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Court Limits Duty Of Hospitals In Responding To Credentialing Inquiries

Court Limits Duty Of Hospitals In Responding To Credentialing Inquiries


Health Care Law Note
(June 2008)

2006 District Court Decision Awarded Damages for Response to Medical Staff Inquiry

In May 2006, a Federal District Court in Louisiana threatened to significantly change the landscape of hospital and health care employer references for departing physicians.1  Specifically, a jury returned an $8.2 million verdict against a hospital and several physicians in a federal lawsuit concerning the scope and substance of response to a medical staff credentialing inquiry.  The hospital at issue provided a cursory response to a credentialing inquiry from another institution even though it was aware of problems with the physician in question.  Unfortunately, a patient was seriously and permanently injured while receiving care from the physician at the second hospital.

2008 Circuit Court Decision Limits Hospital's Duty to Respond to Credentialing Inquiry

In May 2008, the Court of Appeals for the Fifth Circuit reversed the above trial court in part, and narrowed the duty to respond to inquiries regarding former medical staff physicians.2  The appellate court held that hospitals (at least in Louisiana) are not required to provide negative information, even if known, about former medical staff members.  They have no legal duty to complete and return detailed questionnaires regarding prior members of the medical staff.  However, if a hospital volunteers any kind of substantive response, it must be cautious not to provide false or misleading information.

Practical Advice to Hospitals Based upon Kadlec Decision

The Fifth Circuit decision approves the practice of hospitals responding with name, rank and serial number to requests for information concerning departed physicians who have imperfect records.  It is not clear whether other state courts or federal circuits will adopt the same position as the Kadlec Court, but the Fifth Circuit decision eliminates an aberrant verdict that concerned hospitals, health care providers, and their lawyers.

According to this decision, hospitals have a choice when replying to requests for information:  They may answer the request fully and accurately, supplying the whole truth, or they may provide very limited detail.  In either scenario, the information provided must not be materially misleading.  The Circuit Court suggested that hospitals may have an ethical duty to provide more disclosure if patient safety may be a concern with a physician's continued practice, but refused to impose an affirmative legal duty to speak.

Whatever response a hospital chooses to provide to such inquiries, it should obtain a release and waiver of claims from medical staff applicants and staff members protecting the hospital and its managers, employees, the board, and medical staff members from action by a physician for information provided to subsequent hospitals.

Background on Kadlec Case

The lawsuit centered on Dr. Robert Berry, an anesthesiologist who exhibited drug abuse and addiction issues while providing services at Lakeview Regional Medical Center ("LRMC").  Dr. Berry was part of an anesthesia practice group known as Lakeview Anesthesia Associates ("LAA").  Dr. Berry ultimately was terminated by LAA for his impairment and for "placing patients at significant risk."  Dr. Berry stopped practicing at LRMC, but his substance abuse problems were not reported to the Louisiana Medical Board, LRMC's medical staff leadership, or its Board of Trustees.

Later that year, Dr. Berry applied for privileges at Kadlec Medical Center ("Kadlec").  Kadlec sent detailed requests for information concerning Dr. Berry to LRMC and LAA, including specific questions on impairment, disciplinary action, and Dr. Berry's judgment.  LRMC provided a letter giving the dates that Dr. Berry was on its medical staff and stating that it was too busy to respond in more detail.3  Such response has been referred to as the 'name, rank and serial number' reply.  Unlike LRMC, two physicians at LAA provided referral letters praising Dr. Berry and stating that he was an "excellent clinician" and would be "an asset to any anesthesia service."

Kadlec credentialed Dr. Berry and he began providing anesthesia services.  Approximately one year into his tenure, Dr. Berry began exhibiting problems, including provision of an overdose of morphine to a patient.  Sadly, in November 2002, a patient anesthetized by Dr. Berry for a routine surgery suffered severe brain damage and was left in a permanent vegetative state.  The patient's family sued Dr. Berry and Kadlec for medical malpractice; both defendants settled.  Kadlec's settlement and legal fees exceeded $8 million.

Thereafter, Kadlec sued LRMC, LAA, and the individual physicians at LAA who provided referral letters for Dr. Berry.  The jury awarded $8.24 million apportioned among these defendants, Kadlec, and Dr. Berry.  On appeal, the Circuit Court held that neither LRMC nor LAA had a legal duty to disclose Dr. Berry's drug problem and that failure to do so was not actionable.  The Court noted that no special relationship existed with Kadlec that was sufficient to impose a duty to disclose.

However, the Court found that both entities responded voluntarily, creating a duty not to provide information that would create a misapprehension about Dr. Berry.  The Court reasoned that the physicians at LAA provided letters that were "false on their face and patently misleading."  Therefore, the LAA physicians could be held liable for their representations to Kadlec.  The decision also concluded that these physicians' reference letters caused Kadlec's damages, holding that the injury was the type that would be expected with Dr. Berry's abuse of narcotics and continued medical practice.

In contrast to LAA, the Court held that LRMC was allowed to refuse to provide the detailed information requested by Kadlec.  Even though the Court found that the information provided by LRMC was inaccurate concerning its reason for not responding more fully and the dates of Dr. Berry's privileges, it found that such response was not affirmatively false or misleading.
 

1Kadlec Medical Center, et al. v. Lakeview Anesthesia Associates, et al., No. Civ. A. 04-0997, E.D. La.
2Kadlec Medical Center v. Lakeview Anesthesia Associates, et. al. No. 06-30745, 5th Cir.
3The Court noted that LRMC responded in full to thirteen (13) other requests for physicians from other facilities received around the same time, but did not find fault with such disparate response to Kadlec.

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