1 “Hospital corporate liability,” or hospital corporate negligence, refers to the tort liability of the hospital for the negligent acts of physicians on its medical staff, specifically independent contractors and private practitioners previously considered to be outside the realm of hospital control. The first few courts to implement the doctrine did not use the term “hospital corporate liability,” and not until legal commentators and subsequent cases reflected upon the doctrine did the label arise. See, e.g., Southwick, , The Hospital as an Institution—Expanding Responsibilities Change Its Relationship with the Staff Physician, 9 Cal. W.L. Rev. 429, 443 (1973)Google Scholar (hospital corporate negligence). For a discussion of the development and fundamentals of the doctrine, see infra text accompanying notes 37-77, and see generally Copeland, , Hospital Responsibility for Basic Care Provided by Medical Staff Members: “Am I My Brothers Keeper,” 5 N. Ky. L. Rev. 27 (1978)Google Scholar; Horty, & Mulholland, , The Legal Status of the Hospital Medical Staff, 22 St. Louis U.L.J. 485 (1978)Google Scholar; Comment, The Hospital-Physician Relationship: Hospital Responsibility for the Malpractice of Physicians, 50 Wash. L. Rev. 385 (1975)Google Scholar [hereinafter cited as Malpractice]; Note, Hospital Corporate Liability: An Effective Solution to Controlling Private Physician Incompetence, 32 Rutgers L. Rev. 342 (1979)Google Scholar [hereinafter cited as Hospital Corporate Liability].

2 The governing body of the hospital, usually a board of directors or trustees, bears the ultimate legal responsibility of the hospital as an institution. See Joint Commission on Accreditation of Hospitals, Accreditation Manual for Hospitals/84 49 (1984) [hereinafter cited as JCAH Manual]; Horty & Mulholland, supra note 1, at 488, 491; -Southwick supra note 1, at 436-38. For the purpose of discussing peer review and credentials screening processes, this Note divides the hospital into three main parts: the governing body, the administration, which carries out the mandates of the governing body and provides support staff for the medical staff, and the medical staff.

3 Hospital corporate liability places an independent legal duty on the hospital to exercise reasonable care in the selection and supervision of its medical staff. Although this duty applies to the selection and supervision of all staff physicians, it is significant only to the extent that it subjects the hospital to liability for the negligence of physicians usually considered outside the hospital's control: private practitioners and certain independent contractors. See infra text accompanying notes 38-57.

4 See.e.g., Beeck v. Tucson Gen. Hosp., 18 Ariz. App. 165, 500 P.2d 1153 (1972); Elam v. College Park Hosp., 132 Cal. App. 3d 332, 183 Cal. Rptr. 156 (1982); Moore v. Bd. of Trustees of Carson-Tahoe Hosp., 88 Nev. 207, 495 P.2d 605 (1972), cert, denied, 409 U.S. 879 (1972); Southwick, supra note 1, at 431; Hospital Corporate Liability, supra note 1, at 342.

5 Hospital Corporate Liability, supra note 1 at 353 n.81, (citing Rudov, Myers & Mirebelle, Medical Malpractice Insurance Claims Files Closed in 1970, in U.S. Dep't of health, Education and Welfare, Pub. No. (OS) 73-88, Report of Secretary's Commission on Medical Malpractice 51 (1973) [hereinafter cited as HEW]).

6 See infra text accompanying notes 38-57. See also articles cited supra note 1.

7 When used in this Note, quality control or quality assurance refers to two major processes used to police physician incompetency in the hospital: credentials screening, which involves scrutinizing applicants for staff privileges, and peer review, which generally involves evaluating the performance of existing staff physicians.

8 The medical staff is usually organized into several departments (surgical, medical, etc., each with its own hierarchical structure) and committees (each with a specific function, e.g., tissue review committees, utilization review committees) depending upon the size and nature of the hospital. In this Note, medical staff review committees refer to those committees responsible for performing credentials screening and peer review functions. See supra note 7. Participation in these committees is usually not determined solely by classification of membership: independent contractors may be committee members, even though they are not employees or agents of the hospital. The medical staff organizes its own committee structure, with the approval of hospital governing body.

For further discussion of the structure of the medical staff, see generally infra notes 38-41 and accompanying text; JCAH Manual supra note 2, at 89-104; Hospital Corporate Liability, supra note 1, at 357 n.10; Copeland, supra note 1.

9 See Hospital Corporate Liability, supra note 1, at 343-56.

10 Id. at 348.

11 Id. at 349.

12 See C. Jacobs, Hospital Risk Management and Malpractice Liability Control 11-12 (1980); Hospital Corporate Liability, supra note 1, at 348 (citing H. Lewis & M. Lewis, The Medical offenders 41 (1970)).

13 Hospital Corporate Liability, supra note 1, at 350 (quoting Quirin, , Physician Licensing and Education Obsolescence: A Medical-Legal Dilemma, 36 Alb. L. Rev. 503, 510 (1972)Google Scholar).

14 See id. at 349.

15 Id. at 350 (quoting HEW, supra note 5, at 53).

16 Id. at 349 & n.52.

17 Id. at 347-48.

18 Only a few states require physicians to report their peers’ misconduct to a disciplinary body. Even fewer designate failure to report as unprofessional conduct subject to disciplinary action. F. Grad & N. Marti, Physicians’ Licensure and Discipline: The Legal and Professional Regulation of Medical Practice 38-39 (1979).

Regardless of state requirements, physicians often avoid reporting the misconduct of their peers to protect themselves from what they perceive to be disproportionately severe punishment (revocation of license), or because they share the widespread feeling that it is wrong to be an informer, a phenomenon known as the “conspiracy of silence.” Id. at 38-39.

19 See Moore v. Bd. of Trustees of Carson-Tahoe Hosp., 88 Nev. 207, 212, 495 P.2d 605, 612 (1972), cert, denied, 409 U.S. 879 (1972).

20 See, e.g., Mass. Gen. Laws Ann. ch. 112, § 2 (West 1983). See also Hospital Corporate Liability, supra note 1, at 346.

21 See, e.g., Mass. Gen. Laws Ann. ch. 112, § 5 (West 1983), which states that upon receiving complaints, the board may discipline, reprimand, or revoke or suspend the license of a physician who is found to have violated any of eight categories of misconduct. Misconduct includes “gross misconduct in the practice of medicine or practicing medicine fraudulently, or beyond its authorized scope, or with gross incompetence, or with gross negligence on a particular occasion or negligence on repeated occasions.” ch. 112, § 5(c). The statute does not, however, define “gross misconduct,” “gross negligence,” or “gross incompetence.“

22 See Moore, 88 Nev. at 212, 495 P.2d at 608 (“licensing, per se, furnishes no continuing control with respect to a physician's professional competence and therefore does not assure The public of quality patient care.“). See generally Baron, , Licensure of Health Care Professionals: The Consumer's Case for Abolition, 9 Am. J. L. & Med. 335 (1983)Google Scholar.

23 See Hospital Corporate Liability, supra note 1, at 346.

24 Id.

25 See, e.g., N.Y. Educ. Law § 6502 (McKinney Supp. 1983); Mass. Gen. Laws Ann. ch. 112, § 2 (West 1981).

26 Hospital Corporate Liability, supra note 1, at 349 & n. 56. See id. at 349 n. 55, indicating that, as of 1975, only eight states required post-licensure education of between 15 to 50 hours per year: California, Illinois, Kansas, Maryland, Michigan, New Mexico, Ohio and Wisconsin.

27 See id. at 350 & n. 63. In addition, see Marks, Physician Deduct Thyself, Boston Globe, Apr. 14, 1984, at 19, col. 1, indicating that physicians may often enroll in medical seminars simply to shelter taxes, regardless of whether the seminar offers information useful to the physician's practice, or whether the physician actually attends the classes.

28 See Williams, , The Quandary of the Hospital Administration in Dealing with the Medical Malpractice Problem, 55 Neb. L. Rev. 401 (1976)Google Scholar (citing How Well does Medicine Police Itself?, Medical World News, Mar. 15, 1974, at 62) (state disciplinary boards have poor records in exercising disciplinary action); see also C. Jacobs, supra note 12, at 12; Hospital Corporate Liability, supra note 1, at 346.

29 See, e.g., N.Y. Pub. health Law § 230 (McKinney Supp. 1983); Mass. Gen. Laws Ann. ch. Ill, §§ 53B, 72G, 72L (West 1983) (mandates reporting by certain health facilities and professionals).

30 See supra note 18. Some states require hospitals to report any disciplining of staff physicians to state licensing boards. These requirements often lack utility, however, as hospitals usually give physicians the opportunity to resign, and thereby avoid in-house discipline and mandatory reporting. F. Grad & N. Marti, supra note 18, at 38; see also Hospital Corporate Liability, supra note 1, at 347.

31 In medical malpractice litigation, a plaintiff alleges that a physician was negligent in failing to exercise reasonable care in rendering medical services. In theory, these suits should enforce quality medical care by punishing negligent physicians and deterring physicians from practicing carelessly. See C. Jacobs, supra note 12, at 32, 41.

32 A study, done on two community hospitals by the Department of Health, Education and Welfare's Medical Malpractice Committee, showed that of the 517 patients in the hospitals that suffered injuries from negligent treatment, only 37 filed malpractice claims. Id. at 351 and n.65 (quoting Staff of House Comm. on Interstate & Foreign Commerce, 94th Cong., 1st Sess., An Overview of Medical Malpractice 13 (Comm. Print 1975)).

33 Hospital Corporate Liability, supra note 1, at 350-51 & n. 65 (quoting Institute of Medicine, National Academy of Sciences, Beyond Malpractice: Compensation for Medical Injuries 3 (1978)[hereinafter cited as Institute of Medicine]).

34 Studies attribute the rise in malpractice claims not to an increase in negligent treatment but to increased access and use of health care services, depersonalization of the physicianpatient relationship, a general increase in all litigation, rising public expectations due to medico-technological advances, and high risks associated with certain advanced medical treatments. Hospital Corporate Liability, supra note 1, at 351 n.68 (citing Institute of Medicine, supra note 33, at 8-9); C. Jacobs, supra note 12, at 11-14.

35 See Hospital Corporate Liability, supra note 1, at 352 n. 74 (citing Institute of Medicine, supra note 31, at 16); see also C. Jacobs, supra note 12, at 33.

36 C. Jacobs, supra note 12, at 33; Hospital Corporate Liability, supra note 1, at 352 n. 74, (citing Institute of Medicine, supra note 33, at 16).

37 Hospital Corporate Liability, supra note 1, at 355.

38 See generally id. at 355 & n. 91, (citing Kamaroff, , The PSRO: Quality Assurance Blues, 298 New Eng. J. Med. 1194 (1978)CrossRefGoogle Scholar).

39 See, e.g., Johnson v. Misericordia Community Hosp., 99 Wis. 2d 708, 301 N.W.2d 156 (1981) (failure to adequately screen incompetent physician's credentials during staff application process); Darling v. Charleston Community Memorial Hosp., 33 111. 2d 326, 211 N.E.2d 253 (1965) (inadequate supervision of private practitioner on call at hospital emergency room).

40 See generally JCAH Manual, supra note 2; Copeland, supra note 1; Hospital Corporate Liability, supra note 1, at 357 n.10.

41 Vicarious liability theory charges an employer with an employee's negligence, even though the employer has done nothing to encourage its occurrence, if the negligence occurred within the scope of employment. It is based on a policy determination that employers have the right to control the methods of an employee's work and therefore should bear the costs of injury resulting from an employee's negligence. W. Prosser, Law of Torts § 69, at 458 (4th ed. 1972).

42 Under agency theories,, courts estop the hospital from claiming that a physician is not an employee of the hospital, even though no official master-servant relationship exists. A plaintiff must prove that he sought treatment directly from the hospital, the hospital provided him with a physician, and the physician was subject to a significant degree of hospital control. One factor that indicates an agency relationship is that the hospital, not the physician, directly bills the patient. For a detailed discussion, see generally Malpractice, supra note 1.

43 See, e.g., Moore v. Bd. of Trustees of Carson-Tahoe Hosp., 88 NEV. 207, 211-12, 495 P.2d 605, 608; see also Hospital Corporate Liability, supra note 1, at 376.

44 See, e.g., Johnson, 99 Wis. 2d at 724, 301 N.W.2d at 164.

45 These changes may not have affected all hospitals across the country equally. For example, hospitals in rural areas may be less technologically advanced or receive less government funding and regulation than others; but even these hospitals have experienced rising consumer and physician reliance and increased medico-technological capabilities.

46 Sec generally Horty & Mulholland, supra note 1.

47 For a formal discussion of the increased consumer reliance on the hospital, see id. at 489, (citing American Hospital Association Statement on a Patient's Bill of Rights (1972)). The “Patients Bill of Rights” in effect guarantees patients the right to receive out-patient non-emergency care whenever desired. Some states, such as California, Colorado, and Minnesota, have drafted statutory and regulatory provisions placing a similar obligation on the hospital.

48 Horty & Mulholland, supra note 1, at 490.

49 In Hannola v. City of Lakewood, 68 Ohio App. 2d 61, 426 N.E.2d 1187 (1980), the Ohio Court of Appeals stated that, “[g]iven the unique nature of the emergency room, and the public's lack of meaningful choice in a dire medical emergency, a hospital may well have a more specific and precise independent duty in the emergency room than in other areas of the hospitals to monitor treatment, procedures, and the medical care provided patients.“Id. at 69, 426N.E.2dat 1192.

50 Horty & Mulholland, supra note 1, at 493.

51 42 C.F.R. § 405.1035 (1983).

52 Similarly, the PSRO program was developed primarily to insure that federally funded medical services are provided within the hospital only when medically necessary and within accepted standards of quality. See supra text accompanying notes 35-36. 53 99 Wis. 2d 708, 301 N.W.2d 156 (1981).

54 Id. at 724, 301 N.W.2d at 164 (emphasis added). “The concept that a hospital does not undertake to treat patients, does not undertake to act through its doctors and nurses, but only procures them to act solely on their own responsibility, no longer reflects the fact.” Id. See also Elam v. College Park Hosp., 132 Cal. App. 3d 332, 345, 183 Cal. Rptr. 156, 163, where the court supported its adoption of hospital corporate liability by stating that it was “consonant with the public's perception of the modern hospital as a multi-faceted, health care facility responsible for the quality of medical care and treatment rendered.“

55 “[T]he hospital is in The best position to evaluate The competence of physicians … as it constitutes the only institutional ‘vehicle available to coordinate the delivery of health care of reasonable quality to large numbers of people … . ‘ “ Elam, 132 Cal. App. 3d at 346, 183 Cal. Rptr. at 164 (quoting Southwick, supra note 1, at 466).

56 See, e.g., JCAH Manual, supra note 2, at 94-104.

57 See supra text accompanying notes 9-37.

58 88 Nev. 207, 4 95 P.2d 605 (1972), cert, denied, 409 U.S. 879 (1972).

59 Id. at 212, 495 P.2d at 608.

60 See Southwick, , The Hospitals New Responsibility, 17 Clev.-Mar. L. Rev. 146, 152 (1968)Google Scholar.

61 Id. “One of the hospital's primary functions is to screen its staff of physicians to ‘insure’ that only competent physicians are allowed to practice in the hospital.” Ferguson v. Gonyaw, 64 Mich. App. 685, 697, 236 N.W.2d 543, 550 (1975); see Horty, A Most Important Case on Hospital Responsibility to Patients—For Physicians, 45 Conn. Med. 383, 388 (1981).

62 See, e.g., JCAH Manual, supra note 2, at 50-51.

63 However, some courts refuse to impute the negligence and knowledge of the medical review staff in this regard to the governing body, and only impose liability on the hospital when enough facts were “brought home” to the administration to give it reason to know that malpractice would occur. Fiorentino v. Wenger, 19 N.Y.2d 407, 227 N.E.2d 296, 280 N.Y.S.2d 373 (1967); see also Collins v. Westlake Community Hosp., 12 111. App. 3d 847, 299 N.E.2d 326 (1973), rev'd on other grounds, 57 111. 2d 388, 312 N.E.2d 614 (1974) (hospital not liable for negligence of attending physician where no “glaringly obvious signals” to the hospital indicated grossly improper medical treatment); Hull v. North Valley Hosp., 159 Mont. 375, 498 P.2d 136 (1972) (hospital not liable under hospital corporate liability for negligent supervision of staff physician unless actual notice of the physician's incompetence reached an administrative level). These cases would support the proposition that a hospital should not be liable for negligent supervision when the administration has no realistic opportunity to learn of a developing problem concerning a particular physician's incompetency. For further discussion of this view, see infra text accompanying notes 87-101. See also Slawkowski, , Do the Courts Understand the Realities of Hospital Practice?, 22 St. Louis U.L.J. 452 (1978)Google Scholar; cf. Porter v. Pandey, 423 So. 2d 126 (Miss. 1982) (refusing to adopt hospital corporate negligence doctrine on basis that the hospital is unable to supervise or second guess treatment rendered by attending physicians because it cannot legally practice medicine).

64 33 111. 2d 326, 211 N.E.2d 253 (1965), cert, denied, 383 U.S. 946 (1966).

65 Although this private physician was not officially under a contract for services with the hospital, his staff privileges agreement with the hospital obligated him to work on back-up call at the emergency room. Thus his services were selected for the patient by the hospital. However, the court did not base its holding on a finding that he was under a significant degree of hospital control, and thus an “ostensible agent,” but rather on the existence of an independent duty on the part of the hospital to supervise his treatment regardless of his staff membership status. Id. at 333, 211 N.E.2d at 258.

66 Id. at 330, 211 N.E.2d at 258.

67 See, e.g., Ziegler v. Superior Court Pima County, 134 Ariz. 390, 656 P.2d 1251 (1982) (to fulfill duty to adequately supervise medical staff, hospital may have to periodically review patients’ medical records to check for unnecessary or substandard procedures by independent staff physicians); Purcell v. Zimbelman, 18 Ariz. App. 75, 500 P.2d 335 (1972) (hospital has a duty to make a reasonable effort to supervise the competence of all doctors on its medical staff; the hospital governing body is liable for any negligence in peer review by the medical staff); Elam, 132 Cal. App. 3d at 332, 183 Cal. Rptr. at 156 (1982) (hospital has duty to patient to screen and review medical staff physicians who are neither employees nor agents of the hospital; hospital is liable for negligence of staff peer review committees in carrying out these functions); Mitchell County Hosp. Auth. v. Joiner, 229 Ga. 140, 189 S.E.2d 412 (1972) (hospital has a duty to act with reasonable care in the selection of its staff physicians; hospital must thoroughly investigate and decide upon an applicant's competency and cannot rest solely on the fact that he is a state licensed physician and has been recommended by members of the medical staff); Bost v. Riley, 44 N.C. App. 638, 262 S.E.2d 391 (1980) (duty on hospital not only to supervise the competency of its medical staff, but also to continually monitor the clinical procedures of all staff physicians and the progress notes kept on their patients); Johnson v. Misericordia Community Hosp., 99 Wis. 2d 708,301 N.W.2d 156(1981) (hospital's failure to properly investigate an applicant's credentials could foreseeably result in incompetent physicians practicing there, creating an “unreasonable risk of harm” to its patients).

68 See, e.g., Wis. Admin. Code § H25.04(l)(d)(l) (1975), relied upon by the Wisconsin Supreme Court injohnson, stating that the hospital governing body shall have the “legal right to appoint the medical staff and the moral obligation to appoint only those physicians who are judged by their fellows to be of good character and qualified and competent in their respective fields.” 99 Wis. 2d at 733, 301 N.W.2d at 169, (citing Wis. Admin. Code § H24.04(l)(d)(l) (1975)).

69 See, e.g., infra text accompanying note 75. In Purcell v. Zimbelman, 18 Ariz. App. 75, 500 P.2d 335 (1972), the defendant hospital was accredited by the American Osteopathic Association, which placed on the governing authority of the hospital the responsibility of selecting its professional staff “to assure the community that the physicians to whom it extends the privilege of the use of its facilities are professionally competent and will offer optimum patient care … .” Purcell, 18 Ariz. App. at 81, 500 P.2d at 341 (quoting from the Basic Accreditation Requirements of the American Osteopathic Association).

70 Johnson, 99 Wis. 2d 708, 301 N.W.2d 156.

71 Purcell, 18 Ariz. App. at 81, 500 P.2d at 341.

72 Johnson, 99 Wis. 2d at 744-45, 301 N.W.2d at 174.

73 See, e.g., Joint Commission on Accreditation of Hospitals, Accreditation Manual for Hospitals 55 (1983) [hereinafter cited as JCAH Manual 1983]. (“The governing body shall delegate to (he medical staff the authority to evaluate the professional competence of staff members and applicants for clinical privileges.“) The notion that the governing body shall require the medical staff to perform these evaluations is embodied in the 1984 edition of the JCAH standards. See JCAH Manual, supra note 2, at 50-51.

74 JCAH Manual, supra note 2, at 50-51. See Mitchell County Hosp. Auth. v. Joiner, 229 Ga. at 142-143, 189 S.E.2d at 414.

75 Johnson, 99 Wis. 2d at 744, 301 N.W.2d at 174,Mitchell, 229 Ga. at 142-43, 189 S.E.2d at 414. But see cases and articles cited supra note 61.

76 The JCAH is a private, non-profit organization whose purpose is to certify that the safety and quality of hospitals meets certain minimum standards. Although its standards for accreditation are not legally binding on hospitals, most hospitals seek accreditation with the JCAH to become eligible to participate in Medicare and other such programs.

77 See generally JCAH Manual, supra note 2.

78 JCAH Manual 1983,supra note 73, at 55 (emphasis added). The 1984 JCAH standards impose similar obligations on the governing body and medical staff. They state that the “governing body requires the medical staff to make recommendations concerning medical staff appointments, reappointments,… and the granting or revision of clinical privileges … . The governing body acts on these recommendations.” JCAH Manual, supra note 2, at 50 (emphasis added).

79 In addition to JCAH standards, some courts adopting hospital corporate liability were also influenced by accreditation standards set by hospital and medical associations. See, e.g., supra note 67.

80 See Horty, supra note 59, at 388.

81 See Copeland, supra note 1, at 83.

82 Id.; see also JCAH Manual, supra note 2, at 101: “the overall responsibility for the quality of medical practice rests with the medical staff … . [OJngoing monitoring of medical staff practice shall be provided by the required regular medical staff and clinical department/ service meetings … .” “[T]he evaluation of physician-directed care must be performed by physician members of the medical staff … .” Id. at 148.

83 See Horty, supra note 59, at 388. 84 See JCAH Manual, supra note 2, at 148, stating that “the evaluation of the physiciandirected care must be performed by physician members of the medical staff … .“

85 See Horty, supra note 58, at 384. “Although these peer reviews are conducted by medical staff'peer’ committees, the governing body of t he hospital is responsible for establishing the review procedures.” Elam, 132 Cal. App. 3d at 343, 183 Cal. Rptr. at 162 (referring to Cal. health & Safety Code § 32128).

86 The administration can also make an effort to uncover reasons for past denials of a physician's staff privileges at other hospitals, and, where the reasons are not completely clinical in nature, evaluate and attach significance to those reasons for t he purpose of granting or withholding staff privileges. In addition, if The administration receives actual notice, either through advice of outside physicians or circumstances within The hospital, of a staff physician's incompetence or misconduct, it should bring this to the attention of a staff peer review committee and, if t he committee fails to act, take some corrective or investigatory action itself. See, e.g., Branch v. Hempstead County Memorial Hosp., 539 F. Supp. 908 (1982); Pickle v. Corns, 106 111. App. 3d 734, 435 N.E.2d 877 (1982) (no duty on board or administration to insure that each staff physician will always perform his duty of care but, once circumstances within the hospital put it on notice that an independent staff physician is violating hospital procedures and otherwise performing wrongful acts, the board and administration must take investigative or corrective action).

The administration should also provide the necessary support to assist the medical staff in procedurally carrying out tasks required to supervise and maintain quality physician care. See, e.g., Johnson v. St. Bernard Hosp., 79 111. App. 3d 709, 399 N.E.2d 198 (1979) (duty on hospital, through administration, to follow hospital bylaws which require it to assist staff physicians in obtaining requested consultations with other staff physicians; fulfilling this duty requires no medical expertise).

For comprehensive discussions detailing the capabilities and proper responsibilities of t he board, administration, and medical staff in quality assurance programs, see generally C. Jacobs, supra note 12; B. Brown, Jr., Risk Management for Hospitals: A Practical Approach (1979).

87 See Williams, supra note 28. For another discussion of the inability of the hospital administrator to effectively learn of physician incompetency in many situations, and t he problems that result from imposing hospital corporate liability on the governing body in these situations, see Slawkowski, supra note 63.

88 Civil No. 229566 (Super. Ct. Sacramento County, Cal., Nov. 27, 1973), rev1 dfor failure to grant jury trial, 60 Cal. App. 3d 728, 131 Cal. Rptr. 717 (1976), rev ‘d and retransferred to Court of Appeals for disposition on the merits, 20 Cal. 3d 500, 573 P.2d 458, 143 Cal. Rptr. 240 (1978).

89 Id. at 194-95.

90 Id.

91 See Cohoon, Piercing the Doctrine of Corporate Hospital Liability, in Specialty Law Digest: health Care 5 (Aug. 1981). This is true regardless of whether review staff members are technically labeled agents of the governing board. Hollowell, infra note 103, at 518.

92 For the proposition that the board and administration should not be held legally responsible to “know” of medical incompetence which they lack the clinical expertise to discover, and which is not of such obvious dimensions as to be discoverable through periodic investigation by lay persons, see cases and articles cited supra notes 61, 84 & 87.

93 American Medical Association, Medical Staff-Hospital Relations, Report of the Council on Medical Service, reprinted in Interqual, Accountability Principles and Mechanisms, 1A Series on Medical Staff and Hospital by Laws and the Law 16 (1976), cited in Copeland, supra note 1, at 53 n.165.

94 American Medical Association, Report on Physician-Hospital Relations (1974), reprinted in Interqual, Accountability Principles and Mechanisms, 1A Series on Medical Staff and Hospital by Laws and the Law 14 (1976), cited in Copeland, supra note 1, at 49 n.142.

95 Id.

96 Association of American Physicians and Surgeons, Medical Care in Hospitals: Who's Responsible, reprinted in Interqual, Accounting Principles and Mechanisms, 1A Series on Medical and Hospital by Laws and the Law 17, 19 (1976), cited in Copeland, supra note 1, at 53.

97 Id. at 20.

98 Id. at 18.

99 Cohoon, supra note 91, at 19.

100 138 NJ. Super. 302, 350 A.2d 534 (1975).

101 The procedural soundness of designating the medical staff an unincorporated association amenable to suit has been criticized. See Horty & Mulholland, supra note 1, at 496-97.

102 The court reasoned that the public would benefit by placing the “responsibility for medical staff function directly on the medical staff.” 138 NJ. Super at 309, 350 A.2d at 539. See Cohoon, supra note 91, at 18.

103 Cohoon, supra note 91, at 19 & n.87.

104 See Hollowell, , Liability of Hospital Staff Committees, 43 Conn. Med. 577 (1979)Google Scholar. The court in Johnson found that the hospital had a “duty” to its patients to act with reasonable care in selecting its medical staff because a failure to do so would create a “foreseeable risk of unreasonable harm.“Johnson, 99 Wis. 2d at 723, 301 N.W.2d at 164. The court made a policy determination that patients in hospitals were entitled to protection from physician incompetency, and that hospitals should provide this through diligent screening of medical staff applicants. A hospital's failure to provide this protection from the risk of negligent treatment was therefore unreasonable.

The same policy determination made by the court in Johnson should also apply in the context of review staff negligence. It is unreasonable for medical staff review committees to fail to diligently perform quality control activities, since they alone are capable of completing the necessary clinical investigations, and their failure creates the same risk to patients which the court so vehemently condemned. See Cohoon,supra note 91, at 15, 17 (hospitals must often blindly rely on staff review committees to perform clinical quality control tasks).

105 Apportioning liability between the governing body and medical staff review committees may also relieve some of the tension created by an administrator's understandable perception that he provides the staff's only source of pressure for carrying out its reviewing responsibilities. Regarding the friction which hospital corporate liability can create between the administration and medical staff over who is responsible for quality control activities, see infra note 102 and accompanying text.

106 E.g., Cal. Civ. Code §§ 43.7, 43.8 (West Supp. 1983); Colo. Rev. Stat. § 12-43.5-103 (Supp. 1978); Hawaii Rev. Stat. §663-1.7 (1976); Mont. Code Ann. §37-2-201 (Supp. 1981). See also Mass. Gen. Laws ch. 112, § 5 (West 1983), which grants civil immunity from complaints arising from the reports of a physician's incompetency, if done in good faith and without malice. Statutes such as this can help dispel the additional fears of committee members that the physicians which they review will sue them for defamation.

107 See Williams, supra note 28, for an excellent discussion of the undesireable tensions between the staff and administration which are caused by the legal pressure behind hospital corporate liability, and the confusion and turmoil which these tensions lend to the quality control process in the hospital.

108 See supra note 32 and accompanying text.

109 E.g., strict products liability, negligent infliction of emotional harm, palimony, wrongful birth.

110 See supra notes 99-100 and accompanying text, regarding the benefits of placing liability for negligent screening and supervision on members of medical staff review committees.

111 Hollowell, supra note 104, at 578.

112 As discussed in part IV above, not all of the quality review process is clinical in nature. Some of the tasks which the staff committees often fulfill—such as calling hospitals where staff applicants periodically worked to find out whether their privileges were ever denied—can be readily double-checked by administrators. See supra notes 82-83 and accompanying text.

113 50 F.R.D. 249 (D.D.C. 1970), aff'd mem., 479 F.2d 920 (1973).

114 50 F.R.D. at 250.

115 Id.

116 See, e.g., Bredice, 50 F.R.D. at 249.

117 See, e.g., Tuscon Medical Center, Inc. v. Misesch, 113 Ariz. 34, 545 P.2d 958 (1976).

118 The extent to which review records and reports are privileged or otherwise protected from disclosure varies among states granting such protection. See, e.g., N. Y. Educ. Law § 6527 (McKinney 1983) (records relating to performance of a medical review function not subject to disclosure in a civil proceeding, except for statements by persons in attendance at peer review meetings who are parties to an action the subject matter of which was reviewed at such meeting). The following states also provide some form of discovery or disclosure privilege for committee records and reports: Alabama, Arizona, California, Florida, Georgia, Hawaii, Idaho, Louisiana, Maryland, Michigan, Minnesota, Montana, Nebraska, Nevada, New Jersey, North Dakota, Ohio, Oregon, Pennsylvania, Texas, Washington and Wyoming.

119 In Nazareth Literary & Benevolent Inst. v. Stephenson, 503 S.W.2d 177 (Ky. 1973), the Kentucky Court of Appeals, rejecting Bredice, refused to bar discovery of committee reports in a hospital corporate liability suit, stating that, although Bredice concerns seem “initially appealing,… one might well debate wherein the public interest lies … Impediments to the discovery of truth are afforded validity in relatively few instances in the common law.” Id. at 179.

120 Hospitals self-insure by setting aside a reserve fund from their operating budgets to cover the risk of incurring liability in negligence actions. Since these hospitals lose or gain in proportion to the occurrence of malpractice in the hospital, they have great incentives to use risk-management programs, designed to prevent the occurrence of malpractice and identify and control potential claims. Use of self-insurance often proves most beneficial to larger hospitals, which normally pay extremely high insurance premiums due to the large number of beds and physicians covered by their policies. For thorough analyses of the strategies and procedures involved in risk management programs, see C. Jacobs, supra note 12; Berkman, Self-Insurance of Hospital Malpractice Liability: A Dissection of Pennsylvania Act 111 and State and Federal Regulations, 51 Temple U.L.Q. 158(1978); Brown, supra note 88; and Hospital Corporate Liability, supra note 1, at 382.

121 This assumes that, once hospitals recognize the need to transfer less money from operating budgets into self-insurance reserve funds (due to a decrease in the amount of quality control mistakes for which they may be liable), they will manage this surplus in a manner which decreases overall patient costs for hospital services.

Costs may also decrease slightly in non-self-insuring hospitals because even though their malpractice premiums may not be experience-rated, under staff liability their policies will cover fewer potential areas of negligence and their overall premiums may decrease.

122 Such an offset would prevent overall insurance-based medical costs to patients from increasing under staff liability. Courts have already stated that “public policy considerations support the imposition of this general duty [on the hospital to screen and supervise staff physicians] and outweigh the potential effect of hospital corporate liability upon the structure of medical malpractice insurance … .” Elam, 132 Cal. App. 3d at 346-47, 183 Cal. Rptr. at 165. Since staff liability may not increase overall insurance costs to hospitals and physicians, and since both doctrines share the same quality assurance goals, the benefits of staff liability should outweigh cost concerns.