Manhas v. Franciscan Hammond Clinic — Feb. 2017 (Summary)

Manhas v. Franciscan Hammond Clinic
No. 45A05-1602-CT-328 (2017 WL 727774), (Ind. Ct. App. Feb. 24, 2017).

A neurologist with a two-year employment agreement was notified by her employing Clinic that she was being terminated for cause due to her failure to obtain unrestricted hospital privileges at a local hospital.  The physician continued to work for the remaining six weeks of her employment agreement, but her employment was, ultimately, not renewed.  She filed a claim with the EEOC, alleging that she was terminated because she had notified the clinic that she was pregnant.  About one year later, the neurologist and Clinic settled the discrimination claim.  As part of that settlement agreement, the neurologist was to direct all inquiries from prospective employers to the Director of HR at the Clinic.  In turn, the Clinic would “provide only the following information:  dates of employment, last position held, and salary.”

About a year-and-a-half later, the Clinic’s credentialing specialist received a request for a reference – in the form of an evaluation form – from an Army Medical Center, which had offered a temporary job to the neurologist.  The medical director of the Clinic refused to complete the form.  Ultimately, another physician completed the form, rating the neurologist as fair and poor in the categories set forth on the form (technical skills, attitude towards supervision, attitude towards duties, attendance record, and overall employment performance) and stated that she had been terminated and was not eligible for rehire.  After the Army Medical Center withdrew its offer to employ the neurologist, her attorney contacted the physician who filled out the evaluation form on behalf of the Clinic.  He then consulted the neurologist’s credentials file and apologized for providing inaccurate information.

The neurologist sued the Clinic and the physician for defamation.  In defense, they claimed that they were third party beneficiaries who were protected by the release that the physician signed when making her application to the Army Medical Center.  That release said that it released the Army Medical Center, “its corporate affiliates, its current and/or former officers, directors and employees, its authorized agents and representatives and all others involved in this background investigation and any subsequent investigations, from any liability in connection with any information they give or gather and any decisions made concerning my employment based on such information.”

The Court of Appeals of Indiana, reversing the lower court, held that this release language unambiguously applied only to the entity that was credentialing the neurologist (the Army Medical Center and/or the temporary physician placement agency that was conducting credentialing on its behalf) – and did not apply to any former employer offering a reference for the neurologist.  The case was remanded to the lower court for additional proceedings.