Monday, May 24, 2010

TN Supreme Court reviews the Peer Review Law in a case involving services provided by various hospitals

LEE MEDICAL, INC. v. PAULA BEECHER ET AL. (Tenn. May 24, 2010)

This appeal involves the application of the Tennessee Peer Review Law of 1967 [Tenn. Code Ann. section 63-6-219 (Supp. 2009)] to a hospital system's business decision regarding the provision of vascular access services to patients in its member hospitals. The hospital system had customarily outsourced these services at several of its hospitals, but, following an audit, it decided to discontinue outsourcing the services and to begin providing them using nurses employed by its own hospitals.

After several of the system's hospitals cancelled their vascular access services contracts, the vendor that had been providing the services filed two suits in the Circuit Court for Sumner County against the manufacturer of the catheters used to provide the services and one of its employees, a staffing affiliate of the hospital system and two of its employees, and the chief nursing officer at one of the system's hospitals.

These suits, which were eventually transferred to the Circuit Court for Williamson County and consolidated, sought damages under numerous theories based on the vendor's allegations that the defendants, all of whom had played a role in the audit, had disparaged the manner in which it had been providing the vascular access services and had improperly interfered with its contracts. During discovery, the vendor sought copies of various records relating to the audit of its services. The defendants claimed that these records were covered by the privilege in Tenn. Code Ann. section 63-6-219(e). After reviewing the disputed records in chambers, the trial court determined that most of the requested records were covered by the privilege. The trial court also granted the vendor permission to pursue an interlocutory appeal to the Court of Appeals; however, the Court of Appeals declined to accept the appeal.

We granted the vendor's Tenn. R. App. P. 11 application to address the trial court's interpretation and application of Tenn. Code Ann. section 63-6-219(e). We have determined that the trial court interpreted the privilege in Tenn. Code Ann. section 63-6-219(e) too broadly. Therefore, we vacate the portions of the trial court's discovery orders applying the privilege in Tenn. Code Ann. section 63-6-219(e) and remand the case to the trial court for further proceedings.

Opinion may be found at:

WADE dissenting

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