Mont. radiologist gets $4M in privileging settlement

A Montana hospital has agreed to pay $4 million to a radiologist to settle a breach of contract lawsuit that accused hospital officials of reducing his staff privileges because he worked for a competing imaging center.

The suit alleged that officials at St. James Healthcare, a 100-bed Catholic hospital in Butte, MT, drastically reduced the staff privileges of radiologist Jesse Cole, MD, because he worked for a competing imaging center, Big Sky Diagnostic Imaging. Cole had previously been director of the hospital's radiology department, where he had an exclusive contract from 2002 to 2004.

Cole was working without a contract on November 27, 2006, when he and three other radiologists were given a few hours notice to clear out their hospital offices, according to the lawsuit.

St. James had entered into an exclusive provider agreement for radiology services and was bringing in radiologists from Boston as hired members of the medical staff, according to the suit. Cole said he was told by hospital officials that it was a "business decision."

Butte has three imaging facilities: St. James Healthcare; Intermountain Imaging Center, of which St. James has 50% ownership; and Big Sky Diagnostic Imaging. Cole was working for St. James and Big Sky during the dispute.

St. James officials pushed out Cole in an effort to eliminate him as a competitor in the local radiology market, said Cole's attorney Rick Anderson. "Jesse just wanted to work for whomever he wanted," Anderson told

"He was attacked for being what hospital management referred to as a 'nonaligned' 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," Anderson said.

The settlement is a "not perfect, but acceptable solution" to his long-running battle to keep his medical privileges at St. James and to protect the medical staff's right to be free from the undue influence of business interest, according to Cole's press release.

The problem, Cole said, is that "when you start working for the hospital, the hospital can tell the doctors how to practice medicine."

St. James released a statement noting that neither the hospital nor Cole admits any fault or wrongdoing, and his hospital staff privileges at "remain unchanged."

St. James had sued Cole in 2006, claiming he interfered with its negotiations with other physicians. The radiologist responded by filing suit in 2007, alleging that the hospital interfered with his business and breached his contract by revoking his privileges.

A court granted an injunction against the hospital, with the judge ruling that "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 2007 court decision, later upheld by the Montana Supreme Court, held that medical staff bylaws, rules, and regulations constitute a contract between doctors and the hospital, and that it appeared the hospital breached that contract when it reduced Cole's staff privileges.

Cole continues to practice at Big Sky Diagnostic Imaging and a hospital in Anaconda, MT.

By Donna Domino contributing writer
November 12, 2010

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