I’m not a medical professional, but occasionally do “fitness for duty” evaluations. It is incredibly difficult to predict how someone will respond in the future and therefore any warning signs should be given extreme caution. Being wrong can have serious, career ending consequences, for the athlete and the doctors.
If the Jazz medical staff saw something that worried them in shoot arounds they did the absolute right thing by saying so, even if they had previously cleared him to play. Having the courage to be wrong and change your mind, even if last minute or unpopular, makes a good health care professional.
This was definitely bad PR, and may have been bad for working relationships, but I have no reason to believe this was bad healthcare.