Lawsuit Against Doctor Rejected
A state appellate court has dismissed a hospital owner’s lawsuit against its former chief of staff, who sent an e-mail to other doctors questioning the company’s financial health.
The 4th District Court of Appeal concluded in a 21-page opinion published Wednesday that the suit should be dismissed under a state law that prevents use of the legal system to chill criticism, and ordered the company to pay the doctor’s legal fees.
The suit stemmed from Integrated Healthcare Holdings Inc.’s heavily leveraged acquisition of Western Medical Center-Santa Ana, one of the few Orange County hospitals that provide services to the indigent. Integrated defaulted on $80 million in loans just two months after completing the March 2005 acquisition, prompting concerns about the hospital’s future.
Integrated sued Dr. Michael W. Fitzgibbons after he sent an e-mail to doctors after the default saying “the hospital appears to be underwater” and that the situation appeared “ominous.”
The company alleged that the comments were defamatory and cost it $500,000 in lost business when Blue Cross postponed finalizing a contract after seeing the e-mail.
The contract was eventually signed.
Fitzgibbons and his supporters, including the California Medical Assn. and other Western Medical staff, contended the case was designed to silence opposition to Integrated’s ownership.
“I’m elated,” said Fitzgibbons, who continues to treat patients at the hospital but is no longer on the executive committee.
“We thought it was spurious to begin with, but it is in keeping with the attitudes of” Integrated.
In February, Integrated canceled a contract with CalOptima, the state-funded healthcare program for the poor, to serve about 30,000 patients at its Santa Ana facility, though it continues to treat other CalOptima patients under a separate contract. The company said it lost $10 million in 2005 serving patients in the program.
The company resolved its default in December when it took on more debt to make an additional $5-million payment to its creditor.
Larry B. Anderson, the president of the company, said Thursday that its lawyers would review the court ruling and decide whether to pursue the case further.
Integrated offered to settle with Fitzgibbons in December but the talks were unsuccessful. Fitzgibbons said his legal fees were more than $100,000.
Integrated was created to acquire four Orange County hospitals from Tenet Healthcare Corp.
