Hospitalists of Nw. Mich., P.L.C. v. Fischer (Summary)

PHYSICIAN EMPLOYMENT TERMINATION

Hospitalists of Nw. Mich., P.L.C. v. Fischer, Nos. 301962, 302126 (Mich. Ct. App. Oct. 10, 2013)

The Court of Appeals of Michigan affirmed in part and reversed in part a lower court’s ruling on a professional physician corporation’s action seeking payment of a member physician’s outstanding loan balance and other amounts allegedly owed, agreeing that the loan agreement between the corporation and the physician, requiring the physician to make monthly payments and allowing the corporation to accelerate the loan upon default of the payments, was still in effect, as the physician’s obligation to repay the loan arose under an agreement separate from his employment agreement and the separation agreement that he ultimately executed at the end of his employment affirmed that the loan agreement remained in full force and effect.

Although the physician argued that the corporation waived its default events under the loan agreement when the physician’s employment ended, the separation agreement provided that remaining provisions of his employment agreement, including terms of his compensation and the repayment of the loan, remained in full force and effect. However, the court did agree with the physician’s argument that the additional money sought by the corporation for “overhead expenses” was mischaracterized and miscalculated because it incorrectly treated the physician as an employee who was terminated for cause, with no entitlement to the money he collected on his accounts receivable, which was inconsistent with the court’s proper determination that the physician was terminated pursuant to a separation agreement that entitled him to keep the accounts receivable and have it applied against his outstanding loan balance.