Harper v. Healthsource New Hampshire, Inc.

• Decision Date: 09 April 1996
• Docket Number: No. 95-535,95-535
• Parties: Paul J. HARPER, M.D. v. HEALTHSOURCE NEW HAMPSHIRE, INC.
• Court: New Hampshire Supreme Court

Page 962

674 A.2d 962

140 N.H. 770

Paul J. HARPER, M.D. v. HEALTHSOURCE NEW HAMPSHIRE, INC.

No. 95-535.

Supreme Court of New Hampshire.

April 9, 1996.

Stanton E. Tefft, Bedford, on the brief and orally, for plaintiff.

Dean, Rice & Howard, P.A., Manchester (Mark W. Dean, on the brief and orally, and Eric A. Kane, on the brief), for defendant.

Sulloway & Hollis, Concord (Martin L. Gross, on the brief), for New Hampshire Medical Society, as amicus curiae.

BROCK, Chief Justice.

The plaintiff, Paul J. Harper, M.D., sued the defendant, Healthsource New Hampshire, Inc. (Healthsource), after Healthsource terminated their contractual relationship. Harper appeals from the Superior Court (Smukler, J.) decision granting Healthsource's motion to dismiss each of Harper's claims. We affirm in part, reverse in part, and remand.

Pursuant to our standard for reviewing rulings on motions to dismiss, we assume the following facts alleged by Harper to be true for purposes of this appeal. See Claire Murray, Inc. v. Reed, 139 N.H. 437, 438, 656 A.2d 822, 823 (1995). Harper is a board-certified surgeon licensed to practice medicine in New Hampshire since 1978. Healthsource is a New Hampshire health maintenance organization governed by the regulations contained in RSA chapter 420-B. Harper has been a participating physician with Healthsource, as a surgeon and as a primary care provider, since shortly after it was organized in 1985. Over the course of their ten-year relationship, Harper's patient base of between 3,000 and 4,000 people has evolved so that approximately thirty to forty percent of his patients are now Healthsource-related, either as regular subscribers, workers' compensation patients, State employees, or welfare patients covered by Healthsource medicaid payments.

In 1989, Healthsource re-enrolled Harper as a primary care physician but did not re-enroll him as a surgeon. Harper states in his writ that in June 1994, he "realized that [Healthsource] was ... manipulating and skewing the records of treatment he had provided to several of his patients and that such inaccuracies adversely affected other subsequent reports." After Harper notified Healthsource of his concerns about the accuracy of his patients' records, Healthsource informed him that its credentialing committee had reviewed his record and found no evidence of a quality of care problem, but nevertheless was recommending that his contract be terminated because he had not satisfied its "recredentialing criteria."

Harper appealed this recommendation to the clinical quality assurance committee, requesting copies of whatever documentation the credentialing committee had relied upon to make its recommendation. See RSA 420-B:26, II (Supp.1995). Healthsource refused to provide the requested material but advised Harper that he could present evidence to counter Healthsource's evidence. Harper did not participate in the clinical quality assurance committee hearing because of Healthsource's refusal to provide him with this documentation. The committee affirmed the decision to terminate Harper for cause but also decided to terminate him without cause, which the credentialing committee had not done.

Harper appealed to the Healthsource Executive Management Committee. This group held another hearing, which Harper attended. Healthsource presented no evidence at this hearing, nor did it accede to Harper's renewed requests for access to the evidence supporting Healthsource's decision. The executive management committee upheld the clinical quality assurance committee's decision to terminate Harper's contract without cause, but did not terminate him with cause. Harper has exhausted his appeal remedies within Healthsource.

Two paragraphs of the contract between Harper and Healthsource govern the process by which their relationship can be terminated:

2.02 Termination Without Cause. This Agreement may be terminated by either party without cause upon six (6) months prior written notice.

2.03 Termination With Cause. This Agreement may be terminated immediately by [Healthsource] at any time with cause upon written notice of cause to [Harper].

Cause shall include, but not be limited to: (i) repeated failure to comply with quality assurance, peer review and utilization procedures; (ii) unprofessional conduct as determined by the appropriate state professional licensing agency; (iii) conviction for any criminal offense related to the practice of medicine or any felony unrelated to such practice; (iv) failure to meet Credentialing Committee standards and procedures; (v) revocation, reduction, or suspension of privileges at any participating provider hospital or any hospital where [Harper] conducts his principal practice; (vi) failure by [Harper] to meet the "Conditions of Participation" specified in Section 3; (vii) interference by [Harper] with [Healthsource]'s employer relations and business contacts; (viii) discrimination against [Healthsource] Members as described in Section 4.03; or (ix) repeated failure of [Harper] to comply with the terms of this Agreement.

Harper filed a petition in equity against Healthsource alleging numerous causes of action. The superior court granted Healthsource's motion to dismiss all of the claims. Harper appeals only four of these rulings, arguing: (1) that the "termination without cause" provision in the agreement, or the termination in this case, is void as against public policy; (2) that Healthsource was a state actor required to afford him equal protection and due process; (3) that he properly pleaded a cause of action for civil conspiracy; and (4) that Healthsource violated RSA 420-B:26, II in refusing to provide him with certain records.

When ruling on a motion to dismiss, we consider "whether the allegations in the plaintiff's pleadings are reasonably susceptible of a construction that would permit recovery." Claire Murray, Inc., 139 N.H. at 438, 656 A.2d at 823 (quotation omitted). We assume that facts asserted in Harper's pleadings are true, and construe all reasonable inferences in the light most favorable to Harper. Id. "If the plaintiff[ ] could recover upon any set of the facts under the pleadings, the motion to dismiss should be denied." Jarvis v. Prudential Ins. Co., 122 N.H. 648, 651, 448 A.2d 407, 409 (1982).

I. Termination Without Cause

Harper contends that we should strike the provision in his agreement with Healthsource allowing Healthsource to terminate the relationship without cause as being against public policy. We construe his pleadings and appeal also to include a claim that the termination of their relationship in this case violates public policy.

The contract between Harper and Healthsource provides that the relationship can be severed by either side without cause at any time. In the pure employment context, a common law employment relationship that is terminable by either the employee or the employer at any time is referred to as "at will." See Cloutier v. Great A. & P. Tea Co., Inc., 121 N.H. 915, 919, 436 A.2d 1140, 1142 (1981). Like most courts, we have carved out exceptions to the common law employment-at-will doctrine, noting that in some cases "the employer's interest in running his business as he sees fit must be balanced against the interest of the employee in maintaining his employment, and the public's interest in maintaining a proper balance between the two." Monge v. Beebe Rubber Co., 114 N.H. 130, 133, 316 A.2d 549, 551 (1974); see, e.g., Lampe v. Presbyterian Med. Center, 41 Colo.App. 465, 590 P.2d 513, 514-15 (1978); Wieder v. Skala, 80 N.Y.2d 628, 593 N.Y.S.2d 752, 756-57, 609 N.E.2d 105, 109-10 (1992).

Strictly speaking, Harper's relationship with Healthsource is not an employer-employee relationship. Healthsource does not control, and has no right to control, the manner of performance of Harper's duties, for example. See Boissonnault v. Bristol Federated Church, 138 N.H. 476, 478, 642 A.2d 328, 329 (1994). Nor is Harper really an independent contractor for Healthsource, in the way that employment cases treat such a relationship. See Merchants Ins. Group v. Warchol, 132 N.H. 23, 27-28, 560 A.2d 1162, 1165 (1989). Harper's status as a "preferred provider" of health care for Healthsource's customers means that Healthsource will pay for services he renders to his patients who are also Healthsource customers.

The trial court treated Harper as making only a wrongful termination of employment argument and applied the legal standards applicable in the employment context. See Cloutier, 121 N.H. at 920, 436 A.2d at 1143 (in order to make wrongful termination of employment claim, plaintiff must prove an employment relationship). Although the relationship in this case is similar to an employment relationship, this was error. Additionally, we reject Healthsource's contention that Harper's petition only alleged such an employment argument. Harper's claim was broad enough to encompass the issue we decide today.

We will not enforce a contract or contract term that contravenes public policy. See, e.g., Audley v. Melton, 138 N.H. 416, 418, 640 A.2d 777, 779 (1994); Technical Aid Corp. v. Allen, 134 N.H. 1, 8, 17, 591 A.2d 262, 265-66, 271 (1991).

An agreement is against public policy if it is injurious to the interests of the public, contravenes some established interest of society, violates some public statute, is against good morals, tends to interfere with the public welfare or safety, or, as it is sometimes put, if it is at war with the interests of society and is in conflict with the morals of the time.

17A Am.Jur.2d Contracts § 263, at 267-68 (1991) (footnotes omitted). The public policy to which a court may refer may be statutory or nonstatutory in origin. Cloutier, 121 N.H. at 922, 436 A.2d at 1144.

The implied covenant of good faith and fair dealing is an example of a common law application of public policy to contract law. See Centronics Corp. v. Genicom Corp., 132 N.H. 133, 139-40, 562 A.2d...