Facts of an Interesting Telemedicine Case1

The plaintiff in the case (“Physician”) is a board-certified radiologist who entered into a contract with defendant teleradiology company (“Company”) to furnish teleradiology services to hospitals, including a hospital on Long Island, New York (“Hospital”).  Under the terms of the contract, Hospital would electronically transmit diagnostic images, such as X-rays, CT scans and ultrasounds, for remote reading by Physician after which she would send a diagnosis back to Hospital within thirty minutes.  For services rendered, Company would pay Physician a set contractual rate and also work with Physician to secure credentialing for Physician at all hospitals covered by the contract.

At various times during a period of years from 2007 through 2011, Hospital raised concerns with Company about the quality of Physician’s services.  In 2011, Hospital contacted Company and requested that Physician resign her medical staff privileges at Hospital.  According to Physician’s complaint, the letter sent to Company by Hospital contained “a number of unmistakable indications that [Physician] was being formally investigated by [Hospital] staff.”  Shortly thereafter, a physician who worked for Company called Physician and asked her to resign her Hospital privileges, explaining further that resigning privileges was a routine step regularly undertaken in response to complaints from hospital quality assurance departments.  The Company representative did not tell Physician that she was being investigated by Hospital or recommend that she retain counsel to advise her.   Physician resigned her privileges as advised by Company, and several days later, Hospital filed adverse reports with the National Practitioner Data Bank (“NPDB”) asserting that Physician had resigned her privileges while under investigation.  Physician eventually was able to rescind her resignation and Hospital filed supplemental reports with the NPDB to reflect the rescission.  However, the chairman of Hospital’s radiology department initiated a corrective action proceeding in June 2011 to revoke Physician’s privileges even though she no longer provided teleradiology services for Hospital. Eventually, a Hospital hearing panel denied the chairman’s revocation request.

The Complaint

Physician filed a complaint against Company alleging that it never advised her of Hospital’s concerns with the quality of her work.  Physician further alleged that had she been aware of Company’s false statement to Hospital that it intended to implement a “corrective action plan,” she would have immediately requested that Company remove her from Hospital’s roster of radiologists long before the chairman of radiology launched an investigation. This would have avoided the resultant NPDB adverse action filing, the corrective action revocation hearings and related expenses, damages and reputational harm to Physician.

Physician alleged seven causes of action against Company, including breach of contract, breach of the implied covenant of good faith and fair dealing, negligence and negligent misrepresentation.

Of note, Physician did not file suit against Hospital or its chairman of radiology, possibly because she believed she might not be able to defeat the Health Care Quality Improvement Act and Connecticut peer review statute-derived peer review immunity protections.

The Resolution 

Company filed a Federal Rule 12(b)(6) motion to dismiss for failure to state a claim.  The U.S. District Court for the District of Connecticut granted the motion to dismiss, having found, in part, that Company did not breach any contractual obligation or covenant of good faith and fair dealing.  Company did not have any duty it breached, and it did not make any negligent misrepresentations.

In the final paragraph of the opinion, Judge Meyer noted that he had no reason to doubt that Physician was a talented and experienced medical professional who sustained considerable harm while providing valuable services.  He also stated that his ruling should not be interpreted to suggest that there was any basis for Hospital’s complaints against her.  However, Physician failed to allege any “plausible claims against the one intermediary company before [the court],” and she did not name the chairman of radiology and the hospital as defendants.  The opinion suggests that Judge Meyer may have thought Physician chose the wrong defendant, although this is just speculation.

Practical Takeaways 

Teleradiology and other telemedicine services are becoming ubiquitous as the technology and legal structures governing these arrangements evolve and the need for services increases due to health care professional shortages and a rapidly aging population.

Health care delivery arrangements in which physicians work with intermediary telemedicine companies to deliver services to remote hospitals, rural health clinics and urgent care centers need special care in contracting.  There may have been no case had there been a contract provision requiring Company to notify Physician immediately concerning any clinical or quality concerns raised by Hospital.  Physicians entering into telemedicine arrangements should have their contracts reviewed by experienced health care counsel to ensure the telemedicine physicians’ interests are protected.  Physicians also should never surrender medical staff membership and privileges without consulting their counsel.