Casale v. Nationwide Children’s Hosp. — Mar. 2017 (Summary)

PHYSICIAN EMPLOYMENT/REFERENCE RESPONSES

Casale v. Nationwide Children’s Hosp.
No. 16-3906 (6th Cir. Mar. 7, 2017)

The United States Court of Appeals for the Sixth Circuit affirmed a district court’s ruling in favor of a hospital following its rescission of an employment contract with a physician.

After gauging the physician’s interest and qualifications through a series of interviews, the hospital sent the physician a first offer letter.  The hospital and physician discussed salary, bonuses, and other terms of the position.  The hospital required the physician to obtain medical staff privileges at the hospital in addition to verifying his Ohio licensure, neither of which occurred in a timely manner.  After receiving a “poor” peer review reference from the physician’s previous hospital, as well as negative input provided by staff members after meetings with the physician to discuss credentialing issues, the hospital withdrew its offer of employment.  The physician sued, alleging breach of contract and defamation, among other claims.

The Sixth Circuit noted the presumption, in Ohio law, of at-will employment, meaning that unless the terms of a contract specify a certain period of time during which the contract would be valid, either party can terminate the contract.  The court held that the hospital’s offer letter included “no express durational term and no limit on either party’s ability to terminate the relationship.”  Thus, even though the contract provided for an annual rate of compensation, guaranteed bonuses, and future raises, the absence of a specific duration indicated that the contract was at-will.

The court similarly rejected the physician’s contentions that the hospital’s manifestations amounted to an implied employment contract.  The court found no implicit promise of definite employment and no evidence that the hospital intended to limit its ability to terminate the physician at will.  The court also dismissed the physician’s claims that the peer review reference constituted defamation; the court held that there had been no forced republication to a third party and the allegedly defamatory statements were “substantially true” in nature.  Therefore, the hospital was entitled to terminate the physician’s prospective employment by rescinding the offer.  Accordingly, the court affirmed the district court’s grant of summary judgment on all claims.