Challenging hospitals that tolerate incompetent doctors: often, medical malpractice is not an isolated incident. What if a doctor has a history of incompetence that a hospital didn't investigate or chose to ignore? In such circumstances, a negligent-credentialing claim will amplify your client's case.

Although the process of granting or denying staff privileges to physicians may be routine, it can be a matter of life and death. For that reason, if a hospital negligently grants staff privileges to an incompetent physician, the hospital should be held accountable when the physician negligently injures a patient.

A claim of negligent credentialing is derived from the "corporate negligence," or "corporate liability," doctrine and can be an important theory of recovery in some medical malpractice cases. The claim is based on good common sense. In Insigna v. LaBella, the Florida Supreme Court followed the lead of dozens of other jurisdic tions in articulating the simplicity of the theory:

   While the term "corporate negligence" may
   have a much broader connotation, we construe
   it here to mean that a hospital's liability
   is founded on the independent duty it owes to
   its patients. The public policy which justifies
   placing the expanded responsibility and duty
   of care on a hospital is based on the present-day
   view that a hospital is a multifaceted health
   care facility that should be responsible for
   proper medical treatment on its premises. This
   view is justified because the hospital is in a
   superior position to supervise and monitor
   physician performance and is, consequently.
   the only entity that can realistically provide
   quality control.

      [W]e find, as a matter of public policy, that
   hospitals are in the best position to protect
   their patients and, consequently, have an independent
   duty to select and retain competent
   independent physicians seeking staff privileges.
   We note that the hospital's liability
   extends only to the physician's conduct while
   rendering treatment to patients in the hospital
   and does not extend to his conduct beyond
   the hospital premises. [T]he hospital will only
   be responsible for the negligence of an independent
   physician when it has failed to exercise
   due care in the selection and retention of
   that physician on its staff. (1)

A trend of accountability has developed in many jurisdictions: 34 states have recognized the doctrine of corporate liability. (2) A minority have rejected it. (3)

Detailed pleadings

A lawsuit that alleges negligent credentialing faces a number of obstacles, from defense efforts to block discovery using the peer-review privilege to ultimately getting the evidence admitted. That is why a well-pleaded complaint is crucial to success. The elements of a negligent-credentialing claim are:

* The hospital had a duty to select and retain competent physicians seeking staff privileges.

* 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.

* The incompetent physician was negligent in treating the patient and caused his or her injury.

* The incompetent physician's negligence took place at the hospital. (4)

The facts giving rise to the second element are generally inadmissible in a basic medical negligence suit because such evidence is prejudicial to the physician and sometimes irrelevant to whether he or she committed the medical negligence the plaintiff described. It is quite relevant, however, to whether the hospital should have credentialed the physician and placed its patients in danger.

It is therefore imperative that the complaint include specific, detailed, and well pleaded factual allegations demonstrating the physician's history of incompetence-a history that should have caused a denial or loss of staff privileges. Specific factual allegations of incompetence place the hospital's decision at issue and, in jurisdictions that recognize the corporate liability doctrine, maximize the chance that the court will admit the evidence.

Know your history

In order to defeat possible defenses, it is important to understand the case law behind the corporate liability doctrine. Many defense arguments come straight from reasoning that has already been rejected by various jurisdictions that have recognized the doctrine.

Previously, a substantial weight of authority supported the view that a private physician with hospital privileges was not a servant of the hospital. The hospital lacked the right to control the acts of an independent-contractor physician, according to this reasoning, and consequently was liable neither for the physician's negligence nor for its failure to ensure his or her competence. (5) Strict application of that principle resulted in holdings like Silver v. Castle Memorial Hospital, in which the U.S. Supreme Court stated, "Since the hospital is not liable for the independent physician's negligence, it has no need to guarantee that he is competent." (6)

Relieving hospitals of accountability for determining physicians' competence led to disastrous consequences and unjust results for malpractice victims. Then, in 1965, the Illinois Supreme Court recognized in Darling v. Charleston Hospital that a hospital's role in patients' medical care was no longer confined to furnishing facilities and equipment and that hospitals assume a much greater role in coordinating health care and leading the public to rely on them as health care providers. (7) Darling affirmed the view that increased responsibilities went hand in hand with the hospital's expanded role. It also recognized patients' rights to recover damages under the doctrine of "hospital corporate negligence." Darling was the first case to recognize hospitals' legal duty to credential physicians and to impose liability for negligently selecting and monitoring those who commit medical malpractice.

Courts further developed and clarified the doctrine of corporate liability in subsequent cases. In Joiner v. Mitchell County Hospital Authority, the Georgia Supreme Court established a hospital's duty to exercise reasonable care in granting staff privileges to physicians. (8) Purcell v. Zimbelman, an Arizona case, established liability for hospitals' failure to monitor physicians on staff, as well as failure to remove those performing incompetently. (9) And the Wisconsin Supreme Court's decision in Johnson v. Misericordia exposed hospitals to direct liability for injuries caused by physicians who were negligently selected and credentialed because the hospital failed to properly investigate an application for privileges and then employed or contracted with the doctor anyway. (10)

Risks of overreaching 

Claims of negligent credentialing are not appropriate for all medical malpractice cases. The theory should be reserved for cases in which 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. Overreaching--bringing a weak negligent-credentialing claim-may endanger an otherwise meritorious suit because the jury is essentially asked to determine whether the physician had a history of misconduct that should have led the hospital to deny staff privileges. Should the jury find no history of incompetence, it may be more inclined to render a defense verdict on the claim as a whole.

However, in cases where the physician has a demonstrable history that should have precluded the granting of staff privileges, a negligent-credentialing claim can be devastating to both the physician and the hospital. It can tie the knot in a plaintiffs malpractice verdict--if the hospital does not settle first. Because the facts giving rise to negligent-credentialing claims tend to be egregious and embarrassing, the cases are difficult to defend and are often resolved before trial. In fact, in cases with detailed, well-pleaded allegations, the defendant-physician will probably ask the court to sever or bifurcate the negligent-credentialing claim from the malpractice claim, arguing that he or she cannot receive a fair trial after a history of incompetent or hazardous conduct is exposed to the jury.

The following examples of incompetence or dangerous conduct gave rise to successful negligent-credentialing claims:

* An orthopedic surgeon with a malpractice history performed surgery on the wrong hip of one victim. He advertised his expertise in performing a complex bone-graft spine surgery that he learned in a three-day course in Hawaii, purchased the bone grafts from a morgue without having donors screened for diseases, "washed" them in his backyard with a garden hose, and kept them in his kitchen freezer, "next to the pork chops and the orange juice." The physician had been sanctioned by the state licensing board and carried no malpractice insurance. (11)

* An anesthesiologist failed the board-certification exam so many times that he required retraining in a residency program to even sit for the boards again. Despite a hospital requirement that all anesthesiologists be board-certified, he was granted staff privileges and was cochair of the hospital's anesthesia department.

* An anesthesiologist was addicted to narcotics and stole drugs by raiding hospital supplies and writing false prescriptions. Before becoming a physician, he had been a pharmacist and lost his license when he was caught stealing from the pharmacy that employed him. When he became an anesthesiologist, he continued to steal medication and write false prescriptions to obtain narcotics. He allegedly wrote false prescriptions on the dates he provided negligent care to the plaintiff.

Peer-review privilege

In many states, defendant hospitals invoke the peer-review privilege in an effort to prevent the plaintiff from learning what the hospital knew about a physician. For example, rather than produce a physician's completed application for staff privileges along with other information it learned of or relied on in credentialing the doctor, the hospital may cite the peer-review privilege in that jurisdiction and refuse to provide anything regarding what it knew or learned about the physician.

The peer-review privilege essentially protects from discovery the hospital's screening, evaluation, and review of job applicants and members of the medical staff. (12) The peer-review process is meant to encourage self-regulation by members of the medical profession. Confidentiality, the profession claims, facilitates meaningful peer review without fear of reprisal in the form of lawsuits brought by patients who claim to have been injured by malpractice. (13)

The privilege is certainly an obstacle to learning how the hospital failed to protect patients from the physician, but in certain jurisdictions, it can also be the plaintiff's ally in a negligent-credentialing claim. The privilege enables a hospital to hide not only what it learned about the physician during its screening process, but also the specific activities it undertook to verify the physician's resume and the sources it relied on to make its credentialing decision. Before bringing a negligent-credentialing claim, you will have already investigated the physician's background and discovered sufficient information that, if considered by the hospital, should have caused it to deny staff privileges.

The negligent-credentialing claim places the hospital in a perplexing dilemma. It must decide whether to stand by its privilege and keep secret the negative information it learned during the peer-review process, or defend itself by revealing what it knew when it credentialed the physician.

If the hospital elects to enforce the privilege and keep its secrets, you should take the position that the peer-review privilege is not both a shield and a sword--that the hospital should be considered to have waived its right to offer evidence that could prove that it took reasonable measures to ensure the physician's competence. In many jurisdictions, the hospital will be unable to defend itself as it watches the plaintiff present his or her case.

If, on the other hand, the hospital waives the peer-review privilege--in jurisdictions where that can be done--to demonstrate the steps it took in credentialing the physician, you will be free to discover all aspects of the review process. At trial, emphasize the negative information that either was or should have been presented to the peer-review committee, and all other potentially relevant factors that committee members did consider at the time.

Informal discovery

Because the peer-review privilege--unless it is waived by the defendant--prevents discovery of what the hospital knew or didn't know about a physician and what it did or did not do to ensure patients' safety, you will have to conduct intensive informal discovery of the negligent physician's background. Generally, it will be necessary to obtain evidence, independent of the peer-review process, that the hospital should have refused to grant or renew the physician's staff privileges.

Sources include:

State insurance department records. Look for information about previous claims against the physician, including the amount of indemnity payments made. Typically, the physician or his malpractice insurer provide the "facts" of a claim--usually a watered-down version of what really happened. Contacting plaintiff counsel in cases that resulted in indemnity payments can lead to helpful information.

Court records. Research lawsuits against the physician, including the allegations, defenses, and documents indicating whether the hospital was involved.

State licensure records. Has the doctor been sanctioned in the past? How many times? What was the basis for the sanctions?

Questionable Doctors. This publication by the Public Citizen Health Research Group includes information, updated periodically, on disciplinary actions taken against specific physicians in 27 states.

Credentialing requirements. These are issued by and available from the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO). Plaintiff lawyers can access the requirements on the World Wide Web at www.jcaho.org.

The hospital. Find out its requirements for granting staff privileges to physicians.

Advertisements and Web sites. Do ads for the hospital or the hospital's home page tout the facility as a "center of excellence"? Its staff as the "best"?

Newspaper articles. Do any news stories discuss the physician in question? Not only are the articles helpful and clearly in the public domain, but the reporters who investigated and wrote them can be useful.

Professional liability insurance applications. These often provide the names of hospitals where the physician had staff privileges. They may show the types of procedures the physician is allowed to perform and the number of malpractice claims brought against him or her. Serial applications often show that the number of hospitals that were willing to grant privileges to the physician was dwindling.

A blank application for staff privileges. Obtain this from the hospital. Complete it with information gathered through informal discovery, and present the "completed" application at trial. It will enable your hospital-credentialing expert to tell the jury that these are the issues that must be addressed to protect the patient, according to state statutes and JCAHO standards. The information the physician provided should have alerted the hospital that it should not have allowed the doctor on its staff.

If you are unable to obtain a blank application, have your credentialing expert prepare a list of the minimal requirements for investigating a physician before granting staff privileges.

Completed application for staff privileges. Request one from the subject physician or the hospital. It never hurts to ask.

Other theories of liability

A strong negligent-credentialing claim will not only be formidable by itself, but it will also complement and strengthen other theories of liability.

Actual agency. Many hospitals tout their staff or specific departments in the media through billboards, Web sites, magazines, TV, and radio. Such advertisements are intended to engender confidence in the facility. A hospital betrays that trust when it hires, contracts with, or credentials a physician to staff its emergency department despite the physician's repeated failures of emergency-medicine board examinations, multiple malpractice claims, and sanctions for acts of medical neglect. Some hospitals even use temporary physician services, bypassing any effective credentialing.

If the hospital doesn't need the physicians' approval to run ads for services that can only be provided at the hospital through the physicians, this is evidence of the hospital's right to control the physicians and grounds for an actual-agency claim. Furthermore, when the hospital buys ads in order to generate patients, both the hospital and the doctors make money by providing services that can be provided only at the hospital through the physicians.

If a hospital tries to develop public trust through marketing, it should be held accountable for protecting patients it has lured to its facility. The first step in protecting patients is credentialing competent, qualified physicians. Using media to develop trust--without ensuring that physicians are as good as advertised--demonstrates that a hospital is sometimes motivated by greed. When a hospital operates in this manner, a powerful theme emerges: What could be worse than trusting your life, or the life of a loved one, to a hospital, only to discover after tragedy strikes that the trust was based on misrepresentations?

Apparent agency. Many hospitals advertise the quality of "our medical staff," "our doctors," "our cardiology department," and so on. When hospitals rely on hospital-based physicians (emergency-room doctors, radiologists, anesthesiologists, pathologists) to provide medical treatment to its patients, patients often reasonably believe those physicians are agents or employees of the hospital. Hospitals will defend the apparent-agency claim by arguing that the doctor was independent and that the hospital had no control over his or her actions.

Proving a negligent-credentialing claim will show the jury just how much control the hospital actually had over the physicians it credentialed and how it controlled the physicians it allowed on its staff. The claim will help expose the hospital's defense as the deception that it is, contrasting the hospital's representations about its facility offering the "best" care with the reality that it does not ensure that its doctors pose no hazard to patients.

Nondelegable duty. State and federal hospital licensing statutes and regulations are important elements of a nondelegable duty claim against a hospital and can be a basis for holding it vicariously liable for negligent physicians' actions. For example, a hospital with an emergency room may have a statutorily imposed duty to provide physicians for emergency care. Became the duty is imposed by statute, the hospital would be responsible for the care rendered by the physicians it had a duty to provide. (14) Hospital licensing statutes often set forth minimum standards for the operation of hospitals and surgical centers. The negligent-credentialing claim complements the nondelegable-duty claim by showing that the hospital had a duty not only to provide physicians, but also to ensure that they were competent.

Joint venture. In some negligent-credentialing cases, multiple hospitals will have terminated the subject physician's staff privileges before the doctor was approved by the defendant-hospital. That hospital reaps the financial benefits of having all the physician's patients admitted to its facility. This fact complements the proof of the elements of a joint venture, in which the physician and hospital benefit from each other's activities. The elements of a joint venture vary from state to state, but essentially they include a community of interest in the performance of a common purpose, joint control or right of control, a joint proprietary interest, a right to share in profits, and a duty to share in losses. (15)

Revocation of staff privileges will not always be documented. On occasion, questionable physicians are told that a revocation may be bad for their record and that resignation may be best for their career. A physician who was formerly on the staff of several hospitals but on the staff of only one when your client was injured needs to be investigated. That investigation may strengthen the negligent-credentialing claim and enhance the joint-venture claim.

Because a negligent-credentialing claim evolves out of a desire to protect patients, it naturally provides a powerful case theme: The hospital dropped the ball and gave its stamp of approval to an incompetent doctor. At trial, tell jurors how the physician's negligence injured the plaintiff; that the physician had a history of injuring patients, doing drugs, or engaging in otherwise hazardous or irresponsible behavior; and that the hospital either ignored, permitted, or failed to recognize the physician's background. Tell them how the hospital nonetheless credentialed the physician, effectively leading to the plaintiffs injury or death. The hospital's negligence compounds the doctor's, amplifying the theme of patient protection.

The plaintiff's story must paint the picture of a physician from whom the public should be protected. Although expert testimony will be required to make that point at trial, common sense must be your guide. Expert opinion should merely reinforce the jury's collective sense of fairness and common sense.

Hospitals are trusted to protect patients from potential harm presented by incompetent doctors. When they violate that trust, hospitals should be held accountable. In trying your case, emphasize that patients need to be protected from the medical good-old-boy network, that hospitals profit by granting staff privileges to incompetent doctors, and that ultimately public trust is one of the greatest casualties of the hospital's negligence.

Notes

(1.) 543 So. 2d 209, 214 (Fla. 1989) (citations omitted).

(2.) See, e.g., Storrs v. Lutheran Hosps. & Homes Soc. of Am., Inc., 661 P.2d 632,635 (Alaska 1983); Leanhart v. Humana, Inc., 933 S.W.2d 820,821 (Ky. 1996); Strubhart v. Perry Mem'l Hosp. Trust Auth., 903 P.2d 263, 274-78 (Okla. 1995); Bryant v. McCord, No. 01A01-9801-CV-00046, 1999 WL10085, at **9-11 (Tenn. Ct. App. Jan. 12, 1999), aff'd and remanded sub nom. Bryant v. HCA Health Servs. of N. Tenn., 15 S.W. 3d 804 (Tenn. 2000); Pedroza v. Bryant, 677 P.2d 166, 168-70 (Wash. 1984); Johnson v. Misericordia Comm. Hosp., 301 N.W. 2d 156, 163-64 (Wis. 1981).

(3.) See, e.g., McVay v. Rich, 874 P.2d 641, 645 (Kan. 1994) (corporate negligence doctrine inapplicable under Kansas malpractice statutes); St. Luke's Episcopal Hosp.v. Agbor, 952 S.W.2d 503,505 (Tex. 1997) (absent showing of malice, hospital was immune from liability for its credentialing activities).

(4.) See Insigna, 543 So. 2d 209, 214; Albain v. Flower Hosp., 553 N.E.2d 1038, 1040 (Ohio 1990), overruled on other grounds, Clarke v. Southview Hosp.'s Family Health Ctr., 628 N.E.2d 46 (Ohio 1994).

(5.) See id. at 212, and cases cited therein.

(6.) 497 P.2d 564, 574 (Haw. 1972), cert. denied, 409 U.S. 1048 (1972).

(7.) 211 N.E.2d 253, 257 (hi. 1965).

(8.) 186 S.E.2d 307,308-09 (Ga. Ct. App. 1971), aff'd, 189 S.E.2d 412 (Ga. 1972).

(9.) 500 P.2d 335, 341-43 (Ariz. Ct. App. 1972).

(10.) 301 N.W.2d 156, 164 (Wis. 1981).

(11.) Golden v. Schneider, No. 97-3563 (Fla., Pinellas County Cir. Ct. Apr. 1999).

(12.) Cruger v. Love, 599 So. 2d 111, 113 (Fla., 1992).

(13.) Id. at 113-14; see also Exparte Krothapalli, 762 So. 2d 836, 838 (Ala. 2000); Claypool v. Mladineo, 724 So. 2d 373, 377 (Miss. 1998); Babcock v. Bridgeport Hosp., 742 A.2d 322,344 (Conn. 1999); State ex tel. Charles Town Gen. Hosp. v. Sanders, 556 S.E.2d 85, 93 (W. Va. 2001).

(14.) See 42 C.F.R. [section] 482.12(e) (1999).

(15.) Mango v. Reyka, 507 So. 2d 1211, 1212 (Fla. Dist. Ct. App. 1987).

James W. Gustafson Jr. is an associate with Searcy, Denney, Scarola, Barnhart & Shipley in Tallahassee, Florida. Thomas D. Masterson is a partner with the Masterson Law Group in St. Petersburg, Florida.