Alloush v. Physician Cardiovascular Venture, LLC (Summary)

CONTRACT DISPUTE

Alloush v. Physician Cardiovascular Venture, LLC, No. 2011-T-0112 (Ohio Ct. App. June 10, 2013)

The Court of Appeals of Ohio reversed and remanded a lower court’s grant of summary judgment in favor of a cardiologist, holding that a jury must decide whether the cardiologist actually retired from the practice of medicine before the court can determine whether there was a material breach of the operating agreement governing his practice with a limited liability corporation (“LLC”).  The cardiologist at issue had purchased membership units in an LLC that owned and operated cardiac catheterization labs, the terms of which were controlled by an operating agreement.  One of the terms of the operating agreement required all members to maintain appointment and clinical privileges at a local hospital.  After the cardiologist resigned from the staff of the hospital, the LLC determined that the cardiologist’s resignation violated the terms of the operating agreement and thus his interest in the entity was paid out at a punitive rate per the terms of the agreement.  However, the cardiologist claimed that he had not just resigned from the hospital, but had retired from the practice of medicine altogether, which should be considered a “triggering event” under the agreement which would give him a payout at a much higher rate.  The lower court had determined that the cardiologist had not breached the agreement and that the LLC should have purchased his units pursuant to the higher formula amount.  The appellate court disagreed, finding that whether he had actually retired was a question of fact especially considering that he had taken affirmative steps to maintain his medical license and had written prescriptions for various family members following the date of his alleged retirement.