May 19, 2016

QUESTION:        Our hospital is registered with the National Practitioner Data Bank (“NPDB”).  We would like to designate as an authorized agent for NPDB querying purposes a credentials verification organization (“CVO”) with which we have recently started working.  How do we go about doing this?

ANSWER:           The NPDB explicitly permits the practice of eligible entities, including hospitals, designating authorized agents, such as CVOs, to query on their behalf.  However, according to the NPDB Guidebook, an authorized agent must, itself, register with the NPDB and comply with all the registration requirements.  Often, CVOs act as authorized agents for a number of eligible entities.  Nonetheless, the CVO must query the NPDB separately for each eligible entity they represent.  Moreover, the CVO is not permitted to share results of a query for one eligible entity with another eligible entity.

After the CVO registers with the NPDB, your hospital will have to designate the CVO as its authorized agent.  This is a relatively simple process that can be done electronically by accessing this web address:  https://www.npdb.hrsa.gov/hcorg/howToDesignateAnAuthorizedAgent.jsp.  Finally, as a part of designating the CVO as an authorized agent to query the NPDB on behalf of your hospital, you will have to create a written agreement between your hospital and the CVO.  The NPDB Guidebook does not identify any required elements for this written agreement, but the NPDB website provides recommendations for what should be included in the agreement.  According to the NPDB website, the agreement should confirm the following:  (1) the authorized agent is authorized to conduct business in the relevant state; (2) the authorized agent’s facilities are capable of maintaining the security and confidentiality of NPDB reporting and query responses; (3) the authorized agent is prohibited from using querying responses for any purpose other than that for which the disclosure was made; and (4) the agent understands that sanctions can be taken if information is requested, used, or disclosed in violation of NPDB provisions.

March 19, 2015

QUESTION:        In this week’s “NEW CASES,” I see that the U.S. Court of Appeals for the 7th Circuit held that a Chief of Staff’s discussion with an applicant about the red flags in his application and the consequences of denial (reporting to the NPDB) constituted an adverse employment action. Should we immediately halt all such conversations?

ANSWER:        No – you do not need to immediately halt informal discussions with applicants regarding the concerns you have about their applications. Nor need you stop educating applicants and medical staff members about the credentialing process and its intricacies. HOWEVER, as always, you should be careful about the legal implications of how you communicate regarding these matters.

First, let’s look at how the Seventh Circuit described the conversation between the Chief of Staff and Dr. Simpson (internal citations omitted):

Dr. Eric Miller [The Chief of Staff] called Dr. Simpson to give him a “heads-up” about the Credentials Committee’s concerns about his application for medical staff privileges. Eric Miller explained to Simpson that if his application were to be denied, it would have to be reported to the National Practitioner Data Bank. Eric Miller outlined some of the Committee’s concerns, including Simpson’s employment and education history, the need to take an oral exam to obtain licensure from the state of Wisconsin, the two malpractice lawsuits, and interpersonal communications. Eric Miller wanted to give Simpson an opportunity to withdraw his application and avoid the risk that a denial would have to be reported to the National Practitioner Data Bank.

* * *

Dr. Eric Miller accused him of “disruptive behavior,” referring to his interaction with [the CEO] when he attempted to get his sign-on bonus. Eric Miller told Simpson that he would have expected an applicant to be on his “best behavior” and more “collegial” during the pendency of his application for medical staff privileges. Simpson suggested that [the hospital] hire him on a probationary status to see how he would do if Eric Miller was concerned that he was disruptive. Eric Miller responded that they had had some “bad actors” in the past, and it was easier not to hire a bad actor than to get rid of one. Simpson also stated that Eric Miller said he wished Simpson well in finding a position that was a “better fit.”

* * *

We agree that Dr. Simpson has suffered an adverse employment action. To establish an adverse employment action, “a ‘plaintiff must show that a reasonable employee would have found the challenged action materially adverse.’” A reasonable physician would have found the threat that his application for privileges would be rejected and that the rejection would have to be reported to the National Practitioner Data Bank to have been materially adverse. While an applicant who voluntarily withdraws an application cannot state a prima facie case of discrimination, Dr. Eric Miller’s warning indicated that it would be futile for Simpson to maintain his application. The writing was on the wall. In essence, viewing the facts in the light most favorable to Simpson, he was compelled to withdraw his application for privileges before the Credentials Committee voted on it; thus the withdrawal does not undermine his prima facie case.

It is clear that, based on the evidence at hand in the Simpson case, the Seventh Circuit believed that the Chief of Staff had not only educated Dr. Simpson about the credentialing process, the concerns with his application, and the consequences of any potential denial – but, also had impressed on Dr. Simpson that his application would, in fact, be denied.

So, what can be learned from this opinion? First, always have more than one person present if you are going to have this sort of discussion with an applicant. That way, you won’t run into a “he said – she said” type of situation.

Secondly, always document these conversations. Documentation serves as great evidence of what was really said years later, when memories have faded. A good way to create the necessary documentation is to follow up in writing, with a letter to the applicant, thanking him or her for talking with you and then outlining briefly the content of your discussion.

Third, never imply or express that the outcome of a credentialing matter has been decided when it has not. Dr. Simpson came away from his conversation with the Chief of Staff believing that he had been told that his application would be denied and he would be reported to the Data Bank, so it would be better for him to go somewhere else where he could fit in better. This is despite the fact that his application was still on hold at the Credentials Committee level of review (it was incomplete due to missing pieces of information). And, though there were a number of unresolved red flags that were part of his application, there was no reason, at the time the Chief of Staff called him, for anyone to conclude that Dr. Simpson would complete his application sufficiently to have it processed or, in the event that he did complete the application, that it would be denied.

Fourth, to make sure that you choose your words carefully and don’t give the wrong impression, prior to having this type of meeting with an applicant, consult with hospital legal counsel and other medical staff leaders involved in the credentialing process. Then, based on those conversations, create a checklist of items to be discussed with the applicant and use that checklist as the talking points for your conversation. Finally, have legal counsel review any follow-up letter, to be sure that any points of confusion are ironed out in that letter. That way, everyone can be clear that a “heads-up” conversation is just that – a heads-up to the applicant about the current status of his or her application, the immediate next steps in the process, and the details of the credentialing process that lies ahead, including any possibly unexpected consequences (such as reporting to the NPDB).