Butte radiologist settles lawsuit against St. James Healthcare

On Oct. 15, Butte radiologist Dr. Jesse A. Cole accepted a $4 million settlement in his lawsuit against St. James Healthcare and its parent corporation, the Sisters of Charity of Leavenworth Health Systems, Inc., a Kansas not-for-profit corporation (not to be confused with the Sisters of Charity of Leavenworth religious community, a separate entity). The settlement marks a not-perfect, but acceptable resolution to Cole's long-running battle to retain his medical privileges at St. James Hospital, restore his good name, and protect the right of the hospital's medical staff (and by extension, medical staffs around the state) to be self-governing and free from the undue influence of business interests - in this case, the out-of-state parent corporation of St. James, the Sisters of Charity of Leavenworth Health Systems, Inc., in Kansas.

The problems started back in 2006, when, after having hospital privileges for many years in good standing at St. James Hospital, three radiologists - Drs. Jesse Cole, Dennis Wright and Michael Driscoll - were given barely more than three hours' notice to clear out their hospital offices. The hospital had entered into an exclusive contracting agreement for the provision of radiology services, bringing in radiologists from Boston as hired members of the medical staff in what the hospital itself described as a business decision, not a medical decision. In addition, St. James was already seeking an injunction against Dr. Cole, who was outspoken in his protests, claiming he was "interfering with the hospital's search for radiology candidates." (Montana Standard, 2008).

The problem, Cole says, is that "when you start working for the hospital, the hospital can tell the doctors how to practice medicine. Then it becomes corporate medicine. The AMA (American Medical Association) realized years ago that you can't work for the hospital as well as for the patient - you can't serve two masters."

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." 1

That court decision -- later upheld by the Montana Supreme Court -- held that the medical staff bylaws, rules and regulations constituted a contract between the doctors on the medical staff and the hospital, and that it appeared the hospital breached that contract when it reduced Cole's privileges. The hospital's "business decision" meant that it was booting out 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 are still in great demand throughout Butte and the surrounding communities.

"We were prepared to prove that the initial allegations against Dr. Cole were false," said Cole's lead attorneys, Rick Anderson, of Anderson Law, P.L.L.C., and Mark A. Vucurovich, of Henningson, Richardson & Vucurovich, P.C., both of Butte. "Back when this lawsuit was first filed, we told the press we'd like to get all the facts out - and now we can," The settlement did not include a confidentiality agreement - and Anderson, Vucurovich, and attorney Thomas P. McMahan of Denver, Colo., who assisted on the case, are as relieved as Cole to be able to tell the story.

"We were prepared to show that the hospital and the Kansas corporation that controls it put our community's health care at risk in order to promote the financial success of its for-profit joint ventures," Anderson continued, "and that Dr. Cole was attacked for being what the hospital management referred to as a 'non-aligned physician,' because he criticized and refused to be a financial partner in the hospital's for-profit joint ventures; and because he worked for a competing joint venture imaging center, Big Sky Diagnostic Imaging. Our theory, of which we were confident, was that the hospital publicized false allegations against Dr. Cole and attacked him on various fronts in hopes of ruining his reputation and driving him from the community, thereby causing the hospital's competitor, Big Sky Diagnostic Imaging, to lose its primary radiologist," he said. 

Cole gives a direct interpretation of the concerns: "The point is, medicine is a business. To say that hospitals aren't interfering with the practice of medicine, or to say they are not practicing medicine by making decisions for their medical staff and patients as to who will practice in a hospital, just by calling it a business decision, is ludicrous.  Economic credentialing and exclusive contracts are simply euphemisms for corporate medical practice."

Three days after Cole's own settlement, the Arkansas Supreme Court upheld a 2009 court decision striking down economic credentialing in that state. More and more states are following suit. The state of Montana expanded and reaffirmed its law against economic credentialing in
2009, but it did not outlaw exclusive contracting.
 
In October, 2010, St. James Hospital announced that it was hiring its emergency room physicians, thus once again asking doctors to serve both their patients and their administrative bosses at the hospital.

Meantime, Dr. Cole continues his radiology practice at Big Sky Diagnostic Imaging in Butte, and, because he is not allowed to practice radiology at St. James, has developed a limited practice at the hospital in Anaconda, working with his former Butte colleague, Dr. Peter Sorini. He is working on the process of setting up a foundation so that a substantial portion of the settlement may be funneled back to the community of Butte and its various causes, as a way of saying thank-you for the support he received from medical staff, employees and patients during his ordeal. Cole estimates that an initial $250,000 will be made available, with an equal amount coming in later years.