Wednesday, May 10, 2006

Impact of Credentialing Requests: Kadlec Medical Center v. Lakeview Anesthesia Associates

The National Association of Medical Staff Services has a nice summary of a recent decision by the United States District Court in Louisiana regarding the scope of response a hospital should consider making when receiving a credentialing inquiry or pre-employment request about a former physician being credentialed by another hospital. I first became aware of this case while attending an American Health Lawyer Association conference earlier this year but at that time the decision had not been issued.

On May 19, 2005, the United States District Court in Louisiana decided the case of Kadlec Medical Center v. Lakeview Anesthesia Associates. The Court in Kadlec found found that hospitals have a duty to disclose material information about their medical staff members to other health care providers in order to protect future patients when a physician moves on. Kadlec requested from Lakeview Regional Medical Center “a candid evaluation of [the doctor's] training, continuing clinical performance, skill, and judgment, interpersonal skills and ability to perform….” Lakeview responded by stating that the doctor had served on the hospitals staff but that due to the large volume of inquires the hospital receives about its former physicians no further information would be provided.

Those involved in responding to credentialing requests for hospital should take a look at this decision and the impact it might have on your process for responding.

UPDATE: On May 26, 2006, a jury returned a verdict in favor of Kadlec Medical Center in the amount of $8.2M . The jury found that Lakeview Regional Medical Center along with the other physcians in the case made intentional and negligent misrepresentations to Kadlec Medical Center and that the misrepresentations were the proximate cause of the injuries. The jury verdict form from the trial can be reviewed courtesy of the Horty Springer website. Thanks to Rita Scwab over at MSSPNexus Blog for pointing me to the jury verdict info.

UPDATE: On May 8, 2008, the 5th Circuit Court of Appeals issued a decision in
Kadlec Medical Center v. Lakeview Anesthesia Associates, Appeal No. 06-30745 reversing the jury's verdict against the Lakeview Regional Medical Center because the hospital did not make misrepresentations of fact to Kadlec Medical Center. The Court also found that the hospital was under no duty to disclose information regarding the physician. The Court upheld the jury's verdict against Louisiana Anesthesia Associates finding that they had midlead Kadlec regarding the physician's abilities.

Following is a summary of the facts and issues presented in the appeal by a member of the FSB Health Care Practice Group.

In Kadlec Medical Center v. Lakeview Anesthesia Associates, the Fifth Circuit Court of Appeals examined what duties a physician and hospital have in responding to credentialing questions from another facility. In Kadlec, Dr. Berry, an anesthesiologist, was investigated by the hospital after the nurses noted that Dr. Berry was making excessive withdrawals of Demerol. As a result of the investigation, the hospital consulted Dr. Berry’s partners at Louisiana Anesthesia Associates (“LAA”). The LAA partners agreed to monitor Dr. Berry’s actions. Dr. Berry and his partners entered into an agreement, in which Dr. Berry was required to document all of his Demerol withdraws.

Three months later, Dr. Berry failed to answer a page while on duty at the hospital. He was found in the on-call room asleep, groggy, and unfit to work. Dr. Berry admitted to his partners at LAA that he had been abusing Demerol. Dr. Berry’s partners terminated Dr. Berry’s employment with LAA “for cause.” Similarly, the hospital decided that it was in the best interest of patient safety for Dr. Berry to no longer practice at the hospital. Neither LAA nor the hospital reported Dr. Berry’s conduct to the Board of Medicine or National Practitioner Data Bank.

Several months later, Dr. Berry applied for privileges at Kadlec Medical Center (“Kadlec”) in Washington State. Dr. Berry obtained and submitted with his application for prvileges two letters of recommendation from his former partners at LAA. The letters, written only 68 days after being fired from LAA, described Dr. Berry as an “excellent clinician, who was “highly recommended.”

Kadlec contacted the hospital where Dr. Berry previously worked and asked the hospital to provide it with information regarding any disciplinary action involving Dr. Berry, Dr. Berry’s ability to perform, and whether Dr. Berry had shown any signs of personality problems. The hospital chose not to respond to Kadlec’s inquiries, but instead sent Kadlec a letter stating that Dr. Berry was employed from March 1997 to September 2001. The letter made no mention of Dr. Berry’s drug problems. Ultimately, Kadlec awarded Dr. Berry anesthesia privileges, and he began working.

Dr. Berry worked at Kedlec without indecent for several months. After suffering a back injury in a car accident, the nurses at Kedlec noticed that Dr. Berry looked sick and exhibited mood swings. In September 2002, Dr. Berry gave a patient too much morphine during surgery, and the patient had to be revived with Narcan. Two months later, Dr. Berry sedated a patient for a routine tubal ligation. When the nurses moved the patient to the recovery room, the nurses noted that the patient’s fingernails were blue and she was not breathing. Dr. Berry was called in to resuscitate the patient, but was unable to do so. Ultimately, the patient was resuscitated, but suffered a brain injury and remains in a permanent vegetative state. Following this incident, Dr. Berry admitted to Kadlec’s administration that he was addicted to Demerol, and he voluntarily entered into a drug rehab program.

The patient’s family brought a medical malpractice suit against Dr. Berry and Kadlec, claiming that both Dr. Berry and Kadlec were responsible for the patient’s brain injury. Both Dr. Berry and Kadlec settled with the patient’s family. After settling with the patient’s family, Kadlec sued LAA and the hospital where Dr. Berry previously worked. Kadlec claimed that LAA and the hospital misrepresented the facts and circumstances surrounding Dr. Berry’s employment in their letters. Kadlec claimed that had it known the truth about Dr. Berry, Dr. Berry would never have obtained anesthesia privileges at Kadlec.

Kadlec’s case against LAA and the hospital was tried to a jury. The jury found that both LAA and the hospital were liable to Kedlec for the representations they made in their letters regarding Dr. Berry. The jury awarded Kadlec $8.24 million in damages. LAA and the hospital appealed the jury’s verdict, claiming that any representations to Kadlec in the referral letters did not establish liability on behalf of either LAA or the hospital.

On appeal, the Fifth Circuit Court of Appeals held that after choosing to write the referral letters on behalf of Dr. Berry, LAA and the hospital assumed a duty not to make any misrepresentations in the letters. The Court examined the letters sent by Dr. Berry’s former LAA partners and the hospital and concluded that the only the partner’s letters were misleading. The Court reasoned that the LAA partner’s letters were false and misleading because Dr. Berry’s former partners referred to him as a “highly recommended” and “excellent” physician, when they knew he was a drug addict. The Court stated that “once a party volunteers information, it assumes a duty to insure that the information volunteered is correct.” The Court found that the letter submitted to Kadlec by the hospital was not false or misleading because it merely provided Dr. Berry’s dates of employment and did not comment on Dr. Berry’s proficiency as an anesthesiologist.

The Court further held that neither LAA nor the hospital had an affirmative duty to disclose to Kadlec Dr. Berry’s addition to prescription drugs. The Court found that only where special circumstances exist, such as a when a fiduciary or confidential relationship exits between the parties, does a party have a duty to disclose such information. The Court stated that protecting an employee’s privacy outweighs imposing a broad duty to disclose information on employers. Therefore, LAA and the hospital did not have a duty to inform Kadlec about Dr. Berry’s addiction to Demerol.

Ultimately, the Fifth Circuit reversed the jury’s verdict against the hospital because the hospital did not make misrepresentations of fact to Kadlec. Further, the hospital was under no duty to disclose information regarding Dr. Berry’s drug addiction to Kadlec. The Fifth Circuit upheld the jury’s verdict against LAA, finding that LAA mislead Kadlec regarding Dr. Berry’s abilities, despite the fact that LAA had no duty to report Dr. Berry’s drug addiction to Kadlec.

While the Fifth Circuit’s holding is not binding in West Virginia, it is likely that the West Virginia courts would rule the same way. When a physician or hospital responds to credentialing questions and/or forms from other health care facilities, it is important that the physician or hospital only provide truthful information. Physicians and hospitals should take care to not provide the inquiring facility with any misleading or false information.

According to the Fifth Circuit’s holding in Kadlec, physicians and hospitals are under no duty to respond to credentialing questions from another facility. However, if the physician or hospital decides to respond, it must seek to provide truthful information that will not mislead the credentialing facility.

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Caverta said...
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