California Supreme Court upholds whistleblower protection for Modesto physician

Feb. 21--The California Supreme Court ruled Thursday that a Modesto physician who challenged the termination of his hospital privileges has whistleblower protections.

Dr. Mark Fahlen, a kidney specialist, filed a March 2011 whistleblower lawsuit in Stanislaus County Superior Court after Sacramento-based Sutter Health canceled his privileges to care for patients at Memorial Medical Center.

Fahlen's lawsuit claims that Sutter Central Valley Hospitals and Steve Mitchell, then the chief operating officer of Memorial, persuaded the Sutter Gould medical group to fire him and terminated his hospital privileges because of his complaints about insubordination and substandard care by hospital nurses.

His attorney said the court decision guarantees that physicians have the same protections as hospital employees if they report problems that threaten to harm patients.

It's "the biggest victory for patient rights since California's health care whistleblower law was adopted in 1999," said attorney Stephen Schear of Oakland. "In a hospital environment dominated by corporate giants too often more focused on protecting their marketing and brand name than patient health, today's ruling will finally unshackle doctors from fear of retribution so they can protect patients."

In a case closely watched by the hospital industry, the American Medical Association supported Fahlen with a "friend of the court" brief. The California Hospital Association and groups such as Kaiser Foundation Hospitals, Scripps Health and Dignity Health filed briefs on behalf of the defendants.

In a statement, Sutter Health said the decision likely will have an effect on peer reviews, which are conducted to evaluate the conduct and clinical skills of physicians.

"We support the actions by our hospital's Medical Executive Committee and the board of directors, and will defend their actions to protect our patients and caregivers," Sutter Health's statement said. "In the very narrow issue addressed in the decision, the court did not express any view on the merits of Dr. Fahlen's retaliation claim."

After he was given staff privileges at Memorial in 2004, Fahlen complained to administrators that nurses refused or failed to follow his patient care instructions. According to facts in the case, Fahlen had six clashes with nurses about patient care from August 2007 to April 2008. He told supervisors and administrators that nurses were insubordinate and that their care was substandard.

One complaint was regarding a nurse's refusal to transfer a patient to intensive care, delaying for five hours the appropriate level of care for the patient, the doctor said.

<p>Mitchell, the chief operating officer, blamed Fahlen for his conflicts with nursing staff and contacted Sutter Gould's medical director about Fahlen's conduct. Sutter Gould cut ties with Fahlen in May 2008, causing his malpractice insurance to be canceled. Fahlen decided to start his own practice and arranged a meeting with Mitchell to talk about his hospital privileges.

Mitchell wrote in an email to Memorial's chief executive officer that Fahlen "does not get it," meaning that he was going to lose his privileges. The CEO replied that it "looks like we need to have the medical staff take some action on his MedQuals!!! (or medical qualifications). Soon!"

According to the lawsuit, Mitchell told Fahlen at the meeting that he should resign and leave town, or the hospital would report him to the Medical Board of California. Fahlen charged that a subsequent in-house investigation, and an executive committee decision not to renew his privileges, occurred in retaliation for his complaints about patient care.

Fahlen asked for a hearing, resulting in an October 2009 to May 2010 review by a six-physician committee at Memorial. The panel concluded that the evidence did not show he was incompetent or that his behavior had endangered patients. Memorial's board of trustees overruled the panel in early 2011.

Sutter attorneys argued that the doctor first needed to exhaust other legal remedies before bringing the whistleblower lawsuit. The Supreme Court dismissed a previous expectation that doctors exhaust other remedies before filing suit with claims of retaliation. Such conditions would "seriously undermine the Legislature's purpose to afford a whistleblower on a hospital medical staff the right to sue," the Supreme Court's opinion said.

Thursday's decision upheld Superior Court Judge Timothy Salter's ruling in 2011 to let the case proceed. Sutter Health asked the Supreme Court to consider the case after an appeals court ruled in 2012 that Fahlen had a right to sue with claims of retaliation.

Schear said the defendants argued that Fahlen was required to seek a writ of mandate to challenge his termination. Hospitals usually win those court cases because they only need to show evidence supporting the disciplinary action, he said. A whistleblower lawsuit allows the doctor to present evidence before a judge and jury that the hospital retaliated against him for trying to protect patients.

Attorney Lowell Brown, who handles physician disciplinary cases for hospitals, said Thursday's ruling will "change the rules of the game," though additional court decisions will be needed to clarify issues. He predicted doctors will be reluctant to serve on hospital panels that review the competency or behavior of physicians.

"The doctor can claim the action is being taken because he or she is whistleblowing," Brown said. "No one ever produces evidence that a sham peer review has taken place. What we will see is sham whistleblower complaints about peer reviews."

Schear said Fahlen has incurred more than $200,000 in legal expenses and will seek to recover attorney fees from the defendants. His client intends to proceed with the lawsuit to regain his privileges at Memorial. Since getting the boot from Memorial, Fahlen has been in private practice and has served as chairman of the department of medicine at Doctors Medical Center. He also was appointed to serve on the Stanislaus County Community Health Center board.

Fahlen said the ruling means that "doctors no longer have to choose between speaking out for their patients or continuing with their careers."

Bee staff writer Ken Carlson can be reached at kcarlson@modbee.com or (209) 578-2321.

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