Tennessee Supreme Court Narrows Hospital Peer Review Privilege


The Tennessee Supreme Court recently released significant companion cases that may affect how hospitals use peer review privilege to shield decision making. In Lee Medical, Inc. v. Paul Beecher, et al., the court substantially narrowed the privilege, while in Kimberly Powell v. Community Health Systems, Inc. et al., it narrowed the original source and ordinary course of business exceptions.

Each involved bitter and protracted pretrial discovery disputes. Lee Medical includes an exhaustive but educational survey of the history of peer review privilege across the nation in order to construe the state provision, which the court disparaged as ungrammatical, contradictory, and otherwise unclear after eleven amendments during its own tortuous history.

In Lee Medical, a hospital system's decision to terminate vascular access contract services in favor of using employed nurses led to a suit by the disappointed vendor for defamation, tortious interference and other causes of action against parties involved in an internal audit leading to the decision, including a catheter supply company and a system-affiliated staffing company. Defendants invoked the peer review privilege as to documents prepared for the audit. The trial court found the privilege to apply, but on interlocutory appeal, the high court, employing an extensive review of legislative history and of peer review in general, narrowed the privilege to proceedings that involve the review of a physician's conduct or competence.

The court concluded that while the Tennessee legislature had steadily expanded the definition of a peer review body, it had not expanded the privilege beyond proceedings involving physician conduct, noting that to apply the privilege to all proceedings before such bodies would expand it to nearly every hospital meeting regarding the provision of care. As the decision to discontinue outsourcing did not involve a physician, the management committee that considered the audit was not engaged in peer review, and no privilege applied. The dissent rejected the majority's effort to infer a limit to the privilege, reasoning that it was for the legislature to respond to any abuse by hospitals bringing routine operations under the ambit of peer review bodies to render them privileged.

In Powell, a former hospital employee sued a hospital and a surgeon for constructive termination, assault, and other causes relating to alleged sexual contact by the surgeon. The employee sought to depose the hospital infection control director regarding an investigation into postoperative infections and whether the surgeon had tested positive for infectious diseases. The trial court held that the information was not privileged because it had been created in the regular course of business and because the infection control director was the original source, both statutory exceptions. On interlocutory appeal, a divided Court of Appeals affirmed.

The Tennessee Supreme Court reversed, holding that only records made in the ordinary course of a hospital's business and independent of the operation of a peer review committee are not protected, while documents prepared by or at the request of a peer review committee exercising its peer review function were. To apply the exception to routine operations in support of peer review, the court reasoned, would swallow the privilege. The court concluded that focused investigations by the infection control director relating to physician conduct at the request of the Quality Review Committee were therefore privileged. On the other hand, it held that the director was not an original source with respect to documents obtained from others that existed independently of her investigation, and that such documents were therefore discoverable.

For additional information, please contact any member of the Waller Lansden Healthcare practice at 800-487-6380.

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