Information excerpted from an article by Michael Callahan, Katten Muchin Rosenman LLP, Chicago, IL
The 5th Circuit Court of Appeals on May 8, 2008, (No. 06030745) reversed the District Court’s opinion which included a holding that Lakeview Medical Center and Lakeview Anesthesia Associates had a duty to disclose to Kadlec Medical Center that Dr. Berry, a former partner with LAA, had a drug problem after Kadlec made inquiry after Berry applied to Kadlec for medical staff membership. This finding and multi-million dollar jury verdict against Lakeview and LAA caused something of an uproar throughout the industry because no court had previously held that such a duty existed. The result was also unsettling for many hospitals because most have been faced with the ethical and legal question of how to respond to third party inquiries about current and former medical staff physicians who have had quality of care or impairment problems.
The holding can be summarized (in part) as follows:
1. A party has an affirmative duty to avoid affirmative misrepresentations in referral letters to another hospital. Here, Lakeview provided a neutral letter regarding Berry which contained only factual, neutral information and did not attempt to recommend Berry for appointment. LAA, on the other hand, stated that Berry was "excellent" and a very good clinician even though they had previously fired him two months earlier because of his addiction to Demerol and his treat to patients.
2. Once a party does disclose information about a physician which creates a "misapprehension" about qualifications or certainly misleads, it has an obligation to clarify the information provided. Here, given LAA’s representations that Berry was excellent and "will be an asset to [his future employer's] anesthesia service, they had a "duty to cure these misleading statements by disclosing to Kadlec that Dr. Berry had been fired for on-the-job drug use."
Lessons learned? The basic message here is that a hospital is better off saying nothing about an impaired or unqualified physician or giving only neutral information as was the case with Lakeview. If a hospital chooses to respond to the questionnaire or other inquiry, it must not mislead and must be truthful. This raises important ethical and legal policy questions because all hospitals rely on each other in attempting to determine whether new applicants or existing members are truly qualified and do not pose a threat to patients. If information is purposefully withheld because there may not be a particular duty, problems like Kadlec will continue to occur. The positive impact that the district court opinion had is that it made hospitals more mindful of needing to make more detailed and truthful disclosures keeping in mind that they must be based on hard evidence and documentation and not rumor or innuendo. Many hospitals also have begun to require physicians to sign absolute, versus qualified, waivers and releases as part of the appointment/reappointment process in order to avoid retaliatory lawsuits in response to a truthful disclosure of an impairment or questionable competency which led to non-appointment/reappointment.
Michael R. Callahan
Health Care Department
Katten Muchin Rosenman LLP
Previous MSSPNexus Blog Posts on the Kadlec Case:
Jury Finds In Favor of Kadlec Medical Center – June 2006
Weakness in Medical Vetting – Letters to the Editor – October, 2005
Major New Case Will Impact Credentialing – June 2005