A Tale of Two References-One Makes You Liable for Damages and the Other Does Not

In a 2008 federal appeals case, two past medical employers gave past employment information for the same anesthesiologist. After the anesthesiologist, Dr. Robert Berry, moved on to yet another hospital, he botched a routine 15 minute procedure, leaving a patient in a permanent vegetative state due to Berry’s own addiction to drugs.

The new hospital and its insurance company settled with the victim and in turn sued the previous two medical organizations for misrepresentations in the past employment information given to the new hospital. The allegation was based upon misrepresentations since the new hospital claimed it hired Berry because the defendants did not give accurate information by withholding information about misconduct and drug use.

The first defendant was a medical group that was fully aware that Berry had a drug abuse issue. After giving Berry a second chance, Berry continued to misuse drugs. Berry was terminated for that reason.’  However,  the first defendant gave Berry a glowing recommendation. 

The court noted that: 

…if an employer makes a misleading statement in a referral letter about the performance of its former employees, the former employer may be liable for its statements if the facts and circumstances warrant. Here, defendants (medical group) were recommending an anesthesiologist, who had the lives of patients in his hands every day. Policy considerations dictate that the defendants had a duty to avoid misrepresentations in their referral letters if they mislead plaintiffs into thinking that Dr. Berry was an œexcellent anesthesiologist, where they had information that he was a drug addict.

The situation with the the second defendant, the hospital, however, was more complicated. The hospital knew that Berry was a potential danger, but yet chose to say nothing, hiding behind a claim that they were too busy to provide more details.

The Court noted that it found no Louisiana case, or cases outside of Louisiana, that imposed a requirement that a past employer reveal negative past information, absent a situation where the past employer made some sort of affirmative misrepresentation. In other words, the first hospital did not have a legal duty to voluntarily step up and give negative information, as long as it limited its report to just factual employment data such as dates and job title.

The court noted that,

And although the (hospital) might have had an ethical obligation to disclose their knowledge of Dr. Berry’s drug problems, they were also rightly concerned about a possible defamation claim if they communicated negative information about Dr. Berry.

The Court noted that if such an obligation were imposed upon employers, there would not only be privacy concerns, but it would create a burden if employers had to investigate each time if negative matters about a past employee was the type that had to be disclosed.

As a result, the employer that gave a glowing recommendation where  it was obviously not true could be liable.  The employer that kept its mouth shut was not liable, even thought it knew the truth and kept it to itself.  The bottom line: if an employer limits itself to just dates of employment and job title, it has no obligation to warn of future dangerousness, provided the employer did not falsely mislead the new employer.

That is why so many employers choose to not say anything either way and limit verificatins to dates of employment and job title.  A practice has developed essentially that if you do not have something good to say, then don’t say anything at all.  Another interesting aspect to this story is that some 40 states have laws that give employers some variation of immunity for statements about past employers that are made in good faith in response to a request from a potential new employer, and are factual and non-malicious.  Even with this protection, labor lawyers still often caution employers to stick to the facts only (name and dates of employment) since it can still be murky as to what is “factual.”

However, contacting past employers is still one of the most vital aspects of due diligence. It can be as important as doing criminal checks. Some employers make a costly mistake by not checking past employment because of the issues raised in this case and the expectation that past employers will not give any information but dates of employment and job title.

Just documenting the fact that an effort was made will demonstrate due diligence. Verification of dates of employment and job titles are also critical because an employer must be concerned about unexplained gaps in the employment history. Although there can be many reasons for a gap in employment, if an applicant cannot account for the past seven to ten years, that can be a red flag.

It is also critical to know where a person has been because of the way criminal records are maintained in the United States. Contrary to popular belief, there is not a national criminal database available to most private employers. Searches must be conducted at each relevant courthouse, and there are over 10,000 courthouses in America. However, if an employer knows where an applicant has been as a result of past employment checks, it increases the accuracy of a criminal search, and decreases the possibility that an applicant has served time for a serious offense.

The case is Kadlec Medical vs. Lakeview, 527 F.3d 412 (5th Cir. 2008) For a copy of the case, contact Jared Callahan at [email protected] or by phone at 415-898-0044.  For more information on employment screening background checks, see: www.ESRcheck.com