Responding to allegations of physician misbehavior is a challenge. A recent court case holds lessons for what can go wrong when a hospital does not follow best practices or even its own internal policies.

An Indiana jury awarded an OB/GYN $4.75 million in damages from a hospital and medical group in January 2020, responding to claims they treated the physician unfairly after a nurse practitioner accused the physician of smelling of alcohol while on duty.

During a four-day trial, the physician’s attorneys argued the nurse practitioner’s claim was unproven and the hospital failed to conduct an adequate peer review investigation. The doctor suffered lost compensation, damage to her professional reputation, other expenses, and emotional distress, she claimed.

Testimony during the trial indicated the claim originated on a night shift in 2017. The nurse practitioner reported to hospital administrators on Dec. 12 she had smelled alcohol on the doctor’s breath the night before.

The doctor alleged she was not tested for alcohol at that time. Hospital policy requires that in such circumstances, the doctor be assessed immediately, relieved of duty, and undergo blood testing at an external facility, according to trial testimony.

The doctor was not told of the allegation against her until Dec. 13, at which point she questioned why the hospital did not follow its own substance abuse protocol.

Nurse Practitioner Reports

The nurse practitioner first reported the allegation to her supervisor by email, and the supervisor contacted the hospital’s chief medical officer. That person met with other administrators and physicians. In this meeting, they discussed previous concerns about drinking by the physician. Other physicians in her practice group had suggested in 2015 that she enter an assistance program, the jury heard.

The physician did not enter the assistance program but changed her drinking habits and began seeing a therapist, which yielded improvements in her workplace performance, according to testimony. There was no other documentation of concerns about the doctor’s drinking or performance after 2015.

The trial revealed the hospital conducted a preliminary review of the allegation through its peer review process before turning it over to the physician’s medical group, which then suspended the doctor with partial pay until she underwent an evaluation for alcohol abuse.

The state medical association referred the physician to an addiction treatment center, where she was diagnosed with alcohol use disorder. To retain her medical license, she was required to enter a treatment program and sign a five-year monitoring contract with the state medical association as a condition of her employment, according to the lawsuit.

The monitoring contract requires the physician undergo a breathalyzer test four times a day for the first year, followed by three times a day for the next four years. In addition, she must undergo random drug screenings; for the first year, she was required to attend four Alcoholics Anonymous meetings a week.

Claims No Due Process

The physician’s lawsuit alleged the hospital and practice group did not offer her a hearing before a peer review committee, provide any evidence against her, or allow her to respond to the claim. Like many state statutes, Indiana law requires a physician under investigation be permitted to see peer review committee records and be allowed to appear before the peer review committee. The physician’s rebuttal has to be included in the record before any decision is made by the committee.

The physician sued the hospital and her medical group, plus the nurse practitioner who made the initial report, claiming fraud, defamation, tortious interference with employment, and negligent misrepresentation. The court dismissed the nurse practitioner from the lawsuit, but the jury awarded the physician $2 million for defamation, $2 million for fraud and constructive fraud, $500,000 for tortious interference with an employer, and $250,000 for negligent misrepresentation.

An attorney representing the physician issued a statement saying she was satisfied with the verdict. A spokesman for the hospital’s parent company said it is considering an appeal. The physician is still employed by the medical group and required to follow the conditions of the state medical association’s monitoring contract.

Lessons on Due Process

The case raises serious questions about due process rights for physicians, says Heather Macre, JD, director with Fennemore Craig in Phoenix. Most hospitals and physician groups have procedures in place for this type of situation. When the need arises, those procedures must be followed to the letter, she says.

“The practice or hospital will have a code of conduct or bylaws or may spell out rules in an employment agreement. In larger institutions or practices, I typically see some sort of reporting and review process for complaints. Often, you can appeal a decision, particularly one that involves termination,” she says. “For a serious allegation like intoxication at work, you can suspend an employee immediately, but after that there is usually some due process. The due process is intended to weed out cases like this one that are false reports.”

However, Macre notes administrators cannot avoid their obligation to report allegations of misconduct or substance abuse to state regulators.

It is vital for leaders to follow their own internal policies for investigating such claims and provide due process to the physician while fulfilling the obligation to report, she says.

“This is something of a catch-22 because medical directors and other professionals are statutorily required to report suspected unprofessional conduct to the state medical board. In other words, beyond the employment context, if you suspect a physician is intoxicated on the job, you have to report that conduct to the board, or you are guilty of unprofessional conduct,” Macre says. “Fortunately, the Arizona reporting statute specifically states that you are immune from defamation for good faith reporting.”

Make Policy Practical

When implementing personal conduct policies, patient safety always is paramount, but hospitals also need to make a policy that can be practically followed, says Callan G. Stein, JD, partner with Pepper Hamilton in Boston. In this case, the substance abuse policy required the hospital to perform an “immediate assessment” of a physician any time there is a reasonable suspicion the physician is under the influence of alcohol or drugs, he notes. Further, the policy required the hospital to “relieve the physician of duty” and “request that the physician submit to immediate testing at an external facility,” he says.

In this case, the suspicion was raised during an evening shift, and the hospital could not perform an immediate assessment, Stein says. He suspects it is likely because the origination on a night shift made it impractical or impossible to follow proper protocols.

The case illustrates the importance of keeping resources available to fulfill those policy obligations at all hours. If that is not possible, avoid creating policy stipulations with which the facility cannot comply in some circumstances, Stein shares.

Also, Stein says to remember the basics. According to the complaint in this case, the hospital suspended the plaintiff indefinitely before ever giving her an opportunity to tell her side of the story.

“Often times, physician disciplinary processes are regimented and laid out in detail through medical staff policies. Having detailed policies is a best practice for hospitals and medical staffs. There is no requirement that those processes confer the same level of due process on physicians as they would enjoy in a judicial proceeding,” Stein explains. “Nonetheless, it should be a basic tenet of any process that a physician be given the opportunity to be heard, either through a written statement or an in-person interview, before his or her privileges are suspended. Taking disciplinary action against a physician prior to hearing from them makes the hospital look unreasonable and may contribute to a physician deciding to pursue litigation.”

Consider the Source

Always consider the source of a physician complaint, he says. The court in this case ultimately determined the nurse’s intracompany statement that she smelled alcohol on the physician was subject to a qualified privilege, Stein notes.

Ordinarily, this would result in summary judgment on the plaintiff’s defamation claim. However, the court declined to dismiss the defamation claim because there was evidence the nurse in question had some prior conflict with the physician, Stein says.

“This, the court found, created a genuine question of fact as to whether the statement was motivated by ill will, which would negate the qualified privilege,” Stein says. “It does not appear that the hospital considered this possibility when going through its investigation process. The possibility of even the appearance of ill will between an accuser and an accused, which legitimately may not be known to the hospital or its administrators, is another reason why it is so important for a hospital to hear from the accused physician before taking action.”

In addition, after the nurse allegedly smelled the alcohol, the physician still performed a medical procedure on a pregnant woman with the nurse’s knowledge, Stein notes. This was another flag the court relied on to infer the possibility the allegation was motivated by ill will, he says.

“Given this fact pattern, it is fairly easy to go back and play Monday morning quarterback and identify things the hospital should have done differently. But in reality, this case is a good example of how difficult these cases can be for hospitals and administrators,” Stein says. “There are a lot of people who have information. To get a complete and accurate picture of what happened, the hospital really needs to get that information from all of those people so it can make an informed decision. This underscores the importance of a thorough and organized internal investigation. It highlights some of the bad things that can happen when one is not conducted.”

Stein acknowledges it is easy to second guess a hospital or medical group when it deviates from its policies and peer review process. But there is significant risk in doing so.

“It is understandable that an allegation this serious would elicit the type of response it did from the hospital,” Stein says. “But this case is a perfect example of why it is so important to remain disciplined and follow your policies.”

Follow Your Policy

The case is a good lesson in how important it is to follow designated policies and procedures, says Juliette Gust, CFE, an expert in workplace misconduct reporting and founder and president of Ethics Suite, an online workplace misconduct and fraud reporting channel. She has led more than 1,500 investigations spanning 75 countries and has advised on close to 10,000 whistleblower reports.

“Any deviation from the stated policies and procedures is going to invite scrutiny. Why would they not follow their procedures?” she asks. “The other notable question is why she agreed to a rehabilitation program. The only thing I can surmise is that perhaps her history led them to deviate from protocol, but all investigations should be handled the same way to the extent that is possible.”

When it is necessary to deviate from your policies and procedures in any way, possibly because of the particular circumstances of an incident or investigation, it is crucial to document the cause of the deviation, Gust says. It also is important to document who approved the deviation, she adds.

Carol Michel, JD, partner with Weinberg Wheeler Hudgins Gunn & Dial in Atlanta, agrees with this point. She notes plaintiffs’ attorneys relish the opportunity to use your own documents against you. The hospital’s apparent failure to let the accused physician defend herself must have been an important factor in the jury’s decision, Michel says.

“I always tell hospitals to treat this physician the way you would want to be treated in a similar circumstance,” Michel says. “Give that physician the opportunity to come before whatever the decision-making group is and defend themselves, to make their case before any decision is made.”

Create Formal Protocol

Any healthcare organization should institute formal protocols for handling such allegations against physicians. Leaders must consider all relevant state laws or federal requirements in addition to medical staff bylaws.

“If there is not a chief compliance officer who will address that aspect, there must be some sort of committee that will handle all the laws and regulations relevant to all the things that might be investigated,” Gust says. “You can’t cover every single thing that might happen, but you can cover all the things that could possibly be alleged. Substance abuse is certainly near the top of the list and is important because of the likelihood of harm.”

The protocol should include who is responsible for the intake of allegations, who will conduct an investigation, and who will review the results and make recommendations, Gust offers.

“Consistent discipline also is important in this environment. Inconsistency will draw scrutiny,” she says. “Why did one physician get a warning or a conversation about the behavior but another got terminated? There may be valid reasons for the discrepancy, but that should be well documented.”

Gust also encourages internal hotlines and other methods for reporting impaired physicians or other concerns. Even when a hotline exists, she says peer review professionals often do not know where the calls go or what happens to the information after it is reported. Find out and make sure the hotline is effective, Gust adds.

SOURCES

  • Juliette Gust, CFE, Founder and President, Ethics Suite, Scottsdale, AZ. Phone: (844) 469-6366.
  • Heather Macre, JD, Director, Fennemore Craig, Phoenix. Phone: (602) 916-5396. Email: hmacre@fclaw.com.
  • Carol Michel, JD, Partner, Weinberg Wheeler Hudgins Gunn & Dial, Atlanta. Phone: (404) 832-9510. Email: cmichel@wwhgd.com.
  • Callan G. Stein, JD, Partner, Pepper Hamilton, Boston. Phone: (617) 204-5103. Email: steinc@pepperlaw.com.