Novotny v. Sacred Heart Health Services
In a case filed in South Dakota against a physician and the hospitals that credentialed him, the patient-plaintiffs alleged that a physician performed unnecessary medical procedures or performed procedures improperly on them. They claimed, among other things, that the hospitals wrongfully credentialed the physician despite knowing that he had lost privileges to practice at his prior hospital in Nebraska and that questions had arisen regarding his fitness to practice medicine.
To help establish their claims, the plaintiffs sought information about the peer-review process by which the hospitals credentialed the physician. The hospitals sought to block the discovery, claiming that the process is confidential under South Dakota law, which recognizes an evidentiary privilege for peer-review discussions. The trial court recognized an exception to the privilege where the process is alleged to facilitate criminal or fraudulent conduct (the “crime-fraud exception”). Therefore, the trial court held that the plaintiffs would be allowed discovery about the process that led hospitals to permit the physician to practice at their facilities.
The hospitals appealed to the South Dakota Supreme Court. In April 2016, Public Citizen weighed in with an amicus brief in support of plaintiffs, arguing based on the work of Public Citizen’s Health Research Group that the medical peer-review system is not performing adequately to protect patients, and that transparency in the peer-review process in instances of criminal or fraudulent conduct will improve the system by deterring decisionmaking that is adverse to patient safety and enhancing accountability for wrongdoing. In a decision issued in October 2016, the South Dakota Supreme Court reversed the trial court’s decision and rejected the argument that the state statutory peer-review privilege was subject to a crime-fraud exception.