust hospital-based or judicial remedies before bringing a claim under the California Medical Professional Whistleblower statute.  Fahlen v. Sutter Central Valley Hospitals (No. S205568) (Cal. 2014 [enhanced opinion available to lexis.com subscribers]).  The decision does not abrogate peer review immunity from monetary damages, but provides an end-run around the usual protections from judicial interference in peer review actions. 

Under long-standing prior law, physicians aggrieved by a peer review action had to exhaust all hospital-based due process rights, and all judicial appeal remedies, before bringing any suit.  The direct judicial review was under a deferential standard.  The recent Fahlen decision allows an end-run around that process.  Physicians claiming to be “whistleblowers” can sue for an injunction as to a peer review action (such as a suspension), without exhausting peer review remedies.  Under the Fahlen decision, the judge or jury can assess whether the peer review action was in retaliation for whistle-blowing, without deferring to the Hospital board and without seeking judicial review of the peer review decision.

The particular facts of the case are troubling, as the physician’s claim of retaliation related to a very common claim for disruptive or problematic physicians: blaming the nurses with which he or she works.  The physician-plaintiff had been denied reappointment at the hospital because of disruptive conduct.  The physician claimed that the problems were caused by improper care by nurses and other problems he had attempted to bring to the attention of the hospital administration.  The California Supreme Court’s decision opens the door to physicians to claim “whistleblower” status if the physician has made any complaints as to quality of care by other providers.  No special form or severity of complaint is required.

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