Radiologist Collects $4 Million Settlement in Breach-of-contract Suit

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A Montana radiologist has won a three-year legal battle and a $4 million breech-of-contract settlement from St James Healthcare, Butte, Montana, which revoked his hospital privileges and replaced him and two other practitioners with radiologists from Boston. Jesse Cole, MD, of Big Sky Imaging in Butte, also alleged that the hospital had damaged his reputation by suing him in November of 2006 for interfering with its efforts to add radiologists to its staff. Neither party admitted wrongdoing in the settlement.

Cole deemed the settlement a “not perfect, but acceptable” resolution to a long-running battle not only to retain his medical privileges at St James Hospital, and restore his good reputation and protect the right of the hospital's medical staff—and, just as significantly, that of medical staff at other institutions—to be self-governing and free from the “undue influence” of business interests.

Such interests and influence, Cole stated, originated with the Sisters of Charity of Leavenworth Health Systems, St. James’ Leavenworth, Kan.-based parent corporation. In a 2007 court decision granting an injunction against the hospital, District Judge Brad Newman wrote: “Certainly, corporations and unlicensed persons, such as lay hospital administrators or hospital directors, are legally and ethically prohibited from controlling or interfering with a physician's practice of medicine.”
The ruling referred to then-CEO James Kiser and to Sharon Hecker, MD, president of the board of directors at the time, who are said to have spearheaded the move to rescind Cole’s hospital privileges.

Cole’s saga unfolded in 2006, when he and two other radiologists were, after having maintained privileges at St James Hospital for many years in good standing, instructed without warning to vacate their offices within a three-hour window. They learned that the hospital had entered into an exclusive provider agreement for the provision of radiology services by radiologists from Boston. These practitioners had been hired as members of the hospital’s medical staff in what its management termed a “business” decision, rather than a medical one. At the time, St James was already seeking an injunction against Dr Cole, charging that through excessive protests, he had been interfering with its search for radiology candidates.

“The problem is, when you start working for the hospital, the hospital can tell the doctors how to practice medicine,” Cole wrote in a statement on his blog. “Then it becomes corporate medicine. The AMA realized years ago that you can't work for the hospital as well as for the patient—you can't serve two masters."

Judge Newman’s decision, which was later upheld by the Montana Supreme Court, held that St James’ medical staff bylaws, rules and regulations constituted a contract between the doctors on the medical staff and the hospital, further noting that in reducing Cole’s privileges, the hospital had indeed breached that contract. The decision also defined and derided the hospital's business decision as dismissing one of “only a handful of physicians in the entire country with triple board certifications in neuroradiology, diagnostic radiology, and vascular and interventional radiology, whose skills were and are still in great demand throughout Butte and the surrounding communities.”

Cole continues his radiology practice at Big Sky Diagnostic Imaging. Because he did not regain the right to practice radiology at St. James, he has also developed a limited practice at Community Hospital of Anaconda in nearby Anaconda. In another vein, Cole said he is in the process of setting up a foundation through which a substantial portion of the settlement monies will be funneled back to the community of Butte to support various community causes. Approximately $250,000 will be made available at the foundation’s inception, with an equal amount coming in later years.

Spokespersons for St. James Hospital declined to comment on the settlement.