Novotny v. Sacred Heart Health Servs. — Oct. 2016 (Summary)

PEER REVIEW PRIVILEGE

Novotny v. Sacred Heart Health Servs.
Nos. 27615, 27626, 27631 (S.D. Oct. 26, 2016)

The Supreme Court of South Dakota reversed and remanded the lower court’s decision ordering  defendant health care providers to produce peer review materials in suits brought by patients asserting numerous claims, including fraud, deceit, and negligent credentialing.

The patients sought production of documents from the defendants, but the defendants claimed that the documents were protected by the state’s peer review privilege. In the lower court, the patients challenged the privilege as unconstitutional. The lower court agreed, but ultimately held that the statute was constitutional, but only if a court-created “crime-fraud exception” applied.  Pursuant to this “crime-fraud exception,” the lower court ordered the defendants to turn over the peer review materials, finding that the patients had presented enough evidence to make out prima facie cases for fraud and deceit.

On appeal, the Supreme Court of South Dakota disagreed with the lower court, determining that the state’s peer review privilege gives broad protection to information generated “by or at the behest of a peer review committee,” including deliberative information and objective information.  The Supreme Court of South Dakota also took issue with the lower court’s “crime-fraud exception,” concluding that the exception was not necessary to preserve the patients’ rights to open courts.  The court noted that the patients “may obtain certain information from independent sources.  The availability of that information from sources outside the peer review committees allows [the patients] access to information that may expose alleged fraudulent activity and allow [the patients] to present their case.”