NEW ORLEANS -- A Louisiana hospital wasn't obligated to notify a doctor's new employer that he had been fired for practicing while under the influence of narcotics, a federal appeals court ruled this week, tossing out a multimillion dollar verdict.

The case decided Thursday by the 5th U.S. Circuit Court of Appeals in New Orleans centers around Dr. Robert Berry, an anesthesiologist who surrendered his medical license in Washington state after a patient nearly died while in his care.

Berry, who practiced at Lakeview Regional Medical Center in Covington, was fired by his colleagues at Lakeview Anesthesia Associates in March 2001 for using prescription painkillers while on duty.

Berry allegedly continued to abuse drugs when he went to work at Kadlec Medical Center in Richland, Wash. In November 2002, he failed to resuscitate one of his patients, Kimberly Jones, after she stopped breathing during what was supposed to be a routine procedure.

Jones remains in a coma to this day and is living at a nursing home in Lansing, Mich. Her family sued Berry and Kadlec and later settled the cases for $8.5 million.

Kadlec, in turn, sued Lakeview and Berry's former LAA supervisors for failing to disclose his firing or history of drug abuse when the Washington hospital asked for his employment record.

In 2006, a federal jury in New Orleans held the Louisiana hospital and doctors liable for misrepresentation and awarded the Washington hospital and its insurer $8.2 million -- an amount later reduced to $5.5 million.

On Thursday, a three-judge panel from the 5th Circuit vacated the award and reversed the judgment against Lakeview hospital. But the court upheld the jury's finding of liability against Lakeview Anesthesia Associates and ordered a new judgment to be entered against the group.

After Berry's firing, nobody at Lakeview or LAA reported his drug problem to the hospital's board of trustees or the Louisiana Board of Medical Examiners.

Berry briefly practiced at a Shreveport hospital before he applied through a staffing firm for credentials to practice at Kadlec. As part of that process, Kadlec asked Lakeview if Berry had been disciplined or shown any signs of "behavior/personality problems or impairments."

In response, Lakeview simply said that Berry was on its staff from March 1997 through September 2001. Lakeview didn't disclose his on-duty drug use.

The appeals court ruled that Berry's former supervisors in Louisiana had a duty not to make misrepresentations in the referral letter they sent to Kadlec. But they weren't obligated to disclose any negative information about him, the judges said.

Brian Cahill, a lawyer for Kadlec, said the hospital is disappointed by Thursday's ruling and will likely ask for a rehearing of the case by all of the 5th Circuit's judges.

"This decision has provided a road map to the health care profession on how to hand off incompetent and impaired doctors to other hospitals around the country without fear of liability," Cahill said.

The appeals court said Lakeview didn't mislead Kadlec because its referral letter didn't recommend Berry or pass judgment on his work. However, the court faulted two LAA doctors for describing Berry as an "excellent anesthesiologist" and recommending him "highly" in letters sent only 68 days after they fired him.

"These letters are false on their face and materially misleading," Judge Thomas Reavley wrote.

Berry's former employers in Louisiana might have had an ethical obligation to disclose their knowledge of his drug problems, but doing that could have left them open to a possible defamation claim, Reavley noted.

Reavley said he couldn't find a single case, inside or outside Louisiana, in which a court has ruled that employers have an "affirmative duty" to disclose negative information about a former employee. "Finally," he wrote, "concerns about protecting employee privacy weigh in favor of not mandating a potentially broad duty to disclose."

In a statement, Lakeview CEO Jason Cobb said the hospital is pleased with the ruling. A spokeswoman said Cobb wouldn't have any further comment.

Ron Perey, a lawyer for Jones and her family, said the 5th Circuit's ruling won't change his clients' view that the Lakeview hospital failed to protect Jones from a dangerous doctor. "They were scoundrels," he said. "They didn't reveal the truth about this guy's obviously impaired status."