In a case of fi rst impression, an Illinois appellate court held that Illinois hospitals may be liable for the negligent credentialing of physicians. A negligent credentialing cause of action makes a hospital liable for damages that include injury to its patients when the hospital fails to ensure that physicians practicing in their facilities are properly credentialed and licensed.

In Frigo v. Silver Cross Hospital and Medical Center, 2007 WL 2736595 (Ill. App. 1st Dist.), the plaintiff brought a medical malpractice suit against Dr.Paul Kirchner and Silver Cross Hospital (the “Hospital”) in October 2000. In her original complaint, the plaintiff alleged that Dr. Kirchner was negligent in performing an elective bunion surgery on an ulcerated area. With regard to the Hospital, the plaintiff asserted both that Dr. Kirchner was its agent and that the Hospital improperly managed and maintained the Hospital.

Through discovery, the plaintiff learned that the Hospital granted Dr. Kirchner Category II surgical privileges even though he did not meet the requirements for these privileges under the Hospital and the medical staff bylaws and the Joint Commission for Accredidation of Healthcare Organizations (“JCAHO”) standards. The plaintiff then amended her complaint to include a claim for negligent credentialing against the Hospital. At trial, the jury found the Hospital guilty of negligent credentialing and awarded the plaintiff $7.7 million. The Hospital appealed.

Writing for the majority, Justice P. Scott Neville Jr. acknowledged that no Illinois cases have addressed negligent credentialing as a recognized cause of action. Nevertheless, he emphasized that the principles involved were not new. The court relied on Illinois Supreme Court cases Darling v. Charleston Community Memorial Hospital, 33 Ill. 2d 326, 331 (1965) (recognizing that hospitals have an independent duty to assume responsibility for the care of their patients), and Jones v. Chicago HMO Ltd. of Illinois, 191 Ill. 2d 278, 291 (2000) (finding this duty to be administrative or managerial in character). The court concluded that a negligent credentialing claim does exist and the following elements must be proven to prevail on the claim:

First, the plaintiff must prove the hospital failed to meet the standard of reasonable care in the selection of the physician to whom it granted medical staff privileges and whose medical care provided the basis for the underlying medical malpractice claim. Hospitals are required to exercise reasonable care in the granting of medical staff privileges. “Reasonable care” means that degree of care, skill and judgment usually exercised under like or similar circumstances by the average hospital. Expert testimony is required to prove the applicable standard of care and whether that standard was violated.

Second, the plaintiff must prove that the physician, while practicing pursuant to negligently granted medical staff privileges, breached the applicable standard of care.

Finally, the plaintiff must prove that the negligent granting of medical staff privileges was a proximate cause of the plaintiff’s injuries.

On appeal, the Hospital argued, among other things, that it was not negligent because Dr. Kirchner met all of the standards to obtain Category II surgical privileges and even if he did not, he should have been “grandfathered” in because he met previous standards. The Hospital also argued that the negligent credentialing claim was barred by the Hospital Licensing Act, 210 ILCS 85/10.2, and the Medical Studies Act, 735 ILCS 5/8 2101, 8-2102, that provide immunities and privileges for medical credentialing decisions.

The court found ample evidence in the record to support the negligence claim. Also, there was no concept of “grandfathering” in the Hospital’s bylaws and, in any event, Dr. Kirchner had never met the standards set out in the bylaws for Category II surgical privileges; therefore, he could not be “grandfathered” in. With respect to the Hospital Licensing Act, the court disagreed with the Hospital’s position that the statute insulated it from liability on the basis of its credentialing decisions. The court adopted a narrow reading of the statute, fi nding it to be a limitation on remedies available to physicians aggrieved by a hospital’s peerreview process. With respect to the Medical Studies Act, the court rejected the Hospital’s contention that the Act shielded all information reviewed by its credentialing committee. The court defi ned the scope of the privilege to documents “generated specifi cally for the use of a peer-review committee.” Chicago Trust Co. v. Cook County Hospital, 298 Ill. App. 3d 396, 402 (1998). Further, the court stressed that documents such as the bylaws and regulations created in the ordinary course of business were not privileged even if they were subsequently used by a committee in a peer-review process. Ultimately, the court found that information the plaintiff relied on was not protected since the complaint did not center on the process the credentialing committee followed when it granted Dr. Kirchner his credentials; rather, the information related to the credentialing requirements codifi ed in the Hospital’s regulations and bylaws and the JCAHO standards (characterized as documents generated in the ordinary course of business) and whether Dr. Kirchner met those requirements.

Since Illinois has now joined other states by recognizing a cause of action for negligent credentialing, hospitals must realize that this development constitutes an added fi nancial risk.

Considerations in light of this decision

  • Hospitals are strongly advised to make sure that their bylaws, rules and regulations comport with JCAHO standards for credentialing and reappointment.
  • Every effort should be made to follow the hospital’s bylaws, the medical staff bylaws, and JCAHO mandates.
  • Any local practices or “customs” associated with credentialing and reappointment, such as the grandfather clause, should be codifi ed in the hospital’s bylaws.
  • The hospital’s board of directors should make an independent examination of a candidate in addition to assessments and evaluations made previously by the credentials committee and the medical staff executive committee.
  • Hospitals are strongly encouraged to set up policies and/or an oversight committee to ensure that bylaws, rules and regulations are, in fact, followed.
  • Hospitals should conduct thorough background investigations of candidates seeking credentialing, focusing on such information as education, experience, training and medical malpractice history.