Potential malpractice issues
The federal court ruling in United States v Willis12 describes how a psychiatrist learned during treatment that a patient’s husband was seeking to become CEO of a large bank. Realizing that this development might make the bank more valuable, the psychiatrist told his broker what he had learned and purchased 13,000 shares of the bank’s stock for himself and his children. When the husband’s efforts were announced publicly a few weeks later, the psychiatrist sold the shares at a big profit.
Quoting the vow of confidentiality contained in the Hippocratic Oath (Box),13 the court held that the psychiatrist had an obligation to the patient not to disclose information learned during her treatment without her permission. The court said the patient “had an economic interest in preserving the confidentiality of the information disclosed,” and the psychiatrist’s actions “might have jeopardized her husband’s advancement” and financial benefits the wife would have gained. Also, the psychiatrist’s “disclosures jeopardized the psychiatrist-patient relationship,” which might negate the wife’s financial investment in her care, require her to find a new psychiatrist, or require additional treatment to deal with how the psychiatrist’s behavior had affected her.12
Excerpt from the Hippocratic Oath
And about whatever I may see or hear in treatment, or even without treatment, in the life of human beings—things that should not ever be blurted out outside—I will remain silent, holding such things to be unutterable.
Source: Reference 13
More legal consequences
Dr. Willis had legal problems more serious than just a malpractice lawsuit. He faced criminal prosecution for insider trading and mail fraud, and the court refused to dismiss these charges. The court reasoned that the psychiatrist received the information while in a position of trust and confidence, and breached that trust when he used that confidential information for his personal benefit—behavior that meets the legal definition of “misappropriation.” Because the psychiatrist received stock trade confirmations through the U.S. mail, he also could face federal charges of mail fraud. Ultimately, Dr. Willis pled guilty and paid $137,000 in fines and penalties. Although Dr. Willis retained his New Jersey medical license and avoided a prison sentence, the district court sentenced him to 5 years of probation and required that he perform 3,000 hours of community service.14,15
In a second case,16 a licensed clinical social worker made investments through a broker based on information learned during a therapy session about upcoming business developments (the 1994 Lockheed-Martin Marietta merger). The social worker pled guilty to insider trading, forfeited the illegal gains, and paid a large fine.
Related Resources
- Insider trading versus medical professionalism. Lancet. 2005;366(9488):781.
- Nijm LM. The online message board controversy. Physicians hit with claims of libel and insider trading by their employers. J Leg Med. 2000;21(2):223-239.
Disclosure
Dr. Mossman reports no financial relationship with any company whose products are mentioned in this article or with manufacturers of competing products.