Competing businesses breach doctors' duty to hospital; jury awards Desert Hospital $13 million; for hospitals and doctors, it is a fine line between loyalty and competition.

PALM SPRINGS, Calif.--(BUSINESS WIRE)--Oct. 24, 1995--Desert Hospital, one of the area's most important health-care facilities, prevailed in a four-year-long legal battle with two physicians who conspired to use confidential hospital information and ignored their fiduciary responsibilities in establishing their own competitive services almost identical to those envisioned by the hospital.

Drs. Erwin Demiany and Mark Smith were on the hospital's board of directors and several hospital committees and each served a two-year term as president of the hospital's medical staff. They both helped to launch a medical office building, outpatient surgery center and an outpatient radiology center in Palm Springs.

After less than five hours of deliberations, the jury found that the doctors breached their fiduciary duty and found them liable for $11.7 million in compensatory damages and $1.75 million in punitive damages.

"While doctors are increasingly looking to be entrepreneurial, they still have to abide by the same rules as corporate America," said Rick McKnight, partner with Jones, Day, Reavis & Pogue, lead trial attorney for Desert Hospital. "The jury understood that responsibility and teamwork should govern the conduct of those placed in fiduciary positions."

"The result of this case affirms our belief that a position of trust can't be used to prey on a hospital or any other corporation," said Michael Appelhans, general counsel, Desert Hospital.

Jones, Day, Reavis & Pogue is an international law firm with offices in the United States, Europe, the Middle East and Asia.

CONTACT: Julianne Tsapatsaris, 310/207-3361