Yesterday, the California Supreme Court ruled in Fahlen v. Sutter Central Valley Hospitals that a physician claiming he lost his hospital privileges as a form of whistleblower retaliation has the right to seek relief via a whistleblower lawsuit under California Health and Safety Code section 1278.5., and does not have to first seek relief through a peer review writ process, as the hospital had claimed.

In 2007, California Medical Association (CMA) successfully sponsored AB 632, legislation that extended whistleblower protections to physicians on hospital medical staffs. Prior to this, the existing whistleblower law (Health & Safety Code section 1278.5) only protected patients and hospital employees.

CMA argued before the legislature that physicians, too, can be subject to retaliation in hospitals when they raise concerns about patient safety or medical care. The Legislature agreed to extend whistleblower protection to physicians and to protect them against sham peer review. The bill was passed and signed into law by then Governor Arnold Schwarzenegger in October 2007.

In this case, the plaintiff physician alleged that his staff privileges were terminated in retaliation for reporting nursing errors and insubordination to the hospital. He sued the hospital under section 1278.5, which provides that any medical staff member who suffers retaliation can sue for damages and reinstatement of privileges. The statute also creates a presumption, which applies in the case, that adverse action taken within 120 days of a whistleblower complaint was retaliatory.

The defendant hospital argued, however, that the action under section 1278.5 was improper because the alleged retaliation involves an adverse peer review decision. The hospital claimed that the physician instead must first try to seek reinstatement of his privileges through a writ process, in which the physician faces evidentiary hurdles and a presumption that the peer review action was correct. The hospital argues that only after that writ process, can the physician pursue a whistleblower claim.

In 2013, CMA filed an amicus brief in this case (along with the American Medical Association). In January 2014, Long Do, legal counsel for CMA, presented oral arguments before the California Supreme Court. Do argued that physician whistleblower protection is too important to be subsumed under the peer review "exhaustion requirement." He point out that the Legislature provided all health care workers in a hospital the same level of broad and immediate whistleblower protection in order to encourage reporting of patient safety issues in hospitals. Requiring physicians to go through a protracted writ process only thwarts this public policy and effectively denies physicians protection under section 1278.5. CMA asked the state's high court to hold that the peer review "exhaustion requirement" does not apply to whistleblower actions. The court agreed with this argument.

Click here to read the court’s ruling.

Contact: CMA's legal information line, (800) 786-4262 or legalinfo@cmadocs.org.