About the Case:
Kadlec Medical Center vs. Lakeview Anesthesia Associates (May 19, 2005)

The defendants in the case, Lakeview Anesthesia Associates and Lakeview Regional Medical Center (LRMC) were found by the federal district court to have intentionally omitted material adverse information about a physician when responding to Kadlec Medical Center’s credentialing inquiry. The court ruled that a hospital owed a duty not to misrepresent directly, or by omission of “material” information, to an inquiring hospital. A jury trial awarded multi-million dollars in damages to Kadlec.  You can read more about the case at these links:

www.mhalaw.com/mha/newsroom/legalAlerts/HealthCare09_06.pdf
www.msspnexus.com/documents/Kadlec05.pdf

Without a doubt, this case will incur greater legal exposure for hospitals and additional workload for MSSPs. Clearly, the industry will need to make some drastic changes to improve the quality of communication with their peers, but several challenges remain for medical staff departments:

1. Fear of legal risks result in inadequate information on responses
2. Lack of written policies and procedures on how to respond to requests
3. Other hospitals’ forms are all different with variations in questions
4. Medical staff department usually not qualified to answer competency questions
5. Medical Director does not have the time to respond to all the questions
6. Understaffed and under budgeted

Some have misinterpreted the Kadlec case by identifying the “template” letter as the culprit.  In reality, evidence showed that it was the intent to mislead by withholding information as the reason the ruling went against the defendants. The “smoking gun” which supported such evidence was the finding of letters sent to other hospitals did not contain the same content as the letter sent to Kadlec. This emphasizes the need for medical staff departments to implement processes that ensures content-consistent responses. 

Another important point to remember is that under the federal Health Care Quality Improvement Act (HCQIA) liability is limited for peer review issues. Under this law, a hospital is immune from damages for providing information unless it knowingly provides false information. However, some cases have established that this law will not protect a hospital if bylaws / policies and procedures are not followed (Estate of Blume vs. Marian Health Center, 03/14/2007), or if they don’t exist at all.

The Kadlec case has confirmed the need for documented policies and procedures when it comes to communications with other health care organizations about practitioners’ quality and competency. Based on our estimates, over 75% of hospitals in this country do not have any written Policies and Procedures specifically covering the verification of practitioner hospital affiliation.