Belnap v. Iasis Healthcare

• Decision Date: 05 January 2017
• Docket Number: No. 15-4010,15-4010
• Citation: 844 F.3d 1272
• Parties: LeGrand P. BELNAP, M.D., Plaintiff–Appellee, v. IASIS HEALTHCARE, a Delaware corporation; Salt Lake Regional Medical Center, L.P., a Delaware limited partnership, d/b/a Salt Lake Regional Medical Center; Ben Howard, M.D.; Alan Davis, M.D. ; Angelo Chachas, M.D.; Wanda Updike, M.D.; Kathy Oleson, Defendants–Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

844 F.3d 1272

LeGrand P. BELNAP, M.D., Plaintiff–Appellee,

v.IASIS HEALTHCARE, a Delaware corporation; Salt Lake Regional Medical Center, L.P., a Delaware limited partnership, d/b/a Salt Lake Regional Medical Center; Ben Howard, M.D.; Alan Davis, M.D. ; Angelo Chachas, M.D.; Wanda Updike, M.D.; Kathy Oleson, Defendants–Appellants.

No. 15-4010

United States Court of Appeals, Tenth Circuit.

Filed January 5, 2017

Juliette P. White of Parsons Behle & Latimer, Salt Lake City, Utah (Francis M. Wikstrom and Alan S. Mouritsen of Parsons Behle & Latimer, Salt Lake City, Utah, with her on the briefs), for Defendants-Appellants.

Peter Stirba of Stirba, P.C., Salt Lake City, Utah (Julia D. Kyte and Jeffrey D. Mann of Stirba, P.C., Salt Lake City, Utah, with him on the brief), for Plaintiff-Appellee.

Before KELLY, BALDOCK, and HOLMES, Circuit Judges.

HOLMES, Circuit Judge.

LeGrand P. Belnap, M.D., is a surgeon at the Salt Lake Regional Medical Center ("SLRMC"). Dr. Belnap and SLRMC entered into a Management Services Agreement ("Agreement") under which he would provide consulting services to help SLRMC develop a new surgical center. The Agreement contained an arbitration provision, including an agreement to arbitrate questions of arbitrability. SLRMC subsequently disciplined Dr. Belnap for alleged misconduct and then reversed course and vacated the discipline. As a result, Dr. Belnap brought various claims against SLRMC, its alleged parent company, and several of its individual employees. These Defendants moved to compel arbitration on the basis of the arbitration provision in the Agreement. The district court determined that most of the claims fell outside the scope of the Agreement, and granted in part and denied in part the motion. Exercising jurisdiction under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 16(a)(1)(A) and (C), we AFFIRM IN PART , REVERSE IN PART , and REMAND for further proceedings.

I

A

Dr. Belnap is a general surgeon. In 2009, he joined the staff of the Salt Lake City hospital, SLRMC. Dr. Belnap was appointed Surgical Director of SLRMC's intensive-care unit.

As an SLRMC staff member, Dr. Belnap's relationship with the hospital is governed by the SLRMC Bylaws of the Medical and Dental Staff ("Bylaws"). In addition to governing the treatment and care of patients, the Bylaws provide rules for investigating a physician, implementing a suspension, and guaranteeing due process through fair hearing procedures. The Bylaws do not contain an arbitration provision.

On February 1, 2012, Dr. Belnap entered into the Agreement with SLRMC. It related to the development of a "Hepatic Surgical department devoted to a[n] Abdominal Treatment Program," called the "Center." Aplts.' App. at 54. Specifically, the Agreement engaged Dr. Belnap's "management and consulting services" to develop and operate the Center. Id. at 55.¹

With respect to those services, the Agreement created an "independent contractor" relationship between Dr. Belnap and SLRMC. Id. at 65 (§ 5.1). provided that SLRMC could "terminate th[e] Agreement effective immediately." Id. at 66–67 (§ 8.3).

In the Agreement, Dr. Belnap represented that he:

(i) holds a license to practice medicine in the State of Utah, and neither that license nor any license to practice medicine in any other jurisdiction has ever been denied, suspended, revoked, terminated, voluntarily relinquished under threat of disciplinary action, or restricted in any way; (ii) maintains an active surgery practice; (iii) holds medical staff privileges at [SLRMC]; [and] (iv) has not had medical staff privileges denied, suspended, revoked, terminated, voluntarily relinquished under threat of disciplinary action, or made subject to terms of probation or any other restriction at any health care facility[.]

Id. at 63 (§ 4.2). If any of these representations ceased to be true, the Agreement

The Agreement contained the following dispute-resolution provision:

24. Dispute Resolution. The Parties shall initially attempt to settle any dispute between them (as well as with all or any of the Service Providers; each Party and any such Service Provider being referred to individually in this Section 24 as a "Disputant") arising under or related to this Agreement informally. If the Disputants are unable to resolve the dispute informally, the Disputants shall seek to resolve the dispute through mediation and if mediation fails, shall have the dispute resolved by arbitration. No Disputant may prosecute any suit until and unless the Disputants have submitted the issues to mediation and, if necessary, to arbitration in Salt Lake County, Utah, in accordance with the rules of JAMS and applying laws of the United States and State of Utah, or another suitable dispute resolution service agreeable to their respective attorneys . [Dr. Belnap] will secure the agreement of each Service Provider to be bound by the provisions of this Section 24. Notwithstanding the foregoing, [SLRMC] may at any point bring action in a court of competent jurisdiction to enforce the provisions of Section 10 [regarding confidentiality of health information], 14 [regarding the noncompetition agreement] and 15 [regarding SLRMC's confidential information] of this Agreement.

24.1 Mediation. Mediation shall be initiated by a Disputant, and the mediation shall be conducted, in accordance with the JAMS mediation guidelines, except as herein provided otherwise. The mediator shall be chosen by the Disputants, or if they are unable to agree within fourteen (14) days, by the applicable representative of JAMS. If the mediator chosen has not succeeded in achieving a mediated settlement after ninety (90) days, any Disputant may initiate resolution of the dispute through arbitration.

24.2 Arbitration. If the Disputants are unable to resolve the dispute informally or through mediation, any Disputant may within thirty (30) days of completion of the failed mediation submit the matter to final, binding arbitration, provided that the issue is arbitrable under Utah law. The arbitration shall be administered by JAMS and conducted in accordance with its Streamlined Arbitration Rules and Procedures (the "Rules"), except as provided otherwise herein . Selection of an arbitrator shall be made on or before fourteen (14) days after the receipt of the demand for arbitration. In the event the Disputants cannot agree on the selection of an arbitrator within this time, the arbitrator shall be selected pursuant to the Rules. A preliminary conference shall be held as provided in the Rules. The Disputants, the JAMS Case Manager and the arbitrator shall maintain the substance of any proceedings hereunder in confidence and the Case Manager and the arbitrator, prior to any proceedings being held hereunder, shall sign an agreement whereby they agree to keep the substance of any proceedings hereunder in confidence. The arbitrator may award, wholly or in such partial amount(s) as the arbitrator determines, any Disputant its costs of the arbitration proceeding (including attorneys fees) at the expense of the other Disputant(s).

Id. at 73, 75 (§ 24) (emphases added).

On March 18, 2013, SLRMC's Medical Executive Committee ("MEC") suspended Dr. Belnap's medical privileges. The suspension was based on allegations that Dr. Belnap had sexually harassed an SLRMC employee, as well as "other allegations of prior incidents." Aplts.' App. at 17. Dr. Belnap challenged the suspension by requesting a fair hearing pursuant to the Bylaws. Id. at 18. SLRMC's Fair Hearing Committee ("FHC") held a hearing and determined that "the MEC's actions on the whole were not supported by the evidence, and were arbitrary and capricious." Id. at 19. As a result, the FHC recommended that the MEC vacate Dr. Belnap's suspension. When the MEC adopted the FHC's recommendations, the Board of Trustees vacated the suspension in full.

While Dr. Belnap was suspended, however, SLRMC sent a report to the National Practitioner Data Bank regarding his suspension. Although SLRMC voided the report after the suspension was vacated, SLRMC allegedly "failed to notify other organizations that the report had been retracted, which triggered inquiries from various entities," and it also allegedly did not "adequately correct the factual record after the conclusion of the Fair Hearing proceedings, which caused Dr. Belnap further harm and expense." Id. at 21–22. Furthermore, after the suspension was lifted, SLRMC's CEO issued a letter indicating that Dr. Belnap's reappointment to active medical staff, and the renewal of his surgical privileges, had been "extended" for three months—rather than the customary two-year renewal period. Id. at 22. According to Dr. Belnap, the letter "referenced the Fair Hearing process [but] did not indicate that Dr. Belnap [had been] cleared of all allegations of wrongdoing." Id.

B

On February 7, 2014, Dr. Belnap filed a lawsuit in the United States District Court for the District of Utah against: (1) SLRMC, (2) SLRMC's alleged parent company, Iasis Healthcare Corporation ("Iasis"),² (3) four physician members of the MEC, (4) an SLRMC Risk Manager, Kathy Oleson, and (5) Does 1–10 (collectively, "Defendants").

The Complaint asserts seven causes of action:

(1) combination and conspiracy in restraint of trade in violation of federal antitrust laws by scheming "to eliminate Dr. Belnap as a competitor" and "prevent the market entry of a new and more efficient transplant or abdominal surgery specialty center in the marketplace," against all Defendants, Aplts.' App. at 24–25 (alleging that Defendants have "succeeded" in "not creating the Center promised to him");

(2) breach of contract for violation of the Bylaws by, inter alia , improperly suspending Dr. Belnap based on "personal animus and desire to get Dr. Belnap ‘fired,’ " against SLRMC, id. at 26;

(3) breach of implied covenant of good faith and fair dealing for "actions made in bad faith and with malice to achieve the suspension of Dr. Belnap, in violation of SLRMC's Bylaws," against

...