Gianetti v. Norwalk Hosp. (Summary)

PHYSICIAN ENTITLEMENT TO LOST PROFITS

Gianetti v. Norwalk Hosp., Nos. 18549, 18550 (Conn. May 15, 2012)

The Supreme Court of Connecticut upheld a lower court’s order that a hospital pay a physician $258,000 in lost profits 28 years after the hospital terminated the physician’s privileges in contravention of its bylaws.  In 1984, the physician, a plastic and reconstructive surgeon, reapplied for hospital privileges but was denied.  He sued the hospital for breach of contract, leading to a lengthy court battle.  After several trials, the state courts ultimately found that the physician was a “lost volume seller,” and consequently was entitled to lost profits up to 1988, but not thereafter.  Both the hospital and physician appealed, necessitating that the state’s supreme court review the ruling.

On appeal, the hospital argued that the physician was not entitled to lost profits because he was not a “lost volume seller.”  The court disagreed, finding that a physician may qualify as a lost volume seller, and be entitled to profits lost due to a breach of contract by a hospital, if he proves that (1) he could have simultaneously performed both the breached contract and any new contracts, (2) the new contract would have been profitable, and (3) he would have entered into the new contract even if the old contract had not been breached.  The court found that the physician, under the specific facts of this case, had proven all of these requirements.

The physician, while accepting the ruling that he was a lost volume seller, appealed the court’s determination that he was entitled to lost profits only up to 1988.  The lower court had determined that the contract would end naturally in 1988.  The court found that the physician had offered no evidence to rebut the court’s conclusion, no evidence allowing the court to determine with reasonable certainty the amount of likely profits after 1988, nor any evidence that the court’s method of calculation was improper (other than his disagreement with the method).  The court also found that the physician was not entitled to interest because the hospital challenged in good faith the physician’s request for lost wages, an issue which was not resolved until over 25 years later.  Finally, the court determined that the physician was not entitled to attorney’s fees due to the hospital’s breach of fiduciary duty, because the court determined that the hospital did not actually owe the physician such a duty.