"I think that Dr. Billig would be a valuable asset to any teaching program. Through all his time with us, he was most anxious and competent to provide teaching with excellent input from an academic, theoretical and practical point of view." -- Manfred Cohen, M.D., to the Navy, August 1982

"I found Dr. Billig to be capable, cooperative and dependable. His judgments were reliable and he was diligent in carrying out his responsibilities to his patients. His teaching abilities were quite impressive and he handled his administrative duties very well. It is without reservation that I recommend Donal Billig, M.D." -- Teruo Matsumoto, M.D., to the Navy, August 1982

Four years after those letters were written, a court-martial found Cmdr. Donal M. Billig responsible for the deaths of three patients after heart operations he performed at Bethesda Naval Hospital. Following that verdict this month, the doctor is serving a four-year prison term on involuntary manslaughter and negligent homicide charges stemming from those operations.

How did Billig, who was portrayed as an incompetent, vision-impaired surgeon during a two-month general court-martial, come to practice in the Navy? Navy officials say it was at least in part through letters of reference from the civilian medical world.

Neither Dr. Manfred Cohen, who employed Billig in 1981 as a surgeon with Thoracovascular Associates, a private group in Pittsburgh, nor Dr. Teruo Matsumoto, a surgeon at Hahnemann Medical College and Hospital of Philadelphia when Billig was there from 1972 through 1976, would comment on their letters or the trial that took place at the Navy Yard.

Other doctors and health care institution officials who wrote eight letters about Billig declined to comment or, in many cases, referred any questions to their attorneys. That reluctance to talk reflects a growing phenomenon among doctors. Letters of reference, used by doctors both inside and outside the military, are becoming a sticky legal issue for a profession that is deeply concerned with malpractice costs, legal fees and attempts by individual doctors and hospitals to better police themselves.

Some physicians are turning to the federal courts to determine whether opinions of other doctors, written as references or heard in internal hearings, can be construed not as part of a self-policing measure but rather as an effort at curbing competitors' practices. In at least one court in Oregon, what several doctors wrote as assessments of another's skills during a peer review process recently has been judged to be an attempt at unlawful restraint of trade.

Health care experts are calling that ruling "frightening" and a "nightmare" for an industry trying to rid itself of errant doctors.

"It is becoming so that it takes a very courageous or perhaps stupid individual to say what he really thinks about another doctor," said Dr. Bryant Galusha, executive vice president of the Federation of State Medical Boards, a national clearinghouse of disciplinary actions that have been taken against doctors. "People are just refusing to put things in writing that will put them in legal jeopardy later."

Billig, an honor graduate of the University of Louisville Medical School, was a surgeon with 20 years of experience before he entered a Navy recruiting office in 1982. A one-time protege of heart surgeon Michael DeBakey, the doctor had moved from hospitals in Boston, Philadelphia and Long Branch, N.J., to a private practice in Pittsburgh before he joined the Navy in 1982, arrived at Bethesda Naval Hospital in 1983 and quickly rose to the head of its heart surgery program.

Billig brought with him letters of reference from doctors in nearly every city he had worked. They described him as "competent," "a delight," "articulate" and someone "with a long and productive career in academic surgery" whose "teaching abilities were quite impressive."

There was no indication that Billig had lost his operating privileges at a hospital in New Jersey, had been fired from a group in Pittsburgh -- which Billig described during his trial as "terminating an association" -- or had poor vision in one eye.

"This case raises the whole issue of how the medical profession is policing itself," said Andrew Webber, executive vice president of the American Medical Peer Review Association, an umbrella organization for federally financed agencies that initiate disciplinary actions against doctors. "The reputation of the whole profession is at risk here."

Representatives of the American Medical Association, the Federation of State Medical Boards, the Joint Commission on Accreditation of Hospitals and the American Medical Peer Review Association and lawyers who are involved with the evolving system of reviewing doctors for community practice expressed little surprise at the nature of the letters for Billig.

But most said the wording, to someone schooled in the art of reference letters, prompted another look if not a phone call to the individual who wrote them.

What the letters did not say, they cautioned, was as important as what they did say.

Said Dr. Dennis O'Leary, a former dean of clinical affairs at George Washington University and the newly elected president of the Joint Commission on Accreditation of Hospitals: "You might say he's a jolly fellow, a nice guy, a good teacher. If I looked at a letter like that I'd think: 'Hey, I asked them about his clinical skills and they're telling me he's a good teacher.' People are writing letters of reference cautiously. Writing a bad letter is an unnecessary liability."

A group of doctors in Astoria, Ore., has seen such a liability turn into a multimillion-dollar loss. Dr. Timothy Patrick, a surgeon in the West Coast town of 10,000, has successfully sued half the town's physicians -- 11 doctors -- on charges that a peer review process by the town's only hospital was unfair and was made as an attempt to eliminate him as competition.

According to Patrick's suit, filed in 1981, a group of doctors from Columbia Memorial Hospital reviewed what they called "mistakes in his surgical practice" in an effort to find fault. Patrick said the doctors were acting to monopolize business.

The case, heard before a jury, was decided in favor of Patrick. The doctors from Astoria were ordered to pay $2.3 million in damages, an award in a kind of case that doctors are not insured against. Their case is being appealed.

"What happens in the West Coast case is having a major impact in New Jersey and an impact around the country," said attorney Frank Cielsa, who represents 20 hospitals in New Jersey.

He also said, "You don't need many lawsuits, all you need is one -- and that one is a nightmare."

In the Billig case, Cielsa's client, Monmouth Medical Center of Long Branch, N.J., wrote a four-page letter informing hospitals and doctors who inquired about Billig that the doctor had his privileges revoked there based on questions about his competence. The letter was received by Bethesda Naval Hospital in March 1983, three months after Billig was working there.

It was the only letter that told Bethesda there were concerns in the medical profession about Billig. Other letters appeared to tout the doctor, including one written by Cohen.

Here is Cohen's letter:

"To Whom It May Concern: Dr. Billig was in our employ for a seven-month period of time. During that time, he had appointments at two teaching hospitals, one of which was affiliated with the University of Pittsburgh, namely Montifiore Hospital, and the other had its own teaching program, namely West Penn Hospital.

"Dr. Billig's performance at both of these hospitals, in terms of his ability to perfrom surgery and in terms of student and resident teaching, were most satisfactory. His clinical judgment and technical ability were most satisfactory and without fault.

"I think that Dr. Billig would be a valuable asset to any teaching program. Through all his time with us, he was most anxious and competent to provide teaching with excellent input from an academic, theoretical and practical point of view. Sincerely yours, Manfred Cohen."

During his testimony, Cohen said he told the truth about Billig in the 1982 letter. But, he added without further elaboration in his testimony, "It was a letter that I would have thought would have initiated further inquiry by anyone who would have received it."

Navy doctors who were found lax in their review of Billig testified that they relied on letters such as Cohen's to sway them to retain the doctor, and it is unclear whether they made follow-up calls. Health care professionals say such phone calls, which could elicit a back-room, closed-door kind of frankness, may be the only way that some doctors can safely tell the truth.

Attorneys such as Cielsa are not so sure such networks can or will survive in a medical world entangled with legal concerns.

"The good news is people are asking a lot more -- and a lot more sophisticated questions -- about the doctors who are applying to their hospitals," Cielsa said. "But the bad news is that [in the face of lawsuits] we're seeing sources of information we could rely on drying up. I used to get phone calls from people who said: 'I got your letter but I'm not going to respond in writing because the doctor is no good.'

"Now I'm not even getting the phone call."