• IL Supreme Court Limits Claims of Privilege in Neglect Credentialing Cases
  • July 26, 2016 | Authors: Mark Hansen; J. Matthew Thompson
  • Law Firm: Heyl, Royster, Voelker & Allen Professional Corporation - Peoria Office
  • In its recent opinion in Klaine v. Southern Illinois Hospital Services, 2016 IL 118217, the Illinois Supreme Court addressed the privileged nature of certain documents when negligent credentialing is alleged. While, the court rejected arguments in support of certain privileges, defendants can argue for a narrow interpretation of Klaine. Furthermore, a bill was recently introduced in the Illinois General Assembly that would overturn the Klaine decision, at least in part. Lawmakers should be encouraged to pass this legislation.

    Background

    The plaintiffs claim was originally limited to medical malpractice. However, the plaintiffs later added a claim against the hospital system for negligent credentialing of the defendant physician. For a limited number of documents, the hospital system claimed privilege. The trial court agreed that many of the documents were privileged, but found other documents were not. The hospital system disagreed with the trial court’s determination as to two groups of documents: (1) the defendant physician’s three applications for staff privileges, and (2) procedure summaries and case histories of the defendant physician. The hospital system maintained that these documents were privileged pursuant to the Health Care Professional Credentials Data Collection Act (Credentials Act) and the Medical Studies Act. In order to appeal, the hospital system refused to produce the documents so that it would be found in “friendly” contempt.

    The appellate court affirmed the trial court’s order, with two exceptions. First, it ordered all references to an external peer review report within one application to be redacted. It also ordered any patient identifying information within any of the documents to be redacted in accordance with federal regulations.

    On appeal to the Illinois Supreme Court, the hospital system limited its challenge to the discoverability of the defendant physician’s three applications for staff privileges. The hospital system claimed the applications for staff privileges were completely privileged under section 15(h) of the Credentials Act. If the court found the applications were not privileged in their entirety, the hospital system argued alternatively that:

    Any reference to information reported to the National Practitioner Data Bank (NPDB) must be redacted because it is privileged under section 11137 of the Health Care Quality Improvement Act of 1986.

    The hospital system argued that any information regarding the defendant physician’s treatment of nonparties was privileged under the Credentials Act and physician-patient privilege.

    Applications for Staff Privileges and the Credentials Act

    First, the supreme court considered whether the defendant physician’s applications for staff privileges were privileged in their entirety under section 15(h) of the Credentials Act, which provides in relevant part:

    Any credentials data collected or obtained by the health care entity, health care plan, or hospital shall be confidential, as provided by law, and otherwise may not be redisclosed without written consent of the health care professional...

    The hospital system relied upon the statute’s provisions providing that all credentials data collected or obtained by a hospital “shall be confidential” and “may not be redisclosed,” to argue that the legislature created an explicit privilege protecting the applications for staff privileges. The hospital system pointed to TTX Co. v. Whitley, 295 Ill. App. 3d 548 (1st Dist. 1998) to support its argument. In TTX Co., the appellate court considered a similar statutory confidentiality provision, and held that confidential materials were privileged. The TTX Co. court specifically found, “[i]n the absence of a statutory exception to the confidentiality rule, permitting disclosure of [the confidential] information pursuant to the discovery order would violate the explicit prohibition of such disclosures as stated in [the statute].”

    Despite the similarity, the supreme court found the TTX Co. decision distinguishable because the TTX Co. court did not rely solely on the statute’s confidentiality provision. Because the TTX Co. court also found the requested information to be irrelevant, the supreme court believed the TTX Co. decision was “inapposite” to the discovery sought in Klaine.

    Instead, the supreme court found that a statute’s confidentiality provision “does not necessarily mean that an impenetrable barrier to disclosure has been erected.” It held that in the case of a statutory confidentiality provision, “disclosure will depend on whether applying an evidentiary privilege promotes sufficiently important interests to outweigh the need for probative evidence.” On the other hand, the court held that “when the plain language of a statute creates a privilege, the information may not be disclosed, regardless of its relevance” because “the statutory privilege is an indication that the legislature has determined that other interests outside the truth-seeking process must be protected.”

    Turning to the confidentiality clause at issue, the court held that it did not create a blanket privilege against discovery of the physician’s applications for staff privileges because such a privilege would not advance interests outside the truth-seeking process. Furthermore, the court found the applications were “highly relevant” to the plaintiffs’ negligent credentialing claim because the applications for staff privileges were “the only materials which, by statute, [the hospital system] was required to consider in determining whether to credential and recredential” the defendant physician. The court also found that the applications were not privileged under the Medical Studies Act because such a reading would expand the Medical Studies Act privilege beyond the scope intended by the legislature.

    Information Reported to the National Practitioner Data Bank

    Alternatively, the hospital system argued that information within the applications regarding reports made to the National Practitioner Data Bank (NPDB) should be redacted. In support of its argument, the hospital system relied upon section 11137(b)(1) of the Health Care Quality Improvement Act, which provides “[i]nformation reported under this subchapter is considered confidential.”

    The supreme court also rejected this argument. The court noted that the same section also states that “[n]othing in this subsection shall prevent the disclosure of such information by a party which is otherwise authorized, under applicable State law, to make such disclosure.”The court also pointed to federal regulations requiring hospitals to query the NPDB for practitioners on its staff. Another federal regulation allows the NPDB to provide information to an attorney who has filed a medical malpractice action against a hospital, upon the attorney’s “submission of evidence that the hospital failed to request information from the NPDB” as required.Reading all of these regulations together, the court found it “clear that information reported to the NPDB, though confidential, is not privileged from discovery in instances where, as here, a lawsuit has been filed against a hospital and the hospital’s knowledge of information regarding the physician’s competence is at issue.”

    Information Regarding Treatment of Other Patients

    Finally, the court considered whether the physician-patient privilege protected information in the physician’s applications regarding care and treatment of other non-party patients. The court did not address this issue in detail because individual patient identifiers were either not included or had already been redacted. Therefore, HIPAA protections were not at issue. Nonetheless, the hospital system maintained that the physician-patient privilege is broader than HIPAA and “should be applied to require the redaction of all references to medical care and treatment rendered to nonparties.” But, because the applications only contained information regarding treatment provided or procedures performed by the defendant physician at the hospital system, and because the plaintiff did not seek the medical records of nonparties, the court found no privilege applied to this “raw data.”

    Mitigating the Impact of Klaine

    While Klaine is not a positive decision, it is not devastating. The supreme court makes clear that Klaine is limited to negligent credentialing cases. Of course, a plaintiff must have a good-faith basis and plead facts to support a cause of action for negligent credentialing before discovery.

    Next, the court’s decision regarding NPDB materials appears limited. It only found “references in [the defendant physician’s] applications to material reported to the NPDB” to be discoverable. It left open the possibility that other information reported to or obtained from the NPDB is privileged, including information obtained by a quality control committee.

    Additionally, Klaine does not stand for the proposition that non-party patient-identifying information is discoverable. The decision supports the well-accepted rule that such information should not be produced or the patient-identifiers should be redacted.

    Finally, legislation was recently introduced in the Illinois General Assembly that would overturn part of the decision. Under the proposed legislation, section (h) of the Credentials Act would be amended to read, in part: “[a]ny credentials data collected or obtained by the health care entity, health care plan, or hospital shall be confidential and privileged, and may not be redisclosed . . ..” This legislation would make clear that such information is privileged and nondiscoverable. Lawmakers should be encouraged to pass this legislation so that the intended privilege for credentialing information will be restored.