Fraud and negligent misrepresentation. (In The Courts).

Patient's consent to surgery, obtained through alleged misrepresentations concerning physician's professional experience and credentials, may not be basis of fraud claim.

Howard v. University of Medicine and Dentistry of New Jersey, 172 N.J. 537, 800 A.2d 73 (2002). Plaintiff Joseph Howard had a history of cervical spine disease, apparently the result of a car accident in 1991. Although advised to undergo surgery at the time of the accident, the plaintiff decided not to have the surgery done at that time.

In January 1997, the plaintiff had another automobile accident, which further aggravated his cervical condition. He went to see the doctor who had treated him at the time of his 1991 accident, and the doctor recommended that plaintiff go to the University of Medicine and Dentistry of New Jersey (UMDNJ) to be seen by defendant, Dr. Robert Heary, a Professor of Neurosurgery and the Director of UMDNJ's Spine Center of New Jersey.

Dr. Heary consulted with plaintiff concerning his condition, during which he advised Howard to have surgery to correct a cervical myelopathy secondary to cervical stenosis and a large C3 C4 disc herniation. Dr. Heary advised plaintiff to bring his wife to a second consultation, so that he could once more explain the risks, benefits, and alternatives to surgery, as well as to answer any questions. This consultation occurred, although the parties differ as to what was said.

Dr. Heary's office notes stated that he explained fully the risks of the surgery, including possible paralysis, and that he discussed alternatives to surgery. Plaintiff then allegedly gave his consent to have the procedure performed. Plaintiff and his wife, on the other hand, contended that they were not informed of such risks of surgery, and they also contended that plaintiffs wife asked Dr. Heary whether he was Board Certified, and he responded that he was. Dr. Heary also allegedly told the Howards that he had previously performed approximately sixty corpectomies in each of the eleven years he had been performing such procedures. Mrs. Howard further contended that she opposed the surgery and she and her husband had only agreed to it because of the reassurance they got from Dr. Heary's claims of skill and experience.

Dr. Heary performed the surgery on Mr. Howard in March 1997, but it was not successful. Howard was rendered a quadriplegic, allegedly as a result of Dr. Heary's negligence.

The Howards brought the instant action against Dr. Heary, alleging medical malpractice. When, during discovery, plaintiffs learned that Dr. Heary had not actually been Board Certified at the time of the surgery and that he had performed approximately a couple of dozen corpectomies in his entire career, they moved to amend their complaint to add a claim for fraud. The trial court denied this motion, however, stating that a fraud claim would be duplicative, because even if proved, plaintiffs would still have to prove that the defendant deviated from the standard of care in order to recover. The Appellate Division reversed, disagreeing that plaintiffs would be required to prove that the surgery was negligently performed. On further appeal to the New Jersey Supreme Court, the decision was reversed once more, with the court holding that a separate action for fraud may not be brought based on misrepresentations concerning a physician's credentials and experience.

A patient generally has three potential causes of action against a physician for a bad outcome: (1) medical malpractice (deviation from the standard of care): (2) lack of informed consent a "sub-group" of a claim of medical negligence): and (3) medical battery (i.e., performance of a procedure different from that authorized). The New Jersey Supreme Court explained the historical bases for the latter two causes of action and the differences between the claims. It then noted that a deceit-based claim based on a physician's misrepresentations about his credentials and experience is not analogous to either of the other two types of claims.

Few jurisdictions have addressed the question of whether a cause of action should lie when a doctor misrepresents his credentials or experience. The court could find only one jurisdiction that has recognized such a claim, and that court based its decision on the absence of informed consent. (9) On the other hand, a number of courts have refused to allow a fraud-based claim to proceed, although at least one has suggested that a claim might be appropriate if a doctor actively misrepresented his or her background or credentials. (10) The instant court accordingly held that the common law should not be extended to allow a fraud-based claim in the doctor-patient context.

The court next turned to a consideration of whether a claim based on lack of informed consent, rather than an independent fraud claim, could support a cause of action based on a physician's misrepresentations.

The court noted first that New Jersey case law has never held that a doctor has a duty to detail his background or experience as a part of obtaining informed consent. The court then indicated that a serious misrepresentation concerning the quality or extent of a doctor's professional experience may affect the validity of consent obtained by a physician, especially in a case like the instant one in which the patient's decision is based substantially on the doctor's credentials. However, in order to state a valid claim, a plaintiff would have to show that a reasonably prudent patient would not have consented to the procedure had the misrepresentation been revealed (rather than the plaintiffs subjective view). Thus, a plaintiff must prove that the defendant's actual level of qualifications and experience had a "direct and demonstrable relationship" to the harm suffered by the plaintiff, that is, the physician's lack of experience or misrepresentation about his credentials increased the risk of harm warned about in the informed consent process, in this case paralysis.

Such a case would require a two-step inquiry, said the court. First, the plaintiff would have to show that the physician's limited experience or credentials substantially increased the risks from the procedure being undergone. Second, the plaintiff would have to prove that this substantially increased risk would cause a reasonably prudent person not to consent to undergo the procedure. Lastly, in order to satisfy the damages component of the claim, the plaintiff would have to show a causal connection between the inadequately disclosed risk of the procedure and the injury incurred.

The court accordingly concluded that the district court did not err in barring the plaintiff from bringing a separate action for fraud. Rather, a claim based on lack of informed consent as outlined by the court "is all that is required and appropriate to address plaintiffs allegations."

Interference With Contract

Absence of evidence that defendant knew of, or had inquiry notice of, existing agreements between plaintiff and third party supported summary judgment in defendant's favor.

ACT, Inc. v. Sylvan Learning Systems, Inc., 2002 WL 1476313 (8th Cir., July 11, 2002). ACT, Inc. (ACT) is a nonprofit corporation that provides its clients with standardized testing for educational and professional purposes. Sylvan Learning Systems, Inc. (Sylvan) is a competitor that also provides its customers with various educational services, including high-security computer-based testing (CBT).

In 1993, ACT sought to acquire a network of CBT centers owned and, operated by the National Association of Securities Dealers, Inc. (NASD). These CBT centers offered certification testing to stock brokers.

ACT and NASD entered into two agreements preliminary to ACTs acquisition of the NASD testing centers. First, in August 1993, the parties executed a Memorandum of Understanding stating that ACT and NASD were entering into a "non-exclusive relationship that facilitates mutual development of business opportunities involving computer testing services." This agreement did not expressly address ACTs acquisition of the testing centers.

In May 1995, ACT and NASD executed an interim letter agreement intended to supplement the earlier Memorandum of Understanding until negotiations …