Medical Malpractice Case of the Month
November 2001

Physician Breached Duty by Not Disclosing. HMO's Financial Arrangement. An Illinois appellate court has reversed the dismissal of a breach-of-fiduciary~duty charge against a physician under contract to an HMO, holding
that, the~de1endant should have disclosed the fact that the HMO had a financial incentive to limit diagnostic tests and treatment. Neade v. Portes, No.2-97-1099(Ill. Ct. App. 2Dist. March 31) The plaintiff's decedent had visited the defendant, complaining of chest pain and shortness of breath. He was hospitalized and given several tests, including an EKG and a thallium stress test, and was diagnosed with a hiatial hernia or esophagitis. When his chest pains continued, he returned to the defendant, who did not do any additional tests but relied on the hospital test results to rule out cardiac problems, even after two other physicians recommended anglograms. The decedent died about a year later. His widow claimed that the defendant was negligent in not ordering an anglogram that could have diagnosed the decedent's heart condition. She further alleged 'that the defendant did so because of a financial incentive by the HMO, in which member physicians were rewarded for not performing too many diagnostic tests or specialist referrals, arid claimed that the defendant had a duty to disclose these Incentives The trial judge dismissed the financial claims, ruling that they had no bearing on whether the defendant violated the standard of care. The appellate court reversed, observing that federal case law has held that when an HMO's financial incentives discourage physicians from providing certain services, these Incentives must be disclosed; failure to do so is a breach of fiduciary duty.

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