Jury Finds against Hospital in "Sham Peer Review" Case (Updated)

A federal court jury in South Dakota awarded a surgeon in excess of $1.1 million in damages for breach of contract.  The surgeon, Dr. Linda Miller, claimed that she was forced to resign from the Huron Regional Medical Center where she had staff privileges as a surgeon.  The jury awarded $586,617 in lost wages, $343,640 in future loss of earning capacity, and $250,000 for pain and suffering (which was disallowed and not awarded because there was no finding of defamation).  On February 7, 2018, the Court denied the hospital's Motion for New Trial and Motion for Remittitur.

Dr. Miller claimed that HRMC violated its Medical Staff Bylaws because it took "corrective action" by requiring her to voluntarily reduce her surgical privileges.  The jury found that the hospital violated her due process rights under the bylaws of the Medical Center, which under South Dakota law, constitute a contract between the hospital and the doctor that created a procedural right to a hearing.  HRMC did not allow Dr. Miller to have a hearing or present any evidence in her defense.

Dr. Miller claimed that she was told she either had to agree to voluntarily reduce her privileges or she would be fired.  Because she was reported to the NPDB, Dr. Miller claimed she was unable to obtain employment as a surgeon.  Instead, she testified that she could only get a job as a wound care doctor, which was a lower paying position than a surgeon.

At trial, Dr. Lawrence Huntoon testified as an expert, and stated that this was a "sham peer review." Dr. Huntoon testified that HRMC took an adverse action when it coerced her to reduce her  privileges at the hospital.  He testified that the MEC conducted a review of Dr. Miller but it was not done in anticipation of a corrective action, and that if a corrective action had been intended, it would have required an investigation , which was never done, followed by a hearing.

The jury failed to find that the NPDB report constituted defamation.

The hospital also moved to have the Court reduce the amount of damages awarded, but the Court refused.  The Court held that the jury's award was not the result of "passion, partiality, prejudice, or corruption," and held that the jury award was not "unreasonable or outrageous."