Muhammad v. Riverside Healthcare
Key Takeaways
- 1 Sham peer review allegations based on patient-diversion to competitor defeat Hospital Licensing Act immunity at pleading stage.
- 2 Breach of contract claim survives mootness challenge where plaintiff still seeks monetary relief for reportable adverse action.
- 3 Relevant for healthcare and hospital credentialing attorneys defending or prosecuting physician privilege disputes and peer review immunity claims.
Summary
Dr. Kermit Muhammad, an orthopedic and hand surgeon with clinical privileges at Riverside Healthcare, filed suit after Riverside took adverse action against his privileges when he sought a religious exemption from its COVID-19 vaccination policy. His third amended complaint alleged breach of contract, tortious interference, intentional interference with employment contract, and intentional infliction of emotional distress. The circuit court dismissed all counts with prejudice, finding statutory immunity under section 10.2 of the Hospital Licensing Act, mootness as to the breach of contract count, and failure to state a claim on the remaining counts. The Third District reversed in part and affirmed in part.
The appellate court reversed on immunity and mootness. Applying Valfer v. Evanston Northwestern Healthcare, the court held that plaintiff sufficiently alleged a sham peer review purpose — specifically, that defendants used the COVID-19 vaccination policy as a pretext to divert his hand surgery patients to a competing Riverside Medical Group surgeon, supported by specific volume statistics showing a 408-surgery increase for the competitor. The breach of contract count was not moot because plaintiff still sought monetary damages tied to mandatory adverse-action reporting obligations that would affect his insurance rates and practice going forward.
The court affirmed dismissal of the remaining counts. Tortious interference failed because plaintiff did not allege binding contracts with patients or referring physicians, and past relationships alone do not establish a reasonable expectancy of future business. The intentional interference with employment contract claim failed because plaintiff did not plead specific facts showing CEO Kambic acted outside his qualified privilege as a corporate officer. The intentional infliction claim failed for insufficient allegations of extreme and outrageous conduct and severe emotional distress. Attorneys litigating physician credentialing disputes should note that detailed, fact-specific allegations of competitive patient-diversion can overcome statutory peer review immunity at the pleading stage.
Key Holdings
1. A physician plaintiff sufficiently alleges a sham peer review purpose under section 10.2 of the Hospital Licensing Act — defeating immunity at the pleading stage — by pleading specific facts showing that adverse privilege action was taken to divert patients to a competing physician rather than to protect patient or staff safety.
2. A breach of contract claim arising from adverse credentialing action is not moot where the plaintiff continues to seek monetary damages caused by mandatory adverse-action reporting obligations, even if the hospital later amended the underlying policy.
3. Tortious interference with contractual relations requires allegations of a legally binding contract in existence at the time of the interfering conduct; a past patient or referral relationship alone is insufficient to establish a reasonable expectancy of future business for a prospective economic advantage claim.
4. To overcome a corporate officer's qualified privilege in an intentional interference with employment contract claim, a plaintiff must plead specific facts — not conclusory allegations — demonstrating that the officer's conduct was motivated by personal interest unrelated to the corporation's interests or by actual malice.