Kent Farnsworth v. Lutheran Medical Group, LLC (mem. dec.)

FILED
MEMORANDUM DECISION Dec 19 2019, 10:37 am
CLERK
Indiana Supreme Court
Pursuant to Ind. Appellate Rule 65(D), this Court of Appeals
and Tax Court
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.
APPELLANT PRO SE ATTORNEYS FOR APPELLEE
Kent Farnsworth Roger K. Kanne
Fort Wayne, Indiana David D. Becsey
Erin E. Meyers
Zeigler Cohen & Koch
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Kent Farnsworth, December 19, 2019
Appellant-Plaintiff, Court of Appeals Case No.
19A-PL-1726
v. Interlocutory Appeal from the
Allen Superior Court
Lutheran Medical Group, LLC, The Hon. Craig J. Bobay, Judge
Appellee-Defendant. Trial Court Cause No.
02D02-1903-PL-113
Bradford, Judge.
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Case Summary
[1] As of 2017, Dr. Kent Farnsworth, M.D., practiced internal medicine for
Lutheran Medical Group, LLC, in Fort Wayne. That year, Lutheran’s Practice
Management Committee (“the Committee”) voted to eliminate call-coverage
duties for Dr. Farnsworth (among others) at Lutheran Hospital (“the
Hospital”). In March of 2019, Dr. Farnsworth sued Lutheran, claiming that it
had breached the terms of its employment agreement (“the Agreement”) with
him by eliminating call coverage. At the same time, Dr. Farnsworth requested
that the trial court enjoin enforcement of the non-compete provisions of the
Agreement, a request the trial court denied. Dr. Farnsworth contends that the
trial court abused its discretion in denying his request for a preliminary
injunction. Because we disagree, we affirm.
Facts and Procedural History
[2] Dr. Farnsworth has practiced internal medicine in Indiana since 1996. In 2009,
Dr. Farnsworth became employed by Lutheran in the Internal Medicine
Section (“the Medical Group”), pursuant to the Agreement. The Agreement
provided that Dr. Farnsworth was to render “Professional Medical Services and
such reasonable administrative and management services as may be delegated
to Physician by Employer on an exclusive basis, in accordance with all of the
terms and conditions of this Agreement.” Appellant’s App. Vol. II p. 36.
[3] More specifically, the Agreement provided that Dr. Farnsworth was to conduct
office visits during normal business hours as determined by Lutheran, upon
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mutual agreement by Dr. Farnsworth, in consultation with the Committee.
The Agreement also provided that Dr. Farnsworth’s duties included
providing on-call coverage for patients of the Hospital (i.e.
Emergency Room Call) after regular business hours in
coordination with other Medical Group Physicians, in accordance
with a schedule established by [the Committee] as necessary to
satisfy the Medical Group Physicians’ obligations under the
Hospital’s Medical Staff Bylaws, rules and regulations, and
providing on-call coverage after regular business hours for patients
of Physician or other physicians practicing in the same Medical
Office in coordination with such other physicians, in accordance
with a schedule established by [the Committee.]
Appellant’s App. Vol. II p. 38. Hospital call coverage is a practice pattern that
can place heavy demands on a physician’s time because it requires admitting
and performing rounds on hospitalized inpatients before and after regular office
hours, including weekends. Dr. Farnsworth was also required to comply with
the policies and procedures established by Lutheran through the Committee as
they were liable to change from time to time. Finally, the Agreement contained
a non-competition provision, pursuant to which Dr. Farnsworth agreed that
after leaving employment with Lutheran, he would not practice medicine for
one year within a thirty-mile radius of Lutheran’s Hospital and Medical Office.
[4] In 2017, after one the internists in the Medical Group left, several of the
remaining internists decided that they no longer wanted to provide call
coverage at the Hospital. The Medical Group held a vote, which resulted in
three internists voting to continue call coverage and three voting to end it. The
deadlock was referred to the Ops-Finance Subcommittee (“Finance
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Subcommittee”) of the Committee. The Finance Subcommittee determined
and recommended to the Committee that the Medical Group no longer be
scheduled to have call-coverage duty in the Hospital.
[5] On April 20, 2017, the Committee held a meeting at which Dr. Farnsworth was
present. As it happens, Dr. Farnsworth had been a member of the Committee
for eighteen years. The Committee voted unanimously in favor of the Medical
Group call-coverage schedule change. The schedule change was reaffirmed,
again by unanimous vote, on May 18, 2017. On October 1, 2017, the new
Hospital call-coverage schedule went into effect.
[6] Over the course of the next year or so, Dr. Farnsworth noticed a significant
decrease in his compensation as a result of the elimination of call coverage. On
December 7, 2018, Dr. Farnsworth notified the Finance Subcommittee that he
considered the call-coverage schedule change to be a breach by Lutheran of the
Agreement. Checking with other members of the Medical Group revealed that
none of the other internists desired to resume call coverage.
[7] On February 18, 2019, Dr. Farnsworth received a letter from Lutheran, which
stated:
Thank you for taking the time to discuss your concerns with me.
While we have not breached our employment agreement, allow
this letter to document, permit and clarify that you shall have
complete control over the diagnosis and treatment of patients
assigned to you, including the ability to round on same in the
hospital, before and after normal business hours. In addition, our
employment agreement does not obligate us to create an on-call
schedule, or provide you a call group, but requires you to provide
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on-call services should such a schedule be created. Currently, no
such schedule exists.
Appellant’s Br. p 35.
[8] On March 29, 2019, Dr. Farnsworth filed suit against Lutheran, alleging breach
of the Agreement and seeking declaratory judgment. Dr. Farnsworth claimed
that Lutheran had breached the Agreement by changing the call-coverage
schedule on April 20, 2017. Dr. Farnsworth also moved to preliminarily enjoin
enforcement of the non-competition provision of the Agreement. On June 27,
2019, the trial court denied Dr. Farnsworth’s motion for a preliminary
injunction.
Discussion and Decision
[9] Dr. Farnsworth contends that the trial court abused its discretion in denying his
motion to preliminarily enjoin enforcement of the non-compete provisions of
the Agreement. “The grant or denial of a preliminary injunction rests within
the sound discretion of the trial court, and our review is limited to whether
there was a clear abuse of that discretion.” Ind. Family & Soc. Servs. Admin. v.
Walgreen Co., 769 N.E.2d 158, 161 (Ind. 2002) (citing Harvest Ins. Agency, Inc. v.
Inter-Ocean Ins. Co., 492 N.E.2d 686, 688 (Ind. 1986)).
To obtain a preliminary injunction, the moving party must
demonstrate by a preponderance of the evidence: (1) a reasonable
likelihood of success on the merits; (2) the remedies at law are
inadequate, thus causing irreparable harm pending resolution of
the substantive action; (3) the threatened injury to the moving
party outweighs the potential harm to the nonmoving party from
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the granting of an injunction; and (4) the public interest would not
be disserved by granting the requested injunction.
Ind. High Sch. Athletic Ass’n, Inc. v. Cade, 51 N.E.3d 1225, 1235 (Ind. Ct. App.
2016).
[10] In addition, Dr. Farnsworth is appealing from a negative judgment, where he
failed to prevail on a claim where he had the burden of proof. Dr. Farnsworth
must therefore establish that the trial court’s judgment is contrary to law.
Pinnacle Healthcare, LLC v. Sheets, 17 N.E.3d 947, 953 (Ind. Ct. App. 2014). “A
judgment is contrary to law only if ‘the evidence in the record, along with all
reasonable inferences, is without conflict and leads unerringly to a conclusion
opposite that reached by the trial court.’” Id. (quoting Carley v. Lake Cty. Bd. of
Elections & Registration, 896 N.E.2d 24, 32 (Ind. Ct. App. 2008), trans. denied). If
the trial court correctly concluded that Dr. Farnsworth failed to establish any
one of the four requirements for a preliminary injunction by a preponderance of
the evidence, we will affirm.
[11] We choose to first address Dr. Farnsworth’s claim that he established a
likelihood of success on the merits. “To obtain a preliminary injunction, the
party seeking the injunction must have a reasonable likelihood of prevailing on
the merits.” Bowling v. Nicholson, 51 N.E.3d 439, 444 (Ind. Ct. App. 2016),
trans. denied. To demonstrate this element, the moving party is not required to
show that he is entitled to relief as a matter of law, but only that success on the
merits is probable. See id.
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[12] As mentioned, Dr. Farnsworth’s underlying claim is that Lutheran breached
the Agreement. To prevail in any contract action under Indiana law, a plaintiff
must establish that (1) a contract existed; (2) the defendant breached the
contract; and (3) the plaintiff suffered damage as a result of defendant’s breach.
Roche Diagnostics Operations, Inc. v. Marsh Supermarkets, LLC, 987 N.E.2d 72, 85
(Ind. Ct. App. 2013), trans. denied. Contract construction is a question of law
for the court, and if the intention of the parties can be ascertained from their
written expression, that intention must be carried out by the court. Eck &
Assocs., Inc. v. Alusuisse Flexible Packaging, Inc. 700 N.E.2d 1163, 1167 (Ind. Ct.
App. 1998), trans. denied.
[13] “Indiana courts have long recognized and respected the freedom to contract.”
Id. (quoting Trotter v. Nelson, 684 N.E.2d 1150, 1152 (Ind. 1997)). The courts
should interpret contracts as a whole to determine the intent of the parties. Id.
“‘[T]he general rule of freedom to contract includes the freedom to make a bad
bargain.’” Indpls.–Marion Cty. Pub. Library v. Chadier Clark & Linard, PC, et al.,
929 N.E.2d 838, 852 n.13 (Ind. Ct. App. 2010) (quoting Ind. Bell Tel. Co. v.
Mygrant, 471 N.E.2d 660, 664 (Ind. 1984)), trans. denied.
[14] Specifically, Dr. Farnsworth argues that the Committee’s elimination of call
coverage constituted a breach of the Agreement. The Agreement provided, in
part, that Dr. Farnsworth was required to provide call coverage “in accordance
with a schedule established by [the Committee] as necessary[.]” Appellant’s
App. Vol. II p. 38. So, the Agreement clearly provides that the call-coverage
schedule was to be established by the Committee.
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[15] Dr. Farnsworth does not dispute that the Committee (of which he was a
member) had the authority to establish the call-coverage schedule. Dr.
Farnsworth does argue, however, that the Committee was not authorized to
eliminate call coverage altogether. This argument ignores the fact that the
Agreement provides that a schedule would be established “as necessary[.]”
Appellant’s App. Vol. II p. 38. In other words, if no call coverage was deemed
necessary, none need have been scheduled. Moreover, the Agreement clearly
provided that Dr. Farnsworth was required to perform those medical services
delegated to him by Lutheran, and Lutheran simply decided to no longer
delegate call coverage to him.
[16] Dr. Farnsworth also contends that the elimination of call coverage ran afoul of
Section 11 of the Agreement, which prevented the Committee from exercising
“any direct supervision or control over the individual treatment of patients by
[Dr. Farnsworth.]” Appellant’s App. Vol. II p. 45. We have little hesitation in
concluding that the elimination of call coverage did not amount to the
Committee directly supervising or controlling Dr. Farnsworth’s care over any
individual patient. By eliminating call coverage, the Committee was merely
removing a class of patients from Dr. Farnsworth’s care, which is not the same
thing.1
1
If we were to accept Dr. Farnsworth’s argument on this point and follow it to its logical conclusion, any
decision by the Committee regarding a call-coverage schedule—be it elimination, establishment, or
alteration—would have violated Section 11 of the Agreement.
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[17] Given the Agreement’s clear language granting the Committee the power to
establish (or not establish) a call-coverage schedule, Dr. Farnsworth has failed
to show a reasonable likelihood of success on the merits of his breach-of-
contract claim. Consequently, Dr. Farnsworth has not established that the trial
court abused its discretion in denying his request to enjoin enforcement of his
non-compete agreement with Lutheran.
[18] We affirm the judgment of the trial court.
Altice, J., concurs.
Robb, J., concurs in result with opinion.
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IN THE
COURT OF APPEALS OF INDIANA
Kent Farnsworth, Court of Appeals Case No.
19A-PL-1726
Appellant-Plaintiff,
v.
Lutheran Medical Group, LLC,
Appellee-Defendant,
Robb, Judge, concurring in result.
[19] I agree that the trial court did not abuse its discretion in denying Dr.
Farnsworth’s request to enjoin the enforcement of the Agreement. However, I
do so for different reasons than the majority.
[20] The Agreement states that Dr. Farnsworth’s duties include providing on-call
coverage “in accordance with a schedule established by [the Committee] as
necessary to satisfy the [Medical Group’s] obligations[.]” Appellant’s App.,
Vol. II at 38. To me, that implies that there will be an on-call schedule and
therefore, eliminating the on-call schedule altogether would be a breach of the
Agreement. However, Dr. Farnsworth was a member of the Committee that
voted unanimously to eliminate the on-call coverage schedule, which means he
agreed to the change. See slip op. at ¶ 5. For that reason, I do not believe he
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has demonstrated by a preponderance of the evidence a reasonable likelihood of
success on the merits, and I would affirm the trial court’s judgment on that
basis.
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