Case Title: LoPriesti v. Rutland Regional Health Services, Inc.

Citation: 177 Vt. 316, 2004 VT 105, 865 A.2d 1102

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2004-10-22T00:00:00Z

Document:
LoPresti v. Rutland Regional Health Services, Inc. (2003-222); 177 Vt. 316;
865 A.2d 1102

2004 VT 105

[Filed 22-Oct-2004]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 2004 VT 105

                                No. 2003-222

  Leigh LoPresti, M.D.	                         Supreme Court

                                                 On Appeal from
       v.	                                 Rutland Superior Court

  Rutland Regional Health Services, Inc.     	 April Term, 2004
  f/k/a Rutland Regional Physician Group, Inc.

  Richard W. Norton, J.

  James A. Dumont of Law Office of James A. Dumont, P.C., Bristol, for
    Plaintiff-Appellant.

  Allan R. Keyes of Ryan Smith & Carbine, Ltd., Rutland, for
    Defendant-Appellee.

  PRESENT:  Amestoy, C.J., (FN1) Dooley, Johnson and Skoglund, JJ., and 
            Gibson, J. (Ret.), Specially Assigned

        
       ¶  1.  JOHNSON, J.   Plaintiff, Dr. Leigh LoPresti, appeals from the
  superior court's summary judgment in favor of defendant, Rutland Regional
  Physician Group, Inc. (Physician Group), his former employer.  Dr. LoPresti
  claims that he was fired for his refusal to refer his patients to certain
  other Physician Group doctors whom he believed provided substandard and
  unnecessary care to his patients.   Dr. LoPresti claims that by firing him
  for this reason, Physician Group violated compelling Vermont public policy
  and the implied covenant of good faith and fair dealing.  Alternatively, 
  he seeks damages under a promissory estoppel theory.  Physician Group
  argued, and the trial court agreed, that because the written employment
  contract allowed for termination "with or without cause" after 180-day
  notice, the reasons for the firing were immaterial as a matter of law.  The
  court granted summary judgment on all counts.  We affirm the court's
  judgment on the implied covenant and promissory estoppel counts, but
  reverse and remand for further development and consideration of the public
  policy count.

       ¶  2.  In July 1994, Dr. LoPresti entered into a "Physician Employment
  Agreement" with Physician Group, a "Vermont Non-Profit Corporation . . .
  rendering professional services through those of its employees who are duly
  licensed to practice medicine in the State of Vermont."  Physician Group is
  not a hospital; it is a business arrangement among a group of doctors. 
  Physician Group employees receive a base salary plus incentive payments,
  group liability insurance, accounting, administrative and marketing
  services, support staff and office facilities.  In exchange, Physician
  Group collects and retains the fees that patients pay to the doctors it
  employs. 

       ¶  3.  Dr. LoPresti's contract was to continue until terminated in
  accordance with Section 1.2 of the agreement.  Notwithstanding any
  provision to the contrary, Section 1.2 set out a number of different
  circumstances under which the agreement could be terminated.  Section
  1.2(c)(ii) states that the agreement could be terminated "[o]ne hundred
  eighty (180) days after written notice of termination with or without cause
  from either party to the other."  The agreement also provides that Dr.
  LoPresti would render medical services primarily at the Manchester Family
  Health Center, "and at such other locations as mutually agreed between [Dr.
  LoPresti] and [Physician Group]."

       ¶  4.  As a primary care physician, Dr. LoPresti often had to refer
  patients to specialists for further care, and, as part of his referral
  responsibility, he would follow up with patients to assess their status
  after receiving specialized treatment. Dr. LoPresti began practicing in the
  Rutland area in 1991.  In his affidavit, Dr. LoPresti stated that, after
  several years in the area, he had familiarized himself with the practices
  of many area specialists.  During the course of his practice with Physician
  Group, Dr. LoPresti developed concerns about the quality of care that some
  of his patients were receiving from particular Physician Group specialists. 
  Dr. LoPresti alleged that one Physician Group doctor, Orthopedic Surgeon
  Doe, (FN2) was "performing unnecessary procedures unnecessarily
  hospitalizing patients."  Dr. LoPresti also concluded that two other
  Physician Group specialists, Obstetrician Doe and Surgeon Doe, were
  "providing clearly substandard care" that had "actually harmed more than
  one patient."  Though he routinely referred patients to other doctors
  within Physician Group, Dr. LoPresti greatly reduced the number of
  referrals he was making to the three specialists or stopped referring
  patients to them altogether.  At one point, Physician Group's President,
  Thomas Huebner, apparently told Dr. LoPresti that Orthopedic Surgeon Doe
  was complaining about the small number of cases that Dr. LoPresti had been
  referring to him. 

       ¶  5.  In 1998, Physician Group officials, including Mr. James Hagen,
  Dr. Robert Cross, and President Huebner, informed Dr. LoPresti that the
  Manchester office, where he worked with one other primary care physician,
  Dr. Leffel, might be closed due to insufficient revenue.  Dr. LoPresti did
  not agree with Physician Group's revenue conclusions and proposed course of
  action.  He requested, and was granted, a meeting with President Huebner
  and Physician Group's Medical Practice Committee (MPC). 
   
       ¶  6.  At the July 1998 MPC meeting, Dr. LoPresti made a detailed
  presentation on the Manchester office revenue situation with suggestions
  for how it could be improved.  After his presentation, Dr. LoPresti was
  asked to leave so that the MPC could meet in executive session.  As a
  result of the July meeting, the MPC decided to move Dr. Leffel to another
  office, close the Manchester office, and terminate Dr. LoPresti's contract. 
  The day after the MPC executive session, Huebner gave Dr. LoPresti written
  notice of termination pursuant to Section 1.2(c)(ii) of his contract. 
  Consistent with the terms of the contract, the letter of termination
  provided no explanation as to why Dr. LoPresti was being fired except to
  say that the decision was made "[a]fter seeking input from the Medical
  Practice Committee as well as the Board of Directors."   

       ¶  7.  Despite its decision to terminate Dr. LoPresti, Physician Group
  did not ultimately close the Manchester office.  Dr. LoPresti asserts that
  he was more senior than Dr. Leffel, was seeing more patients than she was,
  and that he participated on three Physician Group committees while Dr.
  Leffel did not serve on any.  In addition, of all the Physician Group
  primary care physicians, Dr. LoPresti had received the highest satisfaction
  ratings from his patients.  Thanks to Dr. LoPresti's high ratings,
  Physician Group received a financial award from the HMO Kaiser Permanente. 
  Dr. Leffel had not received any comparable recognition.  Dr. Leffel had,
  however, been making regular referrals to the Physician Group specialists
  that Dr. LoPresti avoided using. 

       ¶  8.  Unsatisfied with the circumstances of his termination, Dr.
  LoPresti filed suit in July 2001 alleging breach of contract based on the
  implied covenant of good faith and fair dealing, wrongful discharge in
  violation of public policy, and promissory estoppel.  Initially, Dr.
  LoPresti alleged that Physician Group retaliated against him for his
  frequent complaints regarding proposed benchmarks for physician
  profitability related to the number of patients a Physician Group doctor
  should see in one day.  
   
       ¶  9.  Due to a number of scheduling conflicts, discovery proceeded
  very slowly.  By deposing Dr. Cross, one of the physicians present during
  the MPC executive session when the MPC decided to terminate Dr. LoPresti,
  the doctor learned that there was perhaps another reason why he was
  terminated: his referral practices.

       ¶  10.  Of the Physician Group personnel who were at the MPC executive
  session and were deposed by Dr. LoPresti, only Dr. Cross could remember
  details of the one and one-half hour conversation that took place.  Dr.
  Cross stated that the MPC "talked about Leigh's style of practice, Leigh's
  style of interacting with specialists in the area.  And the feeling - and
  his interaction with other members of [Physician Group], and the feeling
  was that he hadn't created the relationship with the specialists to be
  optimistic that it would grow into the future." Dr. Cross also indicated
  that physicians from other offices lacked enthusiasm about the prospect of
  Dr. LoPresti joining them in the event that the Manchester office was
  closed.  Dr. Cross testified that this feeling was "[m]ostly . . . based on
  that Leigh had created a lot of - I guess had created a lot of lack of
  support by the specialists in the Rutland area.  As the person to lead that
  practice, there were a number of specialists that thought Leigh ought not
  to be the head of the practice there."  When asked to describe the nature
  of the concern raised by the specialists, Dr. Cross responded in part by
  stating that "he [Dr. LoPresti] could have consulted and utilized the
  specialists more for patient benefit."  Prior to the MPC executive session,
  Dr. Cross had also heard complaints from certain specialists about the lack
  of referrals from Dr. LoPresti.  Dr. Cross summed up the situation as one
  of "frustration and dissatisfaction among the specialists."   
   
       ¶  11.  Based on these late-stage revelations, Dr. LoPresti sought to
  amend his complaint to incorporate the allegations that his termination was
  related to his referral practices. (FN3)  Specifically, he alleged that his
  referral practices had been guided by both the American Medical
  Association's Principles of Medical Ethics (AMA Principles) and Physician
  Group's own internal Code of Ethics.  He claimed that the implied covenant
  of good faith and fair dealing prohibited Physician Group from firing him
  for these reasons because doing so would undermine the parties' reasonable
  expectations about the contract's common purpose.  Further, he claimed that
  clear and compelling public policy restrained Physician Group from firing
  him over his referral practices.   He argued that his obligation to abide
  by the ethical code of his profession, thereby protecting his patients,
  took precedence over Physician Group's conflicting demands.     
                                          
       ¶  12.  Physician Group moved for summary judgment on July 15, 2002. 
  In its memorandum of law accompanying its motion, Physician Group argued
  that the contract provision requiring 180- day notice prior to no-cause
  termination controlled the dispute absolutely.  Accordingly, it argued that
  its reasons for termination were immaterial as a matter of law,
  notwithstanding the implied covenant of good faith and fair dealing or
  public policy restraints on contracts.  It argued that no compelling public
  policy supported Dr. LoPresti's theory that Physician Group should have
  been prohibited from firing him because of his resistance to proposed
  benchmarks requiring Physician Group doctors to see a certain number of
  patients per day, or his ethical concerns about referring patients to
  certain specialists.  Physician Group also argued that Dr. LoPresti's
  promissory estoppel claim must fail because that theory is unavailable when
  there is a written contract between the parties, as there was in this case. 
  Further, in its reply memorandum to Dr. LoPresti's memorandum in opposition
  to summary judgment, Physician Group argued that "[p]laintiff has not
  produced admissible evidence of specific facts to show a genuine issue for
  trial as to the alleged reason for termination." 

       ¶  13.  After hearing oral argument from the parties, the trial court
  granted Physician Group summary judgment.  In its opinion and order, the
  court concluded that Dr. LoPresti's assertions regarding the causal
  connection between his discharge and his refusal to refer to specialists
  based on professional ethical objections were immaterial and did not alter
  the right of either party to terminate the agreement for any reason.  The
  only facts that the court considered relevant were the  written contract
  between the parties containing the "with or without cause" termination
  clause and Physician Group's compliance with the clause's terms when it
  terminated Dr. LoPresti.  The court ruled that the reasons why Physician
  Group terminated Dr. LoPresti were "moot, as a matter of law."  The court
  also noted that Dr. LoPresti's complaint had been filed more than one and
  one-half years earlier, and on summary judgment, "other than Dr. LoPresti's
  conclusory allegations, there [was] no evidence of bad faith in [Physician
  Group]'s utilization of the explicit termination clause of the employment
  contract."  For the reasons set forth below, we disagree in part with the
  trial court's ruling, and so reverse and remand for further proceedings.

       ¶  14.  We review a trial court's decision on summary judgment de
  novo, applying the same standard as the trial court.  White v. Quechee
  Lakes Landowners' Ass'n, 170 Vt. 25, 28,