United States District Court, N.D. Illinois
January 7, 2004.
IN RE SUBPOENA DUCES TECUM ACCREDITATION ASSOCIATION FOR AMBULATORY HEALTH CARE, INC. Petitioner
UNITED STATES OF AMERICA, Respondent
The opinion of the court was delivered by: GEORGE LINDBERG, Senior District Judge
MEMORANDUM OPINION AND ORDER
The United States Attorney's Office for the District of Vermont
("Government") is investigating whether David S. Chase, a Vermont
physician, committed health care fraud in violation of federal statutes.
The Government began its investigation shortly after the Vermont Medical
Practice Board filed formal civil charges against Chase in July 2003,
seeking to revoke his medical license. Those charges allege that Chase
performed medically unnecessary eye surgeries on patients with normal
vision, and falsified medical records to support his recommendations to
On September 10, 2003, the Government issued an administrative subpoena
to petitioner Accreditation Association for Ambulatory Health Care, Inc.
("AAAHC"), in relation to its investigation of Chase. AAAHC, located in
Illinois, sets accreditation standards for health care organizations,
evaluates health care organizations for compliance with those standards,
and recognizes compliance by certifying accreditation. The Government's
subpoena commanded AAAHC to produce "all documents relating to any
accreditation, consulting, auditing, and quality
assurance services provided to Dr. David Chase . . . from 1995
to present, including but not limited to audits, recommendations,
correspondence, billing records, medical records, and memoranda. . . ."
AAAHC produced some documents in response to the subpoena, but claims
that production of other responsive documents would violate the Illinois
Medical Studies Act, 735 ILCS § 5/8-2101 & 5/8-2102. AAAHC
petitions this court to modify the subpoena to exclude information
protected by the Illinois Medical Studies Act, or to issue a protective
order permitting AAAHC to withhold the documents. The Government
cross-moves for enforcement of its subpoena.
The Illinois Medical Studies Act provides in pertinent part:
All information, interviews, reports, statements,
memoranda or other data of . . . allied medical
societies . . ., used in the course of internal
quality control or of medical study for the
purpose of reducing morbidity or mortality, or for
improving patient care, shall be privileged,
strictly confidential and shall be used only for
medical research, the evaluation and improvement
of quality care, or granting, limiting or revoking
staff privileges. . . .
735 ILCS § 5/8-2101. The Act further provides that such
information "shall not be . . . discoverable in any action of any kind in
any court or before any tribunal, board, agency or person." 735 ILCS
§ 5/8-2102. The Illinois Supreme Court has held that legitimate
accreditation associations are "allied medical societies" under the
Illinois Medical Studies Act. See Niven v. Siqueira,
487 N.E.2d 937
, 942-43 (Ill. 1985).
In a case where federal law supplies the underlying rule of decision,
however, the court must look to federal common law, interpreted in the
light of reason and experience, to determine whether a privilege exists.
See Fed.R.Evid. 501. State law still may be considered in
determining whether a privilege should be recognized as a matter of
federal law. Memorial HOSP. for McHenry County v. Shadur,
664 F.2d 1058, 1061 (7th Cir. 1981). "A strong policy of comity
between state and federal sovereignties impels federal courts to
recognize state privileges where this can be accomplished at no
substantial cost to federal substantive and procedural policy."
Id. (quoting United States v. King, 73 F.R.D. 103,
105 (E.D.N.Y. 1976)).
Thus, the court must determine whether to recognize Illinois' peer
review privilege in this case as a matter of federal law. Evidentiary
privileges "are not lightly created nor expansively construed, for they
are in derogation of the search for truth." United States v.
Nixon, 418 U.S. 683, 710 (1974). The court must consider the
particular factual circumstances of the case, and "weigh the need for
truth against the importance of the relationship or policy sought to be
furthered by the privilege, and the likelihood that recognition of the
privilege will in fact protect that relationship in the factual setting
of the case." Memorial Hosp., 664 F.2d at 1061-62 (quoting
Ryan v. Commissioner of Internal Revenue, 568 F.2d 531, 543
(7th Cir. 1977)).
The Government argues that this court should find the peer review
privilege inapplicable under the authority of Memorial Hosp. for
McHenry County v. Shadur, in which the Seventh Circuit declined to
recognize the Illinois Medical Studies Act's peer review privilege in a
civil antitrust action, In that case, a physician claimed that a group of
physicians at Memorial Hospital conspired to deny him hospital staff
privileges, effectively destroying his practice and limiting competition
in an unlawful restraint of trade. Id. at 1059-60. The
physician sought discovery of documents relating to hospital review or
disciplinary proceedings instituted by the hospital against other
physicians who had applied for or were granted admission to the
hospital's medical staff. Id. at 1060. The court noted that
such proceedings would be privileged under the Illinois Medical Studies
Act in a case governed by state law. Id.
The court observed that the public interest in preserving open and fair
competition is a
strong one. Id. at 1062. The court further observed that
the policy of promoting confidentiality in peer review proceedings is
substantial. Id. Medical staff meetings are held for the
purpose of improving patient care through self-analysis; the Illinois
legislature intended to encourage individuals with relevant information
to participate freely in such meetings. Id. The court
concluded, however, that under the factual circumstances presented, the
public interest in private enforcement of federal antitrust law was too
great to allow the application of the peer review privilege.
Id. at 1063. Specifically, the court found that excluding the
evidence sought would have a significant impact on the physician's
ability to establish his claim, because what occurred in the peer review
process itself was at issue. Id. at 1062-63.
AAAHC responds that here, in contrast to Memorial Hospital,
the integrity and fairness of the peer review process is not at issue.
AAAHC argues that the Government can obtain much of the information it
seeks regarding the medical necessity of Chase's procedures from other
sources, such as Chase's own records. Thus, in this case, unlike in
Memorial Hospital. the importance of the interest protected by
the privilege greatly outweighs the relevance of the information sought.
AAAHC further observes that Memorial Hospital was decided
before Congress enacted the Health Care Quality Improvement Act of 1986
("HCQIA"), 42 U.S.C. § 11101, et seq., in which Congress
found that "[t]here is an overriding national need to provide incentive
and protection for physicians engaging in effective professional peer
review." See 42 U.S.C. § 11101(5).
The Government argues that, to the contrary, information elicited
during the accreditation process is highly relevant to its investigation.
First, the Government contends that it needs access to AAAHC's
information to determine whether Chase was placed on notice, during the
accreditation process, of problems with quality of care or documentation.
further argues that it needs access to the representations Chase
and his staff made to AAAHC, because any misrepresentations could be
relevant to a charge that Chase pursued a scheme to defraud a health care
benefit program in violation of 18 U.S.C. § 1347.
The court first notes that it is not persuaded by AAAHC's suggestion
that congressional recognition in the HCQIA of the need to protect
physicians participating in peer review supports the recognition of a
federal peer review privilege. Congress had an opportunity to establish
such a privilege in the HCQIA and did not do so. See Johnson v.
Nyack Hosp., 169 F.R.D. 550, 560 (S.D.N.Y. 1996) ("Congress spoke
loudly with its silence in not including a privilege against discovery of
peer review materials in the HCQIA.").
The purpose of the Illinois Medical Studies Act is "to ensure that
members of the medical profession will effectively engage in
self-evaluation of their peers in the interest of advancing the quality
of health care." Roach v. Springfield Clinic. 623 N.E.2d 246,
251 (Ill. 1993). This policy is a substantial one. See Memorial
Hosp.. 664 F.2d at 1062. However, the Government's law enforcement
interest here is significant; indeed, its goal also is to advance the
quality of health care. Moreover, the information the Government seeks
may be directly relevant to determining whether Chase knowingly executed
or attempted to execute a scheme to defraud a health care benefit
program. The court concludes that the Government's need in this case
outweighs the importance of the policy sought to be furthered by the peer
review privilege. Accordingly, the court declines to recognize the peer
review privilege in this case.
ORDERED: Accreditation Association for Ambulatory Health
Care's Petition to Modify Subpoena [1-1] and Alternative Motion for
Protective Order [1-2] are denied. The Government's Cross-Motion to
Enforce Subpoena  is granted.
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