Linda A. Malek
Over the course of the past few years, the Department of Justice has stepped up its enforcement of the False Claims Act1
(“FCA”) against health care providers at all levels. In an effort to comply with FCA, Stark2
and other self-reporting laws and regulations,4
providers have enhanced their compliance efforts and instituted various levels of self-audits and internal investigations to help identify areas for improvement. Guided in part by the Office of Inspector General’s policies encouraging self-evaluation, health care providers have operated under the assumption that self-disclosure will demonstrate mitigation efforts should violations or potential violations be identified.
Given a handful of recent cases, and a recent update to the CMS Voluntary Self-Referral Disclosure Protocol, it appears that the federal government may be using the existence of these audits as a means for demonstrating that the provider “knew or should have known” that fraud occurred.
In New York, Education Law §6527(3) confers, in the context of self-critical analyses, confidentiality on proceedings and records prepared by or for a wide variety of medical institutions, including hospitals, in connection with the performance of medical or quality assurance review functions. This includes immunity from document discovery and from disclosure during depositions. The statute specifically provides protection for documents prepared and submitted to the state as part of a statutory or regulatory compliance program. “The thrust of section 6527(3) is to promote the quality of care through self-review without fear of legal reprisal."5
The privilege is not exclusive to healthcare matters, but is sometimes invoked in lawsuits involving hospitals or other health care organizations.6
Until the late 1990s, the self-critical analysis privilege was also alive and well in New Jersey, thanks to a Superior Court decision in Wylie v. Mills
involved a public utilities employee who had been injured in an automobile accident while on the job. Shortly after the accident, the utility company conducted an internal investigation to evaluate its policies and procedures to determine whether future employee injuries could be reduced or prevented. The employee sought discovery of this internal self-analysis, but the court shielded the documents, relying on the self-critical analysis privilege.8
Within a year of the Wiley
decision, New Jersey courts began to reject a blanket privilege, and instead began advocating the use of a “balancing test.” In McClain v. College Hospital
the plaintiff in a wrongful death suit sought to compel disclosure of certain hospital internal-review documents. These internal reviews included an Executive Committee report completed by the Board of Medical Examiners, which detailed the treatment of the decedent, as well as testimony and findings by the Board’s internal expert witness.10
While the Court acknowledged the existence of the self-critical analysis privilege in Wylie
, it also recognized that the personal injury suit in Wiley
was fundamentally different from a wrongful death suit against a hospital. Wiley’s
case could proceed without the information in the internal audit documents it requested, whereas McClain’s
case relied heavily on the fact that the hospital knew there were problems and it failed to act to fix them.
The court found that it was in the interest of public policy to allow “disclosure of the materials involved in an internal investigation into health-care services….”11
court advocated using a balancing approach to determine whether internal audit documents could be subject to discovery. The balancing test is intended to weigh the need for maintaining confidentiality against the need for the plaintiff to have those documents to prove its case.12