Shelbyville Hosp. Corp. v. Mosley (Summary)

RECRUITMENT AGREEMENTS

Shelbyville Hosp. Corp. v. Mosley, No. 4:13-cv-088 (E.D. Tenn. Nov. 24, 2014)

The United States District Court for the Eastern District of Tennessee granted in part and denied in part a hospital’s motion to dismiss an orthopedic surgeon’s claims for breach of contract, intentional interference with a business relationship, and negligent misrepresentation. Plaintiff, an orthopedic surgeon, was recruited by defendant, a hospital, to open a practice at a clinic owned by the hospital. The surgeon alleged that during negotiations the hospital supplied him with false information regarding the practice’s potential profitability and indicated that there would be an x-ray service and facility available to him. But after opening his practice, he alleged, the hospital removed the x-ray equipment that had previously been located next door, failed to replace signage referring to the previous orthopedic practice, placed a competing surgeon in his office space, and otherwise interfered with his attempts to successfully establish his practice. The hospital sued the surgeon for breach of the recruitment agreement, seeking to recoup guarantee payments that had been paid. The surgeon counterclaimed for breach of contract, intentional interference with a business relationship, and negligent misrepresentation.

The court dismissed the breach of contract claim on the basis that the recruitment agreement (the contract) did not address the issues which the surgeon complained hurt his practice (that the hospital removed the x-ray equipment that was located next to his practice, failed to replace signage from the old practice, and removed an ice maker and copier from his practice) and, in turn, could not form the basis of a breach of contract claim. The court allowed the surgeon’s claim for fraud in the inducement to move forward, however, noting that his claim could be successful if he can show that the hospital knowingly misrepresented the financial prospects for his orthopedic practice (by providing inaccurate figures regarding earnings by the prior group).