Sherr v. HealthEast Care System

Background

Dr. Gregory Sherr, a neurosurgeon who had clinical privileges at HealthEast hospitals, alleged that HealthEast’s in-house neurosurgeons tried to remove him as a competitor by making disparaging statements about his professional abilities and arranging a sham peer-review process. The process began after concerns were raised about infection rates, blood loss, repeat procedures, and other adverse events involving Dr. Sherr’s patients. After reviewing eight cases, HealthEast’s Spine Council unanimously recommended suspending Dr. Sherr’s privileges. Dr. Stephen Kolar then imposed a summary suspension, and HealthEast’s Medical Executive Committee upheld it by a 12-to-1 vote. HealthEast’s Judicial Review Committee later overturned the suspension, stating that the evidence did not support it, but also stating that its decision was not an endorsement of Dr. Sherr’s medical care or surgical competence.

Dr. Sherr resigned his HealthEast privileges, later resigned from Midwest Spine and Brain Institute, and moved his practice to Florida. His remaining claims were defamation, tortious interference with prospective economic advantage, and tortious interference with contract. Earlier in the case, the court had dismissed claims for breach of peer-review confidentiality, invasion of privacy, and antitrust violations. The CentraCare defendants had also been dismissed by stipulation.

Peer-Review Immunity

The defendants sought summary judgment, which is a decision without a trial when the evidence shows no genuine dispute over a fact important to the outcome. They argued that Minnesota and federal peer-review immunity statutes protected their actions.

The court held that Minnesota’s peer-review immunity applied because HealthEast and the peer reviewers followed their established procedures. The process began through ordinary channels, including safety-event reports and the Spine Quality Report. Dr. Sherr received notice of the cases and meetings and had opportunities to respond in writing and in person. The cases were assigned for review, discussed at two meetings, and followed by review by the Medical Executive Committee and the Judicial Review Committee. The court rejected Dr. Sherr’s arguments that Dr. Wallenfriedman improperly initiated the process, that her participation as a competitor violated HealthEast’s procedures, or that HealthEast gave inadequate notice.

The court also held that the federal Health Care Quality Improvement Act protected the defendants. It found that the peer-review actions were taken with a reasonable belief that they would improve health care, followed a reasonable effort to gather facts, provided fair opportunities for Dr. Sherr to respond, and were reasonably believed to be supported by the known facts. The later decision by the Judicial Review Committee to overturn the suspension did not establish that the defendants lacked a reasonable belief when they acted.

Defamation

The court granted summary judgment on Dr. Sherr’s defamation claim for statements made during peer review because peer-review immunity applied.

For statements allegedly made outside peer review, Dr. Sherr relied primarily on his testimony about what four operating-room nurses told him. Because Dr. Sherr was not present when the statements were allegedly made, the court held that this evidence was multiple-level hearsay and could not by itself defeat summary judgment. The court also ruled that statements described by Dr. Daniel Sipple, such as calling Dr. Sherr a “hack” or “not a good surgeon,” were not included in the First Amended Complaint or discovery responses and therefore were outside the scope of the pleaded claim. In addition, the court held that those statements were non-actionable opinions or insults because they could not reasonably be understood as precise, verifiable statements of fact.

Tortious Interference with Prospective Economic Advantage

The court granted summary judgment on Dr. Sherr’s claim that the suspension interfered with his prospective economic opportunities at Midwest Spine and Brain Institute and Allina’s United Hospital. Peer-review immunity independently protected the defendants from liability for the suspension.

The court also held that Dr. Sherr lacked sufficient evidence of interference. Midwest Spine and Brain Institute renewed his employment contract and was willing to support his continued practice, but Dr. Sherr chose to resign and relocate. The court found no admissible evidence that the suspension caused the loss of the proposed Allina relationship; the evidence offered on that point was hearsay.

Tortious Interference with Contract

The court granted summary judgment on Dr. Sherr’s contract-interference claim. Peer-review immunity protected the defendants, and the claim also failed on its merits. Midwest Spine and Brain Institute renewed Dr. Sherr’s employment contract, and he received the compensation he was contractually entitled to. As to HealthEast, the court stated that Dr. Sherr had not shown that his privileges constituted a contract and that a party generally cannot interfere with its own contract.

Disposition

Judge Montgomery ordered that the defendants’ motion for summary judgment was GRANTED. The court also ordered that the First Amended Complaint was DISMISSED with prejudice and directed that judgment be entered.