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Sherr v. HealthEast Care System

United States District Court, D. Minnesota

September 9, 2019

Dr. Gregory Sherr, Plaintiff,
v.
HealthEast Care System, Dr. Margaret Wallenfriedman, Dr. Mary Beth Dunn, Dr. Richard Gregory, and Dr. Stephen Kolar, Defendants.

          Lawrence P. Schaefer, Esq., Peter Christian, Esq., and Jean M. Boler, Esq., Schaefer Halleen, LLC, Minneapolis, MN, on behalf of Plaintiff.

          Jaime Stilson, Esq., Meghan L. DesLauriers, Esq., and Daniel Falknor, Esq., Dorsey & Whitney LLP, Minneapolis, MN, on behalf of Defendants HealthEast Care System, Dr. Margaret Wallenfriedman, Dr. Mary Beth Dunn, Dr. Richard Gregory, and Dr. Stephen Kolar.

          MEMORANDUM OPINION AND ORDER

          ANN D. MONTGOMERY U.S. DISTRICT JUDGE.

         I. INTRODUCTION

         On May 28, 2019, [1] the undersigned United States District Judge heard oral argument on Defendants HealthEast Care System (“HealthEast”), Dr. Margaret Wallenfriedman (“Dr. Wallenfriedman”), Dr. Mary Beth Dunn (“Dr. Dunn”), Dr. Richard Gregory (“Dr. Gregory”), and Dr. Stephen Kolar's (“Dr. Kolar”) (collectively, “Defendants”) Motion for Summary Judgment [Docket No. 84]. For the reasons discussed below, the Motion is granted.

         II.BACKGROUND

         Dr. Sherr, a neurosurgeon who previously maintained privileges at HealthEast's hospitals, alleges HealthEast's in-house neurosurgeons sought to remove him as a competitor by defaming his professional abilities and orchestrating a sham peer review process that resulted in a summary suspension. First Am. Compl. (“FAC”) [Docket No. 15] ¶¶ 3, 48, 49, 54-73. Although Dr. Sherr's summary suspension was later overturned by HealthEast's Judicial Review Committee, he alleges that word of his suspension destroyed his referral sources and forced him to move to another state to continue his career. Id. ¶¶ 5, 89-90.

         Dr. Sherr asserts claims for defamation, tortious interference with prospective economic advantage, and tortious interference with contract.[2] FAC ¶¶ 112-139. Defendants argue they are entitled to summary judgment on all claims because state and federal peer immunity statutes protect them from liability on claims stemming from the peer review process. Further, Defendants argue the alleged defamatory statements made outside the peer review process are not actionable.

         A. Defendants

         HealthEast is a non-profit health care provider and hospital management company that owns four hospitals in Minnesota. FAC ¶ 8. Drs. Wallenfriedman, Dunn, and Gregory (collectively, the “HealthEast Neuro Group”) are neurosurgeons who began working as in-house surgeons for HealthEast in July 2013. Pl. Exs. 63, 112, 130.[3] Their compensation structures are linked to the number of procedures they perform, and their employment contracts state that HealthEast patients requiring specialized medical services will be referred to specialists within the HealthEast system. Pl. Ex. 63 at 9, 11-15; Pl. Ex. 112 at 9, 11-15; Pl. Ex. 130 at 9, 11-15.

         Dr. Kolar is an internal medicine physician who served as HealthEast's Senior Vice President and Chief Medical Officer in 2015. Schaefer Decl. Ex. A [Docket No. 121, Attach. 3] (“Kolar Dep.”) at 11:23-12:16.

         B. Dr. Sherr

         Dr. Sherr, who completed his residency in 2010, specializes in brain, spine, and peripheral nerve surgery. Schaeffer Decl. Ex. A [Docket No. 121, Attach. 5] (“Sherr Dep.”) at 15:7-18. He developed a large referral source from primary care doctors in northern Minnesota, and estimates that he was ranked in the country's 95th percentile in productivity for neurosurgeons specializing in spine surgery. Id. at 27:17-28:8.

         In November 2014, Dr. Sherr entered into a one-year employment agreement with Midwest Spine Institute, L.L.C. Def. Ex. 4.[4] Upon hiring Dr. Sherr, the entity changed its name to Midwest Spine and Brain Institute (“MSBI”) to reflect that its practice also included brain surgery. Sherr Dep. at 26:8-12. MSBI's president, Dr. Stefano Sinicropi (“Dr. Sinicropi”) planned for Dr. Sherr to be a leader in building MSBI's neurosurgical program. Schaeffer Decl. Ex. A [Docket No. 121, Attach. 6] (“Sinicropi Dep.”) at 68:12-17. The employment agreement provided that after 12 months, MSBI could “in its sole discretion consider whether to offer [Sherr] the opportunity to become an owner” of MSBI. Def. Ex. 4 ¶ 1.3.

         In January 2015, Dr. Sherr applied for clinical privileges to perform certain surgical procedures at HealthEast hospitals. HealthEast granted Dr. Sherr temporary privileges on February 3, 2015, and full privileges on April 30, 2015. Def. Ex. 5 at 6002, 6004. Dr. Sherr also maintained privileges at several other Minnesota hospitals in 2015, including Allina, Fairview Southdale, Fairview Ridges, North Memorial, Maple Grove, Fairview Northland, Brainerd Hospital, and St. Cloud Hospital. Def. Ex. 6 at 34:10-36:24; 42:18-43:6, 44:2-21.

         C. HealthEast's Spine Council

         HealthEast has a Spine Council that meets monthly to review issues related to HealthEast's spine care practice. Pl. Ex. 106 ¶¶ 11.1, 11.4; Schaefer Decl. [Docket No. 121, Attach. 7] (“Sipple Dep.”) at 57:6-14. The Spine Council's members are neurosurgeons and spine surgeons who perform surgeries at HealthEast hospitals including the HealthEast Neuro Group, as well as surgeons employed by other healthcare entities such as MSBI and St. Croix Orthopedic who maintain medical privileges at HealthEast hospitals. Pl. Ex. 106 ¶ 11.3; Def. Ex. 31. In September 2014, Dr. Wallenfriedman became the chair of HealthEast's Spine Council after running unopposed for the position. Def. Ex. 2 at 95:17-19, Def. Ex. 3.

         Prior to Dr. Wallenfriedman becoming chair, the Spine Council began generating a Spine Quality Report that tracked the number of spine surgery patients who were readmitted with surgical site infection (“SSI”) within 30 days of spine surgery at HealthEast hospitals. Def. Ex. 9 at 00297. The trends from the data for July through December of 2014 prompted the Spine Council to continue to generate the Spine Quality Report for January through June of 2015 as an ongoing quality improvement activity. Id.; Def. Ex. 37 at 5188.

         D. HealthEast's Peer Review Process

         The Spine Council also conducts peer review on spine care cases collected from HealthEast's Peer Review committee. Wallenfriedman Dep. at 168:21-24; Def. Ex. 8 (“Peer Review Policy”) at 6098. Under HealthEast's Peer Review Policy, cases potentially requiring peer review are identified through the following sources:

• Electronic, database generated reports
• Logs or other Council/departmental specific reports
• Clinical Documentation and Resource staff referrals regarding patient events and quality concerns
• Referrals from internal sources such as physicians, nursing, Risk Management, or Administration
• Referrals from external sources, such as third party payors and Quality Improvement Organization(s), e.g., Stratis.

         Peer Review Policy ¶ 3. Once a case is selected for peer review, it is assigned to a practitioner reviewer to review the case and document their findings on a Peer Review Form. Id. ¶ 5.

         The Spine Council then holds a peer review committee meeting to discuss the cases. Id. ¶¶ 6-7. The Peer Review Policy states that the review chair “must facilitate the practitioner peer review committee meetings to ensure a fair and objective evaluation of individual practitioner performance and to ensure reasonable actions are taken based on assessment findings.” Id. ¶ 7. The review chair is authorized, but not required, to limit the attendance of clinical peers who may have anti-competitive motives in evaluating the individual being reviewed. Id.

         E. HealthEast's Bylaws

         HealthEast's bylaws set forth the conditions and procedures for summarily suspending a practitioner's clinical privileges. See Pl. Ex. 106 ¶ 9.2. The bylaws provide that “[w]henever a practitioner's conduct requires that immediate action be taken to . . . reduce the substantial likelihood of immediate injury or damage to the health or safety of any patient . . . the Chief Executive Officer, or designee . . . shall have the authority to summarily suspend the . . . clinical privileges of such practitioner.” Id. ¶ 9.2.1.

         F. HealthEast Neuro Group Displeased when Patients Referred to Dr. Sherr

         At the time Dr. Sherr obtained clinical privileges at HealthEast in 2015, Dr. Daniel Sipple (“Dr. Sipple”) served as the director of HealthEast's Spine Center. Sipple Dep. at 12:14-20, 22:17-19.[5] In this role, Dr. Sipple referred HealthEast Spine Center patients to neurosurgeons. Id. at 53:13-55:9.

         Dr. Sipple preferred to refer HealthEast's complex spine cases to surgeons other than the HealthEast Neuro Group. Id. at 27:8-11; 27:23-28:3; 60:1-14. The HealthEast Neuro Group disagreed with Dr. Sipple's referrals of HealthEast patients to non-HealthEast spine surgeons. Id. at 53:4-8. Dr. Dunn frequently raised the issue to Dr. Sipple in conversations and in phone messages, and once became upset with Dr. Sipple when he referred one of Dr. Wallenfriedman's patients to Dr. Sherr. Id. at 11:15-12:10, 13:15-14:15, 17:5-18. Dr. Sipple's referral of HealthEast patients to MSBI was also a “recurrent concern” with Dr. Wallenfriedman. Schaefer Decl. [Docket No. 121, Attach. 9] (“Wallenfriedman Dep.”) at 113:4-8.

         Dr. Sipple testified in his deposition that the HealthEast Neuro Group berated him for referring cases to Dr. Sherr, saying the cases should not be referred to him because he was a “hack, ” “not a good surgeon, ” “asshole, ” “son of a bitch, ” and the “worst goddamn surgeon.” Sipple Dep. at 58:6-7, 62:24-63:4, 65:3-6, 124:13-20. Similarly, Dr. Sherr testified that four members of the operating room staff told him that members of the HealthEast Neuro Group had said to them that Dr. Sherr is “not a good doctor, ” a “dangerous surgeon, ” and that he puts his patients at risk by “operating too quickly, ” “losing excessive amounts of blood during surgeries, ” and having “high infection rates.” Sherr Dep. at 83:2-84:14; 273:21-274:7, 275:13-277:23.

         G. Operating Room Staff, Spine Quality Report Raise Concerns About Dr. Sherr

         In June 2015, HealthEast's operating room (“OR”) staff raised concerns to HealthEast's Infection Prevention and Control (“IPC”) department about the rates of infection, blood loss, and “redo procedures” for Dr. Sherr's surgical patients. Def. Ex. 58. The concerns were expressed to an IPC member at a June 10 meeting with OR staff, and were also conveyed to the IPC department in a June 11 email from nurse Annette Lund (“Nurse Lund”), an Infection Prevention Specialist. Id. Nurse Lund provided information on Dr. Sherr's infection rate from the past three months and stated that the SSI information, “along with the concerns of the OR staff are such that we would appreciate your input on this matter.” Id.

         Concerns about Dr. Sherr's infection rate were also triggered by the Spine Quality Report, which prompted the IPC department to send Dr. Sherr a letter on June 18, 2015 alerting him to his infection rate for spinal fusion surgeries. Def. Ex. 10. The letter stated that the Spine Quality Report showed Dr. Sherr had four spine surgical site infections from February through April 2015, and that “[f]or a point of reference, [HealthEast] had a total of 7 surgical site infections for spinal fusion procedures in 2014.” Id.

         Dr. Sherr's patient care issues were again flagged on June 19, 2015, when Dr. Wallenfriedman sent an email to HealthEast's head of surgery, Dr. Andrew Fink (“Dr. Fink”), providing him with a list of six patients who had experienced adverse events from surgeries performed by Dr. Sherr in April and May 2015. Pl. Ex. 72. Dr. Wallenfriedman testified in her deposition that the list was provided by OR nurse Connie McCook (“Nurse McCook”) who gave Dr. Wallenfriedman a handwritten list of the patients and their adverse events. Wallenfriedman Dep. 34:12-35:1, 41:23-42:7. Nurse McCook related that safety event reports had been completed for some of these adverse events, and asked Dr. Wallenfriedman as chair of the Spine Council to follow up on the safety event reports to determine whether they had reached HealthEast's administration. Id. at 36:1-3; 41:5-16; Def. Exs. 19, 20. In addition to sending the initial June 19 email, Dr. Wallenfriedman sent Dr. Fink four additional emails from late June to early August providing the names and adverse events for four more of Dr. Sherr's surgical patients. Pl. Ex. 74 at 1267-68. Dr. Fink forwarded the lists to Dr. John Kvasnicka (“Dr. Kvasnicka”) of HealthEast's Quality Department, and to nurse Ellen Fletcher (“Nurse Fletcher”), a Peer Review Specialist. Pl. Ex. 72, Pl. Ex. 74 at 1267; Wallenfriedman Dep. at 36:18-24.

         H. Peer Review Initiated for Dr. Sherr

         Beginning in August 2015, HealthEast initiated a peer review process for Dr. Sherr that ultimately resulted in a review of eight of his cases.

         1. Two Cases Identified in Safety Event Reports

         On August 7, 2015, Dr. Sherr was notified by letter that the Spine Council intended to conduct peer review of one of his cases. Def. Ex. 11. The case had been selected for review based on a safety event report documenting an injury to a patient's spinal cord. Def. Ex. 19 at 0036, 0046-47. The case was among those flagged by Nurse McCook and listed in Dr. Wallenfriedman's June 19, 2015 email to Dr. Fink. Def. Ex. 11; Pl. Ex. 72.

         On September 21, 2015, Dr. Sherr was notified of a second case being sent to peer review because of “concerns regarding large amount of intraoperative blood loss and postoperative infection.” Def. Ex. 12. The case was selected for review based on a safety event report and a referral by HealthEast's Peer Review and Medical Director, Dr. Peter Tanghe (“Dr. Tanghe”). Def. Ex. 20. This case was also among those listed in Dr. Wallenfriedman's June 19 email to Dr. Fink. Def. Ex. 12; Pl. Ex. 72.

         Dr. Sherr was notified that both cases would be discussed at a peer review meeting scheduled for October 6, 2015. On September 22, 2015, Nurse Fletcher, the Peer Review Specialist, sent an email to all members of the Spine Council, including physicians from MSBI, notifying them of the October 6 peer review meeting. Def. Ex. 14.

         2. Six Cases Identified in Spine Quality Report

         In the midst of Dr. Sherr's cases being selected for peer review, the Spine Council held its monthly meeting on September 1, 2015. Pl. Ex. 73. At the meeting, Dr. Wallenfriedman provided members with a summary of the data from the Spine Quality Report for January through June of 2015. Id. at 1350-52. The data showed that of the 14 unnamed surgeons tracked during this timeframe, one surgeon had six SSIs, whereas no other surgeon had more than two SSIs, and seven surgeons had zero. Id. at 1352. Further review for the outlier surgeon was requested, which identified the surgeon as Dr. Sherr. Def. Ex. 37 at 5188. Prior to the October 6 peer review meeting, Dr. Wallenfriedman shared the SSI data from the Spine Quality Report with HealthEast's CEO, who in turn asked Dr. Kolar to become involved. Kolar Dep. at 18:10-14, 19:3-25.

         On October 2, the Spine Care Council held a peer review pre-meeting via conference call that included Nurse Fletcher and Drs. Tanghe, Kvasnicka, Wallenfriedman, Kolar, and Fink. Pl. Ex. 79. Dr. Wallenfriedman stated during the call that the Spine Council intended to address the SSI outlier cases from the Spine Quality Report at the October 6 meeting. Id. at 5220. She requested clarification about whether these cases met the criteria for peer review. Id. Dr. Tanghe suggested that the infection cases could be addressed at a different meeting and that a “bigger picture of infection” was needed. Id. at 5221. Dr. Wallenfriedman responded that the Spine Council was under the impression that those cases would be assigned for peer review, and she was concerned that waiting to address the infections at a later meeting rather than on October 6 would be perceived as stalling. Id. Dr. Kvasnicka stated that if one in ten patients were being hurt, the cases should be reviewed within one week and a meeting should be held. Id. Drs. Fink and Kolar also felt that the cases needed to be addressed soon. Id. At Dr. Wallenfriedman's suggestion, it was determined that the six additional cases would be assigned to reviewers that day (October 2) and discussed at the October 6 meeting. Id. at 5222-23.

         On October 2, Dr. Tanghe sent Dr. Sherr an email notifying him that six additional cases would be discussed at the October 6 peer review meeting. Def. Ex. 15. In the email, Dr. Tanghe stated that the additional cases had been identified through the system-wide Spine Quality Report. Id. Four of the six additional cases had been listed in Dr. ...


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