United States District Court, D. Minnesota
Dr. Gregory Sherr, Plaintiff,
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.
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
MONTGOMERY U.S. DISTRICT JUDGE.
28, 2019,  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
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.
Sherr asserts claims for defamation, tortious interference
with prospective economic advantage, and tortious
interference with contract. 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.
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. 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,
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.
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.
November 2014, Dr. Sherr entered into a one-year employment
agreement with Midwest Spine Institute, L.L.C. Def. Ex.
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.
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.
HealthEast's Spine Council
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.
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.
HealthEast's Peer Review Process
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.,
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.
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
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.
HealthEast Neuro Group Displeased when Patients Referred to
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. In this role, Dr. Sipple referred
HealthEast Spine Center patients to neurosurgeons.
Id. at 53:13-55:9.
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.
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.
Operating Room Staff, Spine Quality Report Raise Concerns
About Dr. Sherr
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.
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.”
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.
Peer Review Initiated for Dr. Sherr
in August 2015, HealthEast initiated a peer review process
for Dr. Sherr that ultimately resulted in a review of eight
of his cases.
Two Cases Identified in Safety Event Reports
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.
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.
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.
Six Cases Identified in Spine Quality Report
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.
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.
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.