Health care decision may impact construction employers

By G. Phillip Shuler

Dr. Robert Berry, an anesthesiologist, worked with and was a shareholder in Louisiana Anesthesia Associates (LAA), which contracted with Lakeview Medical Center (LMC) to provide anesthesia services at the hospital.

In November 2000, a small management team at LMC investigated Berry after nurses expressed concern about his undocumented and suspicious withdrawals of Demerol. The investigative team found excessive Demerol withdrawals by Berry and a lack of documentation for the withdrawals.

The CEO of LMC, Max Lauderdale, discussed the team’s findings with Drs. Berry and Dennis. Dr. Dennis then discussed Berry’s situation with his partners and they all agreed that Berry’s use of Demerol had to be controlled and monitored. Berry, however, did not follow the agreement or account for his continued Demerol withdrawals.

Three months later, Berry failed to answer a page while on-duty at LMC. He was discovered in the call-room, asleep, groggy, and unfit to work; as a result, Dennis had Berry taken away after Berry said that he had taken prescription medications.

Lauderdale decided that it was in the best interest of patient safety that Berry not practice at the hospital. Dennis and his three partners at LAA fired Berry and signed his termination letter on March 27, 2001, which explained that he was fired “for cause” : [You have been fired for cause because] 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 our patients at significant risk... Please consider your termination effective March 13, 2001.

Despite recognizing Berry’s drug problem and the danger he posed to patients, neither Dennis nor Lauderdale reported Berry’s impairment to LMC’s Medical Executive Committee, noting only that Berry was “no longer employed by LAA” and ordering the chief nursing officer to notify the administration in the event of Berry’s return.

Neither one reported Berry’s impairment to LMC’s Board of Trustees and no one on behalf of LMC reported Berry’s impairment or discipline to the Louisiana Board of Medical Examiners or to 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 Berry and the investigation.

After leaving LAA and LMC, Berry briefly obtained work as a locum tenens (traveling physician) at a hospital in Shreveport, La. In October 2001 he applied through Staff Care, a leading staffing firm, for locum tenens privileges at Kadlec Medical Center in Washington State. After receiving his application, Kadlec began its credentialing process, including a review of referral letters from LAA and Lakeview Medical.

LAA’s Preau and Dennis, two months after firing Berry for his on-the-job drug use, submitted referral letters for Berry to Staff Care, with the intention that they be provided to future employers. The letter from Dennis stated that he had worked with Berry for four years, that he was an excellent clinician and that he would be an asset to any anesthesia service. Preau’s letter said that he worked with Berry at LMC and that he recommended him highly as an anesthesiologist.

On Oct. 17, 2001, Kadlec sent LMC a request for credentialing information about Berry. The request included a detailed confidential questionnaire, a delineation of privileges and a signed consent for release of information.

The interrogatories on the questionnaire asked whether “(Berry) has been subject to any disciplinary action;” whether “(Berry has) the ability (heath status) to perform the privileges requested;” whether “(Berry has]) shown any signs of behavior/personality problems or impairments;” and whether Berry has satisfactory “judgment.”

Nine days later, LMC responded to the requests for credentialing information about 14 different physicians. In 13 cases, it responded fully to the request completing all the information requested by the healthcare providers.

The 14th request, from Kadlec concerning Berry, was handled differently. Instead of completing the multi-part forms, LMC staff drafted a short letter, which provided:

This letter is written in response to your inquiry regarding [Berry]. Due to the large volume of inquiries received in this office, the following information is provided:

“Our records indicated that Dr. Robert L. Berry was on the Active Medical Staff of Lakeview Regional Medical Center in the field of Anesthesiology from March 4, 1997, through Sept. 4, 2001. If I can be of further assistance, you may contact me at 504-867-4076.”

The letter did not disclose LAA’s termination of Berry, his on-duty drug use, the investigation into Berry’s undocumented and suspicious withdrawals of Demerol that “violated the standard of care,” or any other negative information. The employee who drafted the letter said at trial that she just followed a form letter, which is one of many that LMC used.

After Kadlec hired Berry, several nurses noted he appeared sick and subject to mood swings. While under the influence of Demerol at Kadlec, Berry administered anesthesia to a patient during a routine procedure and the patient is now in a permanent vegetative state, near death.

The patient’s family sued Berry and Kadlec, whose insurers settled the litigation for more than $8 million. In turn, Kadlec and Berry’s insurers sued LAA, its shareholders and LMC in Louisiana federal district court for intentional and negligent misrepresentation and general negligence, claiming that their failure to disclose Berry’s addiction and termination by LAA, as well as his ban by LMC, resulted in Berry’s hiring by Kadlec and the insurers’ resultant liability.

The Fifth Circuit Court of Appeals in New Orleans held that, after choosing to write the referral letters, the defendants assumed a duty not to make affirmative misrepresentations in the letters. The court held that LAA breached this duty, but that LMC had not. The court also held that neither defendant had an affirmative duty of disclosure where no special relationship existed between them and Kadlec and they had no pecuniary interest in the transaction (i.e. had they not provided any references to Kadlec they would not have been liable).

Thus, LMC was absolved of liability, but LAA was found liable for providing misleading information.

Construction employers, especially industrial contractors, engage in extensive drug testing and gather much information about their employees. Construction employers also become knowledgeable about employees’ safety practices, as well as information about the ethical habits of their employees.

This information may predict their employability by future employers. Construction employers should carefully consider these issues before providing positive or glowing recommendations to future employers. The Kadlec case neither makes adverse disclosures safer (because of the risk of defamation lawsuits), nor does it suggest that non-disclosure is the safest course in all cases (particularly where there is a fiduciary or confidential relationship with the requesting party or where the providing party has a pecuniary interest in the transaction, all of which may give rise to an affirmative duty to disclose).

Thus, if one contractor provides a reference to another contractor with whom it had a business relationship or on whose board its owner serves, a duty to disclose may arise.