UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JAMES N. SIMON,
Plaintiff-Appellant,

v.

UNION HOSPITAL OF CECIL COUNTY,
INCORPORATED; STEVE N. OWEN,
individually and as agent for Union
Hospital of Cecil County,
Incorporated; JOHN CORBIN,
individually and as agent for Union
                                                               No. 98-2138
Hospital of Cecil County,
Incorporated; ARCHIE J. SIRIANNI,
individually and as agent for Union
Hospital of Cecil County,
Incorporated; KEN LEWIS,
individually and as agent for Union
Hospital of Cecil County,
Incorporated,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-97-1995-S)

Argued: September 24, 1999

Decided: October 20, 1999

Before WIDENER and MOTZ, Circuit Judges,
and BUTZNER, Senior Circuit Judge.

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Affirmed in part and reversed and remanded in part by unpublished
per curiam opinion.

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COUNSEL

ARGUED: Robin Lynne Cohen, DICKSTEIN, SHAPIRO, MORIN
& OSHINSKY, L.L.P., New York, New York, for Appellant. Linda
S. Woolf, GOODELL, DEVRIES, LEECH & GRAY, L.L.P., Balti-
more, Maryland, for Appellees. ON BRIEF: Donald L. DeVries, Jr.,
Teri Kaufman Leonovich, GOODELL, DEVRIES, LEECH &
GRAY, L.L.P., Baltimore, Maryland, for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

This diversity case arises out of Dr. James N. Simon's departure
from his position as Chief of Anesthesia at Union Hospital of Cecil
County, Maryland. Simon filed an eleven-count complaint against
Union, its chief executive officer, and a number of his former col-
leagues (collectively, Union), alleging defamation, invasion of pri-
vacy, breach of contract, tortious interference with economic and
contractual relations, intentional infliction of emotional distress, neg-
ligent misrepresentation, and negligence. The district court granted
summary judgment to Union on all counts. See Simon v. Union Hos-
pital of Cecil County, 15 F.Supp.2d 787 (D. Md. 1998). Simon
appeals the defamation and breach of contract claims. We affirm in
part, reverse in part, and remand for further proceedings.

I.

Dr. Simon served as Union's Chief of Anesthesia from January
1993 until his resignation in September 1996. Union alleges that, dur-

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ing his tenure, Simon inappropriately added time to patient billing
slips and engaged in other unethical conduct. Simon admits to adding
time to the billing slips of patients for whom he was not the attending
physician, but he maintains that this practice was within the standards
of the profession. He denies any unethical conduct.

In 1996, Dr. Archie Sirianni and Dr. John Corbin, colleagues of
Simon in the Anesthesia Department at the time, met with Steve
Owen, President and CEO of Union, and Dr. Kenneth Lewis, Physi-
cian Advisor to the Medical Staff, to report Simon's practices. Siri-
anni and Corbin specifically alleged that Simon improperly altered
patient billing slips and that Simon had added Sirianni's name to a
patient's medical record when Sirianni had not participated in that
patient's treatment.

On August 22, 1996, Union suspended Simon with pay, pending a
final investigation. On September 6, Union's attorney sent Simon a
letter indicating the hospital's intention to terminate his employment
contingent on the final decision of the Board of Directors. The letter
offered Simon an opportunity to make an "informal" appearance
before the Board prior to its decision. Simon declined the hearing, and
he resigned from the hospital staff on September 19, 1996.

After suspending Simon, and then again after Simon's resignation,
Union reported the changes in Simon's status with the hospital to the
Maryland Board of Physician Quality Assurance (BPQA) and the
National Physician's Data Bank (NPDB). In the initial reports, Union
checked boxes on the BPQA and NPDB forms suggesting that
adverse action had been taken with respect to Simon's hospital privi-
leges, when in fact his privileges remained technically intact. Ulti-
mately, in May 1998, the Department of Health and Human Services
voided Union's reports to the NPDB. Under the Health Care Quality
Improvement Act, 42 U.S.C. § 11101, et seq., health care entities
report only adverse actions taken against physician's privileges after
professional peer review.

In January 1997, Simon began work with Atlantic Medical Anes-
thesia Associates in New York. Atlantic conditioned the continuation
of Simon's employment on his obtaining privileges at South Nassau
Community Hospital. During its credentialing process in May 1997,

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South Nassau discovered the NPDB adverse action reports against
Simon. Lawrence Weiss, a South Nassau administrator, and Dr. Ste-
ven Shoum, of Atlantic Medical, then contacted Union to investigate
the basis of the NPDB reports. Before agreeing to permit its officials
to speak with Weiss and Shoum, Union obtained a waiver from
Simon releasing from liability "any and all individuals and organiza-
tions who provide information to the hospital, or its medical staff, in
good faith and without malice concerning my professional compe-
tence, ethics, character and other qualifications for staff appointment,
and clinical privileges."

Owen, Lewis, and Corbin, who had succeeded Simon as Chief of
Anesthesia, then spoke to Weiss and Shoum in a series of telephone
conversations in May 1997. Each of the three Union officials told
Weiss and Shoum about Simon's allegedly improper alteration of bill-
ing slips and the medical record. Simon contends that Owen, Lewis,
and Corbin made two additional charges. Owen and Lewis allegedly
said that the federal Health Care Financing Administration had
imposed a $100,000 penalty on Union for Simon's billing practices.
Lewis and Corbin allegedly charged Simon with having stolen cryo-
pain equipment from the hospital for use in his own medical practice.
South Nassau subsequently denied Simon's application for privileges,
and Atlantic Medical terminated Simon's employment.

II.

The district court granted summary judgment to Union on all
claims. We review de novo an order granting summary judgment. See
Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th
Cir. 1988). Summary judgment is appropriate only when, viewing the
record as a whole, there is no genuine issue as to any material fact and
the moving party is entitled to judgment as a matter of law. See
Fed.R.Civ.P. 56(c).

With respect to Simon's contract claims, the district court held as
a matter of law that Simon's employment contract did not preclude
Union from suspending him, and that Union fulfilled its obligation
under the contract to offer Simon a "hearing" before termination by
offering him an informal appearance before the Board of Directors.
See Simon, 15 F.Supp.2d at 798. The district court also held that the

                     4
waiver Simon signed before the Union officials spoke with Weiss and
Shoum superseded any contractual protections against disclosure of
information to which Simon might have been entitled under a "resig-
nation agreement." See id. at 797-98. As to the defamation claims, the
district court held that Sirianni and Corbin's initial reports to Lewis
and Owen were protected by a common law qualified privilege for
employer-employee communications, see id. at 796-97; that Union's
reports to the BPQA and NPDB were protected by a related qualified
privilege for statements made in the mutual legitimate interest of the
speaker and the recipient, see id. at 795-96; and "Simon had not pro-
vided sufficient evidence to permit a reasonable juror to find that"
Union officials' statements to Weiss and Shoum were made "in bad
faith or with malice, see id. at 793-94. We affirm the grant of sum-
mary judgment on Simon's contract claims and most of his defama-
tion claims on the basis of the district court's opinion.

For the following reasons, however, we reverse as to two specific
statements allegedly made by the Union administrators to Weiss and
Shoum. A material issue of fact exists as to whether Union defamed
Simon by indicating that his conduct had led the Health Care Financ-
ing Administration to impose a $100,000 fine on the hospital, and by
stating that he had stolen the hospital's cryo-pain equipment.

In Maryland, a plaintiff who is not a public figure ordinarily must
prove four elements to establish a prima facie case of defamation: (1)
a defamatory communication; (2) falsity; (3) fault; and (4) harm. See,
e.g., Shapiro v. Massengill, 105 Md. App. 743, 772, 661 A.2d 202,
216-17, cert. denied, 341 Md. 28, 668 A.2d 36 (1995). If a statement
constitutes defamation per se, however, harm to reputation is pre-
sumed. See Hearst Corp. v. Hughes, 297 Md 112, 125, 466 A.2d 486,
493 (1983). Damages may be awarded on the basis of that presump-
tion when the plaintiff has demonstrated malice by the speaker. See
id., 297 Md. at 125-26; Shapiro, 105 Md. App. at 773-74; Gooch v.
Maryland Mechanical Systems, 81 Md. App. 376, 393-94, 567 A.2d
954, 962 (1990).

With regard to the first element, a genuine issue of material fact
exists as to whether statements as to the $100,000 fine and cryo-pain
equipment were made. Although the Union officials deny having
made the statements, Simon has offered concrete evidence, in the

                    5
form of affidavits and deposition testimony from Weiss and Shoum,
that the Union officials did indeed make these statements to Weiss
and Shoum. As to the second element, the hospital concedes that, if
made, the two statements were false.

The terms of Simon's waiver governs the third element--fault. The
waiver released the Union administrators from liability for statements
made "in good faith and without malice concerning[Simon's] profes-
sional competence, ethics, character and other qualifications." Mary-
land law defines malice, in the context of private party defamation,
as "knowledge of falsity or reckless disregard for the truth." Marchesi
v. Franchino, 283 Md. 131, 139, 387 A.2d 1129, 1133 (1978). A jury
could reasonably infer malice from the specificity and inflammatory
nature of the alleged statements, and from Union's concession that,
if made, the statements were false.

Union argues, however, that Simon cannot establish the final ele-
ment of a defamation claim--harm--because South Nassau and
Atlantic Medical assertedly did not rely on these statements in their
decisions to deny Simon clinical privileges and to terminate his
employment. At oral argument, Union suggested more generally that,
in the total context of the communications between Weiss and Shoum
and the Union officials, the statements were too insignificant to have
caused harm. But Simon has produced evidence that creates an issue
of fact as to the statements' effect. Shoum stated in his affidavit that
Atlantic Medical's decision to terminate was a "direct result of the
comments made by Lewis and Corbin," without specifying which
comments. Weiss, among several other explanations, testified that
South Nassau's decision was based on "a total review of everything
that we heard" and on its estimation of Simon's"moral character."

Moreover, the statements, if made, were defamatory per se under
Maryland law, and the harm element is therefore presumed. A state-
ment is defamatory per se when it "adversely affects an employee's
fitness for the proper conduct of his business." Shapiro, 105 Md. App.
at 775 (quoting Hearst, 297 Md. at 118).

          Words spoken of a person in his office, trade, profession,
          business or means of getting a livelihood, which tend to
          expose him to the hazard of losing his office, or which

                    6
          charge him with fraud, indirect dealings or incapacity and
          thereby tend to injure him in his trade, profession, or busi-
          ness, are actionable without proof of special damage, even
          though such words if spoken or written of an ordinary per-
          son, might not be actionable per se.

Kilgour v. Evening Star Co., 96 Md. 16, 23-24, 53 A.2d 716 (1902)
(quoted in Shapiro, 105 Md. App. at 776).

In harmonizing constitutional and common law principles, the
Maryland courts have held that the Supreme Court's decision in Gertz
v. Robert Welch, Inc., 418 U.S. 323 (1974), bars the award of dam-
ages from a statement defamatory per se when the plaintiff has merely
proven negligence on the part of the speaker. Gertz does not proscribe
the award of damages, however, when the plaintiff has shown actual
malice. Hearst, 297 Md. at 125-26; Shapiro, 105 Md. App. at 773-74.
Here, because a reasonable jury could find "knowledge of falsity or
reckless disregard of the truth" on the part of Union officials in mak-
ing these two statements the resulting harm to Simon is presumed.

III.

In sum, we reverse and remand for further proceedings the grant
of summary judgment to Union on the defamation claims relating to
the $100,000 fine and the cryo-pain equipment. We affirm on all
other respects.

AFFIRMED IN PART AND REVERSED
AND REMANDED IN PART

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