Referral hid employee’s drug use: 5 mil verdict
June 19, 2008 by Fred HosierPosted in: HR blunder of the week, Here comes the judge, Special Report
HR Blunders has already written about how badmouthing a former employee can get a company in trouble. The opposite — giving a glowing recommendation that glosses over serious problems — can cost companies millions, as a recent court case from Louisiana shows. A positive referral letter that omitted a doctor’s on-the-job drug use may cost his former employer millions of dollars.
Lakeview Anesthesia Associates (LAA) and Lakeview Medical Center (LMC) discovered Dr. Robert Berry — an anesthesiologist — had been using narcotics while on duty. He was terminated from his positions at LAA and LMC.
Berry applied for a position with Kadlec Medical Center, which sought referrals.
Two doctors from LAA issued referral letters, saying Berry was an excellent clinician and that he would be as asset to any anesthesia service. The letters didn’t mention anything about Berry’s dismissal for drug use.
LMC issued its own letter which gave only the dates during which Berry was on staff at the facility. It also said nothing about his drug problem.
Berry started work at Kadlec. While under the influence of Demerol, Berry’s negligent performance led to the near-death of a patient, leaving her in a permanent vegetative state.
Kadlec spent $8 million defending and settling a lawsuit against it. Then, it went after LAA, LMC and the two doctors who wrote the glowing referral letters to recover what it lost because of Berry’s mistake.
The court’s ruling is a bit complicated, but the upshot is that LAA and the two doctors will have to pay for the misleading referrals — possibly in the millions.
Referrals’ content made all the difference
The Fifth Circuit federal court is holding LAA and the two doctors responsible, but not LMC. The court said, “The letters from [the doctors] were false on their face and patently misleading.”
The judge also wrote, “But because Lakeview Medical’s letter was not materially misleading, and because the hospital did not have a legal duty to disclose its investigation of Dr. Berry and its knowledge of his drug problems,” the hospital would not be held responsible.
The matter of how much LAA and its doctors will have to pay is still up in the air. A jury awarded Kadlec $5 million and originally apportioned the responsibility to include the hospital. The matter of apportioning responsibility has been remanded to a lower court since the hospital is no longer liable. Under the original apportionment, the doctors were held 25% responsible, which would have equalled $1.25 million. Taking the hospital out of the equation will likely make that amount go up.
Certainly, you’ve heard the advice before: If you can’t give a good referral, just give the dates the person worked for you. Now, you’ve heard it from a federal court. Best advice: Develop a company policy for HR and all managers regarding referral letters with the advice of legal counsel. Tell managers that 100% adherence to the policy is necessary to keep your company out of costly trouble.
Let us know what you think about this case and about your company’s referral letter policy.
Kadlec v. Lakeview (link is a PDF).
Tags: court, drug use, recommendation, referral
June 20th, 2008 at 12:20 pm
What about the agreements between the firm and an employee just fired that no disclosure will be made concerning his firing! Another example of giving lawyers a fixed income!
June 20th, 2008 at 3:01 pm
I guess this is something important to consider if the work history referral deals with a position that could potentially cause harm to another person, as in the case of a medical practitioner. Without a consideration such as that, I agree more with the State of New Jersey’s law prohibiting actions that would potentially interfere with former employees chances of getting another position. Although I wouldn’t give a great referral to someone with poor habits across the board, there are usually good things you can say about someone who was terminated for not showing up one day. I think this is one area HR can have a heart when it comes to the overall well being of a person. I’d be more fearful of a complaint from an former employee than I would be from another company.
June 23rd, 2008 at 9:58 am
I am puzzled. I have an employee who was quite a valuable asset for 4 years. If asked, I would like to give her a good reference because as James says, I would hate to know that I was prohibiting actions that would potentially interfere with former employees chances of getting another position. I do have a heart, but she abandoned her job just after she verbally abused a co-worker then applied for unemployment compensation with a lie! This was an unacceptable action, but she did a good job while employed. What should I say (in Tennessee)?
June 23rd, 2008 at 10:44 am
Lib, your story goes to show there are many shades of gray. I’d recommend staying neutral in this case by keeping to the standard giving of dates, salary and position title, etc. Sounds like this employee may be someone who would file a complaint. If you did decide to disclose the reason for termination or the unemployment issue to a third company, it would be wise to be prepared to support this with strong documentation. I’d ask myself if I was prepared to put the time and effort (and possibly the time and effort of other staff) into defending my negative reference if it became in issue. Let’s see what others may say about your situation. I’m very interested to hear other opinions!
June 23rd, 2008 at 11:50 am
I’m glad I don’t work in New Jersey, if James’ description of the law related to references is accurate. I’m glad I’m in WI, where a law was passed 12 years ago, protecting employers who give accurate information when providing references. I think several of the responses are indicative of why the reference checking process is often a waste of time or significantly lacking in value. Why should HR search to find something good to say about someone who didn’t value their job enough to perform up to expectations. I realize there are exceptions, e.g., individuals who tried their best but couldn’t meet a position’s requirements. I beleiev that HR is not helping (the vast majority of) terminared employees when it is not honest/accurate with the reference information it provides to prospective new employers. I believe being honest/accurate with references can lead terminated employees to face the reality of why they were terminateed, and accept that they need to make changes in order to have a successful employment relationship. Being less-than-accurate with references does not help people accept reality and decide to make changes.
August 29th, 2008 at 11:23 am
We’re considering having new hires sign off on a release at hire holding us harmless for information released when they leave. We may do this in the exit interview process instead or in addition to that. I realize that such a sign-off may not hold up in court, but… When I give out references, I do it only based on documentation of actions, not opinions or verbals from other staff or supervisors. And I am the ONLY one at my organization who can give references.