Friday Question: A Dilemma in Medical Ethics

I want to offer here a case that I take to be an excellent example of a moral dilemma that arises in the field of Medical Ethics. This case is one I remember vividly still from a graduate course in Medical Ethics at the University of Missouri with Professor Bill Bondeson, from whom I am quoting the following case.

Going to Australia...
A 69-year-old male, estranged from his children and with no other living relatives, underwent a routine physical examination in preparation for a brief and much anticipated trip to Australia. The physician suspected a serious problem and ordered more extensive testing, including further blood analysis (detailing an acid phosphatase), a bone scan, and a prostate biopsy. The results were quite conclusive: The man had an inoperable, incurable carcinoma--a small prostrate nodule commonly referred to as cancer of the prostate. The carcinoma was not yet advanced and was relatively slow growing. Later, after the disease had progressed, it would be possible to provide good palliative treatment. Blood tests and X-rays showed the patient's renal function to be normal. (The physician consulted with the urologist who had performed the prostate biopsy in order to confirm the diagnosis.)
The physician had treated this patient for many years and knew he was fragile in several respects. The man was quite neurotic and had an established history of psychiatric disease, although he functioned well in society and was clearly capable of rational policy and decision making. He had recently suffered a severe depressive reaction, during which he behaved irrationally and attempted suicide. This episode immediately followed the death of his wife, who had died after a difficult and protracted battle with cancer. It was clear that he had not been equipped to deal with his wife's death, and he had been hospitalized for a short period before the suicide attempt. Just as he was getting back on his feet, the opportunity to go to Australia materialized, and it was the first excitement he had experienced in several years.
This patient also had a history of suffering prolonged and serious depression whenever informed of serious health problems. He worried excessively and often could not exercise rational control over his deliberations and decisions. His physician therefore thought that disclosure of the carcinoma under his present fragile state would almost certainly cause further irrational behavior and render the patient incapable of thinking clearly about his medical situation.
When the testing had been completed and the results were known, the patient returned to his physician. He asked nervously, "Am I OK?" Without waiting for a response, he asked, "I don't have cancer, do I?" Believing his patient would not suffer from or even be aware of this problem while in Australia, the physician replied, "You're as good as you were ten years ago." He was worried about telling such a bald lie but firmly believed that it was justified. http://web.missouri.edu/~bondesonw/MedicalEthicsSyllabus.html

What do you make of the doctor's decision here? Did he do the right thing? If so, why? If not, why not?