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

CREDENTIALING/RELEASE LANGUAGE

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

The Court of Appeals of Indiana reversed a lower court and held that the release language in a neurologist’s application solely applied to the entity that was credentialing the neurologist, not to the neurologist’s former employer.

A neurologist with a two-year employment agreement was notified by her employer, a clinic, that she was being terminated for cause due to her failure to obtain unrestricted hospital privileges at a local hospital.  The neurologist continued to work for the remaining six weeks of her employment agreement, but her employment was 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 clinic’s director of human resources and, 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 received a request for a reference via an evaluation form from an Army Medical Center which had offered a temporary job to the neurologist.  The clinic’s medical director refused to complete the form; however, another physician did, rated the neurologist as fair and poor in the categories set forth on the form and stated that she had been terminated and was not eligible for rehire.  The Army Medical Center withdrew its offer to employ the neurologist, and she sued the clinic and the physician for defamation.

The clinic and physician claimed that they were third-party beneficiaries who were protected by the release language in the application that the neurologist signed when she applied to the Army Medical Center.  The language stated that the neurologist 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 held that this release language unambiguously applied solely 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.  Thus, the case was remanded to the lower court for additional proceedings.