California doctor fights slander lawsuit on grounds of patient advocacy

The hospital says a contract limits the physician's speech, and a trial court agreed. The case is on appeal.

By Amy Lynn Sorrel — Posted June 5, 2006

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California infectious disease specialist Michael Fitzgibbons, MD, says he knows what it feels like to get a SLAPP -- a strategic lawsuit against public participation.

The term is used to describe lawsuits by large entities, such as corporations, allegedly aimed at silencing criticism by less powerful groups or individuals on issues affecting the public's interest.

Dr. Fitzgibbons, a medical staff member at Western Medical Center Santa Ana, says that the suit filed against him last year by Integrated Healthcare Holdings Inc. is a SLAPP. IHHI, which owns four hospitals including Western Medical, sued him for slander after he spoke out about the financial instability of the company when it defaulted on $50 million in loans.

The physician asked the trial court to dismiss the case, saying his speech is protected under California's anti-SLAPP statute. About 30 states have such laws, and another 10 are pursuing them. California's statute allows those being sued to defend against unfounded lawsuits that often include defamation or business interference claims.

The trial court refused to dismiss the case, and the Fourth Appellate District in California is now considering the doctor's appeal.

Physician groups have joined Dr. Fitzgibbons in his fight. They say doctors have a right and obligation to advocate for their patients on health care matters and that this duty is a fundamental public concern that requires anti-SLAPP protection.

"Physicians have to be able to advocate without fear of retaliation, or doctors and patients will be the ones to suffer," said Gregory M. Abrams, general counsel for the California Medical Assn., which filed a friend-of-the-court brief in support of Dr. Fitzgibbons.

The CMA shares Dr. Fitzgibbons' concern that the potential bankruptcy of the hospital system "could leave hundreds of thousands of patients without care," Abrams said.

The American Medical Association/State Medical Societies Litigation Center also joined the CMA's brief in support of physicians' freedom of speech rights. "The proper application of state laws restricting the use of retaliatory litigation is an important issue in California and elsewhere," said AMA Chair Duane M. Cady, MD.

But IHHI disputes that the doctor's comments were made with the purpose of patient advocacy and instead argues that they were intended to thwart the company's operation of the hospitals, according to Yolita Nowak Lecellier, IHHI's attorney.

"There are many issues that doctors should be speaking out on and by law are required to, but the law has created limits between free speech and making false remarks," which are not entitled to anti-SLAPP protection, she said.

Question of protected speech

IHHI sued Dr. Fitzgibbons after he sent an e-mail to the medical staff at Western Medical in May 2005 stating that the company "appear[ed] to be underwater."

The message followed several local newspaper accounts of a U.S. Securities and Exchange Commission filing that month indicating that IHHI defaulted on two loans it had taken out to acquire four hospitals from Tenet Healthcare Corp. in 2004, court documents show. As a result, IHHI was restricted from borrowing more money, the interest rate was increased and nearly $64 million in debt was immediately due, the SEC filing stated.

Prior to the loan defaults, the financial viability of the 2004 takeover had been the subject of county and state Senate hearings that year because IHHI's major stockholder, Kali P. Chaudhuri, MD, was involved in the bankruptcy of KPC Medical Management of Anaheim, Calif., in 2000. The incident left "hundreds of thousands of patients ... without health care, ... access [to] their medical records, and ... thousands of doctors unpaid for their services," the CMA and organized medicine brief states.

The information worried Dr. Fitzgibbons. "We felt that the financial distress meant that quality of care was going to be impaired and the kind of capital spending we knew we needed wasn't going to happen," he said. The hospital did not respond to his attempts to discuss the problems, he added.

In June 2005, IHHI sued Dr. Fitzgibbons after one of the medical staff members forwarded the physician's e-mail to Blue Shield, with whom the company was in contract negotiations. The e-mail, Nowak Lecellier said, resulted in Blue Shield not increasing fees it paid the hospital, thus jeopardizing the delivery of health care.

"Dr. Fitzgibbons' statements were inaccurate and improper and in essence were not an exercise of free speech and not advocacy for quality of care," she said. When the medical staff in January 2005 consented in writing to "express public support" for the IHHI acquisition in exchange for management rights at the hospital, they contractually waived their rights to criticize the hospital, she said.

The trial court concurred in September 2005 when it denied anti-SLAPP protection to Dr. Fitzgibbons.

"The court notes that constitutional rights can be waived ... . If that is true, then this lawsuit is not an attempt to chill the valid exercise of the freedom of speech, but, at least partially, an attempt to enforce the contractual waiver of that freedom," Orange County Superior Court Judge Geoffrey Glass wrote.

Doctors want decision overturned

Physicians disagree with the ruling and say that the court interpreting an agreement as having such an effect would preclude them from doing what they are legally and ethically bound to do: protect their patients.

The law shields physicians from retaliation when they speak out about health care issues under California's Business and Professions Code and other abuse reporting laws, the CMA and organized medicine brief states, adding, "These protections, however, would be severely undermined" without similarly applying the anti-SLAPP statute.

Doctors say the high-profile nature of the IHHI controversy is a clear indication the company's financial status remains an ongoing public concern.

"That is the whole point: that a bad financial transaction creating instability at a hospital is a legitimate medical quality issue," said Tom Curtis, Dr. Fitzgibbons' attorney.

Because physicians are fiduciaries and advocates for patients, Dr. Fitzgibbons warned, "if they have to look for a lawsuit every time they engage in patient advocacy, then they are going to be deterred in their willingness to speak up, and we will all be losers in that."

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Case at a glance

Integrated Healthcare Holdings, Inc. v. Michael Fitzgibbons, MD

Venue: California Court of Appeal, Fourth Appellate District
At issue: Whether the state's anti-SLAPP statute protects a doctor who spoke out about a hospital system's financial instability. A lower court said no.
Potential impact: Doctors say they will be deterred from talking about patient care issues if the law does not shield them from unfounded lawsuits aimed at silencing criticism. The hospital says the statute was not intended to mask defamatory statements as patient advocacy.

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