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Care Group Heart Hospital v. Sawyer

Court of Appeals of Indiana

June 22, 2017

The Care Group Heart Hospital, Appellant-Defendant,
v.
Roderick J. Sawyer, M.D., Appellee-Plaintiff.

         Appeal from the Marion Superior Court Trial Court Cause Nos. 49D10-1208-PL-32513, 49D10-1307-PL-28479 The Honorable David J. Dreyer, Judge

          Attorney for Appellant John R. Maley Barnes & Thornburg LLP Indianapolis, Indiana

          Attorneys for Appellee Kevin W. Betz Sandra L. Blevins Benjamin C. Ellis Betz Blevins Indianapolis, Indiana

          Brown, Judge.

         [¶1] The Care Group Heart Hospital (the "Hospital") appeals from an order denying its motion to dismiss issued on January 28, 2013, a final judgment entered on February 18, 2016, and an order denying its motion to correct errors issued the same day, in favor of Roderick J. Sawyer, M.D.[1] The Hospital raises one issue which we revise and restate as whether the trial court erred in denying the Hospital's motion to dismiss and in entering judgment in favor of Dr. Sawyer. Additionally, Dr. Sawyer presents the following issues on cross-appeal:

I. Whether the court erred in granting partial summary judgment in favor of the Hospital; and
II. Whether the court abused its discretion in awarding attorney fees to

         Dr. Sawyer as a result of the Hospital's misconduct during discovery.

         We affirm in part, reverse in part, and remand.[2]

         Facts and Procedural History

         [¶2] Dr. Sawyer began practicing as a cardiologist in 1996 and became a partner/shareholder of The Care Group ("TCG") in 1999. In 2003, he became a member of the Hospital when it was founded by physicians of TCG and St. Vincent Health. On July 1, 2010, St. Vincent Health purchased the assets of TCG, resulting in the formation of the St. Vincent Medical Group, Inc. ("SVMG"). At that point, Dr. Sawyer became an employee of SVMG. On July 22, 2011, SVMG notified Dr. Sawyer by letter that his employment was terminated, effective immediately. The letter stated:

The decision to terminate your [employment] was made due to your continued failure to comply with SVMG's policies, guidelines and expectations around appropriate coding services and medical record documentation, despite SVMG's efforts to help you improve. Further, as we have also discussed on several occasions, your office management style and unprofessional behavior has contributed to a dysfunctional work environment.

Appellant's Appendix Volume 2 at 116.

         [¶3] The relationship between Dr. Sawyer, SVMG, and the Hospital is governed by three contracts. First, SVMG and Dr. Sawyer are parties to an employment agreement (the "Employment Agreement") regarding Dr. Sawyer's employment by SVMG as a cardiologist. Second is the Amended and Restated Operating Agreement of the Hospital (the "Operating Agreement"), signed by the Hospital's secretary, which governs "certain aspects of the operations" of the Hospital and sets forth "the rights and obligations of the Members, " which included Dr. Sawyer. Id. at 118. Third, SVMG, Dr. Sawyer, and the Hospital signed a "Joinder Agreement" regarding the redemption of Dr. Sawyer's membership interest in the Hospital in the event of the termination of his employment. Id. at 114.

         [¶4] The letter of July 22, 2011, stated that Dr. Sawyer's employment under the Employment Agreement was terminated pursuant to Section 4.2-2(a) and 4.2- 2(i). Those provisions, as well as other relevant sections of the Employment Agreement, are as follows:

ARTICLE IV TERM AND TERMINATION
4.1 Term. This Agreement shall be effective as of the date of its execution but the employment contemplated hereunder shall begin on July 1, 2010 ("Physician's Start Date"). The Agreement shall have a term of ten (10) years beginning with Physician's Start Date. The Agreement shall automatically renew thereafter for one (1) year terms . . . .
4.2 Termination. Notwithstanding Section 4.1, this Agreement shall terminate on the occurrence of any of the following events:
* * * * *
4.2-2 Immediate Termination for Cause. [SVMG] may immediately terminate this Agreement at its sole option by providing Physician written notice, upon the occurrence of any of the following:
(a) any act or omission of Physician which, in [SVMG's] reasonable opinion, after consultation with the Division (or as determined through the Division's peer review process for (i) the evaluation of the qualifications, competence, or professional conduct of a professional health care provider, or (ii) the evaluation of patient care (collectively, the "Peer Review Matters"), as set forth in I.C. § 34-30-15-16), is grossly and materially contrary to the business interests, reputation or goodwill of [SVMG];
** * * *
(i) in [SVMG's] reasonable opinion, Physician consistently fails to provide professional medical services within the standard of care expected by [SVMG];
** * * *
ARTICLE VIII
MISCELLANEOUS
8.14 Joinder Agreement re: SVHCI. If, as of the date of this Agreement, Physician is a member of [the Hospital], as a continuing condition of employment hereunder a Joinder Agreement having the form attached hereto as Exhibit C shall remain in effect as among Physician, [the Hospital], and [SVMG].

Id. at 94-95, 103. Dr. Sawyer signed the Employment Agreement on May 10, 2010, and Richard I. Fogel, M.D., signed as CEO of SVMG on June 25, 2010.

         [¶5] The Joinder Agreement provides as follows:

This Joinder Agreement is effective as of the 1st day of July, 2010, by and among [SVMG], [the Hospital], and Roderick J. Sawyer, M.D. ("Physician").
WHEREAS, [SVMG] and the Physician are parties to that certain Physician Employment Agreement of even [sic] date herewith (the "Agreement"); and
WHEREAS, Physician is a member of [the Hospital]; and
WHEREAS, [the Hospital] is a member of St. Vincent Heart Center of Indiana, LLC ("SVHCI"); and
WHEREAS, the parties hereto desire that Physician and [the Hospital] shall cause Physician's membership interest in [the Hospital] to be redeemed and Physician to no longer have any continuing direct or indirect membership, ownership or investment interest in SVHCI in the event that Physician's employment referenced in the Agreement is terminated for any reason (other than a termination pursuant to Section 4.4(c)[3] of the Agreement).
NOW THEREFORE, in consideration of the foregoing premises and the mutual agreements and covenants contained herein, the parties hereto agree as follows:
1. Mandatory Redemption. Within ninety (90) days of any termination of employment between Physician and [SVMG] . . . and provided that [the Hospital] then holds a membership interest in SVHCI, Physician and [the Hospital] shall cause Physician to be redeemed of his interest in [the Hospital] such that, following such redemption, Physician shall have no continuing direct or indirect membership, ownership or investment interest in SVHCI.

Id. at 114. The Joinder Agreement stated that the parties executed the agreement as of the date noted, July 1, 2010, and was signed by Richard I. Fogel, M.D., FACC, as CEO of SVMG, James B. Hermiller, M.D., FACC, FSCAI, as Board Chairman of the Hospital, and Dr. Sawyer.

         [¶6] In addition, the relevant portions of the Hospital's Operating Agreement are as follows:

AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and in consideration of becoming a Member of the [Hospital], ...

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