CAVEAT HOSPITIA: Suits Alleging Negligent Credentialing Against Hospitals Get Exemption from Tort Reform

By Alex Stein

Policymakers and scholars interested in medical malpractice and torts generally should read Billeaudeau v. Opelousas General Hospital Authority, — So.3d —-, 2016 WL 6123862 (La. 2016). In this recent and important decision, the Louisiana Supreme Court ruled that suits alleging negligent credentialing against a hospital sound in regular negligence, rather than medical malpractice, and consequently fall outside the purview of the state’s Medical Malpractice Act (MMA) and its limitations on liability. The Court made this decision in connection with the state’s cap on damages recoverable in medical malpractice actions, La. Rev. Stat. § 40:1231.2(B)(1), which limits the total amount that courts can award the victim to $500,000, plus interest and cost, on top of the victim’s future expenditures on medical care and support. For many victims of medical malpractice and their families this cap amount is meager, but the Court nonetheless upheld its constitutionality back in 1992. See Butler v. Flint Goodrich Hosp., 607 So.2d 517 (La. 1992).

The Court has now decided that suits alleging negligent credentialing against hospitals are not subject to this cap and that successful plaintiffs consequently will recover full compensation for any proven damage.

The Billeaudeau decision relied on the multifactor test that the Court previously developed in Coleman v. Deno, 813 So.2d 303, 315 (La. 2002). Under Coleman, in determining whether a suit sounds in medical malpractice, as opposed to regular negligence, or vice versa, the court should consider:

  1. Whether the particular wrong is “treatment related” or caused by a dereliction of professional skill,
  2. whether the wrong requires expert medical evidence to determine whether the appropriate standard of care was breached,
  3. whether the pertinent act or omission involved assessment of the patient’s condition,
  4. whether an incident occurred in the context of a physician-patient relationship, or was within the scope of activities which a hospital is licensed to perform,
  5. whether the injury would have occurred if the patient had not sought treatment, and
  6. whether the tort alleged was intentional.

For my discussions of this and similar tests, see here, here, here, and here.

The Court also reasoned, based upon prior precedent, that the MMA’s limitations on the liability of health care providers—the maximum amount of damages, the mandatory pre-suit review by a medical review panel, and the special prescriptive and peremptive periods for malpractice actions—“are special legislation in derogation of the rights of tort victims, and as such, the coverage of the act should be strictly construed” (citing Sewell v. Doctors Hospital, 600 So.2d 577, 578 (La. 1992)).

The social consequences of Billeaudeau are unclear. This decision motivates plaintiffs’ attorneys to increase their resort to negligent-credentialing allegations in suits filed in connection with hospital care (and potentially with managed outpatient care as well). The social cost of medical malpractice litigation in Louisiana will consequently increase. This increase, however, will not necessarily be socially wasteful because hospitals now have a stronger incentive to properly select and monitor doctors.

Note that this decision is not unprecedented: see, e.g., a similar ruling made in 2013 by the North Carolina Court of Appeals in Estate of Ray ex rel. Ray v. Forgy, 744 S.E.2d 468 (N.C.App. 2013) (holding that claims alleging corporate negligence require no expert-witness certification because they do not arise out of clinical care, but rather “out of policy, management or administrative decisions, such as granting or continuing hospital privileges, failing to monitor or oversee performance of the physicians, credentialing, and failing to follow hospital policies, [to which] the court should apply the ordinary negligence principles and the “reasonably prudent person” standard rather than defer to doctors.”). For my discussion of the Ray decision, see here.

This line of authority aligns with my distinction between “treatment rules” and “setup rules” (Alex Stein, Toward a Theory of Medical Malpractice, 97 Iowa Law Review 1201, 1229-32 (2012)). However, whether suits alleging negligent credentialing against hospitals (a setup rule violation that generally does not require expert testimony, according to my theory) should be completely exempted from tort reform is a separate issue that should be resolved on independent policy grounds.

The Billeaudeau decision and similar developments may prompt hospitals to take measures that will minimize their exposure to suits for negligent credentialing. Contracting away the patient’s right to sue is one such measure. Hospitals cannot contract away their vicarious liability for medical malpractice (see, e.g., Tunkl v. Regents of University of California, 383 P.2d 441 (Cal. 1963)), but negligent credentialing is an entirely different cause of action that may call for a different rule. I hope to address this issue in a future post.

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