Doctor Wins $4.75 Million in Defamation Suit
Against Hospital

Alicia Gallegos

January 28, 2020

An obstetrician/gynecologist accused of being under the influence while on the job has prevailed in her defamation and fraud lawsuit against an Indiana hospital.

Jurors awarded Carmel, Ind.-based ob/gyn Rebecca Denman, MD, $4.75 million in damages against St. Vincent Carmel Hospital and St. Vincent Carmel Medical Group on Jan. 16, 2020, after a 4-day trial in Indiana Commercial Court. Dr. Denman sued after the hospital and medical group took a series of actions in response to a nurse practitioner's claim that Dr. Denman smelled of alcohol while on duty. The doctor's lawsuit alleged the NP's claim was unproven; that administrators failed to conduct a proper peer-review investigation; and that repercussions from the false allegation resulted in lost compensation, out-of-pocket expenses, emotional distress, and damage to her professional reputation.

Indianapolis attorney Kathleen DeLaney, who represented Dr. Denman in the case, said that her client was pleased with the verdict.

"Dr. Denman feels vindicated that a group of jurors spent 4 days listening to all the evidence and gave her a resounding victory," she said in an interview.

Dr. Denman declined to comment for this story through her attorney.

Kathleen DeLaney, attorney for
Dr Rebecca Denman

In a statement, a spokesman for Ascension, the hospital's parent company, said the hospital was disappointed by the verdict and that it was "exploring all options available to us, including appeal." The spokesman declined to answer further questions about the case or its peer-review process.

The case stems from an NP's claim that Dr. Denman's breath smelled of alcohol during an evening shift on Dec. 11, 2017. Dr. Denman was not informed of the allegation on Dec. 11 and was not tested for alcohol at the time, according to Dr. Denman's lawsuit. Under hospital policy, if a physician is suspected of being under the influence of alcohol at work, the employer must immediately assess the doctor, relieve the doctor of duty, and request the physician submit to immediate blood testing at an external facility.

The NP reported the allegation to her supervisor through an email on Dec. 12, 2017. The supervisor relayed the information to the hospital's chief medical officer who met with other administrators and physicians to discuss the claim. During the discussions, a previous concern about Dr. Denman's drinking was raised, according to deposition information included in court documents. In 2015, two physicians had suggested Dr. Denman consider an assistance program after expressing concerns that she was arriving late to work and missing partner meetings. At the time, Dr. Denman did not enter an assistance program, but she changed her drinking habits, began seeing a therapist, and started arriving on-time to work and to partner meetings, according to court documents. No other criticism or complaints regarding her drinking or workplace behavior had been reported since, according to court documents.

When confronted with the NP's claim on Dec. 13, 2017, Dr. Denman denied consuming alcohol on Dec. 11, 2017, and questioned why the hospital's substance abuse protocol was not followed.

St. Vincent Carmel Hospital conducted a preliminary review of the allegation through its peer-review process and turned the matter over to St. Vincent Medical Group for further review, according to court documents. St. Vincent Medical Group later informed Dr. Denman they had reviewed the allegation through its peer-review process and that she was suspended with partial pay until she underwent an evaluation for alcohol abuse through the Indiana State Medical Association, according to the lawsuit.

"They falsely misrepresented to her that peer review had been done," Ms. DeLaney said in an interview. "In spite of that statement, they never offered her a hearing before a peer-review committee, they never shared with her the substance of any evidence they had against her, they never gave her an opportunity to respond to the allegations. In fact, she wasn't interviewed at all until the deposition in the lawsuit."

According to the Indiana Peer Review law, a health care provider under investigation is permitted to see any records accumulated by a peer-review committee pertaining to the provider's personal practice, and the provider shall be offered the opportunity to appear before the peer-review committee with adequate representation to hear all charges and findings concerning the provider and to offer rebuttal information. The rebuttal shall be part of the record before any disclosure of the charges and before any findings can be made, according to the statute.

Dr. Denman was referred by the medical association to an addiction treatment center that evaluated Dr. Denman and diagnosed her with alcohol use disorder, according to the lawsuit. As a result of the report and as a condition of retaining her medical license, the medical association and St. Vincent Medical Group required Dr. Denman to enter a treatment program at the same addiction treatment center. Dr. Denman was also required to sign a 5-year monitoring contract with the Indiana State Medical Association as a condition of her employment, according to the lawsuit.

"The actions had life-changing consequences," Ms. DeLaney said. "As a result, she was required to sign a contract that mandates she do a breathalyzer test four times a day for the first year and then three times a day for 4 more years. She has to go for random drug screenings. For the first year, she had to go to four [Alcoholics Anonymous] meetings a week. Now that number has been reduced, but she's on a 5-year monitoring contract because of all of this."

Dr. Denman sued the hospital, the medical group, and the NP in July 2018 alleging fraud, defamation, tortuous interference with an employment relationship, and negligent misrepresentation. The NP was dismissed from the case shortly before trial.

In its response to the lawsuit, attorneys for St. Vincent wrote that Dr. Denman's action was frivolous, vexatious, and executed in bad faith. The defendants requested that a judge dismiss the lawsuit, noting that they were entitled to immunity pursuant to Indiana state and federal laws, including protection by Indiana's Peer Review statute. In October 2019, a judge denied the hospital's request to dismiss the lawsuit and allowed the case to proceed.

In their verdict, jurors awarded Dr. Denman $2 million for her defamation claims, $2 million for her claims of fraud and constructive fraud, $500,000 for her claim of tortious interference with an employment relationship, and $250,000 for her claim of negligent misrepresentation.

Dr. Denman remains employed by the medical group and must continue the conditions of her 5-year monitoring contract, Ms. DeLaney said. She hopes Dr. Denman's case raises awareness about physicians' due process rights.

"We hope that Dr. Denman's case emboldens physicians to stand up for themselves in the face of false accusations and rushes to judgment," she said. "We hope the verdict leads to fair, prompt, and unbiased investigations by hospital and medical practice administrators, which include due process for accused physicians."

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