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Doctor Awarded Damages for Negligent Misrepresentations During Recruitment
December 17, 2008

The Supreme Court of British Columbia has issued a decision providing guidance to employers on the legal effect of representations made during recruiting and the potential liability of health authorities for pay in lieu of notice on termination of employment for doctors.

The Vernon Jubilee hospital recruited an experienced thoracic surgeon from his private practice in Ontario. Although he expected to remain with the Hospital until his retirement, the doctor was effectively given a year’s notice of termination when the Interior Health Authority decided to move the thoracic surgery program from Vernon to Kelowna as part of a plan to centralize certain hospital services. The doctor sued for negligent misrepresentation and constructive dismissal.

The Court concluded that certain representations by the Hospital to the doctor during the recruitment process constituted negligent misrepresentations. The plan to move the thoracic surgery program was sufficiently crystallized at the time of the recruitment to warrant disclosure, because the plan directly impacted the doctor’s decision to accept the position. The Hospital had assured the doctor that he would be able to maintain his practice until retirement because the position under recruitment was secure and viable in the long-term. By making such assurances despite its knowledge of the plan to move the program, the Hospital was negligent.

Doctors working in hospitals are not typically considered employees. As a result, the doctor’s constructive dismissal depended on whether he could establish he had an “employment-like” relationship with the Health Authority as contemplated in court decisions considering certain types of independent contracts. The Court found that he did, because his contract was of indefinite duration, the relationship was characterized by his financial reliance on the Health Authority and he worked exclusively for the Health Authority.

Because he suffered breaches both in tort and contract, the doctor was entitled to claim the greater of the damages resulting from those breaches. In the result, the Court assessed damages at $243,500 for negligent misrepresentation to put him in the position in which he would have been had the breach not occurred.

Khan v. Vernon Jubilee Hospital and Interior Health Authority, 2008 BCSC 1637