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Published June 07 2012

Dakota Clinic settles doctor's defamation lawsuit

FARGO – Dakota Clinic has settled a lawsuit filed by one its former doctors who claimed the clinic defamed him by giving him a “do not recommend” evaluation when another hospital was considering hiring him.

Dr. John Schmitt Jr., a head and neck surgeon, brought the civil lawsuit in January 2010 in Cass County District Court.

A jury trial scheduled for this week was canceled after the settlement agreement was reached Tuesday, said Schmitt’s attorney, Bruce Schoenwald.

Both sides have agreed to keep the settlement terms confidential, he said.

“With any settlement, it’s always a compromise, so there’s a little pain on each side,” Schoenwald said. “But I think we’re relieved and happy with what we ended up with.”

Schmitt joined Dakota Clinic Ltd. in August 2002. Under his contract, he was eligible to become a stockholder after two full years, the lawsuit stated.

When Schmitt asked for shareholder status in early December 2004, Dakota Clinic denied it, the lawsuit stated. However, Dakota Clinic noted in its response that Schmitt had already been told that August that his contract would be renewed subject to his stockholder opportunities being delayed for one year.

Schmitt was dismissed Dec. 13, 2004, “because he was pressing the request for shareholder status,” the lawsuit alleged. Dakota Clinic denied firing him for any improper reason.

MeritCare Health System – now Sanford Health – hired Schmitt in June 2005. But after confrontations with staff, he tendered his 90-day resignation notice in April 2007.

That spring, Schmitt was offered a temporary post at St. Joseph’s Hospital in Dickinson. The hospital sent a questionnaire about Schmitt’s medical privileges to MeritCare and Dakota Clinic in June 2007. They were asked to check a blank beside one of three options: “recommend highly without reservation,” “would recommend” and “do not recommend.”

Dakota Clinic replied with “do not recommend.” MeritCare initially didn’t respond, but after Schmitt signed an authorization to release information about him, MeritCare returned the questionnaire with “would recommend” and the words “with reservation” written next to it.

St. Joseph’s ultimately denied medical privileges to Schmitt. He subsequently was denied jobs at other facilities in North Dakota and Minnesota and wasn’t able to find work for more than a year until he moved to Ohio, the lawsuit states.

Schmitt sued MeritCare, Dakota Clinic and Innovis Health, which purchased Dakota Clinic in 2008. He sought more than $50,000 under the defamation claim, which alleged that the questionnaire responses “placed Dr. Schmitt in a false light and defamed his professional character.”

Judge Steven Marquart dismissed the claims against MeritCare in April, but he ruled that the defamation and tortious interference claims against Dakota Clinic were for a jury to decide.

In a written opinion, Marquart noted that when Schmitt was applying at MeritCare in 2005, a Dakota Clinic doctor filled out a questionnaire indicating he “would recommend” Schmitt. But about two years later, a different Dakota Clinic doctor gave Schmitt the “do not recommend” evaluation.

“One reasonable inference that can be drawn from these events is that at the time of the July 19, 2007, evaluation, Dakota had no reasonable belief in the truthfulness of the statement it made,” Marquart wrote.

Attorneys for Dakota Clinic did not return messages seeking comment.

Schmitt recently moved back to the area, Schoenwald said.

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Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528