Sherr v. Healtheast Care Sys.

Citation416 F.Supp.3d 823
Decision Date09 September 2019
Docket NumberCivil No. 16-3075 ADM/LIB
Parties Dr. Gregory SHERR, Plaintiff, v. HEALTHEAST CARE SYSTEM, Dr. Margaret Wallenfriedman, Dr. Mary Beth Dunn, Dr. Richard Gregory, and Dr. Stephen Kolar, Defendants.
CourtU.S. District Court — District of Minnesota

Lawrence P. Schaeffer, Esq., Peter Christian, Esq., and Jean M. Boler, Esq., Schaeffer Halleen, LLC, Minneapolis, MN, on behalf of Plaintiff.

Jaime Stilson, Esq., Meghan L. DesLauriers, Esq., and Daniel Falknor, Esq., Dorsey & Whitney LLP, Minneapolis, MN, on behalf of Defendants HealthEast Care System, Dr. Margaret Wallenfriedman, Dr. Mary Beth Dunn, Dr. Richard Gregory, and Dr. Stephen Kolar.




On May 28, 2019,1 the undersigned United States District Judge heard oral argument on Defendants HealthEast Care System ("HealthEast"), Dr. Margaret Wallenfriedman ("Dr. Wallenfriedman"), Dr. Mary Beth Dunn ("Dr. Dunn"), Dr. Richard Gregory ("Dr. Gregory"), and Dr. Stephen Kolar's ("Dr. Kolar") (collectively, "Defendants") Motion for Summary Judgment [Docket No. 84]. For the reasons discussed below, the Motion is granted.


Dr. Sherr, a neurosurgeon who previously maintained privileges at HealthEast's hospitals, alleges HealthEast's in-house neurosurgeons sought to remove him as a competitor by defaming his professional abilities and orchestrating a sham peer review process that resulted in a summary suspension. First Am. Compl. ("FAC") [Docket No. 15] ¶¶ 3, 48, 49, 54–73. Although Dr. Sherr's summary suspension was later overturned by HealthEast's Judicial Review Committee, he alleges that word of his suspension destroyed his referral sources and forced him to move to another state to continue his career. Id. ¶¶ 5, 89–90.

Dr. Sherr asserts claims for defamation, tortious interference with prospective economic advantage, and tortious interference with contract.2 FAC ¶¶ 112–139. Defendants argue they are entitled to summary judgment on all claims because state and federal peer immunity statutes protect them from liability on claims stemming from the peer review process. Further, Defendants argue the alleged defamatory statements made outside the peer review process are not actionable.

A. Defendants

HealthEast is a non-profit health care provider and hospital management company that owns four hospitals in Minnesota. FAC ¶ 8. Drs. Wallenfriedman, Dunn, and Gregory (collectively, the "HealthEast Neuro Group") are neurosurgeons who began working as in-house surgeons for HealthEast in July 2013. Pl. Exs. 63, 112, 130.3 Their compensation structures are linked to the number of procedures they perform, and their employment contracts state that HealthEast patients requiring specialized medical services will be referred to specialists within the HealthEast system. Pl. Ex. 63 at 9, 11–15; Pl. Ex. 112 at 9, 11–15; Pl. Ex. 130 at 9, 11–15.

Dr. Kolar is an internal medicine physician who served as HealthEast's Senior Vice President and Chief Medical Officer in 2015. Schaeffer Decl. Ex. A [Docket No. 121, Attach. 3] ("Kolar Dep.") at 11:23–12:16.

B. Dr. Sherr

Dr. Sherr, who completed his residency in 2010, specializes in brain, spine, and peripheral nerve surgery. Schaeffer Decl. Ex. A [Docket No. 121, Attach. 5] ("Sherr Dep.") at 15:7–18. He developed a large referral source from primary care doctors in northern Minnesota, and estimates that he was ranked in the country's 95th percentile in productivity for neurosurgeons specializing in spine surgery. Id. at 27:17–28:8.

In November 2014, Dr. Sherr entered into a one-year employment agreement with Midwest Spine Institute, L.L.C. Def. Ex. 4.4 Upon hiring Dr. Sherr, the entity changed its name to Midwest Spine and Brain Institute ("MSBI") to reflect that its practice also included brain surgery. Sherr Dep. at 26:8–12. MSBI's president, Dr. Stefano Sinicropi ("Dr. Sinicropi") planned for Dr. Sherr to be a leader in building MSBI's neurosurgical program. Schaeffer Decl. Ex. A [Docket No. 121, Attach. 6] ("Sinicropi Dep.") at 68:12–17. The employment agreement provided that after 12 months, MSBI could "in its sole discretion consider whether to offer [Sherr] the opportunity to become an owner" of MSBI. Def. Ex. 4 ¶ 1.3.

In January 2015, Dr. Sherr applied for clinical privileges to perform certain surgical procedures at HealthEast hospitals. HealthEast granted Dr. Sherr temporary privileges on February 3, 2015, and full privileges on April 30, 2015. Def. Ex. 5 at 6002, 6004. Dr. Sherr also maintained privileges at several other Minnesota hospitals in 2015, including Allina, Fairview Southdale, Fairview Ridges, North Memorial, Maple Grove, Fairview Northland, Brainerd Hospital, and St. Cloud Hospital. Def. Ex. 6 at 34:10–36:24; 42:18–43:6, 44:2–21.

C. HealthEast's Spine Council

HealthEast has a Spine Council that meets monthly to review issues related to HealthEast's spine care practice. Pl. Ex. 106 ¶¶ 11.1, 11.4; Schaeffer Decl. [Docket No. 121, Attach. 7] ("Sipple Dep.") at 57:6–14. The Spine Council's members are neurosurgeons and spine surgeons who perform surgeries at HealthEast hospitals including the HealthEast Neuro Group, as well as surgeons employed by other healthcare entities such as MSBI and St. Croix Orthopedic who maintain medical privileges at HealthEast hospitals. Pl. Ex. 106 ¶ 11.3; Def. Ex. 31. In September 2014, Dr. Wallenfriedman became the chair of HealthEast's Spine Council after running unopposed for the position. Def. Ex. 2 at 95:17–19, Def. Ex. 3.

Prior to Dr. Wallenfriedman becoming chair, the Spine Council began generating a Spine Quality Report that tracked the number of spine surgery patients who were readmitted with surgical site infection

("SSI") within 30 days of spine surgery at HealthEast hospitals. Def. Ex. 9 at 00297. The trends from the data for July through December of 2014 prompted the Spine Council to continue to generate the Spine Quality Report for January through June of 2015 as an ongoing quality improvement activity. Id.; Def. Ex. 37 at 5188.

D. HealthEast's Peer Review Process

The Spine Council also conducts peer review on spine care cases collected from HealthEast's Peer Review committee. Wallenfriedman Dep. at 168:21–24; Def. Ex. 8 ("Peer Review Policy") at 6098. Under HealthEast's Peer Review Policy, cases potentially requiring peer review are identified through the following sources:

• Electronic, database generated reports • Logs or other Council/departmental specific reports
• Clinical Documentation and Resource staff referrals regarding patient events and quality concerns
• Referrals from internal sources such as physicians, nursing, Risk Management, or Administration
• Referrals from external sources, such as third party payors and Quality Improvement Organization(s), e.g., Stratis.

Peer Review Policy ¶ 3. Once a case is selected for peer review, it is assigned to a practitioner reviewer to review the case and document their findings on a Peer Review Form. Id. ¶ 5.

The Spine Council then holds a peer review committee meeting to discuss the cases. Id. ¶¶ 6–7. The Peer Review Policy states that the review chair "must facilitate the practitioner peer review committee meetings to ensure a fair and objective evaluation of individual practitioner performance and to ensure reasonable actions are taken based on assessment findings." Id. ¶ 7. The review chair is authorized, but not required, to limit the attendance of clinical peers who may have anti-competitive motives in evaluating the individual being reviewed. Id.

E. HealthEast's Bylaws

HealthEast's bylaws set forth the conditions and procedures for summarily suspending a practitioner's clinical privileges. See Pl. Ex. 106 ¶ 9.2. The bylaws provide that "[w]henever a practitioner's conduct requires that immediate action be taken to ... reduce the substantial likelihood of immediate injury or damage to the health or safety of any patient ... the Chief Executive Officer, or designee ... shall have the authority to summarily suspend the ... clinical privileges of such practitioner." Id. ¶ 9.2.1.

F. HealthEast Neuro Group Displeased when Patients Referred to Dr. Sherr

At the time Dr. Sherr obtained clinical privileges at HealthEast in 2015, Dr. Daniel Sipple ("Dr. Sipple") served as the director of HealthEast's Spine Center. Sipple Dep. at 12:14–20, 22:17–19.5 In this role, Dr. Sipple referred HealthEast Spine Center patients to neurosurgeons. Id. at 53:13–55:9.

Dr. Sipple preferred to refer HealthEast's complex spine cases to surgeons other than the HealthEast Neuro Group. Id. at 27:8–11; 27:23–28:3; 60:1–14. The HealthEast Neuro Group disagreed with Dr. Sipple's referrals of HealthEast patients to non-HealthEast spine surgeons. Id. at 53:4–8. Dr. Dunn frequently raised the issue to Dr. Sipple in conversations and in phone messages, and once became upset with Dr. Sipple when he referred one of Dr. Wallenfriedman's patients to Dr. Sherr. Id. at 11:15–12:10, 13:15–14:15, 17:5–18. Dr. Sipple's referral of HealthEast patients to MSBI was also a "recurrent concern" with Dr. Wallenfriedman. Schaeffer Decl. [Docket No. 121, Attach. 9] ("Wallenfriedman Dep.") at 113:4–8.

Dr. Sipple testified in his deposition that the HealthEast Neuro Group berated him for referring cases to Dr. Sherr, saying the cases should not be referred to him because he was a "hack," "not a good surgeon," "asshole," "son of a bitch," and the "worst goddamn surgeon." Sipple Dep. at 58:6–7, 62:24–63:4, 65:3–6, 124:13–20. Similarly, Dr. Sherr testified that four members of the operating room staff told him that members of the HealthEast Neuro Group had said to them that Dr. Sherr is "not a good doctor," a "dangerous surgeon," and that he puts his patients at risk by "operating too quickly," "losing excessive amounts of blood during surgeries," and having "high infection rates." Sherr Dep. at 83:2–84:14; 273:21–274:7, 275:13–277:23.

G. Operating Room Staff, Spine Quality Report Raise Concerns...

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