Doctor sues hospital over misconduct report

A Virginia doctor says his hospital was too quick to report him to state regulators when a patient made questionable allegations of misconduct.

Now, the doctor claims in a $500,000 lawsuit that he is still trying to shake the damage to his reputation from an unfounded accusation.

The hospital contends it had a legal duty to report the doctor so state regulators could perform an investigation. The hospital’s attorney says it will vigorously defend its actions.

The lawsuit raises questions about the extent to which hospitals must investigate allegations of serious misconduct before making a report to the state Board of Medicine.

Patient’s allegations

The troubling allegations against internist Richard H. Catlett III came from a long-time patient.

The Winchester physician had been treating “Patient Doe,” as she is labeled in the lawsuit, for more than a decade. Doe had serious, chronic and debilitating medical issues, the lawsuit said.

Because Doe did not always have the means to pay for all of Catlett’s services, he sometimes provided free or discounted items and services, he claimed.

“Far from being inappropriate, this was a simple expression of kindness,” the suit said.

During treatment for a serious illness in early 2016, however, the patient reportedly told WMC staff that Catlett had exchanged medical services for sexual favors. She said the two had carried on a sexual relationship for about five years.

“These statements were, of course, utterly false and defamatory,” Catlett said in his lawsuit. “Patient Doe was obviously experiencing psychic distress and delusional thinking brought about by her condition,” the suit said.

Doe reportedly had been admitted to the hospital with sepsis and lactic acidosis and had been given “a cocktail of powerful medications to address her sepsis.”

Not only did her medical condition present a risk of delusional thinking and hallucinations, but her medications came with possible side effects including psychic derangements and “frank psychotic manifestations,” Catlett said.

Prior conflict with hospital

Catlett is board certified in both internal medicine and “internal medicine: pulmonary disease.” He has 28 years in active clinical practice with no reports of disciplinary action or paid claims, according to state records.

Catlett has had staff privileges at Winchester Medical Center for 25 years, although he acknowledged in his suit that “he has not always been popular with hospital management.”

Catlett said he pressed for higher pay for intensive care physicians in 2008 and bucked the hospital on the need for a competing ambulatory surgical center in 2014.

WMC is owned by the Winchester-based Valley Health System, a non-for-profit health system that operates six hospitals, four in Virginia and two in West Virginia.

Catlett – represented by Timothy J. McEvoy of Fairfax – filed suit Dec. 19 in Winchester Circuit Court naming as defendants WMC, Valley Health and Dr. Nicolas Restrepo, the hospital’s vice-president of medical affairs.

Investigation questioned

Catlett says he was notified on March 3 to attend a meeting with Restrepo a week later. He said he had no warning of the subject.

At the March 10 meeting, he was told of the patient’s allegations and informed that a “forensics nurse” had found the accusations “consistent and credible,” the suit said.

Restrepo allegedly told Catlett that a report to the Department of Health Professions was “mandatory” and recommended that Catlett report himself.

At the meeting, Catlett said nothing other than to deny the allegations, his lawsuit said. He said he was given no time to reflect or to seek legal advice.

Catlett said the hospital reported the allegations against him a week after the meeting. The doctor said the hospital ignored its duties to perform a “reasonable investigation” and to report only if it found a “reasonable probability” of misconduct.

A “legitimate effort” to analyze the evidence would have discredited the claims of Patient Doe, Catlett said.

Catlett also claimed that the hospital failed to provide him a chance to review and respond to the report before it was sent.

“It was, in lay terms, a complete and total ‘CYA exercise’ that had no regard for the rights or reputation of Dr. Catlett,” the doctor’s lawsuit said.

In fact, it appeared that the hospital did not really believe the allegations, the suit claimed. Catlett’s hospital privileges were not suspended, and he was not reported to the police, the suit said.

Restrepo did, however, require a nurse chaperone for Catlett’s encounters with female patients, the suit claimed.

On Aug. 15, the VDHP determined there was no evidence to warrant any discipline against Catlett, the doctor said. However, the state regulators did not officially close his file, providing no vindication for Catlett, he said.

Catlett sued Valley Health, WMC and Restrepo claiming they acted in bad faith and with personal malice toward Catlett. The doctor demanded $500,000 in damages.

The hospital has not yet had to file a response, but a spokesperson said the hospital was justified in its actions.

“We believe after our reasonable investigation that we had a legal duty to report the concerns that were brought to our attention by a patient so they could be further investigated by the Department. We followed guidelines established by the Department and we intend to defend our actions as they were taken in the best interest of our patients,” said MWC public relations manager Carol S. Weare.

Attorney J. Buckley Warden IV of Richmond said he is representing all three defendants.

“The hospital complied with the law and will vigorously defend the suit,” Warden said.

Duty to report

Lawyers familiar with providers’ duties under state law say there is no question that hospitals have an obligation to report “unethical, fraudulent or unprofessional conduct” as defined in the statutes and regulations.

Virginia Code § 54.1-2400.6 requires hospital officials to report – after “reasonable investigation and consultation as needed” – that there is a “reasonable probability” of misconduct. The report is required within 30 days of the date that a hospital office determines “reasonable probability.”

“The question is whether you have reasonable probability – that’s where the rubber hits the road,” said attorney Michael L. Goodman of Richmond. Goodman is not involved in the Catlett litigation.

Goodman and his colleague Eileen M. Talamante represent healthcare providers, including hospitals, in regulatory board matters. Hospital officials take the reporting obligation seriously, they said in a Jan. 9 interview.

They point to the potential $25,000 civil penalty for failing to make a proper report.

“Everybody runs scared,” Goodman said.

It’s not clear that an extensive investigation is required for a report, Telemante said.

The “reasonable probability” standard means a “likelihood greater than a mere possibility,” according to a guidance document from the VDHP.

“The statute does not presume, nor does it entitle, an institution to undertake an extensive or protracted investigation … to determine whether a ‘reasonable probability’ exists that a health professional engaged in misconduct,” the guidance document says.

However, the official guidance says a peer review process could be justified to determine reasonable probability of misconduct.

“They don’t give you a road map on what the internal investigation is supposed to entail and they don’t tell you what ‘reasonable probability’ is,” Goodman said.

The nature of the accusation can escalate scrutiny, he added.

“Sexual violations are taken very seriously,” Goodman said.

Disgruntled health care providers are common, Talamante said. “Nine out of ten of our clients will say, ‘Can I sue them when this is all over,’” she said. “We try to focus on the problems at hand,” she added.