Birth right — Dr. Diana Smigaj's legal battle with Memorial

YAKIMA, Wash. -- Dr. Diana Smigaj had an inkling she was heading into trouble.

It was 1995 when she was being recruited from Ohio to reopen a birthing center at then Providence-Yakima Medical Center. During a visit to Yakima, Smigaj recalled the frosty reception from some of her soon-to-be colleagues.

One doctor told her "that I would be deeply resented if I came to Yakima in this way," Smigaj recounted in an April 1995 memo to her new boss.

Now, more than 15 years and thousands of births later, Smigaj is in the fight of her professional life, trying to prove what she suspected back then: that she wasn't welcome in a market dominated by Providence's competitor, Yakima Valley Memorial Hospital.

In a case that's being watched by the medical community statewide, Smigaj (pronounced SMIG-ee) seeks to prove that Memorial and its obstetricians tried to put her out of business by repeatedly questioning her fitness as a physician and temporarily suspending her from the hospital, which she said damaged her reputation.

In more than 3,000 pages of court documents -- both cross-examined testimony in depositions and submitted declarations -- Smigaj's lawyers attempt to show that Memorial's administrators and physicians violated their own bylaws and used their internal peer-review process -- the way physicians police each other -- against her as a competitor.

Smigaj has already lost round one. In what Memorial claims is a definitive ruling, a visiting Yakima County Superior Court judge dismissed the case in September on summary judgment. The judge, Kittitas County Superior Court Judge Michael Cooper, heard the case because all Yakima County judges recused themselves.

Cooper found there was no evidence to support her claims for defamation, breach of contract, malicious peer review, anti-competitive actions and other alleged violations of state law.

Smigaj's attorneys are appealing the ruling to the Washington State Court of Appeals, arguing that she was denied her constitutional right to a jury trial and that Cooper did not consider the substantial evidence she submitted.

Her attorney, Robert Meals of Whidbey Island, Wash., said if Smigaj gets a trial she will seek damages for the value of her prac-
tice, which could exceed $1 million.

Unless she's successful before the appeals court -- which isn't expected to rule until next year -- Smigaj likely will have to pay Yakima Valley Memorial Hospital $504,000 for its attorney fees and court costs, which Memorial sought and Cooper approved.

One expert says the outcome of her appeal could change the legal-medical landscape in Washington.

At stake is whether physicians will challenge potentially malicious peer reviews knowing they could face astronomical court costs if they lose. Such challenges are still relatively rare but are growing nationwide.

The peer-review process itself is on trial in the Smigaj case, said Tim Layton, legal affairs director for the Washington State Medical Association.

"If that process becomes political or providers feel they can no longer speak out for fear that the process will be used unfairly against them, the integrity of the peer-review process is shaken and patient care is potentially jeopardized," Layton said.

"We don't believe this is an outcome that hospitals, physicians, providers or patients want."

Smigaj, 62, said the battle has worn her out professionally. She's closing her clinic -- Cascade Women's Healthcare Associates -- at the end of January.

But she said the legal battle is worth continuing.

"I believe you have to take a stand and do what you think is right," she said in a recent telephone interview.

Competing for babies

Smigaj contends Memorial used the peer-review process against her because she treats patients who would otherwise be seen by the hospital's obstetricians.

According to her declaration in the case, Barbara Hood, former CEO of Providence-Yakima Medical Center, said Memorial strongly opposed her decision to reopen the birthing center.

"Memorial had enjoyed a monopoly on obstetrical services in Yakima for many years and the new Family Maternity Center at Providence Yakima would cut into Memorial's business," Hood, now retired in Kentucky, said.

Hood said Memorial CEO Rick Linneweh began questioning Smigaj's competence almost immediately after her arrival, even though he is not a medical doctor.

"Mr. Linneweh treated Dr. Smigaj very differently than any other OB/GYN who was practicing in Yakima at that time," Hood said. "He did everything he could do to damage her reputation and make her life miserable."

According to Hood, Linneweh had several of Smigaj's cases reviewed and re-reviewed -- even after her peers found that her work met standards. She said Linneweh also delayed granting Smigaj privileges to deliver babies at Memorial. At the time, the two hospitals had a joint medical staff.

Calling Linneweh "shrewd" and "extremely influential," Hood said he did nothing when the male OB/GYNs refused to allow Smigaj to join their call-coverage group -- the common way physicians relieve each other in emergencies.

"He stirred up the male OB/GYNs who were practicing in Yakima to oppose her," Hood said.

Linneweh's actions prompted Hood to hire an antitrust attorney from Seattle, Douglas Ross of Davis Wright Tremaine, who threatened Linneweh with legal action in a letter that is part of Hood's testimony. Memorial subsequently granted Smigaj privileges.

In his deposition, Linneweh countered that Memorial's and Providence's joint Perinatal Quality Assurance Committee, which reviewed births with questionable outcomes, had concerns about Smigaj.

According to court documents, these concerns were echoed by an outside reviewer and nursing staff but were ultimately resolved when Smigaj agreed to a monitoring plan.

Linneweh said in depositions that the hospital didn't fear her as a competitor. He also said she was never treated differently because she is a woman, nor was she harmed by the peer-review system.

Mounting problems

In 2001, Smigaj's five-year obligation to Providence expired and she opened her own practice, specializing in high-risk pregnancies.

The next year, Providence, a nonprofit, was sold to for-profit Health Management Associates, a Naples, Fla.-based chain of rural hospitals. The newly named Yakima Regional Medical and Cardiac Center subsequently shut down its obstetrical unit.

According to testimony that was not disputed during the case, Smigaj's practice grew to the point where she was handling 30 percent of the deliveries in the county, including high-risk vaginal births after Caesarean sections. For several years, Smigaj was the only female obstetrician in Yakima.

Memorial, meanwhile, was losing money in three of its family practice clinics that offer obstetrical services.

Combined, the three clinics lost $12 million from 2005 through 2009, Linneweh said in a telephone interview. They are Pacific Crest Family Medicine on South 72nd Avenue, the downtown Cornerstone Medical Clinic, and Family Medicine of Yakima on North 40th Avenue.

Linneweh conceded in his deposition that all of the Memorial-owned practices could boost their revenue if they saw more obstetrical patients.

But he also said in a phone interview that the clinics are losing money on Medicare patients because reimbursement rates under the federal system for ages 65 and older fall below the cost of treatment.

To try to bolster their case, Smigaj's lawyers point out that five of the seven members of the Perinatal Quality Assurance Committee that investigated Smigaj are direct competitors.

Three of the five are tied to Memorial financially as contractors or salaried employees: Dr. Roger Rowles, chairman of the committee; Dr. Carl Olden, a nonvoting committee member and the hospital's medical director of quality assurance; and Dr. Jonathan Johns.

Johns, for example, was given a guarantee of up to $400,000 in annual income plus moving expenses when he was recruited by Memorial, according to Linneweh.

Johns and Rowles declined comment for this story, citing the confidentiality of the peer-review process.

Olden was out of town and couldn't be reached for comment, according to his office.

In his declaration, Olden defends Smigaj's suspension.

"I believed at the time, and I believe now, that the recommendation of a precautionary suspension followed by an external review of the current and past cases of concern was an appropriate response," Olden said.

Smigaj's lawyers also attempt to make an issue of Linneweh's compensation in light of the hospital's losses.

Linneweh, 67, said he received a lump sum of "$2 million plus" in deferred compensation in 2008 on top of his regular salary of $475,488.

The deferred compensation kicked in when he turned 65. Memorial reported to the Internal Revenue Service that the exact sum was $2.46 million. Funds continue to accrue in that account toward his retirement.

His current annual salary is $520,000.

Royal Keith, chairman of the hospital's board of directors, said in a telephone interview that Linneweh's compensation is in the mid-range of a group of 14 other similarly sized hospitals in the Pacific Northwest.

Keith added that none of Memorial's executives have had raises in the past two years, and that the deferred compensation is Linneweh's pension. If he retired before age 65, he would not have received the money, Keith said.

"It was not a bonus plan based on profits at the hospital," he said. "It was an incentive plan to keep him there and to give him a reasonable retirement when he reached age 65."

Smigaj suspended

According to Smigaj's lawsuit, the losses at Memorial's clinics prompted the hospital to continue to monitor and question her cases through the peer-review process.

The questions peaked in 2008 when the Perinatal Quality Assurance Committee concluded that Smigaj showed a pattern of "poor medical judgment" and recommended her suspension.

Committee members based their conclusion in part on two pregnancies that had adverse outcomes: a stillbirth and a hysterectomy. They questioned Smigaj's competence and surgical skills, reasoning the results may have been different had she used better judgment.

They also looked at two other cases and found her medical records were sometimes unclear and that she had violated hospital rules by having a midwife induce a patient without having first seen the patient herself. In this same case, they said Smigaj failed to see the patient in a timely fashion and criticized her for performing a Caesarian before recording a history and obtaining informed consent.

The cases were initially reviewed by two outside experts: Dr. Mize Conner of Bellevue, Wash., who went on to be Smigaj's expert witness in the lawsuit; and Dr. Mark Tomlinson of Portland, chosen by Memorial. Smigaj subsequently hired a second expert, Dr. Stephen Brisbois of Sacred Heart in Spokane.

None concluded that Smigaj's care was substandard and said that in all probability there was nothing she could have done to change the patients' outcomes.

The state medical board didn't discipline Smigaj for these cases or any others during her career. According to Smigaj's testimony, she has been the defendant in one malpractice case in the past 15 years, which was dismissed without a judgment or payment to the plaintiff.

Still, the perinatal review committee -- Smigaj's peers -- recommended suspending her hospital privileges in September 2008.

The recommendation to suspend Smigaj was approved by Dr. Brian Padilla, an emergency physician and president of the medical staff. Padilla said in his deposition that he relied solely on the perinatal review committee's expertise and had been briefed on the need for the suspension by committee chairman Rowles, who is also an OB/GYN.

The decision was overturned 12 days later by a higher-level peer-review group, the Medical Executive Committee. However, the executive committee imposed new restrictions on Smigaj:

An outside consultant had to review all her cases for three months. She had to see transfer patients in a timely manner and remain with patients being moved from Memorial until transportation arrived. She also had to consult a specialist in newborns, a neonatologist, on high-risk patients.

Educational
or punitive?

Although there are several issues in contention about Smigaj's practice, both sides agree on several facts.

First, Smigaj was never told in 2008 that the perinatal review committee decided to examine cases from her entire 13-year-history in Yakima. But Memorial says it had the right to look back at old cases.

Both sides also agree that Smigaj was not given an opportunity to defend herself before she was suspended, although they disagree on whether she had a right to that step.

And no one disputes that a suspension can harm a physician's reputation and livelihood, in large part because health insurers can use it as a reason to kick the doctor off their approved lists.

In his deposition, Dr. Kevin Harrington, an independent obstetrician and a member of the committee that lifted Smigaj's punishment, said none of the cases warranted an action as drastic as suspension.

"In looking at the cases in total, and especially looking at the letters from Dr. Conner, I did not feel that the suspension of privileges was necessary or indicated," Harrington said in his deposition. "And I felt that there should be some other way to review cases short of anything along those lines."

Conner, the former president of the Washington State Obstetrical Association and a lawyer, used stronger language about Memorial's peer-review process.

According to his declaration in the case, there was no reasonable basis for suspending Smigaj's privileges. He said the review process, which is supposed to be educational -- not punitive -- "was so devoid of the fundamental attributes of fairness that an objective and reasonable assessment of her practice was impossible."

Conner added that such a remedy should only be taken if patients are in imminent danger -- such as an unexplained death on the operating room table or a physician practicing under the influence of drugs.

He also said the "unauthorized review" of Smigaj's practice was initiated by administrative officials who gathered "false and misleading" information about her practice and presented it to a committee dominated by her competitors.

Overall, Conner described the investigation as unreasonable, inadequate and subjective.

"Her cases were scrutinized far more than any of the other OB/GYN physicians," he said in his declaration. "Other practitioners in the OB/GYN department have had multiple adverse patient outcomes, but their privileges have never been suspended."

Memorial doctors acknowledged Conner's expertise but said in court papers that they simply disagreed with his conclusions. They did not elaborate.

Disparate
treatment?

Smigaj's lawyers will try to show the appeals court that Memorial treated Smigaj more harshly than another physician who also had adverse outcomes in the delivery room.

They point to Dr. John Naiden, a longtime OB/GYN affiliated with the Yakima Valley Farm Workers Clinic. Smigaj said Naiden was among the physicians who bluntly told her in 1995 that she was not welcome in Yakima's obstetrical community.

In April 2007, according to court records, Naiden's use of forceps during a delivery fractured a baby's skull.

According to a malpractice lawsuit that followed, Naiden attempted to deliver the baby by using vacuum extraction and Tucker forceps when the mother was not fully dilated. When that didn't work, Naiden performed a Caesarian.

The baby didn't have an audible heartbeat for four to five minutes and suffered from a severe lack of oxygen, contributing to severe, permanent and disabling injuries, according to court records.

The malpractice lawsuit was settled, but the terms are sealed.

Naiden's actions during the birth were studied by the peer-review committee, which, according to Rowles' deposition, restricted Naiden's privileges by prohibiting him from combining forceps with vacuum extraction in future deliveries.

Smigaj's lawyers -- and Conner -- argue that Naiden's actions were far more serious than Smigaj's, yet he was never suspended.

Neither was he suspended for his temper-amental conduct, while Smigaj was criticized for a "pattern of disruptive behavior" that included two instances in 13 years.

In depositions, Linneweh, Harrington and Rowles said Naiden's "disruptive behavior" and demeaning comments about other medical personnel prompted formal complaints from hospital staff. Linneweh said the number of complaints was fewer than 10.

Citing the confidentiality of the peer-review process, Naiden, through a spokesman at the Yakima Valley Farm Workers Clinic, declined to comment for this story.

Finally, Smigaj's lawyers say Memorial showed disparate treatment by allowing Rowles to review his own cases with questionable outcomes, a practice Rowles acknowledged in court and Conner found objectionable.

"It is not possible for a physician who reviews his or her own cases to objectively evaluate his or her own clinical performance," Conner said.

But Linneweh countered in a recent telephone interview that Rowles' cases also are reviewed by Olden.

Decision next year

Whether any of this evidence will matter to the appeals court remains to be seen. Arguments have not been scheduled, but a decision isn't likely until well into next year.

Whatever the outcome, the two sides aren't likely to ever see eye-to-eye on Memorial's peer-review process. For Linneweh, the results so far vindicate the hospital.

"This is not a physician who was harmed by the system. This is the system working well to see that quality medicine is practiced," he said.

For Smigaj, the case is about standing up to a system gone awry.

"I know other people who have been abused and have been afraid to take a stand, so I did it not just for me but for everyone else," she said. "I was hoping I could make a difference."

* Erin Snelgrove can be reached at 509-577-7684 or esnelgrove@yakimaherald.com.