Warden v. Franklin Brief for Petitioner

    No. 86-..

In the

!$upranp (tort of %  llmtrii States
October Teem, 1986

Soung 0 . K woun, et al.,

vs.
Petitioners,

Southeast Missouri P rofessional Standards 
R eview Organization, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE 
UNITED STATES COURT OF APPEALS 

FOR THE EIGHTH CIRCUIT

L ouis Gulden*
Norah J. R yan

317 North 11th Street 
Suite 1220
St. Louis, Missouri 63101 
(314) 241-6607

Julius L eY onne Chambers 
Charles Stephen R alston 

99 Hudson Street 
New York, New York 10013 
(212) 219-1900

Attorneys for Petitioners
^Counsel of Record



QUESTIONS PRESENTED
1. Are private physicians and 

other employees of a Medicare peer review 

organization operating under contract 
with the United States Department of 
Health and Human Services entitled to 
absolute immunity from claims of race 

discrimination and other constitutional 
violations as well as from common-law 
tort claims even though Congress, by 
statute, has extended only qualified 
immunity?

2. Are non-attorney federal 
officials entitled to absolute immunity 
from the constitutional tort and race 
discrimination claims of a physician 
excluded from Medicare reimbursement, 
where the exclusion is by a non-judicial 
administrative decision made without a 
hearing and in the absence of minimal due 
process?

3. Are Medicare peer reviewers and
l



federal Medicare administrators entitled
to absolute immunity on policy grounds 
arising from the importance of the 

Medicare peer review scheme, without 
regard to the countervailing importance 
of eradicating racial discrimination?

ii



Parties in the Court Below

1. The petitioners, Soung 0.
Kwoun, H e n r i c k s o n  Clinic, Inc.,

Henrickson Clinic Pharmacy, Inc., and 
Henrickson Clinic Laboratory, Inc., were 
plaintiffs below.

2. The following are respondents
here and were defendants below: 
Southeast Missouri Professional Standards 
Review Organization; Missouri Statewide 
Professional Standards Review Council; 
Robert M. Kepner; Raymond A. Ritter; Sue
Legaspi; James Armantrout; Larry Baker; 

William V. Booth; Jean A. Chapman; V. D. 
Delles; R. F. Dettmer; Gordon Eller; Jose 
H. Gonzales; T. 0. Honaas; Robert C. 
Hoye; W. W. Hutton; Christopher Jung; G. 
H. Ladyman; John K. Legan; Gene H. 
Leroux; R. E. Marts; A. G. Miranda; Jesse 
Page; Pin Pu; Vinai Raksakulthai; Ben 
Till; A. T. Tuma; Austin Tinsley; Joseph 
Blanton; D. E. Edwards; Terry Guiley; Tom

iii



Henderson; Berry B. White; Randall Huss; 
George McAnelly; Robert Robbins; Eugene 

Ruff; C. F. Sparger; Michael K. Blank; 

James Conant; A. N. Sandler; Allen 
Spitler; Kirby Turner; E. K. Buford; 
David Clark; Fuad H. Kandalaft; Earl 
Kennedy; Martha Reed; Clifford Talbert; 
Charles P. McGinty; W. E. Hendrickson; 
Robert E. Bregant; Katherine Rosenfeld; 
Frank Kram; Don Nicholson; Ralph A. 
Howard.

3. No review is sought here as to 
the following defendants in the courts 
below: General American Life Insurance
Company; Tom Zorumski; Clifford A. 
Kinnunen; W. F. Montgomery; and Gary 
Clark.

iv



TABLE OF CONTENTS

Page
Questions Presented ............... i
Parties in the Court Below . . . .  iii
Table of Contents.................  iv
Table of Authorities............. vii

CITATIONS TO OPINION BELOWS. . . .  2
JURISDICTION .....................  3
CONSTITUTIONAL PROVISION, STATUTES,
AND REGULATIONS INVOLVED ........  3
STATEMENT OF THE C A S E ............. 4
REASONS FOR GRANTING THE WRIT . . .  16

I. THIS CASE PRESENTS 
QUESTIONS OF NATIONAL 
IMPORTANCE THAT SHOULD 
BE RESOLVED BY THIS
C O U R T ...................  16

II. THE DECISION BELOW CON­
FLICTS WITH PRIOR 
DECISIONS OF THIS COURT AND 
WITH DECISIONS OF OTHER 
CIRCUITS REGARDING THE 
CIRCUMSTANCES UNDER WHICH
ABSOLUTE IMMUNITY IS 
APPROPRIATE............. 21
A. The Decision Below 

Conflicts With 
Decisions of This 
C o u r t ...............21

v



B The Decision Below 
Conflicts With 
Decisions of Other- 
Circuits ........... 31

III. THE DECISION BELOW CON­
FLICTS WITH THE DECISIONS 
OF OTHER CIRCUITS AS TO 
WHETHER PHYSICIANS ENGAGED 
IN MEDICARE PEER REVIEW ARE 
FEDERAL OFFICIALS AND WITH 
STATE COURTS AS TO THEIR 
IMMUNITY FROM SUIT . . . .  32

IV. THE DECISION BELOW RAISES 
IMPORTANT ISSUES RELATED 
TO THOSE PRESENTED BY A 
PENDING CASE, Patrick v.
B u r a e t ................. .. 38

CONCLUSION..........................43

vi



Table of Authorities

Association of American Physicians 
and Surgeons v. Weinberger,
395 F. Supp. 125 (N.D. 111.
1975), affirmed without
opinion. 423 U.S. 975 (1975) . 34

Austin Municipal Securities, Inc. v. 
National Association of 
Securities Dealers, Inc., 757 
F .2d 676 (5th Cir. 1985) 19, 27, 28

Barr v. Matteo, 360 U.S. 564
(1959)............. 11, 12, 14, 35

Bishop v. Tice, 622 F.2d 349
(8th Cir. 1 9 8 0 ) ................. 26

Board of Regents v. Roth, 408 U.S. 564 
(1972) . ........................  26

Bothke v. Fluor Engineers &
Constructors, Inc., 713 F.2d 1405 
(9th Cir. 1983), vacated on another 
ground. 468 U.S. 1201 (1984), 
order on remand. 739 F.2d 484 (9th 
Cir. 1984) . . . . . . .  19, 20, 31

Buckner v. Lower Florida Keys Hosp.
Dist., 403 So.2d 1025 (Fla.

Cases: Page

App. 1 9 8 1 ) .................  35, 41
Bushman v. Seiler, 755 F.2d 653

(8th Cir. 1 9 8 5 ) ................. 12
Butz v. Economou, 438 U.S. 478

(1978)11,12,14,21,22,23,24,28,29,35

vii



Page
Cameron v. IRS, 773 F.2d 126 (7th Cir.

1 9 8 5 ) .....................  19, 31

Case v. Weinberger, 523 F.2d 602
(2nd Cir. 1 9 7 5 ) ...............  26

Cleavinger v. Saxner, 474 U.S. ,88
L. Ed. 2d 507 (1985)........... 24

Clulow v. State of Oklahoma, 700 F.2d
1291 (10th Cir. 1983) . . . 19, 26

Denton v. Mr. Swiss of Missouri, 564 F.2d 
236 (8th Cir. 1 9 7 7 ) ........... 13

Doe v. St. Joseph's Hospital of Fort 
Wayne, 788 F.2d 411 
(7th Cir. 1 9 8 6 ) ........... 37, 42

Dretar v. Smith, 752 F.2d 1015 (5th
Cir. 1 9 8 5 ) ...................  21

Economou v. Butz, 466 F. Supp. 1351 
(S.D.N.Y. 1979) ...............  23

England v. Rockefeller, 739 F.2d 140
(4th Cir. 1 9 8 4 ) ...............  19

Franco v. District Court of Denver, 641 
P.2d 922 (Colo. 1982) . . .  35, 41

Freeman v. Blair, 793 F.2d 166 (8th
Cir. 1 9 8 6 ) ...................  19

Gray v. Bell, 712 F.2d 490 (D.C. Cir.
1 9 8 3 ) .......................  20

Hackenthal v. Weissbein, 592 P.2d 1175, 
154 Cal. Rptr. 423, 24 C.3d 55
(1979).......................  36

viii



Page
Harlow v. Fitzgerald, 457 U.S.

800 (1982)...............  25, 29

Harper v. Jeffries, 808 F.2d 281 (3rd
Cir. 1 9 8 6 ) ........... 19, 20, 32

Page
Hayden v. Foryt, 407 So.2d 535

(Miss. 1982) .................  35
Imbler v. Pachtman, 424 U.S.

409 (1976)........... 21, 22, 29
Johnson v. Rhode Island Parole Bd. 

Members, 815 F.2d 5
(1st Cir. 1987) . . . 00H 20

Kompare v. Stein, 801 F.2d 
(7th Cir. 1986) . . .

883
20

LeClair v. Saunders, 627 F. 
(1980) ............. .

2d 606
19

McKinney v. Whitfield, 736 
(D.C. Cir. 1984) . . .

F. 2d 766
21

McSurley v. McClellan, 753 
(D.C. Cir. 1985) . . .

F . 2d 88 
• • 19

Malley v. Briggs, 475 U.S. f89 L.Ed. 2d 271 (1986) . • • 25
Matviuw v. Johnson, 26 111. Dec. 

794, 388 N.E.2d 795, 70 111. 
App. 3d 481 (1979), aff'd.
67 111. Dec. 370, 444 N.E.2d 
606, 111 111. App. 3d 629
(1980).....................  36

Mitchell v. Forsyth, 472 U.S. ____, 86
L.Ed.2d 411 (1985) . . 12, 24, 25

ix



Page
Nixon v. Fitzgerald, 457 U.S. 731

(1972)............... 12, 24, 30
Patchogue Nursing Center v. Bowen,

797 F .2d 1137 (2nd Cir. 1986) .26
Patrick v. Burget, 800 F.2d 1498 (9th 

Cir. 1986), pet, for cert. 
pending. No. 86-1145 . . 38, 39, 41

Public Citizen Health Research
Group v. Department of Health, 
Education, and Welfare,
668 F .2d 537 (D.C. Cir.
1 9 8 1 ) .................  33, 34, 36

Schware v. Board of Bar Examiners,
353 U.S. 232 (1957)............ 26

Sellars v. Procunier, 641 F.2d 1295
(9th Cir. 1981)...........18, 20

Simons v. Bellinger, 643 F.2d 774 (D.C.
(1980).....................  19, 27

Smith v. North Louisiana Medical 
Review Association, 735 F.2d 
168 (5th Cir. 1 9 8 4 ) ........... 36

State ex rel. Chandra v. Sprinkle,
678 S .W.2d 804 (Mo. en
banc 1 9 8 4 ) ...................  41

Taylor v. Flint Osteopathic Hospital,
561 Supp. 1152 (E.D. Mich. 1983), 
vacated and remanded for trial,
765 F .2d 146 (6th Cir. 1985) . .37

Tripati v. U.S.I.N.S., 784 F2d 345 (10th 
Cir. 1 9 8 6 ) ............. 19, 20, 32

x



Twin City Federal Savings & Loan 
Association v. Transamerica 
Ins. Co., 491 F.2d 1122

Page

(8th Cir. 1 9 7 4 ) ...............  13

U.S. v. University Hospital, 729 F.2d 144 
(2nd Cir. 1 9 8 4 ) ...............  34

Weiss v. Lehman, 642 F.2d 265 (9th Cir. 
1981)i vacated on other grounds.
454 U.S. 807 (1981)........... 19

Williams v. City of St. Louis, 783 F.2d 
114 (8th Cir. 1 9 8 6 ) ........... 13

Windsor v. The Tennessean, 719 F.2d 155, 
reh. denied. 726 F.2d 277 (6th 
Cir. 1 9 8 3 ) .................  19, 31

Statutes and Regulations:
42 C.F.R. § 474.3 .................  4
42 C.F.R. § 474.4 .................  4
42 C.F.R. § 474.7 .................  4
42 C.F.R. § 474.8 .................  4
42 C.F.R. § 474.10 .............4, 6, 28
42 U.S.C. § 1320C-5................ 4, 7
42 U.S.C. § 1320C-6........ 4, 30, 41
42 U.S.C. § 1320C-8...............4, 6
42 U.S.C. § 1320C-9...........4, 6, 28
42 U.S.C. § 1320C-16(b) . . .  15, 30, 41
42 U.S.C. § 1 9 8 1 ................. 3, 10
42 U.S.C. § 1985(3)............. 3, 10
PSRO Program M anual................. 3 4
Public Law No. 99-660 ............... 40

xi



Page

Other Authorities:
Davis, K., Adequate Health Care 

and an Aging Society: Are
they Morally Compatible?
Winter Daedalus, 227 (1986) . . 16

Gregory, D., Immunity for Physicians 
in Peer-Review Committees.
11 Legal Aspects of Med.
Practice No. 9, 1 (Sept. 1983) . 36

Keith, S ., R. Bell, A. Swanson, A.
Williams, Effects of Affirmative 
Action in Medical Schools:
A Study of the Class of 1975.
Vol. 313, No. 24, The New
England Journal of Medicine
1519 (1985)...................  17

J. C. Norman, So-Called Physician 
"Whistle-Blowers" Protected:
Immunity of Peer-Review
Committee Members from Suit. 11
Legal Aspects of Med.
Practice No. 2 (Feb. 1983) . . 36

Note, The Legal Liability of Medical 
Peer Review Participants For 
Revocation of Hospital Staff 
Privileges. 28 Drake L. Rev.
692 (1978-79)............... 35

Note, Medical Peer Review Protection In 
the Health Care Industry.
52 Temple L.Q. 552 (1979) . . .  35

S. Rep. No. 1230, 92nd Cong., 2d
Sess. (1972).................  30

xii



Page
Southwick and Slee, Quality Assurance 

in Health Care. 5 J. Legal Med.
343 (1984)...................  36

132 Cong. Rec. H. 9906 (daily ed.
Oct. 24, 1986)  ........  40

xiii



NO. 86

IN THE
SUPREME COURT OF THE UNITED STATES 

OCTOBER TERM, 1986

SOUNG O. KWOUN, et al. , 
Petitioners. 
vs.

SOUTHEAST MISSOURI PROFESSIONAL 
STANDARDS REVIEW ORGANIZATION, 
et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF 
APPEALS FOR THE EIGHTH CIRCUIT

The petitioner, Soung O. Kwoun,1 
respectfully prays that a writ of 
certiorari issue to review the judgment 
and opinion of the United States Court of 
Appeals for the Eighth Circuit entered in 
this proceeding on February 4, 1987.

-̂ -Dr. Kwuon and the professional 
corporations through which he practices 
are plaintiffs-petitioners.



2
CITATIONS TO OPINIONS BELOW 

The opinion of the court of appeals 

is reported at 811 F.2d 401 (8th Cir. 

1987) and is set out in the separate 
Appendix to this petition at pp. la-55a. 
The orders of the court of appeals 
affirming the district court and denying 
rehearing are set out in the Appendix at 
pp. 145a- 148a. The opinions of the
district court are reported at 622 F.
Supp. 520 (E.D. Mo. 1985) and 632 F.
Supp. 1091 (E.D. Mo. 1986) and are set
out in the Appendix at pp. 76a-123a and
124a-139a, respectively. The decision of 
the district court denying plaintiffs' 
motion to alter or amend the judgment is 
unreported and is set out in the Appendix 
at pp. 140a-143a. An earlier decision of 
the district court in a related case, 
entitled Kwoun v . Schweiker. is reported 
at 528 F. Supp. 1004 (E.D. Mo. 1981) and 
is set out in the Appendix at pp. 56a-



3

75a.
JURISDICTION

The judgment of the court of appeals
affirming the district court's dismissal
of the case in its orders of March 27,
198 6, and June 3, 198 6, was entered on
February 4, 1987. (A. 145a-146a) The
court of appeals entered an order denying
a timely petition for rehearing en banc.
or, in the alternative, for rehearing by
the panel, on March 9, 1987, and this
petition for certiorari is filed within
90 days of that date. (A. 147a-148a.)

The jurisdiction of this Court is invoked
under 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISION, STATUTES, 
______ AND REGULATIONS INVOLVED

This case involves a constitutional 
claim of denial of due process under the 
Fifth Amendment, and claims of racial 
discrimination and conspiracy under 42 
U.S.C. § 1981 and § 1985(3), which are
set out in relevant part in the Appendix



4
at pp.156a-157a.

Other statutes involved are the 
Medicare Peer Review Act, as amended, 42 

U.S.C. § 1 3 2 0 c  et sea,. including: 42

U.S.C. § 1 3 2Oc-16(b) ( 1 9 7 7 ) , now 42 U.S.C. 
§ 1 3 2 0 c —6 ( 1 9 8 2 ) ,  § 1 3 2 0 C - 5 ,  § 1 3 2 0 C - 8 ,

and § 1 3 2 0 c —9 which are set forth, in 
relevant part, in the Appendix at pp. 
149a-156a.

R e g u l a t i o n s  involved are 42 
C.F.R. §§ 474.3, 474.4, 474.7, 474.8, and 
474.10, along with the PSRO Program 
Manual, all of which are set forth in 
relevant part in the Appendix at pp. 
158a-167a.

STATEMENT OF THE CASE

The petitioner, Soung O. Kwoun, 
M.D., is a surgeon who was excluded from 
eligibility for Medicare reimbursement 
for services rendered to his patients by 

a ten year sanction decision of the 
Health Care Financing Administration



5

(H.C.F.A.) of the Department of Health 
and Human Services (HHS), in 1980.

The H.C.F.A. was acting on a 

recommendation based upon alleged quality 

of care issues issued by the Southeast 

Missouri Professional Standards Review 

Organization (the SEMO PSRO) which had 

been forwarded to the H.C.F.A. by the 

Missouri Statewide Professional Standards 

Review Council (the Statewide Council). 

The SEMO PSRO and the Statewide Council 

a r e  n o n - v o l u n t e e r  p e e r  r e v i e w  

organizations operating under contract 

with HHS, pursuant to 42 U.S.C. § 1320c, 

et sea., which are incorporated as non­

profit corporations under Missouri law, 

and which pay their participants in 

accordance with the directives of HHS.

Pursuant to statute and the 

implementing regulations, the sanction 
decision against Dr. Kwuon was imposed 

and a notice of his exclusion from



6
eligibility for Medicare reimbursement 
for quality of care reasons was published 

in newspapers in the area in which 

he practiced prior to a hearing.2 He was 

required to take an administrative appeal 
in order to obtain a hearing before an 
adjudicative officer.

Dr. Kwoun appealed the sanction 
decision under 42 U.S.C. § 1320c-8(b).
In 1983, after a hearing on the record 
before a federal Administrative Law 
Judge, Dr. Kwoun was restored to 
eligibility for Medicare reimbursement.3

242  U.S.C. § 1 3 2 0 C - 9 (b) ( 2 )  ; 42
C.F.R. § 4 7 4 . 1 0 ( e ) .

3As a result of information provided 
by the HCFA to the Missouri State Board 
of Registration For The Healing Arts and 
the Missouri Department of Social 
Services which administers state Medicaid 
payments, Dr. Kwoun was also threatened 
with exclusion from eligibility for 
Medicaid payments and with revocation of 
his medical license. Dr. Kwoun was 
cleared of the charges brought by the 
Board of Healing Arts on May 18, 1984, 
and of the charges made by the Department 
of Social Services in the attempt to



7
The Administrative Law Judge, in a 
lengthy opinion,4 reversed the sanction 
decision of the HCFA and held that the 

HCFA had failed to establish any 
violation of any obligation or any 
professional neglect under the Medicare 
Act by Dr. Kwoun. (Court of Appeals 
Appendix, hereinafter "C.A. App.," 519.)

The ALT found that the SEMO PSRO, 
the Statewide Council, and the HCFA had 
excluded Dr. Kwoun from eligibility 
w i t h o u t  e v e r  h a v i n g  d e v e l o p e d  
Professional Standards of Health Care 
as required by 42 U.S.C. § 1320c-5(a)

against which to compare Dr. Kwoun (C.A. 
App. 516-17, 520). The ALJ further found 
that the SEMO PSRO and the HCFA had

exclude him from Medicaid payments on 
November 7, 1983, after two separate
h e a r i n g s  b e f o r e  the M i s s o u r i  
Administrative Hearing Commission.

4The opinion is 183 pages, excluding 
exhibits, and was based on more than 
2,100 pages of transcript.



8
totally failed to comply with the notice 

and opportunity to respond provisions of 
42 C.F.R. Part 474, and that ". . . by 
reason of the Health Care Financing 
Administration's failure from the onset 
of the prosecution of this case to 
rectify the procedural errors of the SEMO 
PSRO by stating clearly the factual and 
legal issues, the respondent did not 
receive substantive due process in 
accordance with the Social Security Act 

and Regulations and the policy of the 
Department of Health and Human Services." 
(C.A. App. 506) The ALJ found that the 
medical records upon which the HCFA based 
its sanction decision had been 
rearranged, the sanction report had been 
tailored, and that at least one document 
purportedly found in a patient file had 
been contrived. (C.A. App. 528)

In strong language, the ALJ called 
the HCFA's pursuit of sanctions against



9

Dr. Kwoun "despicable" and conduct not 
worthy of professional people, and stated 

that there may have been some motive 

other than a concern over the quality of 

Dr. Kwoun's care of patients behind the 

sanction decision. (C. A. App. 513, 509) 

I n d e e d ,  at a n o n - d u e  p r o c e s s  

administrative review before an HCFA 

official, one of Dr. Kwoun's witnesses 

testified under oath that he had heard a 

member of the SEMG PSRO publicly state 

that they wanted to get rid of "those 

damn Koreans" and that they just about 

"had Dr. Kwoun where they wanted him," 

and that then they were going to start on 

another Korean doctor in the area. (C.A. 

App. 305.) Although the original 

investigation was of the entire hospital 
at which Dr. Kwuon practiced, Dr. Kwuon 
was the only physician against whom 

sanctions were sought.

After the sanction decision was



10
reversed,5 Dr. Kwoun brought suit against 
four employees of HCFA, in their 

individual capacities, fifty-one 

physicians and staff persons who were 
members and employees of the SEMO PSRO 

and of the Statewide Council, the SEMO 
PSRO and the S t atewide Council 
themselves, and certain other defendants 
who are not respondents here.6 The suit 

alleged claims of discrimination on 
account of race (Korean) in violation of 
42 U.S.C. § 1981 and 42 U.S.C. § 1985(3), 
due process violations under the Fifth

5A prior injunction action, brought 
by Dr. Kwoun, Kwoun v. Schweiker. 528 F. 
Supp. 1004 (E.D. Mo. 1981), was dismissed 
without prejudice by the U.S. District 
Court, Eastern District of Missouri, for 
failure to exhaust administrative 
remedies, and was not appealed. A. 56a- 
75a.

^Petitioners do not seek review of 
the district court's dismissal of the 
General Life Insurance Company or of the 
court of appeals' decision with regard to 
the state employee defendants, Montgomery 
and Clark.



11
Amendment, and state law claims of 
malicious prosecution and intentional 

infliction of severe emotional distress, 
and other claims not relevant here. The 
jurisdiction of the district court was 
invoked under 28 U.S.C. § 1331 and § 
1343, and pendent jurisdiction. Damage 

allegations were based upon loss of 
income, damage to Dr. Kwoun's practice 
and reputation, and emotional distress.

In an order dated September 19, 
1985, the district court denied the 
federal defendants' motion to dismiss on 
grounds of absolute immunity under Butz 
v. Economou. 438 U.S. 478 (1978) and
official immunity under Barr v. Matteo. 

360 U.S. 564 (1959). The federal
defendants took an immediate appeal.7

7Plaintiffs argued in the court of 
appeals that the denial of the federal 
defendants' motion to dismiss on grounds 
of official immunity under Barr was not 
an immediately appealable order under
Mitchell v. Forsyth. 472 U.S. ___, 86
L .E d .2 d 411 ( 1985) and Nixon v.



12

The SEMO PSRO defendants' motions based 
on official immunity under Bushman v. 

Seiler. 755 F.2d 653 (8th Cir. 1985) and 

on other grounds were denied by the 
district court. A. 76a-123a.

However, on March 27, 1986, the

district court sua sponte entered an 

order dismissing the entire case on the 

grounds that the peer review defendants 

were entitled to what was later described 

as "qualified immunity,"8 a claim they 

had never raised. In so ruling, the 

court stated that it would "correct"

F i t z g e r a l d . 457 U.S. 731 (1982).
Although the court of appeals addressed 
the question of official immunity under 
Barr before it reached the question of 
absolute immunity under Butz. the court 
did not address the procedural and 
jurisdictional question of appealability 
anywhere in its opinion.

8In its March 27 order the district 
court did not describe the immunity it 
was granting as qualified, but discussed 
it in terms appropriate to a grant of 
absolute immunity. It was only in its 
later June 3 order that the district 
court used the term "qualified immunity."



13

Congress' failure to grant Medicare peer 

reviewers immunity. A. 124a~139a. In an 

order dated June 3, 1986, the district

court held that its dismissal extended to 

all defendants, and that it intended to 

overrule its September 19, 1985 order

with respect to the federal defendants.9 

A. 140a-143a. Dr. Kwoun appealed from 

the latter two orders of the district 

court to the Court of Appeals for the 
Eighth Circuit. The three appeals were 

consolidated for argument and decision.

The court of appeals held that all 

of the sixty-some defendants in the case,

9The question of the procedural 
unfairness of a sua sponte dismissal of 
the case on grounds barring later 
litigation on the merits was presented to 
the court of appeals but was not 
addressed by that court even though the 
Eighth Circuit has consistently held that 
sua sponte grants of summary judgment are 
improper and require reversal. Williams 
v. City of St. Louis. 783 F.2d 114, 116
(8th Cir. 1986) , Denton v. Mr. Swiss of 
Missouri. 564 F.2d 236, 242 (8th Cir.
1977) , Twin City Federal Savinas & Loan 
Association v. Transamerica Ins. Co.. 491 
F .2d 1122 (8th Cir. 1974).



14
including the peer review physicians, 
were entitled to absolute immunity under 

Butz v. Economou. 438 U.S. 478 (1978),

and to the immunity of federal officials 
from common-law tort claims under Barr v. 
Matteo, 360 U.S. 564 (1959). Therefore,
Dr. K w u o n ' s  c l a i m s  of racial 
discrimination and denial of due process 
must be dismissed in their entirety. At 
oral argument before the appeals court, 
government counsel had expressed the 
o p i n i o n  t h a t  the p e e r  r eview 

organizations could claim qualified but 
not absolute immunity. Since it held 
that all defendants were entitled to 
absolute immunity, the court of appeals 
did not reach the issue of the 
correctness of the district court's 

dismissal purportedly based on qualified 

immunity.
Judge Heaney, in a dissenting 

opinion, objected to the court of appeals



15
ordering the case dismissed. Instead, he 
urged, the court should have remanded for 
a determination by the district court of 
the functions performed by the federal 
defendants, as this Court did in Butz. 
He further urged that the peer review 
defendants were not entitled to absolute 
immunity in light of the clear language 
of 42 U.S.C. § 1 3 2 0 C -1 6  ( 1 9 7 7 ) ,  which 
expressly provides such persons with only 
good faith immunity. A. 43a-55a.

A petition for rehearing or for 
rehearing en banc was denied, thus 
occasioning this petition for a writ of
certiorari.



16

REASONS FOR GRANTING THE WRIT

I. THIS CASE PRESENTS QUESTIONS OF 
NATIONAL IMPORTANCE THAT SHOULD BE 
RESOLVED BY THIS COURT
The present case raises significant

questionsi concerning the scope of

immunity to which state and federal

officials responsible for carrying out

portions of the Medicare! program are

entitled. At issue is not only the

immunity doctrine as developed by

decisions of this Court but also the

intent of Congress when it enacted an

immunity provision as part of the

Medicare Act.
The Medicare program is nationwide 

in scope and is one of the primary means 
of providing low cost medical care to the 
poor and elderly.10 Its administration 
depends to a significant degree on the

10K. Davis, "Adequate Health Care 
and an Aging Society: Are they Morally 
Compatible?" Winter Daedalus. 227, 229- 
230 (1986).



17
states and on private physicians, both as 

providers of care and as regulators. For 
the minority poor, often the only source 

of medical care is minority physicians 
who are willing to establish practices in 

their communities.11 Racial discrimi­
nation in the administration of the 
program can have a devastating effect, 
therefore, not only on the rights of 
minority physicians who are excluded as a 
result of prejudice but also on those 
persons for whose ultimate benefit the 
Medicare program is intended.

Physicians excluded from Medicare 
payments because of their race or 
ancestry not only suffer the immediate 
c o n s e q u e n c e  of suspension from 
eligibility for reimbursement but suffer

11S . Keith, R. Bell, A. Swanson, A. 
Williams, "Effects of Affirmative Action 
in Medical Schools: A Study of the Class 
of 1975." Vol. 313, No. 24, The New 
England Journal of Medicine 1519, 1524 
(1985) .



18

serious damage to their reputations and 

practices that restoration to eligibility 

is inadequate to correct. The only 

effective remedy for, and deterrent to, 

racial discrimination in this situation 

is the availability of damages against 

those who violate the civil and 

constitutional rights of physicians.

The importance of the issues 

presented here are not confined to the 

operation of the Medicare program. In 

recent years there have been dozens of 

reported decisions by both the federal 

appellate and district courts that have 

grappled with the issue of when and to 

what degree particular officials should 

be granted immunity from actions for 
damages. The results have been

divergent, with courts granting absolute 
immunity to some officials,12 and

12E .q., Johnson v. Rhode Island 
Parole Bd. Members. 815 F.2d 5 (1st Cir. 
1987); Sellars v. Procunier. 641 F.2d



19

qualified immunity to others.13

1295 (9th Cir. 1981) (parole board 
members); Trioati v. U.S.I.N.S.. 784 F.2d 
345 (10th Cir. 1986) (federal probation
officer); Harper v. Jeffries. 808 F.2d 
281 (3rd Cir. 1986) (parole board hearing 
officer absolutely immune; probation 
officer only entitled to qualified 
immunity); Clulow v. State of Oklahoma. 
700 F.2d 1291 (10th Cir. 1983) and Simons 
v. Bellinger. 643 F.2d 774 (D.C. Cir. 
1980) (attorney disciplinary committees); 
Austin Municipal Securities Inc, v .  Nat'l 
Ass/n of Securities Dealers. Inc.. 757 
F.2d 676 (5th Cir. 1985) (securities 
dealers' association).

13E.q.. LeClair v. Saunders. 627 
F.2d 606 (1980) (dairy farm inspector) ;
England v. Rockefeller. 739 F.2d 140 (4th 
Cir. 1984) (governor not entitled to 
absolute legislative immunity); McSurlev 
v. McClellan. 753 F.2d 88 (D.C. Cir.
1985) (congressional staff member); 
Freeman v. Blair. 793 F.2d 166 (8th Cir.
1986) (department of health inspectors) ;
Bothke v. Fluor Engineers & Constructors. 
Inc.. 713 F.2d 1405 (9th Cir. 1983),
vacated on another ground. 468 U.S. 1201 
(1984), order on remand. 739 F.2d 484 
(9th Cir. 1984) (IRS official entitled 
only to qualified immunity); accord. 
Cameron v . IRS. 773 F.2d 126 (7th Cir.
1985) ; Tripatl v. U.S.I.N.S.. supra 
(immigration official entitled only to 
qualified immunity); Weiss v. Lehman. 642 
F.2d 265 (9th Cir. 1981), vacated on 
other grounds. 454 U.S. 807 (1981)
(Forest Service employee); Windsor v. The 
Tennessean. 719 F.2d 155, reh. denied, 
726 F. 2d 277 (6th Cir. 1983) (U.S.
Attorney acting as employer only entitled



20
The decisions conflict both in terms

of the results and the standards used.
In the present case the court below
decided as a matter of policy that
certain types of officials should have
absolute immunity without requiring a

particularized showing of the functions

performed by the officials. Other courts 

have followed the admonition of this 

Court in Nixon v. Fitzgerald. 457 U.S. 

731 (1982) and have required a rigorous

showing of need and function before 

extending absolute immunity.* 14

to qualified immunity); Kompare v. Stein. 
801 F. 2d 883 (7th Cir. 1986) (medical 
examiner).

14See, e.g. . Gray v. Bell. 712 F.2d 
490 (D.C. Cir. 1983); Sellars v.
Procunier. 641 F.2d 1295 (9th Cir. 1981), 
followed. Johnson v. Rhode Island Parole 
Bd. Members. 815 F.2d 5 (1st Cir. 1987). 
Bothke v. Fluor Engineers & Constructors. 
Inc. . supra (under functional analysis, 
IRS official had only qualified 
immunity); Tripati v. U.S.I.N.S.. supra 
(immigration official who reported alien 
to INS had qualified immunity, probation 
officers who prepared reports had 
absolute immunity); Harper v. Jeffries.



21

Petitioners urge that this case 

provides the opportunity for the Court to 

resolve a number of issues that have 

divided the lower courts and to provide 

guidance that will permit them to decide 

in particularized cases the degree of 

immunity to which an official should be 
entitled.
II. THE DECISION BELOW CONFLICTS WITH 

PRIOR DECISIONS OF THIS COURT AND 
WITH DECISIONS OF OTHER CIRCUITS 
REGARDING THE CIRCUMSTANCES UNDER 
W H I C H  A B S O L U T E  IMMUNITY IS 
APPROPRIATE.

A. The Decision Below Conflicts 
With Decisions of This Court

The court below has misconstrued the
scope of absolute immunity delineated in
this Court's decisions in Imbler v.
Pachtman, 424 U.S. 409 (1976), and Butz

gppra (parole board member has absolute 
immunity, probation officer only 
qualified immunity) . See also McKinney 
v, Whitfield, 736 F. 2d 766 (D.C. Cir.
1984) (functional analysis used to deny 
immunity to common-law torts to federal 
official acting outside the scope of 
authority) . Contra Dretar v. Smith. 752
F•2d 1015 (5th Cir. 1985).



22
v . Economou, and has granted absolute 

immunity based upon points expressly left 
undecided by prior decisions of this 
Court.

The decision of the court of appeals 
takes the doctrine of prosecutorial and 
judicial immunity laid out in Imbler and 
extended in Butz. and expands it beyond 
all recognition, in holding that all of 
the participants in Medicare peer review, 

whatever their role, are entitled to the 
absolute immunity of prosecuting 
attorneys. The result is to completely 
bar a physician who claims that his 
wrongful exclusion from Medicare 
reimbursement was motivated by racial 
considerations from recovering for any 
part of his loss under common law, 
statutory, or constitutional theories.

In Imbler. this Court expressly left 
undecided the question whether a 
prosecutor performing investigative or



23
administrative tasks would be entitled to 
absolute immunity. In Butz, the Court 

held that federal hearing examiners or 

administrative law judges, agency 

attorneys arranging for the presentation 

of evidence on the record, and agency 

officials responsible for initiating or 

continuing a proceeding subject to agency 

adjudication were entitled to absolute 
immunity because their roles were 

analogous to those of judges and 

prosecuting attorneys. On the other 

hand, officials not performing such 

functions would be entitled to only 

qualified immunity, and that the actual 

functions performed would be determined 

by the district court on remand.15

The Court has denied absolute 
immunity to the Attorney General of the

15 On remand, Economou v. Butz. 466 
F. Supp. 1351 (S.D.N.Y. 1979), the
district court held that two of the 
defendants in Butz were not entitled to 
absolute immunity.



24

United States, Mitchell v. Forsyth. 472
U.S. ____ _, 86 L.Ed. 2d 411 (1985), where
the claim to absolute immunity was 
a s s e r t e d  b a s e d  u p o n  p o l i c y  

considerations. The Court has also
indicated that the "public policy" to be 
considered in connection with claims for 
absolute immunity has to do with "the 
'inherent' or 'structural' assumptions of 
our scheme of government," Nixon v. 
Fitzgerald. 457 U.S. 731, 748 n. 26
( 19 8 2 ) , rather than with policy 
considerations per se.

In Cleavinaer v. Saxner, 474 U.S.
___, 88 L.Ed. 2d 507 (1985) , this Court
declined to grant members of a federal 
prison discipline committee absolute 
immunity, holding that the discipline 
committee's function was not a classic 
adjudicatory one. An important factor in 
the decision was the unavailability in 
the proceedings at issue of the



25

procedural safeguards present in Butz 

under the Administrative Procedure Act. 
88 L.Ed.2d at 517.

In the present case, both the 
district court and the court of appeals 
determined that the peer review 
physicians and federal officials were 
entitled to immunity because of the 
importance of Medicare peer review to the 
Medicare system. The district court 
stated, "Immunity has consistently been 
provided for groups and individuals who 
by legal mandate, are charged with 
undertaking unpopular tasks," (A. 134a)
relying on Mallev v. Briggs. 475 U.S. 
___, 89 L. Ed. 2d 271 (1986).16 The

16The district court, by relying on 
Mallev. supra. apparently intended to 
grant the peer review defendants 
qualified immunity and to dismiss on that 
basis, although it did not so state. The 
court did not, in its March 27, 198 6
order, apply the analysis set forth in 
Harlow v. Fitzgerald. 457 U.S. 800 (1982)
or in Mitchell v. Forsyth, 472 U.S. __,
86 L.Ed.2d 411 (1985) to determine
whether the defendants were alleged to



26

district court further stated that 
although Congress had "determined that 

comprehensive review of government funded 

health care is in the public interest," 

Congress had "not specifically provided 

immunity to encourage PSROs to vigorously 

pursue their appointed task," and "[t ]he 

Court will correct Congress' oversight 

with its ruling today.es (A. 138a-139a.)

have violated rights which were clearly 
established at the time of the alleged 
conduct. However, in the district 
court's earlier order of September 19, 
1985, the court had held that Dr. Kwoun's 
claim of entitlement to Medicare 
reimbursement, provided he complied with 
the conditions and requirements of the 
Medicare statutes, was within the type of 
property interests recognized in Board of
Regents__v.__ Roth, 408 U.S. 564, 577
(1972) , that his claim of damage to his 
practice was recognized in Schware v. 
Board of Bar Examiners. 353 U.S. 232, 238 
( 19 5 7 ) , and that o t h e r  claimed 
deprivations had been recognized by the 
Eighth Circuit in Bishop v. Tice. 622 
F. 2d 349, 357 (8th Cir. 1980) . Other
courts have held that physicians have 
1 iberty and property interests in 
connection with Medicare reimbursement.
Patchogue Nursing Center v.__Bowen, 797
F.2d 1137 (2nd Cir. 1986); Case v. 
Weinberger. 523 F.2d 602 (2nd Cir. 1975).



27

The court of appeals granted 

absolute immunity to the peer review 

defendants, analogizing Medicare peer 

r e v i e w  to a t t o r n e y  disciplinary 

committees17 and to the disciplinary 

committee of a securities dealers' 

association,18 to which other circuits 
have granted absolute immunity. The 

court stated, "we are convinced that 
absolute immunity is 'essential for the 

conduct of the public business,' Butz. 

438 U.S. at 507, . . .  in this critical 

health care area.” A. 362.

In affording the federal defendants 

absolute immunity, the court of appeals 

held that the federal officials' actions 

were at all relevant times prosecutorial

17 Citing Clulow v. State of
Oklahoma. 700 F.2d 1291, 1298 (10th Cir.
1983) and Simons v. Bellinger. 643 F.2d 
774, 782 (D.C. Cir. 1980).

18 C i t i n g  A u s t i n  M u n i c i p a l  
Securities. Inc, v. National Association 
of Securities Dealers. Inc.. 757 F. 2d 
676, 689 (5th Cir. 1985).



28
in nature. A. 21a. The court ignored 

the differences between the statutory 
scheme at issue in Butz under the 

Commodities Exchange Act and the 

Administrative Procedure Act, and in 

Austin, under the Securities and Exchange 

Act, where the initial action taken by 
the agency is a formal charge that is 

followed immediately by a judicial-type 

hearing on the record at which a charged 

party has the right to counsel and cross- 

examination, and the proceedings under 

the peer review statute here. The 

sanctioned provider is excluded from 

reimbursement by an administrative 

decision and a publication of the 

Medicare denial in a local newspaper long 

prior to any opportunity for an 

adjudicatory hearing. 42 U.S.C. § 1320c- 

9(b)(2), 42 C.F.R. § 474.10(e).

The court of appeals' logic would 

grant absolute immunity to any official,



29
regardless of his or her actual 

functions, if the action taken is 

eventually reviewed or subject to an 

adjudicatory hearing. Such a result is 

wholly at odds with the fundamental 

proposition that absolute immunity is the 

exception rather than the rule and is to 

be granted only to a narrow class of 

officials whose duties and functions 

particularly require immunization from 
the threat of suit. Harlow v. 

Fitzgerald. 457 U.S. 800, 807 (1982);

Butz v. Economou. 438 U. S. at 506.

In sum, this case provides the Court 

the opportunity to resolve, for the 

guidance of the lower courts, two issues 

left undecided by Imbler and Butz: (1)

what is the scope of the administrative 

and investigatory exception to absolute 
prosecutorial immunity; and (2) what are 
the limits of the policy considerations 
for granting absolute immunity that were



30

discussed in Butz? The issues in this 

case are presented in a context in which 

Congress has expressly provided that only 

limited immunity, of a hybrid variety, 

would be available to peer review 

participants. 42 U.S.C. § 13 2 Oc-16 
(1977).19 Although the case does not 

present the issue of a Congressional 

a t t e m p t  to a b r o g a t e  an already 

established application of immunity,20 it 

does present issues concerning the limits 

of Imbler and Butz in the context of an 

explicit Congressional determination that 

public policy does not require absolute 
immunity.21

19The present statutory section is 
42 U.S.C. § 132QC-6(1982).

20See Nixon v. Fitzgerald. 456 U.S. 
at 748, n. 27.

21The legislative history of the 
Senate Committee on peer review appears 
at S. Rep. No. 1230, 92nd Cong. 2d Sess. 
256-58 (1972) and with regard to PSRO
liability states:

T h e  a m e n d m e n t  p r o v i d e s



31

B. The Decision Below Conflicts 
With Decisions Of Other 
Circuits.

As can be seen from the text and 

cases cited above at nn. 12-14, other 

circuits have begun with the proposition 

that absolute immunity is the exception, 

not the norm. E.q. . Windsor v. The 

Tennessean. 719 F.2d 155, 163-4 (6th Cir. 

1983) ; Cameron v . I.R.S. . 773 F. 2d 126,

128 (7th Cir. 1985); Bothke v. Fluor 

Engineers and Constructors. Inc.. 713 

F .2d 1405 (9th Cir. 1983). Thus, other 

courts of appeals have engaged in a 

particularized analysis of the functions

protection from civil liability for 
those engaged in required review 
a c t i v i t i e s ,  or who p r o v i d e  
information to PSROs in good faith, 
for actions taken in the proper 
performance of these duties. 
Activities taken with malice toward 
a practitioner or institution, or 
group of practitioners would not be 
considered action taken in the 
proper performance of these duties.

S. Rep., supra, at 266-67.



32
of each of the officials involved to 

determine whether absolute or qualified 

immunity was appropriate. See, e.g.. 

Trjpati v. U.S.I.N.S.. 784 F.2d 345 (10th 
Cir. 1986); Harper v. Jeffries. 808 F.2d 
281 (3rd Cir. 1986).

The court below, on the other hand, 

extended absolute immunity to every level 

and type of official involved in the peer 

review process because of policy 

considerations it derived from an 

overview of the statutory scheme 

involved. The absence of any functional 

analysis places the decision in square 

conflict with at least five other 
circuits.

III. THE DECISION BELOW CONFLICTS WITH
THE DECISIONS OF OTHER CIRCUITS AS 
TO WHETHER PHYSICIANS ENGAGED IN 
MEDICARE PEER REVIEW ARE FEDERAL 
OFFICIALS AND WITH STATE COURTS AS 
TO THE SCOPE OF THEIR IMMUNITY FROM 
SUIT.

The court of appeals held that 

Medicare peer reviewers are federal



officials, ignoring both the clear 
Congressional intent that Medicare peer 

review be placed in the private sector,22

22The legislative history of the 
Professional Standards Review statute is 
set forth in detail in Public Citizen 
Health Research Group v. Department of 
Health. Education, and Welfare. 668 F.2d 
537, 542-43 (D.C. Cir. 1981). From its
review of the legislative history the 
court concluded:

We begin with the Report of the 
Senate Committee on Finance on the 
Social Security Amendments of 1972, 
S. Rep. No. 92-1230, 92d Cong., 2d
Sess. (1972). It was the 1972 
amendments which authorized the 
establishment of PSROs. Reading the 
Report, we are struck by the strong 
and recurrent theme, that the review 
process must be conducted by 
practicing physicians, not by the 
government or government employees. 
This theme is sounded over and over 
in the report.

* * * *

We think these expressions 
demonstrate the fixed purpose of 
Congress that PSROs should be 
independent medical organizations 
operated by practicing physicians in 
the private sector, and not 
g o v e r n m e n t  a g e n c i e s  run by 
government employees. Government, 
said the committee, should not 
u n d e r t a k e  to r e v i e w  t h e  
appropriateness and quality of



34

and the decisions of other circuits that 

are to the contrary. Public Citizen 

Health _ Research Group v. Department of

Healthy.Education, and Welfare. 668 F.2d

537, 544 (D.C. Cir. 1981),* U.S. v. 

University,. Hospital. 729 F.2d 144 (2nd 
Cir. 1984).

The court of appeals determined that 

the peer review defendants were federal 

officials in order to reach the further 

holding that they were therefore entitled

medical services. A holding that 
the Foundation, an organization of 
private physicians, constitutes a 
g o v e r n m e n t  a g e n c y  w o u l d  be 
inconsistent with the congressional 
purpose.

S-ge.- also Assoc.iation of American
Physicians— and__Surgeons v. Weinberger.
395 F. Supp. 125, 140 (N.D. 111. 1975),
affirmed without opinion. 423 U.S. 975 
(1975).

HHS, in the PSRO Program Manual, 
states: "The Department of Health,
Education, and Welfare recognizes that 
PSROs operate as independent, private, 
nonprofit corporations." P.S.R.O. 
Program Manual, Chapter XXIV, p. 1, June 
20, 1978. See Appendix at 167a.



35

to official immunity from common law tort 

claims under Barr v. Matteo. 360 U.S. 564 

(1959).23 As the dissent below points 

out, however, (A. 51a-53a) , a number of 

state courts have held that medical peer 

review committees, their members, and 

witnesses before them have only qualified 

immunity.24

2 3 The court of appeals considered 
the issue of official immunity from 
common law tort claims under Barr as to 
each group of defendants prior to 
considering the defendants' claims to 
absolute immunity under Butz v. Economou. 
thereby revealing considerable analytical 
confusion about the application of these 
immunity defenses; absolute immunity 
based upon prosecutorial or judicial 
functions would subsume the official 
immunity established in Barr.

24See. e.g. . Franco v. District 
Court of Denver. 641 P.2d 922, 925 (Colo. 
1982) ; (citing, Note, The Legal Liability 
of Medical Peer Review Participants For 
Revocation of Hospital Staff Privileges. 
28 Drake L. Rev. 692 (1978-79) ; Note, 
Medical Peer Review Protection In the 
Health Care Industry. 52 Temple L.Q. 552 
(1979)). Havden v . Forvt, 407 So.2d 535, 
536 (Miss. 1982), (granting review 
committee and witnesses before committee 
qualified immunity); Buckner v . Lower 
Florida Keys Hosp. Dist.. 403 So.2d 1025, 
1028 (Fla. App. 1981) (granting hospital



36

The other circuits that have held 

that PSROs were not federal entities have 

thereby reached findings that they were 

not liable under the Freedom of 

Information Act. Public Citizen Health

Research. GrouB-JL-...Department of Health.
Educa t i on f andjfelfare, supra; U.S. v. 
Universxty,_Hogp 11a.1. On the other hand, 

the Fifth Circuit in Smith v. North 

Louisiana Medical Review Association. 735

staff and disciplinary body and its 
agents qualified immunity); Hackenthal v. 
Weissbein. 592 P.2d 1175, 154 Cal. Rptr. 
423, 426-27, 24 C. 3d 55 (1979) (granting 
qualified immunity to witnesses at 
hearing of peer review committee of 
nonpublic institution) ; Matviuw v. 
Johnson. 26 111. Dec. 794, 388 N.E.2d
795, 799, 70 111. App. 3d 481 1979)
(granting witnesses at hearing of peer 
review committee qualified immunity), 
aff'd, 67 111. Dec. 370, 444 N.E.2d 606, 
111 111. App. 3d 629 (1980) ; Southwick
and Slee, Quality.Assurance...... in Health
Care. 5 J. Legal Med. 343, 386-96 (1984);
D. Gregory, Immunity.for Physicians in
Peer-Review Committees. 11 Legal Aspects 
of Med. Practice No. 9, pp. 1, 2-4 (Sept. 
1983); J . C. Norman, So-Called Physician 
JIMiis11 e-B 1 pwers18 Protected: Immunity of
Peer-Review Committee Members from Suit. 
11 Legal Aspects of Med. Practice No. 2, 
pp. 4-7 (Feb. 1983).



37

F.2d 168 (5th Cir. 1984), held that PSROs 
were federal entities, thereby affirming 

the dismissal of an action under 42 

U.S.C. § 1983. A similar result was 

reached in Tavlor v. Flint Osteopathic 

Hospital. 561 Supp. 1152 (E.D. Mich.

1983), vacated and remanded for trial. 

765 F.2d 146 (6th Cir. 1985), except that 

the plaintiff, a black physician alleging 

racial discrimination in a PSRO sanction 

decision, ultimately was found to be 

entitled to a trial on his 42 U.S.C. 

§ 1981 claim. Thus, the result in Tavlor 

is squarely in conflict with the result 

here. Cf. also, Doe v. St. Josephs 
Hospital of Fort Wavne. 788 F.2d 411 (7th 

Cir. 1986), holding that a Korean 
physician who had been disqualified from 

hospital privileges could not bring an 

anti-trust action against a medical peer 
review committee because of the state 
action doctrine, but could maintain an



38

a ction under § 1981 for racial

discrimination.

In short, the nature of PSROs, 

whether they are federal or private, has 

been interpreted virtually at will by the 

circuits, but in most cases in a manner 

which prevents the assertion of theories 

of recovery by persons who claim to be 

victims of the PSRO process. The 

variation in holdings as to the nature of 

PSROs, coupled with the near-uniformity 
in rulings against individual physicians 

seeking to challenge actions by PSROs, 

essentially leaves the medical community 

without the protection of any rational 
rule of law. The confusion in this area 
of law clearly requires resolution by 
this Court.

IV. THE DECISION BELOW RAISES IMPORTANT 
ISSUES RELATED TO THOSE PRESENTED BY 
A PENDING CASE, PATRICK V. BURGET■

Patrick v. Burget. 800 F.2d 1498

(9th Cir. 1986) , pet, for cert, pending.



39

No. 86-1145, like the present case, 

concerns the scope of potential liability 

for medical peer reviewers who are 

alleged to have conducted peer review 

activities in bad faith. Patrick also 

raises the question of the limits to 

judicially-created doctrines of immunity 

where Congress has expressly indicated, 
by statute, its determination that public 

policy requires less than complete 

immunity for peer reviewers.

In Patrick the Ninth Circuit 
reversed a jury verdict finding the 

d e f e n d a n t  p h y s i c i a n s  liable for 

conducting in-hospital peer review 

activities in a manner that violated 

federal anti-trust laws. The Ninth 

Circuit held that the peer review 

activities at issue in Patrick, which 

were authorized by an Oregon statute that 

required that medical facilities have 

procedures for reviewing staff privileges



40

and professional competence, were immune 
from antitrust liability by virtue of the 

state statute and state supervision of 

the process that the court found to 
exist.

The Ninth Circuit's decision in 
Patrick was the impetus behind passage of 

the Health Care Quality Improvement Act 

of 1986, Title IV, Public Law No. 99-660, 

which authorized peer review activities 

in private settings and provides for 

limited good faith immunity for 

p a r t i c i p a n t s , 25 and w h i c h  also 
specifically provides that there is a 

cause of action remaining under 42 

U.S.C. § 1981 against peer reviewers. 

The limited good faith immunity provided 
in the new law is substantially the same 

as that contained in the Medicare peer 

r e v i e w  law at issue here, 42

25132 Cong. Rec. H9960 (daily ed. 
October 14, 1986) (statement of Rep.
Edwards).



41
U.S.C. § 1 3 2 0 C - 1 6 , 26 and is also 

substantially the same as that provided 

in many state statutes.27

In the present case, the claims 

asserted were not antitrust, but rather 

were claims of racial discrimination, 

conspiracy, violation of constitutional 

rights, malicious prosecution and 

intentional infliction of severe 

emotional distress. If antitrust claims 

had been asserted, there could have been 

little basis for the assertion of state 

action immunity defense by the peer 

review defendants in view of the federal

26Now 42 U.S.C. § 1320C-6.
27State ex rel. Chandra v. Sprinkle. 

678 S.W.2d 804, 806 n. 13 (Mo. en banc
1984) (Missouri Supreme Court recognized 
in dicta that peer reviewers would have 
only good faith immunity under Missouri 
Statute); Franco v. District Court of 
Denver. 641 P.2d 922 (Colo. 1982) 
(granting review committee and members 
qualified immunity); Buckner v . Lower 
Florida Keys Hospital District. 403 So.2d 
1025, 1028 (Fla. App. 1981) (granting
only good faith immunity).



42

statute authorizing the establishment of 

the SEMO PSRO. However, the absolute 

immunity granted by the Eighth Circuit in 

the present case, if carried to its 

logical conclusion, would bar civil 
damages actions arising out of private 

peer review as well as Medicare peer 

review, on whatever theory.28 There is a 

potential for direct conflict between the 

Eighth Circuit, which may extend Kwoun to 

all medical peer review activities, and 

Patrick, should this Court find that the 

Ninth Circuit's decision in Patrick 

should be reversed, because in the Eighth

28The decision in Patrick left open 
the possibility that state law theories 
such as malicious prosecution could be 
asserted on remand. Patrick, at 1509. 
The Seventh Circuit in Doe v. st. 
Joseph's Hospital of Fort Wavne. 788 F.2d 
411 (7th Cir. 1986), held that a 
physician excluded from hospital staff 
privileges under the hospital's peer 
review process could not assert an anti­
trust claim because of state action 
immunity, but remanded for trial on the 
physician's Title VII and 42 U.S.C. 
§ 1981 claims based on race, Korean.



43

Circuit, even if an anti-trust theory 
lies, all possible defendants would have 
absolute immunity from suit.

CONCLUSION
For the foregoing reasons, a writ of 

certiorari should be issued to review the 
judgment and opinion of the Eighth 
Circuit.

Respectfully submitted,

LOUIS GILDEN*
NORAH J. RYAN

317 North 11th Street 
Suite 1220
St. Louis, Missouri 63101 
(314) 241-6607

JULIUS LeVONNE CHAMBERS 
CHARLES STEPHEN RALSTON 

99 Hudson Street 
New York, N.Y. 10013 
(212) 219-1900

Attorneys for Petitioners
♦Counsel of Record



Hamilton G raphics, Inc.—-200 Hudson Street, New York, N.Y.—-(212) 9 6 6 -4 1 7 7