Physician Failure to Obtain Medical Staff Membership Breaches Contract
The United States District Court of the Southern District of Indiana awarded summary judgment to a hospital claiming damages based upon a physician's breach of the employment contract. Joseph Richardson, M.D. , an anesthesiologist, signed an employment contract with Knox County Hospital d/b/a Good Samaritan Hospital ("Hospital"), which included a $15,000 advance. The contract required that Dr. Richardson obtain medical staff membership and clinical privileges at the hospital, but Dr. Richardson was unable to do so. The hospital requested repayment of the advance, but Dr. Richardson refused.
The outcome of the case is based upon their credentialing decision. The medical staff voted to reject Dr. Richardson's application based upon the omission of information from his application regarding residency program that he had not completed. The hospital's independent inquiries revealed that Dr. Richardson had received unsatisfactory grades from the program; Dr. Richardson attempted to explain that the omission was inadvertent. The hospital advised Dr. Richardson that it would reject his application, but that he had the option of withdrawing the application so that there would be no report to the National Practitioner's Data Bank. Dr. Richardson withdrew his application.
The hospital's breach of contract claim is based upon Dr. Richardson's failure to fulfill a condition of the employment contract, i.e. medical staff membership. Dr. Richardson's defense was that the hospital acted in bad faith by refusing to grant medical staff privileges and that he cannot be held responsible for the performance of a condition when the responsibility for that condition lies with the hospital and the hospital had a duty of acting in good faith.
The court rejected the defense and held that the hospital was responsible for the performance of the condition, but that it acted in good faith in denying medical staff membership. The court granted summary judgment against Dr. Richardson on the breach of contract claim. A copy of the opinion is attached below.