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Community Anesthesia & Pain Treatment, L.L.C. v. St. Mary Medical Center, Inc.

Court of Appeals of Indiana

February 4, 2015

Community Anesthesia & Pain Treatment, L.L.C., Appellant,
St. Mary Medical Center, Inc., Appellee

Appeal from the Lake Superior Court. The Honorable Diane Kavadias Schneider, Judge. Cause No. 45D11-1001-PL-4.

ATTORNEY FOR APPELLANT: Randall J. Nye, O'Neill McFadden & Willett LLP, Schererville, Indiana.

ATTORNEYS FOR APPELLEE: Michael D. Sears, Jacquelyn S. Pillar King, Crist, Sears & Zic, LLP, Munster, Indiana; Heather Fesko Delgado, Barnes & Thornburg LLP, Chicago, Illinois.

Brown, Judge. Barnes, J., and Bradford, J., concur.


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Brown, Judge.

[¶ 1] Community Anesthesia & Pain Treatment, LLC, (" CAPT" ) appeals the trial court's order entering summary judgment in favor of St. Mary Medical Center, Inc., (" SMMC" ) with respect to Count I of SMMC's complaint and Counts II and III of CAPT's counterclaim. CAPT raises three issues which we consolidate and restate as whether the trial court erred in entering summary judgment in favor of SMMC. We affirm.

Facts and Procedural History

[¶ 2] Prior to August 2006, a group headed by Dr. G[1] provided anesthesia services at SMMC. Dr. G was losing staff due in part to personal conflicts. On August 15, 2006, SMMC and CAPT entered into a contract to arrange for hospital-based services (the " Agreement" ) in which CAPT would provide anesthesiology services for patients at SMMC beginning on October 2, 2006, for a period of three years. At the request of SMMC, Dr. G became the medical director of the CAPT group. SMMC informed CAPT that a critical part of the Agreement was that CAPT keep Dr. G.

[¶ 3] Section 6.3 of the Agreement addressed compensation and provided in part that SMMC would pay CAPT a monthly income guarantee of $175,000 on the first day of each month and that, on or before the fifteenth day of each month, CAPT would remit to SMMC all of its net anesthesiology collections received in the immediately prior month up to $175,000. Section 6.3(b)(3) provided:

The annual income guarantee for such initial term shall be $2,100,000, payable by [SMMC] to [CAPT] as provided in this Section 6.3(b). Within forty-five (45) days following the end of each contract quarter during each of the three (3) years of the initial term of this Agreement, the parties shall complete an accounting reconciliation of [CAPT's] Net Anesthesiology Collections and compare such Net Anesthesiology Collections for the most recently ended contract quarter to the quarterly guaranteed net collections amount of $525,000 (the " Quarterly Income Guarantee Amount" ). If [CAPT's] Net Anesthesiology Collections exceed the Quarterly Income Guarantee Amount, and if [SMMC] has accrued any shortfall amounts (as described in subsections (2), above), then [CAPT] shall pay [SMMC] within fifteen (15) calendar days of the completion of such reconciliation the aggregate of all such shortfall amounts, up to the amount by which [CAPT's] actual Net Anesthesiology Collections exceeds the Quarterly Income Guarantee Amount for such contract quarter. The accounting reconciliation for the fourth (4th) quarter of each of the three (3) years

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of the initial term of this Agreement shall serve as the annual reconciliation, such that at the conclusion of each year of the initial term, a full and complete reconciliation for such year shall be achieved as provided in this subsection. Final reconciliation shall occur at the end of the three (3) year term.

Appellant's Appendix at 155.

[¶ 4] Section 9.15 of the Agreement contained a non-solicitation clause which provided in part that SMMC agreed to not directly or indirectly solicit any physician who was employed by or under contract with CAPT at any time during the eighteen months prior to the date of termination of the Agreement. Section 3.12 of the Agreement is titled " Locum Tenens Physicians" [2] and provided:

For the first three (3) months of this Agreement, or at any time upon [SMMC's] request to remove a Physician per Section 8.4 if a mutually agreeable and reasonable amount of time is not provided to replace such Physician, it may be necessary for [CAPT] to retain one or more locum tenens physicians specializing in the practice of Anestbesiology [sic] (the " Locum Tenens Physician" ) to provide Anesthesiology Services. In such a case, [SMMC] shall reimburse [CAPT] for fifty percent (50%) of all direct and indirect costs of each and every Locum Tenens Physician incurred by [CAPT], upon receipt of a written invoice for those costs.

Id. at 149.

[¶ 5] During the first year of the Agreement between November 16, 2006, and September 7, 2007, SMMC paid $1,575,000 to CAPT consisting of nine payments of $175,000. CAPT remitted payments to SMMC of $820,763.75. During the second year, from October 1, 2007, to September 2, 2008, SMMC paid $2,139,504 to CAPT consisting of eleven payments of $175,000 and a payment of $214,504, and CAPT paid SMMC $2,505,124. In October 2008, SMMC paid $175,000 to CAPT, and CAPT did not remit any net collections to SMMC.

[¶ 6] On March 14, 2007, Milton Triana, the CEO / Administrator of SMMC, held a meeting with Dr. G and told him that he needed to change the manner in which he dealt with staff, and Dr. G admitted he needed to change his demeanor and to be nicer to staff. In a letter dated May 18, 2007, Triana informed Dr. Steven Gottlieb of CAPT that he was providing notice in accordance with Section 8.4 of the Agreement that SMMC was requesting the removal of Dr. G from services with SMMC due to the fact that SMMC perceived him to be a " problematic physician." Id. at 240. The letter also stated: " We understand that a reasonable period of time may be necessary for an appropriate transition of services as mutually agreed by the parties." Id. In a letter dated July 19, 2007, Triana wrote Dr. Tushar, the chief operating officer of CAPT, and informed him that Dr. G had completed an anger management course and that Triana reconsidered his initial request and would allow Dr. G to remain working at SMMC.

[¶ 7] In an email dated March 25, 2008, Dr. Ramani informed Janice Ryba, an administrator for SMMC, that Dr. G resigned his position as an anesthesiologist at SMMC and that Dr. G informed CAPT that his last date of service would be June 13, 2008. The message also stated: " We have already been in contact with several well-qualified anesthesiologists regarding his open position and are confident that

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SMMC surgeons will continue to have excellent anesthesia service." Id. at 168. In a letter dated April 18, 2008, Ryba informed Dr. Gottlieb of CAPT that SMMC requested the removal of Dr. G. At some point, Dr. G no longer worked for CAPT.[3]

[¶ 8] On November 21, 2008, CAPT and SMMC entered into a termination agreement (the " Termination Agreement" ) in which the parties agreed to terminate the Agreement with an effective date of December 1, 2008. The Termination Agreement provided that CAPT agreed to " release Kandiyur Seshadri, M.D. ('Dr. Seshadri') from any and all applicable restrictive covenants that exist between CAPT and Dr. Seshadri, as well as any provisions of the Agreement which otherwise would prohibit [SMMC] from directly or indirectly employing or retaining Dr. Seshadri to provide anesthesia services at [SMMC] . . . ." Id. at 96-97. The release was conditioned upon SMMC paying CAPT $100,000 and compliance by SMMC with obligations under the Termination Agreement and certain provisions of the Agreement including Section 3.12 dealing with locum tenens, Section 6.3 dealing with compensation, and Section 9.15 dealing with non-solicitation. In an email dated December 11, 2008, Dr. Ramani sent Ryba data for locum tenens reimbursement which indicated that SMMC owed CAPT $219,378.47.

[¶ 9] On May 20, 2009, SMMC filed a complaint against CAPT alleging: Count I, breach of contract; Count II, conversion; Count III, interference with prospective business advantage; Count IV, constructive fraud; Count V, unjust enrichment; Count VI, imposition of constructive trust; and Count VII, action for an accounting. On July 24, 2009, CAPT filed its answer and counterclaim. In its counterclaim, CAPT alleged: Count I, breach of contract based upon SMMC's failure to pay amounts due upon reconciliation of Agreement; Count II, breach of contract based upon SMMC's failure to reimburse locum tenens costs; and Count III, breach of contract based upon SMMC's violation of the non-solicitation provision of the Agreement.

[¶ 10] On March 30, 2012, both parties filed motions for summary judgment. CAPT's motion alleged that " summary judgment will reserve for trial only the claims between the parties for failure to pay amounts due upon reconciliation of the [Agreement] presented by Count I of the Complaint and Count I of the Counterclaim." Id. at 124. On September 6, 2012, the court held a hearing on the motions.

[¶ 11] On June 28, 2013, the court entered an order which provided in part:

* * * * *
2. The parties' Motions for Summary Judgment, and, specifically, their respective breach of contract claims, center around three issues: (1) the meaning of the term " final reconciliation" ; (2) reimbursement of locum tenens costs to CAPT; and (3) the non-solicitation provision contained in the Agreement.
3. Indiana law provides that a contract shall be interpreted as a whole in a way that harmonizes all of its provisions and does not render any words, phrases or terms meaningless. T-3 Martinsville, LLC v. U.S. Holding, LLC, 911 N.E.2d 100, 111 (Ind. Ct. App. 2009) ...

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