The ruling in Kadlec Medical Center v. Lakeview Anesthesia Associates by the U.S. Court of Appeals for the Fifth Circuit overturns a previous decision in the case.
From Nov. 2000 until his termination in March of 2001, Dr. Robert Berry, an anesthesiologist, was a shareholder of Lakeview Anesthesia Associates (LAA), the sole provider of anesthesia Services to Lakeview Medical Center (LMC). The LMC administration and LAA discovered Dr. Berry’s on-duty use of narcotics after pursing an investigation spurred by his excessive Demerol withdrawals that lacked documentation, say court documents. Over the following months, Dr. Berry failed to follow an agreement to control and monitor his used of Demerol withdrawals; after an incident in which Dr. Berry was found in the call room “asleep, groggy, and unfit to work,” LMC’s CEO “decided that it was in the best interest of patient safety that Dr. Berry not practice at the hospital,” say court documents. LAA fired Dr. Berry “for cause,” as explained in a termination letter:
… you have reported to work in an impaired physical, mental, and emotional state. Your impaired condition has prevented you from properly performing your duties and puts your patients at significant risk.”
Neither LAA nor LMC’s CEO reported the incidents to the hospital’s medical executive committee or board of trustees, “eventually noting only that Dr. Berry was ‘no longer employed by LAA,'” say court documents, nor were they reported to the La. Board of Medical Examiners or the National Practitioner’s Data Bank. “In fact, at some point Lauderdale took the unusual step of locking away in his office all files, audits, plans, and notes concerning Dr. Berry and the investigation,” say documents.
Seven months later, Dr. Berry applied for locum tenens privileges at Kadlec Medical Center in Washington state. In referral letters written by LAA and LMC and relied on by Kadlec to determine hiring, they did not disclose Dr. Berry?s drug use. Kadlec’s detailed, confidential questionnaire send to LMC included questions about Dr. Berry’s health, judgment, whether he had been subject to any disciplinary actions, and whether he had shown any signs of behavior problems or impairments. LMC responded at the same time to 13 other requests for credentialing information; all were filled out completely. Only in responding to Kadlec did LMC choose to not respond to the multi-part forms but to draft a short letter that, citing “the large volume of inquiries received in this office,” provided only dates of employment for Dr. Berry and a phone number to call if further assistance was needed on the matter.
Subsequent to Dr. Berry’s hiring by Kadlec, while under the influence of Demerol, his negligent performance led to the near-death of a patient at Kadlec, resulting in a lawsuit against the hospital, which it paid over $8 million to defend and settle, say court documents. Kadlec sued, claiming that LAA’s and LMC’s misleading referral letters were ultimately responsible for Kadlec’s financial injury. A jury originally found in favor of the plaintiffs and judgment followed. LAA’s referral letters have been deemed false and misleading by the appeals court, and the liability judgment against those physicians upheld; at issue here is the referral letter that came from LMC.
The ruling overturning that decision says that the letter sent by LMC was not actively misleading; further, while a hospital does have a duty to not misrepresent qualifications of former medical staff members, it is not required to report negative information. A hospital may be ethically obligated to disclose such knowledge, but LMC was “also rightly concerned about a possible defamation claim if [it] communicated negative information about Dr. Berry.” The appeals court continues:
“As a general policy matter, even if an employer believes that its disclosure is protected because of the truth of the matter communicated, it would be burdensome to impose a duty on employers, upon receipt of a employment referral request, to investigate whether the negative information it has about an employee fits within the courts? description of which negative information must be disclosed to the future employer. Finally, concerns about protecting employee privacy weigh in favor of not mandating a potentially broad duty to disclose.
In summary, because LMC’s letter was not misleading and because the court determined that the hospital “did not have a legal duty to disclose its investigation of Dr. Berry and its knowledge of his drug problems,” the judgment against LMC has been vacated, and the case has been remanded to district court to re-determine apportionment and damages issues.
