Malicious Credentialing and the Cloak of Secrecy:
 KPH Consolidation, Inc.  v.  Romero

By Susan A. Allinger, J.D., L.L.M Candidate

Even before his patient Ricardo Romero nearly exsanguinated on the operating room table during what should have been routine back surgery, Dr. Merrimon Baker had a long history of problems.  He was a drug addict, known to consume the prescription narcotic Vicodin by the handfuls.  Twice he performed surgery on the wrong limb.  His surgical privileges at a near-by hospital had been suspended, first on a temporary basis then later permanently.  A few days before the Romero surgery, Baker had assaulted his ex-wife and threatened suicide, showing mood swings and erratic behavior even more extreme than his usual.  Dragging behind him was a lengthy trail of malpractice claims, botched surgeries and lawsuits, which trail became even longer when his surgery on Romero at Columbia Kingwood Medical Center left Romero brain damaged and totally disabled.  Yet on January 9, 2003, the Fourteenth Court of Appeals in Texas reversed Romero’s $23 million judgment against the hospital in KPH Consolidation, Inc. v. Romero, No. 14-00-01177-CV, 2003 WL 60482  (Tex. App.–Houston [14th Dist.] Jan. 9, 2003), and held that as a matter of law, Romero did not establish liability on the part of the hospital for maliciously credentialing Baker.

As horrific as the facts may seem, the Court of Appeals wrote on firm ground due to the convergence of two discrete areas of state law:  the legal requirements for a malicious credentialing claim and the confidentiality privileges afforded to the hospital by statute.  Earlier in St. Luke’s Episcopal Hospital v. Agbor, 952 S.W.2d 503, 506 (Tex. 1997), the Texas Supreme Court held that before a health care entity can be liable for actions taken during peer review (such as credentialing), malice must be shown.  As defined under section 41.001(7)(B) of the Texas Civil Practice and Remedies Code, malice consists of an objective and a subjective component.  Objectively, the defendant’s conduct must involve an extreme risk of harm, a significantly higher threshold than the objective “reasonable person” test for negligence. Subjectively, the defendant must have actual awareness of the extreme risk created by the conduct and proceed with conscious indifference to the rights, safety or welfare of others. For the former, the conduct must create the likelihood of serious injury, not merely pose a remote risk or possibility; under the latter, the defendant must know of the peril and take action in a manner demonstrating that it did not care. Proof of simple negligence would not suffice to establish either component. The evidence must be “clear and convincing,” such that it produces in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations. Either circumstantial or direct evidence can be used.

However, noted the Court, Texas statutory law provides hospitals and physicians a confidentiality privilege which “cloaks all proceedings and records of a credentialing body in secrecy.” 2003 WL 60482, *5.  Under section 160.007 of the Texas Occupations Code, “each proceeding or record of a medical peer review committee is confidential, and any communication made to a medical peer review committee is privileged.”  Under section 161.032 of the Texas Health & Safety Code, the records and proceedings of a medical committee are confidential and exempt from court subpoena.  Together, stated the Court, the two provisions allow exacting, critical and candid peer review of health-care provider competence and performance, promoting improved standards of medical care within the hospital and profession. Id.   They also, concluded the Court, precluded Romero from discovering evidence sufficient to prove his malicious credentialing claim.

In reviewing the legal and factual sufficiency of Romero’s evidence, the Court of Appeals ruled that an extreme risk of harm was shown by Dr. Baker’s drug abuse, satisfying the objective prong for malice, and that the hospital was aware of such abuse and of the extreme risk it presented, satisfying the requirement for subjective awareness.  Nevertheless, the Court held that Romero failed to meet his burden of proving the hospital acted with conscious indifference –- the final hurdle for establishing malice. The fact that the hospital did not suspend or deny Dr. Baker’s privileges when it became aware of his drug addiction did not, as a matter of law, establish conscious indifference on the hospital’s part, as even Romero’s own credentialing expert admitted such action was not mandatory.  Because the hospital invoked its confidentiality privilege as to Dr. Baker’s credentialing review, there was no evidence as to what the hospital did in response to its awareness of Dr. Baker’s drug problem, and nothing could be inferred from the lack of such information. Id. at *13.

The Court was clearly troubled by the situation, echoing Texas Supreme Court Chief Justice Phillip’s concern in his Agbor dissent that the statutes make proving a malicious credentialing claim “virtually impossible.”  It did not disagree with Romero’s argument that “if malice was not proved here, it can never be proved.”  But that, one can almost hear the Court saying, is the point.