Originally Published in Law360 - June 27, 2013.

On June 6, 2013, the California Supreme Court ruled unanimously in El-Attar v. Hollywood Presbyterian Medical Center that the delegation of a peer-review matter to the hospital's governing board did not violate a physician's common law right of fair procedure. The El-Attar case includes valuable lessons for both hospitals and physicians.

In El-Attar, the California Supreme Court determined that while a hospital's governing board must give great weight to the actions of the medical staff, it may take unilateral action if warranted. It also clarified that the standard by which any bylaws deviations would be reviewed is "fairness" and importantly found that it is not inherently unfair for the governing body to appoint a hearing committee.

The central issues in the case arose over 10 years ago in the context of a warning from the Centers for Medicare and Medicaid Services that Hollywood Presbyterian Medical Center (HPMC) should resolve deficiencies in the oversight of its quality assurance program or risk exclusion from Medicare and Medicaid.

In response, the HPMC governing board formed an ad hoc committee that identified Dr. El-Attar as one of several physicians involved in clinically unnecessary, inappropriate and opportunistic consultations with emergency department patients. The ad hoc committee then commissioned an internal audit that gathered evidence of numerous serious problems with El-Attar's practice.

Meanwhile, as the expiration date of El-Attar's privileges approached, he applied for reappointment. The HPMC Medical Executive Committee (MEC) recommended approval of El-Attar's reappointment application.

But the HPMC governing board denied El-Attar's reappointment, overruling the HPMC MEC. When El-Attar, pursuant to HPMC's medical staff bylaws, requested a hearing on the denial, the HPMC MEC ceded hearing arrangements to the governing board, noting in its minutes that "since the MEC did not summarily suspend [El-Attar‘s] privileges, did not recommend any adverse action relating to [El-Attar] ... and since the requested hearing would be to review actions by the Governing Board; it should be the Governing Board and not the MEC which arranges and prosecutes the requested hearing."

The governing board then impaneled a judicial review committee (JRC) comprised of six medical staff physicians. The JRC held a hearing and determined that the denial of El-Attar's reappointment was reasonable and warranted because his medical skills were dangerously substandard, and he had behavioral problems. On appeal, the governing board concurred with the JRC's findings.

El-Attar next sought relief in state court, losing at trial but prevailing in the California Court of Appeals. The case then reached the California Supreme Court. In the court's view, the relevant issue was solely whether the HPMC MEC's delegation of arranging El-Attar's peer-review hearing to the governing board had violated his rights to fair procedure.

The court refused to accept El-Attar's assertion that any hearing officer or panel member appointed by the HPMC governing board was automatically biased. To the contrary, the court noted that in many similar contexts, it is not uncommon to rely on "an adjudicator's impartiality in reviewing the propriety of an adverse action taken by an agency ... even if the adjudicator is chosen by, and is a member of, the agency prosecuting the matter." The court quoted from its own jurisprudence on administrative hearings — as well as from a U.S. Supreme Court case on point, Withrow v. Larkin — to highlight the general legal presumption of integrity in those serving as adjudicators.

The court indicated that the result might have been different had El-Attar marshaled more facts suggesting unfairness. For example, El-Attar did not show that any of the JRC members had a financial or other conflict of interest that made them unfit to serve. There was also no evidence that the HPMC governing board took control of the peer-review hearing over the objections of the MEC.

Moreover, the court was bound by the trial court's determination that the MEC had willingly delegated its peer-review role to the HPMC governing board. In short, El-Attar had no facts to support his contention that the governing board's control of the process led to unfairness.

The California Supreme Court thus determined that because there were no facts demonstrating the unfairness of the process, and because the governing board has ultimate responsibility for the health and safety of hospital patients, the HPMC did not violate El-Attar's fair procedure rights by permitting the governing board direct control of the peer-review process.

According to the court, the Court of Appeal had reached the wrong result because it attempted to enforce a "strict separation" in the peer-review system between the HPMC's medical staff and governing board. The California Supreme Court concurred with the Court of Appeal insofar as the HPMC governing board owes deference to the MEC.

In resolving the proper role of hospital governing boards, the California Supreme Court revisited a four year-old case, Mileikowsky. Some had interpreted that case — incorrectly, according to the California Supreme Court — to mean that a hospital governing board may not assume control of a peer-review matter. To ensure patient safety, the Supreme Court explained, a governing board may also act independently when necessary.

The court's ruling was not a total defeat for the affected physician, however. The court ruled only on the narrow question of delegation and remanded much of the case to the Court of Appeal for further consideration.

Nevertheless, the El-Attar case is good news for California hospitals and medical staffs. The decision concludes that no provision of California's peer-review statutes (Cal. Bus. & Prof. Code 805 et seq.) prohibits the delegation of a peer-review hearing to a hospital governing board or indeed any designee of the medical staff. More importantly, the decision reaffirms, "Not every violation of a hospital's internal procedures provides grounds for judicial intervention."

El-Attar also reminds us that the primary purpose of the peer-review process is to protect patients and reaffirms California's longstanding policy that hospital governing boards have the ultimate authority to ensure that substandard physicians are removed from hospital staffs.

The court, however, left hospitals with a warning: The mere fact that state law does not specifically mandate a given medical staff bylaw provision does not mean that a hospital can violate such a provision with impunity. To the contrary, "the violating entity's decision to depart from procedures delineated in the bylaws may constitute evidence of that entity's bad intent, and it may bolster a claim that the entity has taken other action that deprived a physician of his or her right to a fair proceeding."

In other words, it remains essential for California medical staffs to have carefully drafted bylaws — and whenever possible to strictly follow them — to safeguard both fair procedure and patient safety.