A Washington hospital and professional liability insurer successfully sued a Louisiana hospital and two physicians for failure to disclose in their letters of recommendation that an anesthesiologist had been asked to leave the hospital and his practice because of his narcotic addiction.  After receiving glowing letters of recommendation from the Louisiana hospital and physicians, the Washington hospital hired the anesthesiologist.  Subsequently the hospital and the anesthesiologist were named as defendants in a malpractice suit brought by the family of a young woman who had suffered severe brain damage during anesthesia.  During the malpractice suit, the woman’s family discovered that the anesthesiologist had been asked to leave his former position in Louisiana because he had been diverting Demerol and had been found to be impaired while on the job.   Because no formal action was taken against the anesthesiologist for his actions in Louisiana, his conduct was not reported to the National Physician Data Bank.

       After settling this malpractice action for $8.5 million, the Washington hospital and its professional liability insurer sued the Louisiana hospital and the two doctors who had provided favorable recommendations for the anesthesiologist.   The Washington jury awarded damages in the amount of $4 million for fraud and negligent misrepresentation.  This is the first reported case in which a hospital considering the application of a physician for staff privileges has successfully sued another hospital for failure to disclose adverse information about the physician.  This case sends an important message to hospitals and physicians about the necessity for truthfulness in response to requests for information by potential healthcare employers and will impact physician and hospital conduct in the future.