May 22, 2015

May 22, 2015

This week, the Texas Supreme Court released one new opinion discussing application of the medical peer review committee and medical committee privileges. This is the first time the Court examined the exception to the privileges and is of utmost importance to those of us that represent hospitals, doctors, and other medical services providers that conduct or are subjects of peer review and credentialing activities.

In re Memorial Hermann Hosp. Sys. et al, Case No. 14-0171: http://www.txcourts.gov/media/981611/140171.pdf

In this mandamus proceeding involving the medical committee and medical peer review committee privileges, the Court was confronted for the first time with application of the privileges and the anticompetitive action exception. The Plaintiff, allegedly groundbreaking heart surgeon Dr. Gomez, asserted causes of action for business disparagement, defamation, tortious interference with prospective business relations, and improper restraint of trade under the Texas Free Enterprise and Antitrust Act of 1983 ("TFEAA"). The case arose as a result of the opening of a rival hospital to Memorial Hermann Hospital and its attempts to allegedly use a whisper campaign against Dr. Gomez to discredit him and prevent surgical referrals after his decision to conduct some of his groundbreaking robotic heart surgeries at the rival hospital. Prior to this alleged campaign, Memorial Hermann actively used Dr. Gomez with prominence in its marketing activities for the hospital's surgical services. Following his decision to use the other hospital, Memorial Hermann allegedly began questioning mortality rates of Dr. Gomez's procedures and allegedly making comments related to Dr. Gomez's competence. According to Dr. Gomez, this activity was calculated to scare other surgeons from using the competitor's facilities. In an effort to prevent Dr. Gomez from discovering certain documents, Memorial Hermann asserted the medical committee and medical peer review committee privileges to prevent production. The trial court agreed with Dr. Gomez the documents were discoverable and the court of appeals refused to grant mandamus relief. The Texas Supreme Court granted mandamus finding some documents privileged and others falling within the anticompetitive action exception to the privileges.

Texas Occupation Code Section 160.007 protects from disclosure a medical committee's and medical peer review committee's materials in a variety of circumstances, but it allows production for proceedings, records, or communications that are relevant to an anticompetitive action.

First, the Court agreed with Memorial Hermann that the records at issue were protected under the medical committee and medical peer review privileges. The Court then examined a variety of sources to determining the meaning of the phrase" anticompetitive action" found in the statute's exception. The Court concluded that the phrase included not only antitrust actions but claims for violation of the TFEAA and tortious interference with prospective business causes of actions, as alleged by Dr. Gomez.

The Court then looked at the burden of proof necessary under to invoke the exception. Memorial Hermann argued Dr. Gomez bore the burden of establishing the relevance of the documents to his anticompetitive causes of action and the trial court served a gate keeping function. The Court disagreed. It held all that was necessary was for the trial court to determine plaintiff's entitlement to the exception based upon his pleadings. It encouraged defendants to judiciously use special exceptions to require the plaintiff to clarify his vague allegations and narrow the range of facts that will be of consequence in the action. The Court also upheld the trial court's finding that Dr. Gomez had pleaded anticompetitive actions and did not abuse its discretion in finding the documents were relevant to his causes of action.

The Court found that any affidavits submitted to the trial court are not subject to the privilege at all and that the hospital by-laws were also not privileged. The Court went on to find that information related to mortality rates, referral rates, physician volume, Memorial Hermann's plans to differentiate itself from other cardiovascular hospitals and its geographical marketing plan were all relevant to Dr. Gomez's actions and not subject to the privileges. However, the Court held that documents not related to those topics were privileged.

Because Memorial Hermann stipulated that the documents sought were the records and proceedings of a medical peer review committee, the Court avoided analyzing the possible additional protections under or contradictions between statutes in the Health and Safety Code and Occupations Code that might apply solely to medical committees that are not deemed medical peer review committees.

Conclusion:

We hope this edition of the Texas Supreme Court Update is of use to your practice. This case will be of considerable significance to those of us that represent doctors, hospitals, ambulatory surgery centers, and other medical services providers or medical business managers in their commercial litigation needs. Please don't hesitate to contact The Bassett Firm if you need any advice or analysis of how this case could impact your business or practice.

Best Regards,

The Bassett Firm