Miller v. Huron Regional Medical Center, Inc. et al

Filing 155

MEMORANDUM OPINION AND ORDER granting in part and denying in part 132 Motion for Summary Judgment; granting 133 Motion for Summary Judgment. Signed by U.S. District Judge Karen E. Schreier on 11/5/15. (SLW)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
LINDA A. MILLER, M.D.,

4:12-CV-04138-KES

Plaintiff,
vs.
HURON REGIONAL MEDICAL CENTER,
INC., CY B. HAATVEDT, M.D., as a
Member of its Executive Committee and
Individually, and
MICHAEL N. BECKER, M.D., as a
Member of its Executive Committee and
Individually,

MEMORANDUM OPINION AND
ORDER GRANTING SUMMARY
JUDGMENT IN PART AND DENYING
SUMMARY JUDGMENT IN PART

Defendants.

Linda Miller, M.D., filed a complaint against Huron Regional Medical
Center, Inc. (HRMC), Cy B. Haatvedt, M.D., and Michael N. Becker, M.D. The
complaint was subsequently amended. Docket 81. The first amended complaint
alleges the following causes of action against HRMC: breach of express
contract, breach of implied contract, negligence, and defamation. The first
amended complaint alleges the following causes of action against Dr. Becker
and Dr. Haatvedt: negligence, defamation, and interference with business
relationship and expectation. Defendants, HRMC, Dr. Haatvedt, and Dr.
Becker, move for summary judgment on all claims asserted by Dr. Miller.
Docket 132; Docket 133. Dr. Miller resists the motion. For the following
reasons, the court grants the motions in part and denies the motions in part.

Background
Viewing the evidence in the light most favorable to the nonmoving party,
Dr. Miller, the facts are:
Dr. Miller is a general surgeon, who began working at HRMC in February
2004. Dr. Miller and HRMC entered into a contract in February 2009 that
established that Miller would be employed as an independent contractor for
HRMC. A Surgical Services Agreement and HRMC Medical Staff Bylaws govern
the terms of the contract.
The Medical Staff Bylaws create a Medical Executive Committee (MEC).
The MEC oversees any request from the HRMC administration or medical staff
that seeks review of a physician’s quality of care. During the relevant time
period, Dr. Haatvedt, Dr. Becker, Dr. Jim Schwaiger, and Dr. Karl Blessinger
were members of the MEC.
On August 24, 2010, the HRMC Board of Directors passed a motion
requesting that the MEC conduct a review of Dr. Miller’s medical records to
determine whether there were any medical trends of concern. Docket 135 – 2,
at 16. In response, on October 14, 2010, the MEC met with Dr. Miller and
determined it would review 100% of Dr. Miller’s patient charts for a three
month period. The MEC sent a letter to Dr. Miller confirming the three-month
review and stated, “The charts will be reviewed for improvement in timeliness of
documentation as well as improvement in thoroughness and quality of
content.” Docket 135 - 5. The MEC completed its review and did not report any

2

problem with the charts during this review period. Despite this finding, the
Board of Directors decided to continue the review for an additional 90 days.
The MEC reviewed a grievance filed with the hospital on February 7,
2011. The grievance asserted that Dr. Miller performed an unnecessary surgery
that resulted in a patient’s physical complications. The MEC elected to send
the case to ProAssurance Casualty Company for further review.
Docket 135 – 2, at 8. At the time, ProAssurance was HRMC’s professional
liability insurance carrier.
On March 22, 2011, the HRMC Board of Directors requested that John
Single, HRMC’s Chief Executive Officer, meet with Dr. Miller “regarding medical
record deficiencies, the need to achieve consistent compliance, and that future
deficiencies may result in specific action by the Board.” Docket 135 – 2, at 30.
In April 2011, Dr. Miller treated a patient suffering from acute
pancreatitis. Dr. Miller performed surgery on the patient with the assistance of
Dr. Haatvedt. The patient later developed complications and was transferred to
Sioux Falls, South Dakota, for further care. The patient died in Sioux Falls
from unknown complications.
On April 25, 2011, three members of the HRMC Board of Directors met
with the MEC to discuss the internal and external reviews of Dr. Miller’s work.
Dr. Miller was not present during this meeting. After the meeting, the MEC
decided that Dr. Blessinger should meet with Dr. Miller to discuss whether she
would be willing to voluntarily reduce her surgical privileges.

3

In the afternoon of April 25, 2011, Dr. Blessinger met with Dr. Miller and
informed her about the MEC meeting earlier in the day. Dr. Blessinger notified
Dr. Miller that the Board of Directors requested that the MEC address
Dr. Miller’s recent issues associated with patient care. Furthermore,
Dr. Blessinger suggested that Dr. Miller voluntarily reduce her surgical
privileges. Even though the voluntary reduction in privileges was no guarantee
that HRMC would maintain its contract with Dr. Miller, Dr. Blessinger
informed Dr. Miller that there were no other viable options at that time. In
addition, based on a conversation with Single, Dr. Blessinger informed
Dr. Miller that a voluntary reduction in privileges was not a reportable event to
the National Practitioner Data Bank (NPDB). The following morning, on April
26, 2011, Dr. Miller submitted her reduction of privileges paperwork to Single.
After Dr. Miller submitted her paperwork to Single, HRMC determined
that Dr. Miller’s voluntary reduction in surgical privileges was a reportable
event. Single reviewed the NPDB Guidebook and sought the advice of Huron
attorney Rodney Freeman. Single believed that the internal and external
reviews of Dr. Miller’s quality of care, coupled with a voluntary reduction in
privileges, created a situation where HRMC was required to report the event to
the NDPB. An Adverse Action Report, dated May 11, 2011, was filed with the
NPDB. It stated that “Dr. Miller voluntarily surrendered a portion of her
surgical privileges while the Medical Executive Committee was investigating her
quality of care. The Board of Directors approved this surrender of certain

4

privileges April 29, 2011.” Docket 135 – 8, at 3. Dr. Miller responded to the first
Adverse Action Report on June 6, 2011, and stated the following:
In late April, I voluntarily reduced my privileges as I was concerned
about the quality of care I was able to give. At that time, I was
managing some personal issues along with a demanding call
schedule of solo practice. I was working 24/7 and hadn’t taken
time off in several months. Since that time, the issues have been
resolved, I took some much needed vacation time, and at the
subsequent Board Meeting in May, I requested and was granted
the majority of my privileges. (I did not request open Thoracic or
Vascular as I don’t have the need here.)
Id.
Following Dr. Miller’s reduction in surgical privileges, there was some
confusion regarding whether Dr. Miller had any remaining privileges. On
May 18, 2011, Dr. Miller sent a letter to Dr. Haatvedt that requested the
approval of privileges relating to modified radical mastectomy. Docket 137 – 5,
at 4. The letter also requested that the board consider approving privileges
associated with elective abdominal cases. Id. Dr. Miller proposed two conditions
in support of obtaining the new privileges: (1) the procedure would be
completed in the presence of another general surgeon; and (2) the patient’s
diagnosis, co-morbidities, and proposed surgery would be presented to
Dr. Haatvedt at least 24 hours before the surgery. Id. On June 3, 2011,
Dr. Miller sent a letter to the MEC that requested a myriad of additional
privileges. Id. at 5. The request suggested the imposition of the same two
conditions listed in Dr. Miller’s first letter. The HRMC Board of Directors
approved the issuance of new privileges with the conditions suggested by
Dr. Miller.
5

Following the approval of new surgical privileges, HRMC sent two
additional Adverse Action Reports to the NPDB. These reports indicated that
Dr. Miller received new privileges with the imposition of the conditions listed
above. HRMC sent the reports on July 21, 2011. Dr. Miller resigned from her
position at HRMC on September 2, 2011.
Standard of Review
Summary judgment is appropriate if the movant “shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). The moving party can meet this
burden by presenting evidence that there is no dispute of material fact or by
showing that the nonmoving party has not presented evidence to support an
element of its case on which it bears the ultimate burden of proof. Celotex Corp.
v. Catrett, 477 U.S. 317, 322-23 (1986). To avoid summary judgment, “[t]he
nonmoving party may not ‘rest on mere allegations or denials, but must
demonstrate on the record the existence of specific facts which create a
genuine issue for trial.’ ” Mosley v. City of Northwoods, Mo., 415 F.3d 908, 910
(8th Cir. 2005) (quoting Krenik v. Cty. of Le Sueur, 47 F.3d 953, 957 (8th Cir.
1995)).
Summary judgment is precluded if there is a factual dispute that could
affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). For purposes of a motion for summary judgment, the court views
the facts and the inferences drawn from such facts “in the light most favorable

6

to the party opposing the motion.” Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 588 (1986).
Discussion
I.

HRMC’s motion for summary judgment.
A.

Is HRMC entitled to summary judgment on the breach of
implied contract claim.

South Dakota Codified Law 53-1-3 establishes that a contract is either
“express or implied.” An express contract is “one, the terms of which are stated
in words,” whereas “[a]n implied contract is one, the existence and terms of
which are manifested by conduct.” Id. “A contract can either be express or
implied, but not both.” Humble v. Wyant, 843 N.W.2d 334, 343 (S.D. 2014)
(citing SDCL 53-1-3). HRMC asserts that the court should grant summary
judgment on count two of Dr. Miller’s complaint, alleging a breach of implied
contract, because the dispute involves a written Surgical Services Agreement
and HRMC Medical Staff Bylaws. Because the parties signed and operated in
accordance with the written agreement, HRMC’s motion for summary judgment
regarding count two of the complaint, alleging a breach of implied contract, is
granted.
B.

Is HRMC entitled to summary judgment on the breach of
express contract claim.

“It is well settled in South Dakota that ‘a hospital’s bylaws constitute a
binding contract between the hospital and the hospital staff members.’ ” Mahan
v. Avera St. Luke’s, 621 N.W.2d 150, 153 (S.D. 2001). When analyzing whether
a party has breached the bylaws, the court applies “the normal principles for
7

construction and interpretation of a contract.” Id. at 154. Typically, a jury
determines whether a party’s conduct constitutes a breach of contract. Harms
v. Northland Ford Dealers, 602 N.W.2d 58, 63 (S.D. 1999).
Dr. Miller alleges that HRMC breached the contract by disregarding the
Bylaws’ procedural mandates relating to corrective action. Specifically,
Dr. Miller argues that HRMC and the MEC breached the Bylaws by requesting
that Dr. Miller voluntarily reduce her surgical privileges without providing a
formal hearing. In its motion, HRMC asserts that the corrective action
procedures were inapplicable because formal corrective action proceedings
were never instituted against Dr. Miller.
The contractual provisions relied upon by each party are found in the
HRMC Medical Staff Bylaws. Bylaw 10.2 provides the criteria and procedures
associated with corrective action. Docket 135 – 4, at 33. Bylaw 10.2(a)
provides:
Whenever the medical activities or professional conduct of any
Member are, or are reasonably probable to be, contrary to the
delivery of quality patient care or to effective hospital operations,
corrective action against such Member may be requested by any
member of the Medical Staff, Board, President/CEO or any
employee of the Medical Center. Initiation of any corrective action
proceedings shall be the responsibility of the Executive Committee.
Additionally, Bylaw 10.2(b) states that “all requests for corrective action shall
be in writing, shall be made to the Executive Committee and shall be supported
by reference to the specific activities or conduct which constitutes the grounds
for the request.” Id. According to Bylaw 10.2(d), within fifteen days of the date
the request for corrective action is filed, the Executive Committee must
8

determine whether to dismiss the complaint or to appoint three physicians,
who are not in direct competition with the affected physician, to investigate the
charges. Id.
After the investigation is complete, under Bylaw 10.2(h), the Executive
Committee may recommend the following corrective actions:
(i)
(ii)
(iii)
(iv)
(v)
(vi)

Reject or modify the request for corrective action;
Issue a warning, a letter of admonition, or a letter of reprimand;
To impose terms of required clinical education, probation or
consultation;
Recommend reduction, suspension or revocation of clinical
privileges;
Recommend reduction of staff category or limitation of any staff
prerogative directly related to patient care;
Recommend that the affected Member’s Staff membership be
suspended or revoked.

Id. at 34. According to 10.2(i), if the Executive Committee recommends formal
action described in subsection (iv) through (vi), a physician is entitled to
procedural rights provided in Article XI of the Bylaws. Id.
In Article XI, Bylaw 11.1 establishes that physicians are entitled to a
hearing “upon the occurrence of any events as set forth in this Fair Hearing
Plan.” Id. According to Bylaw 11.2-1, the purpose of the Fair Hearing Plan
“shall be to promote quality health care through the adoption of procedures to
provide for reasonable investigations into questions concerning an individual’s
Medical Staff membership or clinical privileges[.]” Id. The Fair Hearing Plan also
itemizes potential action from the MEC or HRMC Board of Directors that
constitute grounds for a hearing:
(1)
(2)
(3)

Denial of initial Medical Staff appointment;
Denial of reappointment;
Revocation of Medical Staff appointment;
9

(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)

Denial of requested advancement in Medical Staff category;
Denial of requested initial clinical privileges;
Denial of requested increased clinical privileges;
Suspension or restriction of clinical privileges in excess of fourteen
days
Suspension or restriction of Medical Staff membership in excess of
fourteen days
Denial of requested committee affiliation;
Reduction in Staff category;
Individual application of or individual changes in mandatory
consultation requirements;
Change in terms of probation if it impacts on the exercise of
clinical privileges.

Id. at 35. According to Bylaw 11-2.1 (e) and (f), in the event that the MEC
makes one of the recommendations provided above, the Chief of Staff must give
notice to the affected physician, and the physician must request a hearing. Id.
at 37.
HRMC did not institute formal proceedings against Dr. Miller. Despite
HRMC’s decision to forego formal corrective action proceedings, Dr. Miller
argues that HRMC implemented corrective action through Dr. Blessinger’s
request to her to voluntarily reduce her surgical privileges. After the meeting
where the MEC decided to request a voluntary reduction in privileges, Dr.
Blessinger reached out to Dr. Miller in person. Dr. Blessinger describes the
conversation with Dr. Miller as “I discussed with her that reducing her
privileges might allow us to continue to have her practice medicine, give her
time to regroup, get her career back in order, and potentially as far as certain
board members, if something wasn’t done would consider termination of
agreement.” Docket 135 – 20, at 9. Dr. Miller describes the conversation with
Dr. Blessinger as more analogous to an ultimatum:
10

[T]he Medical Executive Committee had met, had just met, the
board had asked them to do something. He said that they were
trying to appease the Board of Directors. And the best way to do
this was for me to voluntarily reduce my privileges so that no
action would be taken by the MEC. . . . I then asked him what
alternatives I had. He said I had none.”
Docket 149 – 2, at 3.
Viewing the facts in a light most favorable to Dr. Miller, a reasonable jury
could conclude that HRMC failed to address its concerns regarding Dr. Miller’s
care in a manner prescribed in the Bylaws. A reasonable jury could find that
the Board of Directors, during the April 25, 2011 meeting, formally requested
that the MEC address the Board’s concerns about Dr. Miller’s care. A jury
could also find that the MEC, through Dr. Blessinger, made a formal
recommendation that Dr. Miller reduce her surgical privileges. Bylaws 10.2(i)
and 11-2(a) create a procedural right to a hearing when the MEC takes action
that results in the reduction of a physician’s surgical privileges. Here, when
Dr. Miller inquired about why she did not have an opportunity to attend the
MEC meeting, Dr. Blessinger allegedly responded by saying, “[T]hey didn’t have
time. As it was, they spent two hours discussing this.” Docket 149 – 2, at 3.
Even though HRMC did not institute a formal proceeding against
Dr. Miller, a jury could find that the board demanded corrective action and the
MEC responded by requesting that Dr. Miller reduce her surgical privileges. In
this scenario, the Bylaws create a procedural right to a hearing where
Dr. Miller could have challenged any concerns about her standard of care.
Because there are factual disputes relating to whether HRMC complied with its

11

Bylaws, the motion for summary judgement pertaining to a breach of express
contract is denied.
C.

Is HRMC entitled to summary judgment on Dr. Miller’s
negligence claim.

“In order to prevail in a suit based on negligence, a plaintiff must prove
duty, breach of that duty, proximate and factual causation, and actual injury.”
Johnson v. Hayman & Assocs., Inc., 867 N.W.2d 698, 702 (S.D. 2015). HRMC
does not argue that Dr. Miller failed to assert a prima facie negligence claim.
Instead, HRMC argues that it is immune from Dr. Miller’s negligence claim
based upon the Healthcare Quality Improvement Act.
Immunity under the HCQIA is a question of law that may be resolved
whenever the record is sufficiently developed. Johnson v. SSM Healthcare Sys.,
988 F. Supp. 2d 1080, 1087 (E.D. Mo. 2013), aff'd, 583 F. App'x 591 (8th Cir.
2014). HRMC urges the court to grant summary judgment regarding
Dr. Miller’s negligence claim by relying upon the immunity provision in
42 U.S.C. § 11137(c). Section 11137(c) states the following:
No person or entity (including the agency designated under section
11134(b) of this title) shall be held liable in any civil action with
respect to any report made under this subchapter (including
information provided under subsection (a) of this section) without
knowledge of the falsity of the information contained in the report.
The reporting requirement cited in § 11137(c) stems from 42 U.S.C. § 11133.
Section 11133 establishes that every health care entity that accepts the
surrender of clinical privileges from a physician “while the physician is under
an investigation,” must file a report with the Board of Medical Examiners.
42 U.S.C. § 11133(a)(1). The report should contain the name of the physician
12

and a description of the acts or omissions leading to the surrender of privileges.
42 U.S.C. § 11133(a)(3). “Thus, immunity for reporting exists as a matter of law
unless there is sufficient evidence for a jury to conclude the report was false
and the reporting party knew it was false.” Brown v. Presbyterian Healthcare
Servs., 101 F.3d 1324, 1334 (10th Cir. 1996).
In the Adverse Action Report filed with the NPDB, HRMC stated,
“Dr. Miller voluntarily surrendered a portion of her surgical privileges while the
Medical Executive Committee was investigating her quality of care. The Board
of Directors approved this surrender of certain privileges April 29, 2011.”
Docket 135 - 8, at 3. HRMC argues that it was legally obligated to file the
report with the NPDB because Dr. Miller was under an investigation as
articulated in 42 U.S.C. § 11133. HRMC also asserts that even if Dr. Miller was
not under an investigation as contemplated in the statute, Dr. Miller cannot
meet her burden of establishing that HRMC filed the report with knowledge of
the falsity of information contained in the report.
In response, Dr. Miller argues that the Adverse Action Report contained
false information because HRMC merely conducted a routine review of her case
files, not a formal investigation as contemplated in § 11133. Dr. Miller
maintains that there is sufficient evidence to find that HRMC filed reports that
contained false information and that HRMC was aware of the falsity.
Therefore, the court’s inquiry is limited to two issues. First, could a
reasonable jury find that HRMC’s internal and external review of Dr. Miller was
not an investigation as articulated in 42 U.S.C. § 11133(a)(1)(B)(i). Second, if
13

HRMC did not conduct what amounts to an investigation, is there sufficient
evidence to find that HRMC was aware of the falsity of information filed with
the NPDB.
1.

A reasonable jury could find that Dr. Miller was not
under an investigation at the time HRMC filed the
reports with the NPDB.

The term “investigation” as employed in the HCQIA is not defined by
statute or regulation. Costa v. Leavitt, 442 F. Supp. 2d 754, 769 (D. Neb.
2006). But the Secretary of the Department of Health and Human Services
published the National Practitioner Data Bank Guidebook, and it provides
guidelines relating to the analysis. The Guidebook provides the following
“Guidelines for Investigations:”
1. An investigation must be carried out by the health care entity, not an
individual on the staff.
2. The investigation must be focused on the practitioner in question.
3. The investigation must concern the professional competence and/or
professional conduct of the practitioner in question.
4. A routine or general review of cases is not an investigation.
5. A routine review of a particular practitioner is not an investigation.
6. An investigation should be the precursor to a professional review
action.
7. An investigation is considered ongoing until the health care entity’s
decision making authority takes a final action or formally closes the
investigation.
Docket 135 – 22, at 11. If the hospital can satisfy the investigation
requirements provided above, it must also have documentation to support its
formal action of filing a report with the NPDB:
A health care entity that submits an [Adverse Action Report] based
on surrender or restriction of a physician’s . . . privileges while
under investigation should have contemporaneous evidence of an
ongoing investigation at the time of surrender . . . Examples of
acceptable evidence may include minutes or excerpts from
14

committee meetings, orders from hospital officials directing an
investigation, and notices to practitioners of an investigation.
Id.
HRMC submits that all seven guidelines provided in the NPDB
Guidebook support the argument that Dr. Miller was under an investigation.
HRMC cites the six month period where the MEC conducted a 100% review of
Dr. Miller’s case files to ensure “improvement in timeliness of documentation
as well as improvement in thoroughness and quality of content.” Additionally,
the MEC sent one case to ProAssurance to review whether Dr. Miller had
breached any standard of care while conducting the procedure in question. To
substantiate the existence of these two investigations as provided in the NPDB
Guidebook, HRMC points to the testimony of HRMC physicians and MEC and
Board of Directors meeting minutes.
In response, Dr. Miller asserts that HRMC’s Medical Staff Bylaws reveal
that HRMC never completed necessary procedural requirements for the
internal reviews to reach the level of a formal investigation. Dr. Miller points
the court to Bylaw 10.2(d) which requires that the MEC create an Investigating
Committee to determine whether any alleged physician misconduct requires
corrective action. Because HRMC and the MEC did not convene a formal
investigative committee, Dr. Miller’s argument aligns with NPDB guidelines 4
and 5, which state that a routine review of cases and physicians is not an
investigation under the HCQIA.
Dr. Miller also cites to the depositions of HRMC physicians that
distinguish internal reviews from formal investigations. Dr. Miller first cites to
15

Dr. Blessinger’s statement that establishes the MEC was merely reviewing
Dr. Miller’s records to determine whether there were any trends that needed to
be addressed. Docket 135 – 20, at 4-5. Second, Dr. Miller cites to
Dr. Haatvedt’s testimony that states that “we weren’t investigating Dr. Miller.
We were reviewing cases. That’s different from a formal investigation.”
Dr. Haatvedt explains that “the investigation is a formal action where we have
to appoint an ad hoc committee. A review is just – we’re looking at practice
standards and reviewing charts, listening to those kinds of things, but it’s not
an investigating committee.” Docket 135 – 15, at 6. These statements by HRMC
physicians and members of the MEC support the argument that the internal
review was merely a routine practice, not an investigation.
As it pertains to the review conducted by ProAssurance, Dr. Miller argues
that the external review was merely an insurance related process that assessed
potential liability associated with a surgical procedure. Dr. Miller aptly cites the
fact that ProAssurance did not provide a formal report regarding its analysis.
Instead, ProAssurance conducted a phone interview with the reviewing
physician and sent a letter to HRMC summarizing the conversation.
Docket 135 – 11.
Relying upon guidelines provided in the NPDB guidebook, a reasonable
jury could find that Dr. Miller was not under an investigation at the time she
surrendered her surgical privileges. Multiple physicians downplayed the
internal review of Dr. Miller’s cases and distinguished that review from the type
of action that would constitute a formal investigation. Moreover, a reasonable
16

jury could find that the review conducted by ProAssurance is more analogous
to an external risk assessment than a formal investigation. Thus, viewed in the
light most favorable to Dr. Miller, the first element of the immunity analysis
does not support a finding of immunity.
2.

A reasonable jury could find that HRMC was aware of the
false information contained in the Adverse Action
Report.

The “Health Care Quality Improvement Act confers immunity on any
person who makes a report to the National Practitioner Data Bank ‘without
knowledge of the falsity of the information contained in the report.’ ” Brown,
101 F.3d at 1334 (citing 42 U.S.C. § 11137(c)). “Thus, immunity for reporting
exists as a matter of law unless there is sufficient evidence for a jury to
conclude the report was false and the reporting party knew it was false.” Id.
HRMC relies upon two arguments to establish that it was not aware of
the falsity of any information in the Adverse Action Report. First, HRMC
submits that Single sought the advice of counsel, Rodney Freeman, to confirm
the necessity of filing a report with the NPDB. Second, HRMC asserts that
Dr. Miller can produce no evidence to establish that HRMC was aware of any
false information in the Adverse Action Report.
To dispute HRMC’s argument that relies upon the advice of counsel,
Dr. Miller cites Bucher v. Staley, 297 N.W.2d 802 (S.D. 1980). In Staley, the
Supreme Court of South Dakota stated the following: “To constitute a good
defense, the advice of counsel must have been sought in good faith, from
honest motives, and for good purposes, after a full and fair disclosure of all the
17

facts within the accuser’s knowledge and information, and the advice must
have been followed in good faith.” Id. at 805. Based on Staley, Dr. Miller
attempts to reject the value of Freeman’s legal advice by asserting that
“Freeman may have simply acquiesced in a conclusion Single had already come
to when stating: ‘The fact that [Single] advised me that [Miller] was voluntarily
surrendering privileges while under investigation triggered the report.’ ” Docket
145, at 11.
As HRMC’s Chief Executive Officer, Single knew that the MEC had not
instituted formal corrective action proceedings against Dr. Miller. Without
formal corrective action proceedings, Single was also aware that the MEC had
not appointed a committee to conduct a formal investigation as required by the
Bylaws. Moreover, according to Dr. Blessinger’s deposition testimony, Single
initially informed Dr. Blessinger that a voluntary reduction of Dr. Miller’s
privileges was not a reportable event. Viewing these facts in a light most
favorable to Dr. Miller, a reasonable jury could conclude that Single provided
Freeman with false information, namely that Dr. Miller was under an
investigation, and that Freeman relied on this false information when he
opined that HRMC needed to report Dr. Miller to the NPDB. As a result, HRMC
may not be able to avail itself of the advice of counsel defense. And, Dr. Miller
can argue that Single was aware of the false information included in the
Adverse Action Report, namely that Dr. Miller was under an investigation when
in fact she was not under investigation under HRMC’s corrective action

18

proceedings or Bylaws. Thus, 42 U.S.C. 11137(c) does not provide immunity
from the negligence claim. HRMC’s motion for summary judgment is denied.
D.

Are administrative remedies a prerequisite to filing suit.

HRMC also submits that summary judgment is appropriate because
Dr. Miller did not challenge the accuracy of the Adverse Action Report with the
Secretary of the Department of Health and Human Services before filing suit.
HRMC relies upon 42 U.S.C. § 11136, 45 C.F.R. § 60.21, and a United States
District Court decision in Straznicky v. Desert Springs Hosp., 642 F. Supp. 2d
1238 (D. Nev. 2009). 42 U.S.C. § 11136 requires the Secretary of the
Department of Health and Human Services to provide procedures for a
physician to dispute the accuracy of reports filed with the NPDB.
45 C.F.R. § 60.21 outlines the process for a physician to challenge the
accuracy of an Adverse Action Report.
In Straznicky, a physician sought injunctive relief stemming from a
hospital filing an Adverse Action Report. 642 F. Supp. 2d at 1244. The court
held that the physician’s claim was premature because the physician failed to
challenge the accuracy of the report with the Secretary of the Department of
Health and Human Services as provided in 45 C.F.R. § 60.14. Id. at 1245-46
(45 C.F.R. § 60.14 was renumbered in 2010 and 2013, without material
change, to 45 C.F.R. § 60.21).
Dr. Miller disputes the application of Straznicky by arguing that the
court’s holding in Straznicky is limited to the viability of seeking injunctive
relief. Further, Dr. Miller points the court to the decisions rendered in Ritten v.
19

Lapeer Reg’l Med. Ctr., 611 F. Supp. 2d. 696 (E.D. Mich. 2009), and Zawislak v.
Memorial Hermann Hosp. Sys., 2011 WL 5082422 (S.D. Tex. 2011). The Ritten
and Zawislak courts held that the administrative remedies available to correct
the information filed with the NPDB are not a prerequisite to filing suit. See
Ritten, 611 F. Supp. 2d at 734 (stating the regulations provide that a physician
“may” challenge the report through administrative channels, and thus “does
not dictate such a course of action as a prerequisite to suit.”); Zawislak, 2011
WL 5082422 at *2 (holding that a failure to proceed through the administrative
process does not preclude filing suit).
The court finds the Ritten and Zawislak analysis persuasive.
45 C.F.R. § 60.21 states that a “[physician] may request that the Secretary
review the report for accuracy.” Id. Because the regulation employs permissive
language and does not mandate that the physician pursue an administrative
remedy, the court holds that Dr. Miller’s failure to dispute the accuracy of the
report does not provide a basis for granting HRMC’s motion for summary
judgment.
E.

Is HRMC immune from Dr. Miller’s defamation claim.

According to SDCL 20-11-2, defamation is “effected by: (1) Libel; or (2)
Slander.” SDCL 20-11-3 defines libel as “a false and unprivileged publication
by writing . . . which has a tendency to injure [a person] in his occupation.”
“Slander is a false and unprivileged publication, other than libel[.]”
SDCL 20-11-4. HRMC asserts that the immunity provision in
42 U.S.C. § 11137(c) bars Dr. Miller’s defamation claim.
20

The court’s analysis regarding HRMC’s immunity defense to Dr. Miller’s
negligence claim directly relates to the defamation claim. Viewing the facts in a
light most favorable to Dr. Miller, a reasonable jury could conclude that the
Adverse Action Report contained false information and that Single, acting on
behalf of HRMC, was aware of the false information. As such, immunity does
not apply here. HRMC’s motion for summary judgment relating to the
defamation claim is denied.
F.

Can Dr. Miller present evidence relating to punitive damages.

South Dakota law allows plaintiffs to recover punitive damages “where
the defendant has been guilty of oppression, fraud, or malice, actual or
presumed[.]” SDCL 21-3-2. “Malice as used in reference to exemplary damages
is not simply the doing of an unlawful or injurious act, it implies that the act
complained of was conceived in the spirit of mischief or of criminal indifference
to civil obligations.” Dahl v. Sittner, 474 N.W.2d 897, 900 (S.D. 1991).
Punitive damages “are not ordinarily recoverable in actions for breach of
contract, because, as a general rule, damages for breach of contract are limited
to the pecuniary loss sustained.” Hoffman v. Louis Dreyfus Corp., 435 N.W.2d
211, 214 (S.D. 1989). As HRMC notes in its reply brief, Dr. Miller does not
dispute that punitive damages are unavailable in regard to her breach of
contract claim. Accordingly, the court grants HRMC’s motion for summary
judgment relating to punitive damages stemming from the breach of contract
claim.

21

As to the viability of punitive damages relating to the negligence and
defamation claims, the court declines to provide a holding at this time. As
articulated in Lillibridge v. Nautilus Ins. Co., 2013 WL 870439 (D.S.D. 2013),
near the end of Dr. Miller’s case in chief, she can request a hearing outside the
presence of the jury where the court will review the evidence to determine
whether there is a reasonable basis “to believe that there has been willful,
wanton, or malicious conduct by [HRMC.]” Id. at *7. If Dr. Miller meets this
evidentiary burden, the court will allow Dr. Miller to present evidence relating
to punitive damages.
II.

Dr. Becker and Dr. Haatvedt’s motion for summary judgment.
Dr. Miller’s claims against Dr. Becker and Dr. Haatvedt stem from their

positions on the MEC. The potential conduct at issue includes the decision to
request that Dr. Miller voluntarily reduce her surgical privileges and the
decision to supervise procedures completed by Dr. Miller after she recouped
some of her privileges.
A.

Does 42 U.S.C. §11137 provide immunity for the conduct of
Dr. Becker and Dr. Haatvedt.

Dr. Becker and Dr. Haatvedt argue that they are immune from suit based
on the protection provided by 42 U.S.C. § 11137(c). Section 11137(c) provides
immunity for the act of filing an Adverse Action Report with the NPDB. Because
Dr. Becker and Dr. Haatvedt took no part in filing the report, the immunity
provided by § 11137(c) does not apply to their conduct.

22

B.

Does 42 U.S.C. §§ 11111 and 11112 provide immunity for the
conduct of Dr. Becker and Dr. Haatvedt.

42 U.S.C. § 11111 establishes a limitation on damages stemming from
professional peer review. In part, the statute provides the following protection:
if a professional review action 1 (as defined in section 11151(9) of
this title) of a professional review body meets all the standards
specified in section 11112(a) of this title . . . (A) the professional
review body, [and] (B) any person acting as a member or staff to
the body . . . . shall not be liable in damages under any law of the
United States or of any State[.]
42 U.S.C. § 11111. To that end, 42 U.S.C. § 11112(a) provides that the
professional review action must be completed in accordance with the following
requirements:
1. In the reasonable belief that the action was in the furtherance of
quality health care,
2. After a reasonable effort to obtain the facts of the matter,
3. After adequate notice and hearing procedures are afforded to the
physician involved or after such other procedures as are fair to the
physician under the circumstances, and
4. In the reasonable belief that the action was warranted by the facts
known after such reasonable effort to obtain facts. . . .
42 U.S.C. §11112(a). “A professional review action shall be presumed to have
met the preceding standards necessary for the protection set out in section
11111(a) of this title unless the presumption is rebutted by a preponderance of
the evidence.” Id.

42 U.S.C. § 11151(9) defines professional review action as “an action or
recommendation of a professional review body which is taken or made in the
conduct of professional review activity, which is based on the competence or
professional conduct of an individual physician . . . which affects (or may
affect) adversely the clinical privileges . . . of the physician.”
1

23

The statutory presumption included in section 11112(a) places the
burden of proof upon Dr. Miller in this analysis. Therefore, the court must
review whether “a reasonable jury, viewing the facts in the best light for
[Dr. Miller], [could] conclude that [she] has shown, by a preponderance of the
evidence, that [HRMC’s] actions are outside the scope of § 11112(a).”
Sugarbaker v. SSM Health Care, 190 F.3d 905, 912 (8th Cir. 1999). In other
words, the court must determine whether “[Dr. Miller] ‘satisfied [her] burden of
producing evidence that would allow a reasonable jury to conclude that
[HRMC’s] peer review disciplinary process failed to meet the standards of
HCQIA.’ ” Id. (quoting Brader v. Allegheny Gen. Hosp., 167 F.3d 832, 839
(3d Cir. 1999).
In this case, a reasonable jury could find that HRMC and the MEC failed
to satisfy the standards of the HCQIA. While the court accepts that HRMC
likely complied with the first, second, and fourth elements of
42 U.S.C. § 11112(a), Dr. Miller has presented sufficient evidence to establish
that HRMC failed to comply with the third element. The third element
mandates that the HRMC peer review process provide a hearing or some other
procedure to ensure fairness. The record establishes that HRMC and the MEC
failed to do so. As such, the HCQIA does not provide immunity for Dr. Becker
and Dr. Haatvedt in this case.

24

C.

Does SDCL 36-4-25 provide immunity for the conduct of Dr.
Becker and Dr. Haatvedt.

Dr. Becker and Dr. Haatvedt also argue that they are immune from
Dr. Miller’s tort claims under South Dakota law. They rely upon SDCL 36-4-25,
which provides:
There is no monetary liability on the part of, and no cause of action
for damages may arise against, any member of a duly appointed
peer review committee 2 engaging in peer review activity 3 comprised
of physicians licensed to practice medicine . . . if the committee
member or consultant acts without malice, has made a reasonable
effort to obtain the facts of the matter under consideration, and
acts in reasonable belief that the action taken is warranted by
those facts.
It is undisputed that Dr. Becker and Dr. Haatvedt were members of a peer
review committee, they were licensed physicians, and their actions constitute
peer review activity. Therefore, state-law immunity will apply in this case
unless there is sufficient evidence to establish that Dr. Becker and
Dr. Haatvedt operated in any of the following ways: they acted with malice, they
failed to make a reasonable effort to obtain the facts of the matter, or they
failed to act with the reasonable belief that the action taken was warranted.

SDCL 36-4-42 defines the term “peer review committee.” In part, the statute
provides “a peer review committee is one or more persons acting as any
committee of a state or local professional association or society, any committee
of a licensed health care facility or the medical staff of a licensed health care
facility . . . that engages in peer review activity.”
3 SDCL 36-4-43 defines the term “peer review activity.” In part, the statute
provides “peer review activity is the procedure by which peer review committees
monitor, evaluate, and recommend actions to improve the delivery and quality
of services within their respective facilities . . . [T]he scope of the functions of a
peer review committee include . . . (2) The grant, delineation, renewal, denial,
modification, limitation, or suspension of clinical privileges to provide health
care services at a licensed health care facility[.]”
2

25

1.

There is no evidence of malice.

Malice is not defined in the statute. Therefore, the court relies upon
precedent analyzing the term in claims for defamation. “Because malice may
not be inferred . . . there must be a specific showing of malice which requires
proof of reckless disregard for the truth or actual malice.” Paint Brush Corp. v.
Neu, 599 N.W.2d 384, 398 (S.D. 1999). “The real test of whether a defendant’s
conduct is reckless so as to constitute actual malice is whether he in fact
entertained serious doubts as to the truth of his publications.” Id. (citing Tibke
v. McDougall, 479 N.W.2d 898, 906 (S.D. 1992)).
Dr. Miller asserts two general allegations against Dr. Becker and
Dr. Haatvedt in support of her claims against them. In regard to Dr. Becker,
Dr. Miller cites a portion of Dr. Becker’s deposition where he confirms that the
MEC discussed a former patient of Dr. Becker and Dr. Miller. In the deposition,
Dr. Becker confirms that he believes that Dr. Miller injured the bowel of one of
their former patients. Docket 137 – 2, at 3. In support of this statement,
Dr. Becker cites medical records and Dr. Miller’s deposition associated with the
lawsuit relating to that procedure. Id. In short, there is no evidence associated
with the statement that can establish Dr. Becker made the statement with a
reckless disregard for the truth. To the contrary, the record establishes that
Dr. Becker believes that the statement is factual and is supported by
Dr. Miller’s own deposition in that case. As such, there is no evidence to
establish that Dr. Becker made the statement with malice.

26

In regard to Dr. Haatvedt, Dr. Miller offers no actual evidence of any
statement made by Dr. Haatvedt that was undertaken with malice. Dr. Miller’s
only vague allegation is that Dr. Haatvedt took part in the review of Dr. Miller’s
work when he also assisted or aided in the procedure being reviewed. As such,
there is no evidence to establish Dr. Haatvedt made any statement that could
be construed as one made with malice.
2.

The MEC made a reasonable effort to obtain the
facts.

The timeline of events leading up to this dispute reveals that the MEC
conducted a six month review of Dr. Miller’s work. Furthermore, the MEC sent
a specific case for external review to ProAssurance. Dr. Miller offers no evidence
that could establish that the MEC, which included Dr. Becker and
Dr. Haatvedt, failed to make a reasonable effort to obtain the facts that resulted
in Dr. Miller’s reduction in privileges. As such, this element also supports the
application of immunity.
3.

Dr. Becker and Dr. Haatvedt acted with a
reasonable belief that the actions taken were
warranted.

As it pertains to this final element, there are two relevant actions at
issue: (1) the process in which the MEC asked for the voluntary reduction in
privileges; and (2) the process in which Dr. Miller obtained new privileges after
the initial reduction.
The record is replete with issues associated with Dr. Miller’s care.
Moreover, it is clear that the MEC faced a difficult problem of crafting a
solution that eased the concerns of the Board of Directors while also allowing
27

Dr. Miller to continue practicing medicine. Based on the testimony of the
physician members of MEC, there is sufficient evidence to establish that the
committee acted with the reasonable belief that a request for the voluntary
reduction in privileges was a warranted action.
In regard to the process in which Dr. Miller recovered some of her
surgical privileges, it is important to note that Dr. Miller proposed the oversight
of her future surgeries. See Docket 135 – 9. Moreover, the Board of Directors
approved Dr. Miller’s application for privileges because it contained the
condition. Thus, the imposition of surgical oversight was approved with a
reasonable belief that the action was warranted.
Because Dr. Miller offers no substantive evidence that could contradict
the application of immunity to the conduct of Dr. Becker and Dr. Haatvedt, the
court finds that the protection provided by SDCL 36-4-25 applies in this case.
As such, the court grants the motion for summary judgment relating to all
claims asserted against Dr. Becker and Dr. Haatvedt.

CONCLUSION and ORDER
Based on the forgoing, it is ORDERED:
HRMC’s motion for summary judgment (Docket 132) is GRANTED in regard to
the claim for breach of implied contract, but DENIED in regard to the claims
for breach of express contract, negligence, and defamation.

28

It is FURTHER ORDERED that the motion for summary judgment
asserted by Dr. Becker and Dr. Haatvedt (Docket 133) is GRANTED in full.
DATED November 5, 2015.
BY THE COURT:

/s/

Karen E. Schreier

KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE

29