When I first read the October 15 New York Times article "Suit Accuses S.E.C. of Failing to Detect Madoff Scheme" I noticed a welling up of "justice deserved" sentiment coupled with admiration for the victims who had found a novel way to circumvent apparent obstacles to suing regulators for compensation as they attempted to recover losses that may, in part, have been enabled by regulatory incompetence. And then came the pause and unease. Diana Henruiqes' discussion of the SEC's immunity - and its potential limitations as claimed by the plaintiffs - made me think of the protection afforded hospital QI and peer review processes. And its potential vulnerability under similar circumstances. Which might be a reason for some pause and unease for health care leaders involved in quality oversight.
Protected, Immune, Vulnerable?
The plaintiffs, two individuals with substantial losses in the Madoff Ponzi scheme, are attempting to recover losses from the SEC but, as Henruiques describes they:
"[face]a significant uphill fight because the legal doctrine of sovereign immunity makes it extremely difficult to sue a government agency for the consequences of its official activity."
However the legal case being developed claims that this immunity applies only to the SEC's official functions such as rule making, decisions, and formal policies but:
" [the plaintiffs] assert that the doctrine does not shield the S.E.C. from the consequences of "serial, gross negligence" in carrying out its day-to-day duties."
In short, the content of policy and decisions is protected but not the "negligence" involved in carrying out its oversight responsibilities or in implementing those policies and decisions. Suggesting that those who allegedly failed repeatedly to follow up on credible allegations of malfeasance by Madoff - or the SEC itself - maybe vulnerable to suit for damages.
?SEC = ?QIC
It could be argued that SEC's role in investigation, oversight, and correction of investment behavior somewhat resembles that of a hospital Quality or Peer Review Committee. And the SEC employees charged with implementation resemble hospital and physician leaders charged with implementation of professional correction, error reduction, and quality improvement activities. Historically, Quality Improvement Committees (QIC) and Peer Review Committees (PRC) and their participants have similarly enjoyed confidentiality from discovery and legal immunity for their activities.
But is the argument being advanced by the Madoff plaintiffs transferable? PRC and QIC protections were designed to encourage the free flow of quality and safety data, to encourage self reporting, and to limit the vulnerability of participants from intimidation by [mainly] physicians who are investigated or sanctioned. All critically important protections. But in today's patient safety conscious environment, will members of QIC or PRC who fail to collect the right data, draw the right conclusions, or appreciate the significance of trends that are before them be protected? Should they be? If physician leaders and executives receiving reports of systematic errors or safety lapses from the QIC or PRC fail to act effectively to make improvements will they be protected?
Is Quality Accountability a Risk to be Managed?
The SEC's immunity appears to be under re-examination. Perhaps the vulnerability of hospitals and health care leaders will be as well. A 2009 Tennessee Court of Appeals case tested the ability to extend peer review protections to hospital management in cases of credentialing. While the ruling in this case was in favor of upholding hospital protection for the Credentials Committee endorsement of a physician for whom there was strong evidence of poor care, the April 27, 2099 Nashville Post's news report of the case makes it clear that the broader question of how far to extend peer review immunity to decisions made by hospital leadership is likely to be scrutinized by legislators in the future:
"The attorney noted that this was probably the closest analysis the [peer review] statute has ever received and may have pointed out some of the unintended consequences of its language, which may be flawed. But that is a problem for legislators, who the attorney opined did not likely see a scenario rising from that particular bit of legislation."
Personal and corporate accountability for participating in and acting upon "protected" quality improvement activities may be yet another risk to be managed by health care leaders.
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