Flint Emergency Med., LLC v. Macon Cnty. Med. Ctr., Inc. (Summary)

BREACH OF CONTRACT

Flint Emergency Med., LLC v. Macon Cnty. Med. Ctr., Inc., No. 5:12-CV-105 (MTT) (M.D. Ga. Oct. 2, 2013)

The United States District Court for the Middle District of Georgia denied an emergency department group’s motion for summary judgment, and granted in part and denied in part a hospital’s motion for summary judgment, in a breach of contract claim and counterclaim.

The hospital and emergency department group entered into a contract in which the group would provide services for patients in the hospital’s emergency department, as well as a medical director, physicians, and midlevel providers for collections from professional fees billed.  The contract also provided for a base payment from the hospital to the emergency department group  as well as supplemental payments if patient volume fell below certain levels.  The hospital terminated the contract after approximately 1 ½ years, after which both parties alleged that the other had breached the contract – the hospital claimed that the emergency department group did not abide by the hospital’s policies and regulations and the group claimed that the hospital did not fulfill payment terms.

The emergency department group moved for summary judgment on the hospital’s counterclaim, arguing that the hospital cannot sue the group because the hospital unilaterally terminated the contract without notice and an opportunity to cure, as set forth in the contract.  The district court, in denying the motion, found that the contract did not set forth remedies in case of breach; rather, it set forth how the contract can be properly terminated, imposing notice and cure requirements as conditions precedent to a proper termination.  The court reasoned, per the agreement, that a party that terminates the contract without abiding by the notice and cure requirements breaches the agreement but does not preclude itself from asserting other claims for breach.  The court also reasoned that the contract did not require that either party give notice of a breach prior to suing on the alleged breach.

The hospital moved for summary judgment on the emergency department group’s claim of breach of contract, arguing that the group did not properly notify the hospital of the hospital’s breaching conduct.  The court found that the emergency department group had no affirmative obligation to notify the hospital, and denied this motion.  The hospital also moved for summary judgment on the emergency department group’s claim that the hospital breached the contract by employing several physicians and a nurse practitioner who had been employed by the group.  The court granted this motion, and found that while the contract stated that neither party could offer employment to each other’s providers, it specifically exempted providers who held privileges at the hospital prior to the contract.

Finally, the court held that whether the hospital owes the emergency department group outstanding subsidy payments must be resolved by a jury as it is a factual dispute.