Chapter N: Medical Staff Privileges and Peer Review The LAA S The Court Decides Berry-an kev Kadlec Medical Center v. Lakeview Anesthesia Associates harehold 527 F.3d 412 (5th Cir. 2008) nu Reavley, Circuit Judge efendants dec Medical Center and its insurer, West- me er Professional Insurance Company, filed Preau, Mark Dennis, David Baidone, and Allan otics. In re his diversity action in Louisiana district Parr at LAA, From November 2090 until his ero court against Louisiana Anesthesia Assori- termination on March 13. 2001. Dr. Berry was ants and shes (LAA), its shareholders, and Lakeview a shareholder ol LAA, the exclusive provider Regional Medical Center (Lakeview Medical). of aristhesia services, to Lakeview Medical (a The LAS shareholders worked with Dr. Robert Louisiana hospital). ployer, Army-an anesthesiologist and loner LAA In November 2000, a small management shareholder--at Lakeview Medical, where the team at Lakeview Medical Investigated Or. he Berry's defendants discovered his on-duly use of nar- Berry after nurses expressed concern about his undocumented and suspicious withdraw- ashes. In referral letters written by the defen- davis and relied on by Kadlec, his future als of Demerol. [ The findings were discussed col with Dr, Berry's LAA partners, who confronted chnicallys amplayer, the defendants did not disclose him with the evidence, but his drug-related In Barry's drug use. (Note: Do Berry was not ed. problems continued and his performance review M jsamically an employee of either Kadlec or deteriorated. In March 2001, Lakeview CEO issevier Medical, although he did have stoff Max Louderdate). . . decided that it was in era alleges at both facilities. In common with the best interest of patient safety that Or. vileges a mer arpeople, some judges have a difficult Berry not practice at the hospital. Dr. Dennis love understanding the concept of privileges hte and his three partners at LAA fired Or. Berry st laypeo wthe healthcare context.! and signed his termination letter on March White under the influence of Demerol at 27, 2001, which explained that he was fired pri Faster, Dr. Berry's negligent performance "for cause": unders led to the near-death of a patient, resulting [You have been fired for cause because] re in s lawsuit against Kadlec. Plaintiffs claim you have reported to work in an impaired e health here that the defendants' misleading referral leaders were a legal cause of plaintiffs' finan- physical, mental, and emotional state. d While un Sa injury, Le., having to pay over $8 million Your impaired condition has prevented I: defend and settle the lawsuit. The jury you from properly performing your bund in favor of the plaintiffs and judgment duties and puts our patients at sig- ec, Dr. B Billowed. We reverse the judgment against nificant risk. . . . [Please consider your Lakeview Medical, vacate the remainder of termination effective March 13, 2001. the ne I the judgment, and remand. At Lakeview Medical, Lauderdale ordered the Chief Nursing Officer to notify the admin- I. Factual Background istration if Dr. Berry returned. Ive awsuit a Or. Berry was a licensed anesthesiologist in Despite recognizing Dr. Berry's drug Louisiana and practiced with Drs. William problem and the danger he posed to e (continued) X gal cause of plaintiffs' finan- Your impThe Law of Re perform the privileges requested," whether personality problems or impairm November patients, neither Dr. Dennis nor Lauderdale "(Dr. Berry has] shown any signs of behavior pairments," and eral of his s reported Dr. Berry's impairment for disci- pline] to the hospital's Medical Executive whether Dr. Berry has satisfactory "judge effects, and Committee, .. . to Lakeview Medical's Board ment" [sic]. Nine days later. Lakeview Medical procedure. Kimber of Trustees, . . . to the Louisiana Board of Medical Examiners or to the National Practi- inPonded to the requests To differs ded ing information about fourteen different patient th should ha tioner's Data Bank. . . . After leaving LAA and Lakeview Medical, physicians. In thirteen cases, it responded tubal lig Du. Berry briefly obtained work as a locum fully and complete npletely to the request, Filling recovery renens (traveling physician) at a hospital in out forms with all the information asked for fingerna Shreveport, Louisiana. In October zoo1, he by the requesting health care provider. The ing. Dr. applied through Staff Care, a leading locum fourteenth request, from Kadlec concerning is now tenens staffing firm, for locum tenens privi- Berry, was handled differently. Instead of Jon leges at Kadlec Medical Center in Washington completing the multi-part forms, Lakeview in Wa State. After receiving his application, Kadlec Medical staff drafted a short letter. the chi began its credentialing process. Kadlec entirety, it read: insur examined a variety of materials, include ing referral letters from LAA and Lakeview This letter is written in response to your [Wes milli Medical. inquiry regarding (Dr. Berry]. Due to the LAA's Dr. Preau and Dr. Dennis, two large volume of inquiries received in months after firing Dr. Berry for his on-the- this office, the following information is 141. job drug use, submitted referral letters for provided. Our records indicate that Dr. A. Dr. Berry to Staff Care, with the intention that they be provided to future employers. Robert L. Berry was on the Active Medi- The letter from Dr. Dennis stated that he had cal Staff of Lakeview Regional Medical worked with Dr. Berry for four years, that he was an excellent clinician, and that he would Center in the field of Anesthesiology be an asset to any anesthesia service. Dr. from March 04, 1997 through Septem- ber 04, 2001. Preau's letter said that he worked with Berry at Lakeview Medical and that he recom- If I can be of further assistance, mended him highly as an anesthesiologist. you may contact me at (504) 867-4076. Dr. Preau's and Dr. Dennis's letters were sub- The letter did not disclose LAA's termina- mitted on June 3, 2001, only sixty-eight days after they fired him for using narcotics while tion of Dr. Berry; his on-duty drug use; the on-duty and stating in his termination letter investigation into Dr. Berry's undocumented that Dr. Berry's behavior put "patients at sig- and suspicious withdrawals of Demerol that nificant risk." "violated the standard of care"; or any other On October 17, 2001, Kadlec sent Lake- negative information. The employee who view Medical a request for credentialing drafted the letter said at trial that she just followed a form letter, which is one of many information about Berry. The request included that Lakeview Medical used. a detailed confidential questionnaire, a delin- Kadlec then credentialed Dr. Berry, and he eation of privileges, and a signed consent for began working there. After working at Kadlec release of information. The interrogatories on without incident for a number of months, [Dr. the questionnaire asked whether "[Dr. Berry] Berry's performance began to deteriorate has been subject to any disciplinary action," again in November 2002. He seemed sick if "[ Dr. Berry has] the ability (health status) to on occasion and exhibited mood swings. OnIIII November 12, he again appeared sick, sev- word of his surgery patients suffered adverse The defendants argue that any represen- jets, and he almost passed out during one tations in, or omissions from, the referral let- lers cannot establish liability. We begin our kimberley Jones was Dr. Berry's fifth analysis below by holding that after choos- patient that morning. She was in for what ing to write referral letters, the defendants should have been a routine, fifteen minute assumed a duty not to make affirmative mis- tubal ligation. When they moved her into the representations in the letters. We next ana- Ipcovery room, one nurse noticed that her lyze whether the letters were misleading, and fingernails were blue, and she was not breath- we conclude that the LAA defendants' letters ing. Dr. Berry failed to resuscitate her, and she were misleading, but the letter from Lakeview is now in a permanent vegetative state. . . . Medical was not. We also examine whether jones's family sued Dr. Berry and Kadlec the defendants had an affirmative duty to Washington. Dr. Berry's insurer settled disclose negative information about Dr. Berry the claim against him. . . . Western, Kadlec's in their referral letters, and we conclude that insurer, settled the claim against Kadlec. there was not an affirmative duty to disclose. Western's payout was approximately $8.25 Based on these holdings, Lakeview Medical did not breach any duty owed to Kadlec, and million./ therefore the judgment against it is reversed. Finally, we examine other challenges to the LAA defendants' liability, and we conclude Ill. Discussion that they are without merit. A. The Intentional and Negligent Misrepre 1. The Affirmative Misrepresentations. The sentation Claims defendants owed a duty to Kadlec to avoid The plaintiffs allege that the defendants affirmative misrepresentations in the refer- committed two forts: intentional misrep- ral letters. In Louisiana, "[allthough a party resentation and negligent misrepresenta- may keep absolute silence and violate no tion. The elements of a claim for intentional rule of law or equity . . . if he volunteers to misrepresentation in Louisiana are: (1) a mis speak and to convey information which may representation of a material fact; (2) made influence the conduct of the other party, he with intent to deceive; and (3) causing is bound to [disclose] the whole truth." In justifiable reliance with resultant injury. To negligent misrepresentation cases, Louisiana establish a claim for intentional misrepre courts have held that even when there is no sentation when it is by silence or inaction, initial duty to disclose information, "once [a plaintiffs also must show that the defendant party] volunteer s] information, it assume[s] owed a duty to the plaintiff to disclose the a duty to insure [sic] that the information information. To make out a negligent mis- volunteered [is] correct." representation claim in Louisiana: (1) there Consistent with these cases, the defen- must be a legal duty on the part of the defen- dants had a legal duty not to make affirma- dant to supply correct information; (2) there tive misrepresentations in their referral must be a breach of that duty, which can letters. . . . Here, defendants were recom- occur by omission as well as by affirmative mending an anesthesiologist, who held misrepresentation; and (3) the breach must the lives of patients in his hands every day. have caused damages to the plaintiff based Policy considerations dictate that the defen- on the plaintiff's reasonable reliance on the dants had a duty to avoid misrepresenta- tions in their referral letters if they misled ontinued)statements in the fcontinued from previous page) ers, the defen. dants had an affirmative duty to disclose amon plaintiffs into thinking that Dr. Berry was responsib an "excellent" anesthesiologist, when they had information that he was a drug addict. [The court proceeds to analyze this issue Indeed, if defendants' statements created a d concludes, despite "compelling policy jury's allo arguments," that Louisiana courts would nis 20%%; 25%; Kad misapprehension about Dr. Berry's suitabil ity to work as an anesthesiologist, then by not impose on the defendants an affirmative have affir "volunteerting] to speak and to convey infor- duty to disclose possible impairments. Such against have rev mation which . . . influenceld] the conduct of a duty would exist , according to the court's Medical [Kadlec], [they were] bound to [ disclose] the whole truth." In other words, if they created a reading of Louisiana law, only if there were must b misapprehension about Dr. Berry due to their a "special relationship" be p" between the parties That relationship apparently would need to corres own statements, they incurred a duty to dis- be contractual or fiduciary in nature. ] agains close information about his drug use and for- cause firing to complete the whole picture. 3. Legal Cause Disc .. . The letter from Dr. Preau stated that . . . Dr. Berry was an "excellent anesthesiologist" The LAA defendants . . . argue that Kadier. and that he "recommend[ed] him highly." Dr. had multiple warning signs . . . and had it Dennis's letter said that Dr. Berry was *an excellent physician" who "he is sure will be responded with an investigation, plaintiffs' an asset to [ his future employer's] anesthesia injuries would have been avoided. . . . The service." These letters are false on their face jury . . . concluded that the LAA defendants negligently and intention tionally misled Kadlec and materially misleading. . . . The question as to whether Lakeview about Dr. Berry's drug addiction. By inter- Medical's letter was misleading is more diffi- tionally covering up Dr. Berry's drug addiction cult. The letter does not comment on Dr. Ber- in communications with a future employer, ry's proficiency as an anesthesiologist, and they should have foreseen that the future it does not recommend him to Kadlec. . . . employer might miss the warning signs of ur. Wjhatever the real reason that Lakeview Berry's addiction. This was within the scope Medical did not respond in full to Kadlec's of the risk they took. inquiry, Kadlec did not present evidence that Indeed, both plaintiffs' and defendants' this could have affirmatively misled it into witnesses agreed at trial that narcotics addict thinking that Dr. Berry had an uncheckered tion is a disease, that addicts try to hide history at Lakeview Medical. Kadlec also says that the letter was mis- their disease from their co-workers, and that leading because it erroneously reported that particularly in the case of narcotics-addicted Dr. Berry was on Lakeview Medical's active anesthesiologists, for whom livelihood and medical staff until September 4, 2001. [The drug supply are in the same place, col- court finds that although Dr. Berry did not leagues may be the last to know about their return to work at Lakeview after his March addiction and impairment. This is not a case 13 termination, technically he was on the where a future tortious act is so unforesee. medical staff until he formally resigned on October 1,] able that it should relieve the earlier tortfea- sor of liability. ... In sum, we hold that the letters from the LAA defendants were affirmatively mislead- E. ing, but the letter from Lakeview Medical was Summa Ond Rend Instructions not. . . . We now examine the thenmitt-. The district court entered judgment Land FaultChapter 8: Medical Staff Privileges and Peer Review 345 among the entities it found to be legally this is unnecessary, if under Louisiana law responsible for the plaintiffs' injuries. The we can simply compare the fault percentages jury's allocation was as follows: Dr. Den- of the remaining parties. But Louisiana law nis 20%; Dr. Preau 5%; Lakeview Medical might also require a reapportionment of fault 25%; Kadlec 17%; and Dr. Berry 33%. We and, therefore, a fresh determination of dam- have affirmed the liability finding of the jury ages. Because there was no briefing on this against the LAA defendants. But now that we issue, we vacate the judgment against the have reversed the judgment against Lakeview LAA defendants and remand the case to the Medical, the question arises whether there district court to determine what, if anything, must be a reapportionment of fault with a needs to be redone on the apportionment and corresponding change to damages assessed damages issues, and then to enter judgment against the LAA defendants. It is possible that against the LAA defendants accordingly