State high court halts new way to bring liability lawsuits

The Kentucky Supreme Court has knocked down an attempt to allow hospitals to be sued for negligent credentialing.

In a 6-0 decision, justices rejected a new cause of legal action that would make hospitals in the commonwealth liable for negligence in credentialing independent contractor physicians with staff privileges who may later be named in a liability claim. Critics of the legal maneuver, which is a plaintiff patient’s option in some states, say that it is both unnecessary and would cause problems—including creating a serious access obstacle by leaving patients with fewer options to receive care.

Had the court upheld the 2-to-1 appeals court ruling establishing the cause of action, “it would make it more difficult for physicians to be able to be credentialed by hospitals, and then potentially health plans and others, at a time that—especially health plans—are looking to narrow their networks, and it would just give them another reason to do so,” said Patrick T. Padgett, Executive Vice President of the Kentucky Medical Association. For patients, those more restricted networks, “would limit their choices and it would limit their ability to see a physician, so it would be an access- to- care issue.”

The KMA filed a 14-page, friend-of-the-court brief in the case. Financial assistance for the amicus brief was provided by the Litigation Center of the American Medical Association and State Medical Societies, which supports those state societies in precedent-setting cases relevant to physicians.

The justices consolidated three cases that were the subject of lower court rulings related to negligent credentialing, into one matter before the court. Two of the cases were sent back to lower courts, but the overarching issue of a new cause of action on negligent credentialing was flatly rejected by the justices.

“This Court is not inclined to recognize the stand-alone tort of negligent credentialing, as this Court has not been persuaded by counsel of the need for a new cause of action, and the tort's far-reaching implications, as well as its impact on rural hospitals and communities in the commonwealth, are unknown,” reads the crucial passage in the 27-page ruling, decided Nov. 2. “The plaintiffs already have available the means by which to bring their claims under common law principles of negligence, therefore, this Court need not create a new tort.”

The KMA brief cites one of the cases, Lake Cumberland Regional Hospital, LLC v. Adams, and presents several main arguments. Lawyers for the KMA pointed out that physicians are pre-qualified—for example, through medical school, training and licensure—well before credentialing becomes a matter for hospitals. Yet, that might not be enough for a hospital fearful of being sued.

The brief questions whether that overly selective approach might extend to insurers. That would create a conflict with the state’s law that requires provider networks be open to any physician willing to meet the health plan’s conditions of participation.

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Ruling could impede efforts to improve patient safety

For hospitals, nervous administrators may seek greater control over physicians, and this would be at odds with the fundamental responsibility of doctors to exercise independent medical judgment in the best interests of their patient. Physicians may also feel pressured another way. “Rather than risk their professional reputations in the context of a credentialing decision, physician-members are likely to decline credentialing committee service,” argues the brief, which says depleted committees would undermine patient care in hospitals.

If a liability claim ever reaches the courthouse, and credentialing negligence and medical negligence claims are heard together, “evidence of physician’s prior conduct arguably relevant to whether the hospital deviated from ‘the standard of care’ in granting the physician privileges would be irrelevant and highly prejudicial on the issue of whether the physician met the standard of care for treatment of a particular plaintiff.” The brief also states that hospitals already have “sufficient incentive to ensure a competent medical staff already exists.”

The KMA brief argues that allowing a new cause of action is a matter for lawmakers, not judges. The court agreed, stating that: “The public policy of the Commonwealth is normally expressed through acts of the legislature, not through decisions by the courts.” Padgett said it was very unlikely that the state legislature would go that route, noting it recently enacted medical tort reforms.

It is likely attempts will be made to introduce the cause of action to other jurisdictions. While the ruling is binding only in Kentucky, Padgett said states pay attention to what other “state courts are doing, and the fact that our state refused to recognize this as a new tort, I think other states will certainly look at that.”

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