Atherton v. Tenet Healthcare Corp.
| Decision Date | 25 May 2005 |
| Docket Number | 2005-UP-362 |
| Parties | Stephen Atherton, On behalf of himself and all others similarly situated, Appellant, v. Tenet Healthcare Corporation and AMISUB of South Carolina, Inc., Respondents. |
| Court | South Carolina Court of Appeals |
UNPUBLISHED OPINION
Heard May 11, 2005
Appeal From York County Paul E. Short, Jr., Circuit Court Judge
Chad McGowan and Kevin Sitnik, both of Rock Hill, and Gordon Ball of Knoxville, for Appellant.
Daniel J. Westbrook and Alice V. Harris, both of Columbia, for Respondents.
This is a class action [1] arising out of the alleged overcharging by Tenet Healthcare Corporation and AMISUB of South Carolina, Inc. (collectively Respondents), for medical services rendered at Piedmont Medical Center. The court granted summary judgment to Respondents on Atherton's claims of breach of contract, unjust enrichment, implied contract for value, and his request for an injunction. We affirm.
In 1980, York County, the Trustees of York General Hospital American Medical International, Inc., and AMISUB of South Carolina, Inc. entered into a contract for American Medical [2] and AMISUB to lease York General Hospital and to construct a replacement hospital. [3] In section 16.15 of the 1980 contract it specifies [t]here are no third party beneficiaries of this Agreement.” Both parties agree Atherton was not a party to this contract.
The contract was subsequently modified on seven different occasions, through seven addenda to the 1980 contract. In August 1995, Respondents and York County executed the Sixth Addendum. The Sixth Addendum provided in part that in order to ensure the continuing provision of high quality, cost effective healthcare to the citizens of York County without cost to York County, [Respondents] have proposed to undertake various obligations expanding upon, or in addition to, those contained in [the 1980 Agreement].” This addendum also contained the following provisions relevant to this appeal:
Section 3.1(e) Pricing
AMI acknowledges that, in addition to the securing of the highest quality health care for the citizens of York County, a major objective of York County in entering into this Agreement is that such care be provided on a cost-effective basis at prices favorably comparable to those paid for similar services provided by comparable acute-care hospitals in the same general geographical area.... Both parties understand that cost-effective, competitive pricing for services provided at the Hospital is essential to the provision of quality health care services to the citizens of York County to the continuing economic well being of the Hospital and to the ability of AMI to meet its obligations hereunder. AMI agrees to exert every effort to so conduct its operations and finances to maintain prices for services at the Hospital at reasonable, competitive levels vis a vis other hospitals in the peer group”.... In the event such pricing information shall show that the average charge per case by the Hospital for All Product Lines” is the highest in the peer group, AMI shall, within twelve (12) months following the delivery of such information to York County present to York County, and implement a plan reasonably expected to fix or reduce its costs and/or charges for services such that the average charge per case for All Product Lines at the Hospital will be less than the highest in such peer group. If such average charge remains the highest in the peer group at the end of the second Medpar reporting period following the reporting period which first showed the Hospital's having the highest average charge, AMI shall not increase any charges for services at the Hospital until such time as there have been delivered to York County reports... which show the Hospital's average charge per case for All Product Lines being less than the highest of the peer group.
(emphasis added). Importantly, section 5 of the Sixth Addendum ratified and confirmed” those sections of the 1980 contract not expressly modified by the addendum.
Atherton and the other class members received medical services at Piedmont Medical Center since the 1995 date of the Sixth Addendum. For each service rendered by the Hospital, Atherton entered into agreements entitled Consent for Treatment and Conditions of Admission.” These agreements included a provision in which Atherton individually obligates [himself] to pay the account of the hospital in accordance with the regular rates and terms of the hospital and physicians.”
In his complaint, Atherton asserts: For the last several years, the hospital charges for Tenet and Amisub have been the highest in the group of 10 peer hospitals in the region....” Atherton alleges that York County entered into the agreement to directly benefit the citizens and residents of York County” and that they were the intended beneficiaries of the agreement between York County and [Respondents].” He sets forth four causes of action: (1) breach of third-party beneficiary contract; (2) unjust enrichment; (3) breach of implied contract for value of goods and services received; and (4) injunctive relief. Respondents answered setting forth numerous defenses, including the defense that neither Atherton nor the purported class were third-party beneficiaries to the agreement and thus lacked standing to enforce the contract. Additionally, Respondents filed a motion for summary judgment.
Following a hearing on the matter, the trial court granted Respondents' motion for summary judgment. The court found that there were no third-party beneficiaries under the contract, at best the citizens of York County were incidental beneficiaries, and Atherton did not have a right to enforce the provisions of the contract. The court held Atherton's claim of unjust enrichment was barred because his assertion was based on an alleged breach of a contract, he asserted no legal duty or obligation upon which to base such a claim, and he was attempting to establish an additional remedy not provided for under the contract.
The court went on to find neither South Carolina, nor any other jurisdiction, has recognized a cause of action for the breach of an implied contract for value of goods and services received, and even if it did exist, Atherton's claim fails because his payments were covered by express contracts with the Hospital. The court also concluded he was not entitled to injunctive relief. Finally, the court held all four of Atherton's claims would require the court to engage in legislative rate-making” in order to determine damages, in violation of the separation of powers doctrine, and Respondents were entitled to summary judgment on this basis as well on all four causes of action. This appeal followed.
In reviewing the grant of a summary judgment motion, this court applies the same standard which governs the trial court: summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), SCRCP; Baughman v. Am. Tel. & Tel. Co., 306 S.C. 101, 114-15, 410 S.E.2d 537, 545 (1991). In determining whether any triable issues of fact exist, the evidence and all inferences which can be reasonably drawn from the evidence must be viewed in the light most favorable to the non-moving party. Strother v. Lexington County Recreation Comm'n, 332 S.C. 54, 61, 504 S.E.2d 117, 121 (1998). On appeal from an order granting summary judgment, the appellate court will review all ambiguities, conclusions, and inferences arising in and from the evidence in a light most favorable to the non-moving party below. Osborne v. Adams, 346 S.C. 4, 7, 550 S.E.2d 319, 321 (2001).
Atherton contends the trial court erred in granting summary judgment in favor of Respondents on his four claims. We disagree.
Atherton contends the trial court erred in finding the agreement between Respondents and York County clearly and unambiguously precluded third-party beneficiaries. He argues the Sixth Addendum modified the 1980 contract such that it now allows for enforcement of its provisions by citizens of the county. He maintains, in the alternative, the agreement is at least ambiguous as to whether the citizens of York County are third party beneficiaries such that summary judgment was improper. We disagree.
South Carolina contract law carries a presumption that an individual who is not a party to a contract lacks privity to enforce it.” Trancik v. USAA Ins. Co., 354 S.C. 549, 553, 581 S.E.2d 858, 861 (Ct. App. 2003) (citing Touchberry v. City of Florence, 295 S.C. 47, 48-49 367 S.E.2d 149, 150 (1988)). [I]t is to be observed that the presumption is that parties contract for their own benefit, and not for that of others not parties to the contract.” Ancrum v. Camden Water, Light & Ice Co., 82 S.C. 284, 295, 64 S.E. 151, 155 (1909). Generally, one not in privity of contract with another cannot maintain an action against him in breach of contract, and any damage resulting from the breach of a contract between the defendant and a third party is not, as such, recoverable by the...
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