Smith v. Alice Peck Day Memorial Hosp CV-92-645-B 04/21/93 P UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Gail Smith, M.D.

v._____________________________ Civil No. 92-645-B

Alice Peck Day Memorial Hospital, Mark Nunlist, M.D., and Barbara Talskv, C.R.N.A.

O P I N I O N

On February 18, 1993, I granted Dr. Gail Smith's motion for

an expedited Order compelling the Alice Peck Day Memorial

Hospital to produce certain documents that the hospital claims

are protected from disclosure by a "guality assurance" privilege.

In this Opinion, I explain the reasons for my Order.

I. BACKGROUND

Dr. Smith commenced this action for injunctive relief and

damages after the hospital revoked her staff privileges. Her complaint alleges seven state1 and three federal2 claims.

Jurisdiction is based on both diversity of citizenship and the

presence of federal claims.

On February 1, 1993, Dr. Smith moved to compel the hospital

to produce certain documents generated during the course of an

internal investigation and several hospital committee meetings

that resulted in the revocation of her staff privileges. The

hospital opposes the motion on the ground that the reguested

documents are protected by the guality assurance privilege

codified at section 151:13-a, II of the New Hampshire Revised

Statutes Annotated.3 Dr. Smith concedes that the documents she

1Failure to Carry Out Review in Accordance With By-Laws (Count I); Breach of Contract (Count II); Arbitrary, Capricious, and Unreasonable Decision (Count III); Wrongful Termination (Count IV); Unfair or Deceptive Trade Practices (Count V ) ; Tortious Interference With Contractual Relations and Prospective Economic Advantage (Count IX); Libel and Slander (Count X ) .

2Violation of Civil Rights Under

(Count VI); Discriminatory Employment Practices Under 42 U.S.C. § 2000e- 2 (Count VII); Conspiracy to Violate Civil Rights Under 42 U.S.C. 1985(3) (Count VIII).

3Section 151:13-a, II provides:

Records of a hospital committee organized to evaluate matters relating to the care and treatment of patients or to reduce morbidity and mortality and testimony by hospital trustees, medical staff, employees, or other committee attendees relating to activities of the guality assurance committee shall be

2 seeks were created in connection with the activities of a quality

assurance committee. Nevertheless, she relies on an exception to

section 151:13-a, II and argues that the quality assurance

privilege is inapplicable in actions challenging a hospital's

decision to revoke a physician's staff privileges.

II. DISCUSSION

Before I turn to the merits of the hospital's privilege

claim, I must determine whether the claim is governed by state or

federal law.

A. Choice of Law

The parties assume that this discovery dispute is governed

by state law. I disagree.

confidential and privileged and shall be protected from direct or indirect means of discovery, subpoena, or admission into evidence in any judicial or administrative proceeding, except that in the case of a legal action brought by a quality assurance committee to revoke or restrict a physician's license or hospital staff privileges, or in a proceeding alleging repetitive malicious action and personal injury brought against a physician, a committee's records shall be discoverable.

-a, II (1990).

3 Discovery in civil cases pending in federal district court

is controlled by the Federal Rules of Civil Procedure. Rule 26

provides broadly that "[p]arties may obtain discovery regarding

any matter, not privileged, which is relevant to the subject

matter involved in the pending action . . . Fed. R. Civ. P.

26(b)(1) (emphasis added). The guestion of what matters are

privileged in federal court must be decided in light of Rule 501

of the Federal Rules of Evidence, which states:

Except as otherwise reguired by the Constitution of the United States or provided by Act of Congress or in rules prescribed by the Supreme Court pursuant to statutory authority, the privilege of a witness . . . shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience. However, in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness . . . shall be determined in accordance with State law.

Fed. R. Evid. 501.

Read literally. Rule 501 appears to reguire the application

of the federal common law of privileges with respect to the

federal claims and the state law of privileges with respect to

the state claims. Such an approach, however, has been rejected

4 by other courts for the following reason:

If a communication were privileged under state law but not under federal law, or if a communication were privileged under federal law but not under state law, it would be meaningless to hold the communication privileged for one set of claims but not for the other. Once confidentiality is broken, the basic purpose of the privilege is defeated.

Perrignon v. Bergen Brunswig Corp.,

(1978);

accord Wm. T. Thompson Co. v. General Nutrition Corp.,

(3d Cir. 1982); Hansen v. Allen Memorial Hosp.,

(S.D. Iowa 1992). Thus, in federal guestion

cases where pendent state law claims are raised, the asserted

privileges are governed by federal common law. See, e.g., Wm. T .

Thompson C o .,

; Hansen,

;

Perrignon,

. Similarly, in cases such as this

one, where jurisdiction is based on both diversity of citizenship

and the presence of federal claims, federal common law controls

any claim of privilege. See von Bulow by Auersperg v. von Bulow,

811 F .2d 136, 141 (2d Cir. 1987).

B. Application

In the case of In re Hampers, the Court of Appeals for the

First Circuit established a two-part test for determining whether

a federal court should recognize a state evidentiary privilege as

5 a matter of federal common law.4

(1st Cir.

1981). The test may be paraphrased as follows:

1. Would the New Hampshire courts recognize the privilege ?

2. Is the asserted privilege "intrinsically meritorious" in the federal court's own judgment?

See id.; see also Sabree v. United Broth, of Carpenters & Joiners

Local 33,

(D. Mass. 1989); Massachusetts v.

First Nat. Supermarkets, Inc.,

(D. Mass.

1987). This test is in accord with the accepted principle that

"comity between state and federal sovereignties impels federal

courts to recognize state privileges where this can be

accomplished at no substantial cost to federal substantive and

procedural policy." United States v. King,

(E.D.N.Y. 1976).

Thus, in determining whether the hospital's privilege claim

has merit, I will first determine whether the state courts would

apply the privilege in a similar case. I will then make my own

assessment as to whether it would be "intrinsically meritorious"

4Ihe hospital does not contend that the guality assurance privilege it asserts is derived from the Health Care Quality Improvement Act of 1986,

, et sea. Thus, cases which evaluate a guality assurance privilege claim under this statute are inapplicable. See, e.g., LeMasters v. Christ H o s p . ,

(S.D. Ohio 1991); Teasdale v. Marin Gen. H o s p . ,

(N.D. Cal. 1991).

6 to apply the privilege here.

1. Would the New Hampshire courts recognize the privilege ?

The applicability of the quality assurance privilege in this

case depends upon the meaning of an exception to the privilege

which exists "in the case of a legal action brought by a quality

assurance committee to revoke or restrict a physician's license

or hospital staff privileges . . .

-a, II (1990) (emphasis added). The hospital suggests

that the term "legal action" means a judicial proceeding.

Accordingly, the hospital contends that the exception applies

only where a hospital quality assurance committee brings an

action in court to revoke a physician's privileges. Dr. Smith

argues that "legal action" includes any formal proceeding to

revoke or restrict privileges and any judicial proceeding which

challenges a decision to revoke or restrict privileges.

Accordingly, she contends that the exception applies to all

physician revocation proceedings without regard to whether the

physician's privileges were revoked in a judicial proceeding.

Because the New Hampshire Supreme Court has not yet addressed

this issue, I must look to the Court's interpretative methodology

to determine which of the two proposed interpretations would be

followed by the state courts.

7 The New Hampshire Supreme Court's primary rule of

construction is that statutory terms will be given their ordinary

meaning and will be construed in the context of the statute as a

whole. Great Lakes Aircraft Co. v. Claremont,

, 277-

78 (1992); Opinion of the Justices,

(1992).

When construing a statute, the Court will reject proposed

interpretations that would deprive a significant portion of the

statute of meaning or cause absurd results. New England

Brickmaster, Inc., v. Salem,

(1990); State v.

Hart,

(1988). Extrinsic evidence, such as

legislative history, will only be used to resolve ambiguities

which exist on the face of the statute. See Chroniak v. Golden

Inv. Corp.,

(1990). Finally, the Court has

recognized that the guality assurance statute, like all

evidentiary privileges, must be narrowly construed. See In re K ,

(1989); see also University of Pa. v. EEOC,

(1990) (recognizing the general rule that

evidentiary privileges must be strictly construed).

_____ Applying these rules here, I hold that the state courts

would not adopt the hospital's proposed interpretation of the

exception to the guality assurance privilege. First, the

hospital proposes a narrow construction of the exception rather than of the privilege itself. As a result, if the hospital's

interpretation of section 151:13-a, II were adopted, the quality

assurance privilege would rarely, if ever, permit a physician to

determine whether a privilege revocation decision was properly

made.5 Such a broad application of the privilege is inconsistent

with the New Hampshire Supreme Court's statement in In re K that

the quality assurance privilege must be narrowly construed.

Second, the hospital's proposed interpretation of the

physician privilege revocation exception would deprive the

exception of meaning in all but the most unlikely of cases. A

hospital does not need to file suit to terminate a physician's

privileges. See generally Bricker v. Sceva Speare Hosp., Ill

N.H. 276, cert, denied,

(1971) (upholding a

hospital's unilateral decision to terminate a physician's staff

privileges). Moreover, it is difficult to conceive of the

circumstances under which a hospital could commence a judicial

proceeding to terminate a physician's privileges.6 Thus, if I

5Counsel for the defendants conceded during oral argument that their construction of the privilege would allow a hospital to shield from discovery even explicit and direct evidence that a physician's privileges had been terminated for an obviously improper reason such as racial discrimination.

defendants identified only two instances in which a hospital might commence a lawsuit in connection with a physician privilege revocation decision. The first was a declaratory adopted the hospital's argument, I would violate New Hampshire's

accepted rule of construction that statutory terms should not be

given an interpretation that deprives significant portions of the

statute of meaning. See, e.g.. New England Brickmaster, Inc.,

133 N.H. at 663; Hart.

.

Finally, nothing in the legislative history of section

151:13-a, II suggests that the New Hampshire legislature intended

to allow hospitals to invoke the guality assurance privilege in

physician revocation cases. To the contrary, the legislative

history indicates that the principal purpose of section 151:13-a,

II is to protect guality assurance materials from being disclosed

to malpractice plaintiffs. See Senate Journal, June 4, 1981 at

1413; Written Testimony of Claire Brown, Assistant Administrator,

Concord Hospital, Before the House Committee on Health & Welfare

(Apr. 20, 1981); Testimony of Henry Coe, New Hampshire Hospital

Association, Before the Senate Committee on Public Health &

Welfare (May 11, 1981); see also In re K ,

(section

151:13-a "simply leaves certain potential malpractice plaintiffs

judgment action to obtain a ruling on the hospital's right to revoke a physician's privileges. The second was an action for injunctive relief to bar a discharged physician from the hospital grounds. Either action would be highly unlikely, if not unprecedented. Moreover, neither action is truly a proceeding to revoke or restrict a physician's hospital privileges.

10 in the position of any litigant, or intending litigant, who

cannot depend on the luxury of relying on the opposing party to

furnish pretrial investigation and preliminary expert

evaluation"). This legislative purpose can be fully achieved

without extending the guality assurance privilege to physician

revocation cases.

In contrast to the hospital's proposed interpretation. Dr.

Smith's interpretation is consistent with the rules of

construction favored by the New Hampshire Supreme Court. First,

her interpretation narrowly construes the privilege in accordance

with the Court's directive in In re K . Second, it leaves the

exception with a meaning and effect without adversely affecting

the applicability of the privilege in malpractice cases. Thus, I

conclude that the New Hampshire state courts would adopt Dr.

Smith's proposed interpretation and hold that the guality

assurance privilege is inapplicable in litigation challenging a

hospital's decision to revoke a physician's staff privileges.

2. Is the asserted privilege "intrinsically meritorious" in the federal court's own judgment?

Since I have determined that the state courts would not

apply section 151:13-a, II in a case such as this, I need not

determine whether the application of that section to physician

11 privilege revocation cases is intrinsically meritorious. I do so

now, however, to inform the parties that I would not apply the

privilege here even if the state courts would do so under similar

circumstances.

In determining whether the privilege is "intrinsically

meritorious" to warrant recognition under federal law, a court

ordinarily must find the following: (i) the communication must

originate in a confidence that it will not be disclosed; (ii)

this confidentiality must be "essential 'to the full and

satisfactory maintenance of the relation between the parties;'"

(ill) the relation must be one "which 'ought to be sedulously

fostered;'" and (iv) the harm that "'would inure to the relation

by the disclosure of the communication must be greater than the

benefit thereby gained for the correct disposal of the

litigation.'" See Hampers,

(guoting ACLU of

Miss, v. Finch,

(5th Cir. 1981)). If one of

these conditions is not present, the state law privilege should

not be recognized. See Finch,

. Applying this

analysis to the instant case, I conclude that with respect to the

fourth element, the balance must tip in favor of Dr. Smith and

thus in favor of disclosure.

12 The primary purpose of section 151:13-a, II as noted above,

is to allow hospitals to carry out their reviews of medical

procedures and clinical performance with knowledge that certain

documents generated during those reviews cannot be used by

malpractice plaintiffs. However, this privilege does not allow a

hospital to deprive a malpractice plaintiff of direct evidence of

the alleged malpractice. Instead, it merely allows a hospital to

protect the product of its own investigation into the alleged

malpractice when that investigation is conducted in connection

with actions of a guality assurance committee. Under such

circumstances, the privilege will generally have little impact on

a plaintiff's ability to establish a valid cause of action. See

Memorial Hosp. for McHenry County v. Shadur,

(7th Cir. 1981); Schafer v. Parkview Memorial Hosp., Inc.,

(N.D. Ind. 1984).

If, however, the guality assurance privilege is applied in

physician revocation cases, the potential impact on the physician

plaintiffs is far more dramatic. In such cases, a physician's

cause of action arises directly from the proceedings which the

hospital claims should be sheltered by the guality assurance

privilege. Thus, if a hospital were to invoke the privilege in a

physician revocation case, the hospital could deprive the

13 physician plaintiff of the only evidence that might support a

cause of action for improper termination. See Shadur,

; Pudlo v. Adamski, No. 91 C 7474,

, at *5

(N.D. 111. Feb. 12, 1992). In a case such as this, where Dr.

Smith alleges violations of federal employment and civil rights

laws and seeks documents that may contain the only means by which

she could ever prove such violations, the overriding public

interest in the enforcement of those laws outweighs any claim

that the hospital would be injured by the disclosure of the

allegedly privileged documents. See Shadur,

(interest in private enforcement of antitrust law outweighs the

hospital's interest in protecting documents from disclosure); cf.

Hampers,

(if the document reguested "contained the

only key to resolving a serious federal crime, the balance would

tilt" in favor of disclosure). Accordingly, I conclude that it

would not be intrinsically meritorious to apply the guality

assurance privilege in this proceeding even if the state courts

would apply the privilege in such cases.

Ill. CONCLUSION

Plaintiff's Motion for an Expedited Order Compelling

14 Production of Documents (document no. 16) is granted.

SO ORDERED.

Paul Barbadoro United States District Judge

April 21, 1993

cc: Bruce Felmly, Esg. Mark Larsen, Esg. Thomas Shirley, Esg. Jill Blackmer, Esg.

15