Amicus Filed in Peyton Sham Peer Review
In an amicus brief filed in the case of Richard R.
Peyton, M.D., v. Johnson City Medical Center, No. #E2001-
02477-COA-R3-CV (Ct. App. Wash. Co. Tenn.), AAPS opposes the
application of immunity under the Health Care Quality Improvement
Act (HCQIA) to "sham peer review," or peer reviews motivated by
economic or other improper factors rather than genuine concern
about patient care.
Out of fear of competition from a free-standing radiation
therapy facility that Dr. Peyton was founding in its referral
area, the hospital aggressively undertook to ruin his reputation
by summarily suspending him from the staff in 1994. Dr. Peyton
was not apprised of the charges against him and was even locked
out of his own office so that he could not access the records
necessary for his defense. The hospital's own Medical Executive
Committee exonerated him in a vote of 11-3 before the hospital
applied improper pressure. No credible case could be made for
imminent patient danger justifying such a draconian measure. For
support, the hospital relied on an allegation of "disruptive
behavior," which consisted of a few oral disagreements without
any hint of bodily harm, although its own bylaws do not permit
summary suspension for such behavior. "Virtually no physician
would still be practicing if the cited quotidian spats could
justify summary suspension. This rationale is purely pretextual,"
writes Andrew Schlafly, General Counsel for AAPS.
In debate on HCQIA, House Subcommittee Chairman Henry Waxman
(D-CA) stated: "We fully agree that we cannot
tolerate abuses of the peer review system, and that H.R. 5540
[HCQIA] was never intended to protect any such abuses... whether
the concern is with anti-competitive activities, with actions
based on race, or any other prejudicial or
discriminatory factors." Precedent, as in Brown v.
Presbyterian Health Care Serv., 101 F.3d 1324 (10th Cir.
1996), cert denied, 520 U.S. 1181 (1997) established
that immunity is unavailable to hospitals whenever they fail to
satisfy any of the HCQIA requirements, including
adequate notice and hearing procedures.
With medical costs skyrocketing, the chilling effect of
retaliatory peer review on competition is unacceptable. Injurious
actions against physicians like Dr. Peyton send a signal to all
other potential competitors. If the hospital prevails in its
argument that it should have immunity for destroying the career
of a physician competitor, the casualties will include all
patients who must endure inflated costs.
This brief was funded by the American Health Legal
Tip of the Month: Every doctor facing an unfair peer
review encounters the same barrier: immunity for the reviewers
under the Health Care Quality Improvement Act ("HCQIA"). The
federal Court of Appeals for the 1st Circuit recently emphasized
limits on that immunity. "HCQIA immunity only covers liability
for damages. It does not shield covered defendants from suit and
other forms of relief." Singh v. Blue Cross/Blue Shield of
Massachusetts, Inc., 2002 U.S. App. LEXIS 17717, *49 (Aug.
27, 2002). There is no HCQIA immunity from claims to be
reinstated-hence consider including demands for injunctive relief
in peer review lawsuits. Also, unlike other forms of immunity,
HCQIA immunity is a purely factual issue dependent on what was
objectively reasonable. The Court emphasized that "there is less
reason under the HCQIA to exclude the jury entirely from
involvement with the dispositive determinations" than other forms
of immunity. Id. at *20.
Court Rebuffs DoJ, Citing Frequent Lies
The secretive court that oversees the Foreign Intelligence
Surveillance Act and must approve spying on terror suspects
refused to grant the Department of Justice broad new powers under
the U.S. Patriot Act. Judge Royce Lamberth signed the decision,
citing 75 misstatements and omissions in applications for wiretap
authority, one signed by former FBI Director Louis Freeh. The
ACLU accused the DoJ of attempting an "end run around the Fourth
Amendment" (NY Times 8/23/02).
"All liberty consists ... in the preservation of an
inner sphere exempt from state power. That reverence for
conscience is the germ of all civil freedom, and the way in which
Christianity served it. That is, liberty has grown out of the
distinction (separation is a bad word) of Church and
Self-Protection. If you had suggested to me 25 years
ago the extremes to which I would be going for self protection, I
would have thought you were completely crazy. But the evidence
required to prove one's innocence requires extreme measures. I
have been studying the law on professional misconduct to make
sure I leave no openings for attack.
On more than one occasion, our hospital's medical director
has warned physicians at medical staff meetings that they should
be wearing their badges whenever they are in the hospital. Many
doctors just brushed it off. What he did not tell them was that,
according to New York Education Law (Sec. 6530 (37)), "failing to
wear an identifying badge, which shall be conspiciously displayed
and legible, indicating the practitioner's name and professional
title ... while practicing in a hospital" is considered
"unprofessional conduct" and could be grounds for delicensure.
Beware of giving administrators any pretext for ridding the
hospital of politically incorrect targets.
Lawrence Huntoon, M.D., Ph.D., Jamestown, NY
"End-of-Life" CME Requirement in California. Before
December, 2006, all California-licensed physicians, except
pathologists and radiologists, are required to have 12 hours of
accredited CME on pain management and the treatment of terminally
ill patients. I am a board-certified oncologist, in practice
since 1982, and am already expert in pain management and terminal
care. Why should I have to spend $200 to $300 on a course given
by persons with less expertise than my own? I have asked the
Department of Consumer Affairs of the Medical Board of California
how and why such a requirement came to be. Does the Board receive
a kickback or some other benefit from the expensive courses we
are required to take?
The weekly journal club I already attend, sponsored by
UCLA/VAH, is trying to include these new requirements.
CME requirements should be abolished. Drug companies send
"CME" credit courses by mail on subjects related to their drugs.
I don't mind this and appreciate the information, but doesn't
that defeat the supposed purpose of the rules?
Linda W. Wilson, M.D., Culver City, CA
Criminalizing Dissent. The Federation of State Medical
Boards will issue a set of standards that it will encourage each
state to adopt: yet another way to persecute and criminalize
physicians who "deviate" from "guidelines" to follow their own
John H. Boyles, Jr., M.D., Dayton, OH
Cost Drivers. A study by the Council for Affordable
Health Insurance (CAHI) identified four key factors driving up
insurance costs in the individual market. Cost-shifting increases
costs by 15-50%; mandated benefits, by 5-45%; restrictions on
underwriting, by up to 100%; and comprehensive instead of basic
benefits, by up to 30%. Employers, consumers, and especially
legislators are responsible for these pressures. See the July
issue of Issues & Answers, www.cahi.org.
Ernest J. White, Alexandria, VA
The Myth that Socialism Lowers Costs. The facts on
government v. private education speak for themselves. The
student:administrator ratio in the Philadelphia public school
system is 204,851:906 or 1:226; in the Philadelphia Archdiocese
school system, it is 100,000:15 or 1:6,666. In Scottsdale, it's
1:189 for the public schools and 1:4,538 for the diocese.
The September issue of AAPS
News impressed me, but I would add that the cost of private
insurance is higher than it needs to be because it is not truly
insurance but a prepayment plan for minor expenses. If the
patient wrote the doctor a check, that would be the end of the
Craig Cantoni, Scottsdale, AZ
Are the People Too Dumb? Many intellectuals still do
not believe that citizens who are productive enough to pay for
their own medical care are capable of making medical decisions in
their own best interest. But I believe that empowering people,
through a competitive marketplace, is the best arbiter of
efficacy, quality, and price.
Roger Beauchamp, D.D.S., Escanaba, MI
Who Should Be in Charge? The system needs to be given
back-not to doctors, but to patients. Doctors, nurses,
chiropractors, ambulance companies, hospitals, etc., can all be
efficient and responsive when provided the right incentives. All
respond to the demands of the payer. If the payer is anyone other
than the patient (the government, the employer, the insurance
company), the patient becomes just the raw material, the puppy
dog at the vet's.
Greg Scandlen, Frederick, MD
Don't Take the Bait. It is too bad that the simplicity,
purity, and safety of opting out of all third-party interference
is too often lost in the frantic rush to comply with absurdity.
By restructuring the medical practice to be a private patient-
physician encounter, in which the entire transaction takes place
between the patient and the physician, we can retake our
profession and live by the Oath of Hippocrates. Anything less
seems to be an economically driven cop-out. That economic
pressure is exactly what the government wants the doctors to
feel. Once physicians fear for their cash flow, they are willing
to surrender almost anything.
Michael Harris, M.D., Traverse City, MI
Legislative AlertFast Forward to a Feverish Fall
The August recess is over. Congress is back.
Appropriations bills are stacking up, and big-ticket items like
Homeland Security and welfare reform are awaiting Senate action.
But medical issues are not far behind. Late in September, the
Census Bureau will again release its numbers on the state of the
nation, and you can bet big bucks they will show an uptick in the
number of the uninsured, setting off another round of
congressional reform rhetoric. Moreover, the prescription drug
bills that crashed and burned in the Senate in July are likely to
come roaring back in the Fall. The "patients bill of rights"
legislation, enacted by the House and Senate in very different
versions, continues to languish and may never recover.
Rising medical costs are likely to be accompanied by a
significant increase in the uninsured. Whatever the Census Bureau
number released at the end of this month turns out to be, it will
pour more fuel on the debate, and the debate is going to
intensify for the rest of our lives.
America is experiencing a return of double-digit medical
cost increases. And within 10 years, America's total medical
spending will double. This huge growth will be fueled by the
intensifying demand for medical services among a rapidly aging
population, the availability of advanced medical technology, new
and better pharmaceuticals, and the application first fruits of a
biomedical research industry. With this growth in the size of the
medical sector of the economy, all of the current problems of
access to care, the cost and quality of care, and the proper role
of physicians and patients will take on a new urgency. The big
question for Congress and the Administration is this: are the
current federal tax and regulatory policies that created the
existing medical insurance market any longer viable? Most
conservatives on Capitol Hill and elsewhere think not.
The Senate: Back on Drugs?
It is hard to imagine how the Senate could fail to take up
the issue of prescription drug coverage. The House has passed its
version of the legislation. Senate Majority Leader Tom Daschle
(D-SD) has said that he would enact a drug bill, though thus far
he has done nothing. But there is a change in the congressional
climate, more significant than the fall in the Fall temperatures.
The big difference between the July session, when four Senate
drug plans failed, is that at midnight on September 30 the
Senate budget rules disappear. Right now, any bill that exceeds
the Senate budget standards requires 60 votes to waive the budget
rules and bring that bill to the floor. When the fiscal year
ends in September, 51 votes on any bill will pass it. Look for
conservatives to ready some changes in the tax laws, including a
permanent end to the death tax. Senators will brush off their
various Medicare drug bills, and go for it. All bets are off.
Readers of this column know that structure is the
key issue in every facet of the medical policy debate, not money.
Money really isn't everything after all. It is the structure
of the policy that determines the levers of power and
control. At the end of the day, either individuals and families
or government officials and their contractors will have control
over the levers of power. Who will manage benefits and services?
Who will control the flow of dollars in the system?
The recent-and future-Congressional Medicare drug debate is
once again proof of that. For example, the House of
Representatives, following the leadership of House Ways and Means
Committee Chairman William Thomas (R-CA), enacted The Medicare
Modernization and Prescription Drug Act of 2002 (H.R. 4954),
which would rely on price competition and private plans to
deliver the drug benefit to senior citizens. Likewise, The 21st
Century Medicare Act (S.2), also known as the Tri-partisan Plan,
would establish a system of drug coverage based on private
insurance companies. The Medicare Rx Drug and Discount Act of
2001 (S. 1239) would rely on pharmacy discount cards in a
competitive market. In sharp contrast, leftists in Congress
generally favor reliance on the traditional Medicare program as
the vehicle for drug coverage. This means that the Medicare
bureaucracy and its contractors would manage and enforce detailed
regulations in the financing and the delivery of the prescription
As Washington Post reporter Helen Dewar noted, the
Medicare drug debate exposed "deep philosophical and political
differences" between Democrats and Republicans.
Another big policy question surfaces: If Medicare is going
to manage a prescription drug benefit, isn't it fair to discuss
Medicare's management of its current responsibilities? The
Medicare management issue is crucial and often overlooked. The
General Accounting Office (GAO), the fiscal watchdog arm of
Congress, has observed that Medicare is an "inherently difficult
program to manage." In size, Medicare ranks second only to Social
Security. Medicare covers about 40 million beneficiaries, and has
contractors that annually process about 900 million claims
submitted by nearly 1 million hospitals, physicians, and other
providers. Medicare's management team comes into contact with
these 1 million providers; it almost never comes face to face
with any of the 40 million Medicare patients. The Medicare
bureaucracy drives doctors crazy, but their patients are largely
insulated from the regulatory regime. That partially explains the
distance in opinion between doctors and patients on the Medicare
program and how it works.
Medicare, according to survey data, is enormously popular
with taxpayers and senior citizens. But these data also show that
the program is not broadly understood. In a comprehensive 1998
survey of public attitudes on the Medicare program, the Kaiser
Family Foundation and the Harvard University School of Public
Health found that only 4% of all Americans and 6% of seniors said
that they knew "a lot" about the Medicare program; 50% of all
Americans and 43% of all seniors conceded that they knew "only a
little"; and 25% of all Americans and 20% of seniors said they
Ironically, while government reform efforts since World War
II have attempted, with varying degrees of success, to import
private-sector management innovations into federal management,
many in Congress believe that Medicare's bureaucracy would do a
better job than competitive private-sector plans. But even among
federal agencies that are often considered sluggish by private-
sector standards, the GAO, as noted in its 2001 report on
Medicare Management, ranked CMS dead last in
terms of the percentage of managers who reported having key
performance measures for their work. And GAO ranked CMS next to
last in having a measure for customer service and for having a
management team that was held accountable for results.
With drug coverage, Medicare's management is not merely a
technical matter. If the government agency manages the drug
benefit, in effect, the agency controls it. Medicare patients
might at first think that this is just peachy keen. But any
senior citizens who share Congressional leftists' faith in the
superiority of the Medicare bureaucracy's management will, if
leftists are successful this Fall, soon endure a test of that
faith. Once again, we say, it's the structure, stupid!
The Bush Administration's Agenda on Medical Policy
The Senate has refused to act on Bush's tax credit proposals
for the unemployed. But the Bush team has been busy while
Congress has been out on recess.
HHS Secretary Tommy Thompson has announced 33 new private
plans in 23 states to serve an estimated 11 million Medicare
patients as part of a new demonstration project. Under this
initiative, Preferred Provider Organizations, or PPOs, will have
more flexibility than Medicare HMO plans. The new plans will
include prescription drug coverage, will vary on the basis of
cost sharing and deductibles, and will allow a wider choice of
doctors than available under HMOs. Thompson said that if the
Congress won't act on serious Medicare reform, he will take the
administrative steps necessary to broaden choice and improve the
On the problem of the uninsured, Thompson also recently
announced approval of New Mexico's request for a Health Insurance
Flexibility and Accountability (HIFA) waiver to use Medicaid
funds to expand private coverage to an estimated 40,000 uninsured
New Mexico residents. HIFA is a Bush Administration initiative to
broaden private coverage for low-income populations, rather than
relying upon government programs such as Medicaid and the State
Children's Health Insurance program (SCHIP). New Mexico, instead
of expanding Medicaid, will use unexpended SCHIP funds to
subsidize private medical insurance for low-income persons.
Employers could also contribute to the plans. With a combination
of government subsidies from existing government programs and
employer contributions, HHS estimates that eligible low-income
employees will be paying about $25 to $35 per month in insurance
The GAO, among others, has been critical of the Bush agenda
on this, noting that SCHIP money is only meant to be spent on
children, not adults. The Bush legal team has a different view.
The ideological hostility on the Left to private insurance plans
is palpable. Let's see who is ready to offer that amendment to
strip the newly insured of their private coverage. Keep watch.
That Generous COBRA Option
Do not, under any circumstances, forget the bitter 2002
debate over the economic stimulus package, and Bush's proposal of
refundable tax credit options for unemployed workers. Recall that
on February 14, the House of Representatives passed the Bush
package, with $13 billion in tax credits for unemployed
individuals and families that could be used for a private medical
plan of their choice. It was blocked in the Senate, the second
time that a stimulus package with a medical insurance provision
(enacted on December 20th) had been blocked in the Senate.
Recall that the Senate leadership had a different idea; they
proposed instead that any federal subsidies for private medical
insurance for the unemployed should be limited to COBRA coverage.
(Under the Consolidated Omnibus Reconciliation Act of 1986, a
former employee can buy into a former employer's medical
insurance plan and pay 102% of the premium.) Under the Senate
option, those not eligible for COBRA, which includes the
employees of small businesses, would be enrolled in Medicaid and
learn to like it.
Curiously, it turns out, according to a recent Commonwealth
Fund study, only 23% of those workers eligible for COBRA would
continue that coverage. The main reason: COBRA coverage,
mostly available in large employer plans, is just too expensive.
If these unemployed workers would get a 75% premium subsidy to
cover the cost, the Commonwealth survey said that 59% of eligible
workers would retain it. Among low-income workers, only 16% would
retain COBRA coverage, and 37% would take it if they got the
federal subsidies. The Commonwealth study also found that only
44% of those surveyed felt that they could get "high quality
health care" from employers.
Next Time Your Publicity-Seeking Congressman Is Loading
Seniors into a Bus for Canada.
Share with him the latest news from Paradise. The Fraser
Institute, a prominent Canadian think tank, has just released a
study that compares the performance of the Canadian system with
other countries. Among the key findings: Canada is the only
country in the industrialized world to outlaw private, parallel
medical coverage for all of its citizens. This, in itself, is
remarkable. For the ordinary Canadian, it's government care or no
care, unless you travel South and escape over the Border to
American doctors and clinics. (This is similar in spirit to the
American Medicare policy that effectively restricts a specific
class of American citizens in the spending of their own money on
lawful medical services, unless their doctor opts out under the
Balanced Budget Act of 1997.)
Curiously, while Canada ranks first in spending among
OECD countries with government-run medicine, Canada ranks 17th in
the number of doctors per 1000 population; 17th in MRI machines
per million persons; and 16th in access to CT scanners.
According to the Fraser Institute, only 37% of Canadian patients
reported a waiting time of less than one month for non-
emergency surgery, compared to 63% in the United States. Paradise
has its problems.
(The Fraser Institute study is available at
Robert Moffit is a prominent Washington health policy
analyst and Director of Domestic Policy at the Heritage