Federal appeals panel: ABC not reckless in exposé on eye clinic

Wednesday, November 1, 2000

An eye clinic chain headquartered in Illinois did not present sufficient evidence that ABC News acted in reckless disregard for the truth when it broadcast a program highly critical of the clinic, a federal appeals court panel has ruled.

In 1993, the Desnick Eye Center sued ABC, a producer of “PrimeTime Live” and reporter Sam Donaldson over a 15-minute program that alleged that employees at several Desnick centers had altered equipment to give false diagnoses of cataracts.

The clinic sued under a variety of legal claims, including trespass, fraud, invasion of privacy and defamation. A lower court dismissed all of the claims, but a three-judge panel of the 7th U.S. Circuit Court of Appeals later reinstated the defamation claim and sent the case back to the district court.

While public figures in such cases must prove defamation under the standard of actual malice — a legal term that means reckless disregard for the truth, private figures must only show negligence or fault.

Because both parties agreed that Desnick was a public figure, this legal dispute centered on the actual malice standard.

In 1999, the district court again dismissed the defamation claim, finding that the clinic had failed to present enough evidence that ABC had acted with actual malice. On Oct. 27, the three-judge panel of the 7th Circuit agreed in Desnick v. American Broadcasting Companies, Inc.

The appeals court panel noted that ABC had relied on the comments of Paddy Kalish, a former optometrist who had worked at the Desnick Eye Center for two years. Kalish claimed that technicians at the clinic had tampered with the auto-refractor to produce false diagnoses of cataracts.

The appeals court noted that ABC corroborated Kalish's accusations with further investigation showing that some patients had unneeded surgery.

The clinic argued that ABC was “reckless” in its investigation because ABC did not follow up on information that the clinic had sued and prevailed against Kalish in state court for defamation on the tampering charge.

The 7th Circuit panel called this “potentially the best fact for the plaintiff” and noted that “the fact that Kalish had lost a defamation suit based on the identical accusation should have set off warning bells at ABC.”

However, the 7th Circuit said there was a “fatal flaw” in the eye clinic's argument: the plaintiff's failure to indicate what would have been revealed if ABC had investigated the state-court suit against Kalish.

The panel pointed out that a state court had awarded summary judgment to Desnick after Kalish's lawyer failed to file a timely response to a request for admissions.

The judges noted that the state-court record failed to show whether the Desnick's victory was due to the fact that Kalish had indeed made false statements about the clinic, or rather that “the clinic sued him not in the hope of obtaining a collectible judgment but in the hope of silencing him and destroying his credibility.”

The appeals panel concluded that because the eye clinic failed to show how an examination of the state-court lawsuit would have shown that Kalish's statements were false, the clinic failed to meet its legal burden.

Michael M. Conway, attorney for ABC News, called the opinion “legally significant” because it “adds a second level or requirement for defamation plaintiffs in proving reckless disregard.”

Sandra Baron, executive director of the Libel Defense Resource Center, praised the 7th Circuit's opinion written by Judge Richard Posner. “Posner showed a genuinely good feel for the actual malice standard,” she said. “He showed a tremendous sensitivity to the First Amendment values associated with this kind of reporting.”

A call to the attorney who argued the case on behalf of the eye clinic was not returned.

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