Kwoun v. Southeast Missouri Professional Standards Review Organization
| Decision Date | 09 March 1987 |
| Docket Number | Nos. 85-2379,86-1502 and 86-1838,s. 85-2379 |
| Citation | 811 F.2d 401 |
| Parties | , 16 Soc.Sec.Rep.Ser. 266, Medicare&Medicaid Gu 36,062 Soung O. KWOUN et al., Appellees, v. SOUTHEAST MISSOURI PROFESSIONAL STANDARDS REVIEW ORGANIZATION et al., Appellants. Soung O. KWOUN et al., Appellants, v. SOUTHEAST MISSOURI PROFESSIONAL STANDARDS REVIEW ORGANIZATION et al., Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Louis Gilden, St. Louis, Mo., for appellants.
Robert Zener, Washington, D.C., Mark Packer, St. Louis, Mo., and Jerry L. Short, Jefferson City, Mo., for appellees.
Before HEANEY and BOWMAN, Circuit Judges, and ARNOLD, * District Judge.
The U.S. Department of Health and Human Services (HHS) oversees Medicare payments to doctors and hospitals. See 42 U.S.C. Sec. 902, Sec. 1395kk(a). As part of its oversight responsibilities, HHS is authorized to exclude doctors and hospitals from eligibility for Medicare payments if services have been provided that are substantially in excess of need or fail to meet professional standards. See 42 U.S.C. Sec. 1395y(d)(1)(C). To determine whether to exclude doctors and hospitals from eligibility, HHS uses reports submitted by regional and statewide peer review organizations. See 42 U.S.C. Sec. 1395y(g). The HHS office with the specific responsibility for making such determinations is called the Health Care Financing Administration (HCFA).
In December, 1978, HCFA notified the regional peer review group for southeastern Missouri 1 that the patient discharge rates in that region indicated the possibility of abuses in claims for Medicare payments. The regional peer review group began an investigation that eventually focused on the Poplar Bluff Hospital and the doctors with admitting privileges there. Soung Kwoun is one of those doctors. 2 Following the investigation, the regional peer review group recommended to the statewide peer review group 3 that the hospital change some of its procedures and that Dr. Kwoun be excluded from eligibility for Medicare payments for ten years. The statewide peer review group adopted the recommendation of the regional peer review group and then transmitted the report and recommendations to HCFA in March, 1980.
In September, 1980, HCFA notified Dr. Kwoun of the recommendation and advised him of his right to oppose it. After an informal hearing in December, 1980, and additional consideration of the peer review group report and Dr. Kwoun's responses to it, HCFA adopted the recommendation. In September, 1981, HCFA officially excluded Dr. Kwoun from eligibility for Medicare payments for a period of ten years. Dr. Kwoun then asked for a formal hearing before an administrative law judge. The administrative law judge reversed the exclusion, citing procedural and substantive errors by HCFA, especially the reliance of HCFA on informal discussions with members of the regional peer review group as the basis for excluding Dr. Kwoun. The administrative law judge then ordered Dr. Kwoun's reinstatement to eligibility for Medicare payments.
Dr. Kwoun subsequently brought this action against certain HCFA employees, members of the regional and statewide peer review groups, two state officials involved in state proceedings brought against Dr. Kwoun as a result of the recommendation of the peer review group, and the insurance company that administers the Medicare payments program under contract with the government. 4 Dr. Kwoun claimed that the HCFA employees 5 deprived him of certain property and liberty interests without due process and subjected him to malicious prosecution and extreme and outrageous conduct. He asserted that the members of the regional and statewide peer review groups 6 and the state officials deprived him of equal rights under the law to make and enforce contracts and conspired to deprive him of the equal protection of the laws. His complaint against the peer review group members and the state officials also contained counts for malicious prosecution and extreme and outrageous conduct. Finally, Dr. Kwoun claimed that the state officials deprived him of certain property and liberty interests without due process.
The HCFA employees moved for summary judgment on the basis of absolute immunity. The district court denied the motion. Three of the HCFA employees appeal the denial of absolute immunity. 7 While the HCFA employees' appeal was pending, the district court dismissed, 632 F.Supp. 1091, sua sponte, the case against all defendants on the ground of qualified immunity. The plaintiffs appeal these dismissals. We affirm the orders of dismissal of all defendants but do so on the ground of absolute rather than qualified immunity.
We turn first to the federal defendants--the HCFA employees. Defendant Frank Kram is the HCFA employee who reviewed the peer review group report and accepted its recommendation to exclude Dr. Kwoun from eligibility for Medicare reimbursement. Defendant Don Nicholson is the HCFA employee who signed the notice of proposed exclusion; defendant Ralph Howard is the HCFA employee who signed the final decision excluding Dr. Kwoun. Apparently the acts of defendant Kram are the primary focus of attention; the complaint is cryptic on this point, and the only specific allegation against defendants Nicholson and Howard in the plaintiffs' brief is that their conduct "was in a line with the earlier conduct of Kram * * * and furthered and reinforced the previous lack of arms' length dealing."
While the regional peer review group was investigating Dr. Kwoun, but before it submitted its report to HCFA, defendant Kram apparently met with the members of the investigating committee in the offices of the statewide peer review group and discussed the investigation of Dr. Kwoun. The administrative law judge found that the report of the peer review group did not meet the substantive due process requirements set forth in the applicable policy manual and federal regulations. He found in addition that Dr. Kwoun had been denied substantive due process because defendant Kram's adoption of the recommendation to exclude him from eligibility for Medicare payments was based at least in part on defendant Kram's discussions with members of the regional peer review group before the report was issued and not on the report itself. 8
Barr v. Matteo, 360 U.S. 564, 575, 79 S.Ct. 1335, 1341, 3 L.Ed.2d 1434 (1959) (plurality opinion), grants absolute immunity from common-law tort claims to federal officials acting "within the outer perimeter of [their] line of duty." Our court has described absolute immunity from common-law torts as applying to acts connected " '* * * more or less * * * with the general matters committed by law to the officer's control or supervision, and not * * * manifestly or palpably beyond his authority.' " Bushman v. Seiler, 755 F.2d 653, 655 (8th Cir.1985), quoting Norton v. McShane, 332 F.2d 855, 859 (5th Cir.1964), cert. denied, 380 U.S. 981, 85 S.Ct. 1345, 14 L.Ed.2d 274 (1965). The plaintiffs contend that defendant Kram (and by extension defendants Nicholson and Howard, those officials having relied on defendant Kram's recommendation) acted outside the scope of his authority because defendant Kram was involved in discussions with members of the regional peer review group before its report was issued.
The first mention of HCFA in the regulations governing the imposition of exclusion sanctions under the Medicare program provides that a peer review group is to submit a report on violations to HCFA after an investigation of possible violations. See 42 C.F.R. Sec. 474.3(b), Sec. 474.8(a). Following submission of a peer review group report, HCFA is to determine whether a violation has occurred and is to provide notice to the alleged violator of the proposed exclusion. See 42 C.F.R. Sec. 474.10(a), Sec. 474.10(c). There is no mention of HCFA involvement prior to the issuance of a peer review group report.
On the other hand, there is no explicit prohibition of such involvement either. Furthermore, HHS is charged with the duty of "promoting the effective, efficient, and economical delivery of health care services, and of promoting the quality of services of the type for which [Medicare] payment may be made." See 42 U.S.C. Sec. 1395y(g). HHS also has the authority to contract with peer review groups in order to carry out its duties. Id. All parties agree that it was HCFA that notified the regional peer review group of data indicating possible Medicare abuses. It seems apparent, then, that any involvement of HCFA employees in a peer review group investigation after that notification would be within the scope of their authority.
Even if acceptance of the recommendation to exclude was based on improper factors (such as consideration of matters outside the peer review group report), that does not make the earlier actions of the HCFA employees outside the scope of their authority; it merely makes the acceptance of the recommendation incorrect. The federal defendants are therefore entitled to absolute immunity from common-law tort claims.
A more difficult question is how to categorize the purpose of the duties of the HCFA employees in the context of the process for imposing exclusion sanctions on possible violators of the rules governing Medicare payments. 9 The courts have recognized that the reasons for granting absolute immunity to federal officials from common-law tort claims--to protect them "in the execution of their federal statutory duties from criminal or civil actions based on state law," Butz v. Economou, 438 U.S. 478, 489, 98 S.Ct. 2894, 2902, 57 L.Ed.2d 895 (1978)--do not apply to claims based on violations of constitutional law. Id. at 495, 98 S.Ct. at 2905.
In most cases, "federal executive officials exercising discretion are entitled only to * * * qualified immunity" from...
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