This reminds me of the old Ally McBeal show. Ally had a psychiatrist played by Tracy Ullman who had a laugh track button on her desk. She would push it and then explain: "I'm sorry, sometimes my patients say things that are so naïve, my own laughter isn't enough."
Honestly this happens a lot and it isn't always a lack of integrity. Sometimes trainees can see the writing on the wall and make plans to transfer to a place where they can start fresh. If the PD doesn't have a paper trail strong enough to fire them, the PD has to be very careful about criticizing the trainee for legal reasons. Maybe some of it is just wanting someone to leave, but giving a poor job reference has created legal battles. Sometimes you can get the latent language of faint praise, but often is blatant undeserved over the top praise. As bad as this is, medical schools are much worse at moving people through and graduating them in my opinion. They may remediate students, make them repeat things, but seldom do they fail anyone out.