Qualified Privilege in Defamation: ASHLAND HOSP. CORP. V. SLUSHER (COA 6/1/2007)

TORTS:  Defamation; Qualified privilege of employer and "common interest"


The dispositive issues in this appeal are whether appellants, King’s Daughters Medical Center and its chief financial officer, Paul McDowell, were entitled to judgment as a matter of law on Dr. Mary Beth Calor’s claims of defamation and tortious interference with contractual relations which she based upon communications appellants made to Staff Care, Inc. concerning her billing practices. A jury trial resulted in an award to Dr. Calor in the amount of $175,000.00 for emotional and mental distress, $59,050.00 in lost wages, and $300,000.00 in punitive damages.

Because there is no dispute as to the nature of the appellants’ statements or the context in which they were communicated to Staff Care, appellants were entitled to application of a qualified privilege as a matter of law on the defamation claim and a verdict in their favor on the tortious interference claim. The judgment must therefore be reversed.

In December 2001, the quality assurance department at Staff Care became concerned about the number of hours Dr. Calor was claiming. Michelle VonLuckner,who was Staff Care’s scheduling consultant for Dr. Calor, initially contacted Dr. Calor’s husband, who was also her business manager, concerning the accuracy of the hours claimed. He assured Ms. VonLuckner that the hours claimed were accurate.

Nevertheless, Staff Care’s concerns over the number of hours Dr. Calor was claiming continued, based primarily on the fact that they were paying “outrageous malpractice premiums” due to the extraordinary amount of actual patient contact she was claiming on the form with Staff Care "red-flagging" many of her bills as involving a questionable number of hours.

Dr. Calor was terminated by the hospital after she refused to meet with their CFO without her business manager-husband being present. The Hospital CFO (McDowell) then contacted notified Staff Care Dr. Calor had been  based upon suspicion that she had been over-billing and that the hospital was investigating her billing records.

As to the defamation claim, the COA was convinced that upon the undisputed facts of this case appellants were protected by a qualified privilege in reporting the results of their investigation into Dr. Calor’s billable hours to Staff Care.   Under the “common interest” theory, as explained by the Supreme Court of Kentucky in Stringer v. Wal-Mart Stores, Inc., 151 S.W.3d 781, 796 (Ky. 2004), appellants clearly had the right, if not the duty, to investigate and convey their concerns about Dr. Calor ‘s billing to Staff Care which had a corresponding interest in the accuracy of her hours.   The Court in Stringer also provides guidance as to the conditional nature of qualified privileges and the circumstances under which the right to claim the privilege may be lost.   The condition attached to all such qualified privileges is that they must be exercised in a reasonable manner and for a proper purpose. The immunity is forfeited if the defendant steps outside the scope of the privilege, or abuses the occasion. The qualified privilege does not extend to the publication of irrelevant defamatory matter with no bearing upon the public or private interest which is entitled to protection.   

COa found there is no question that King’s Daughters’ communications to Staff Care concerning its investigation into Dr. Calor’s hours fall squarely within the Stringer rationale.

Based upon these factors, appellants were entitled to judgment on Dr. Calor’s defamation claims as a matter of law. We are thus convinced that the trial court erred in allowing either the defamation claim or the tortious interference claim to be resolved by a jury.  Accordingly, the judgment in her favor is reversed and the case remanded for entry of an order dismissing those claims.

by Michael Stevens

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