Is it ever OK to hide a medical error?

As I was reading through the Paradise Hills Medical Center example in Chapter 1 of Frankie Perry's book, I was surprised that the option to hide the radiation overdose was even being considered. The text states that Paradise Hills has a reputation for "high-quality care", and "competent, caring staff". In my mind, that reputation would be severely jeopardized if anyone ever found out that a medical error like the one described was hidden from the patients who were affected by it. The text also mentions that Paradise Hills has "strong leadersship". Is hiding a medical error something a strong leader would do? The text mentions that the market share of the oncology division has been declining recently. Maybe the attitude of those in leadership positions has something to do with that.
The reasons given by the medical staff for not disclosing the error included not wanting to confuse terminal cancer patients and thereby destroy their faith in their physicians, frighten the patients unnecessarily which may lead to refusal of treatment, or inducing symptoms by telling the patients of potential ill effects. I think all these reasons are quite ridiculous and do not even begin to justify withholding the truth from these patients. The medical staff are probably more concerned with the potential of a lawsuit, but I would worry more about being sued for not telling them what happened.
The medical staff are assuming quite a lot about how these patients would react to the news that the equipment was not calibrated properly. I think most people would be worried if they knew and hope not to exhibit any ill effects, but would understand that every piece of equipment has the potential to malfunction. By not telling the patients about this, the hospital is opening itself up for lawsuits based on negligence. The physicians can not treat any ill effects of the radiation overdose unless the patient knows what is happening, therefore, if ill effects do occur, what does the doctor do? If he stands by and does nothing, he is committing medical malpractice. By not telling the patients, the hospital administration is banking on the fact that the patients will either die first or not suffer any ill effects that can be attributed to the radiation overdose.
In this case, I think that the CEO has no choice but to encourage the medical staff to "do the right thing" and disclose the error to the patients. He must support them through the consequences that may occur because of the disclosure, but in the long run, a climate of truth-telling will benefit the organization much better than one of hiding errors. The precedent can not be set that allows lying to patients to become justifiable. This time it may seem all right to hide a radiation overdose, but what about the next error that occurs? Having a clear, ethical position makes these types of decisions easy. Dealing with the consequences of an error is usually inevitable. Sooner or later, they will have to face them. I think I would like to do it sooner.
Lynne
reference:
Perry, F. (2002) The Tracks We Leave: Ethics in Healthcare Management. Chicago: Health Administration Press.