Bonzani v. Goshen Health Sys., Inc.

• Citation: 459 F.Supp.3d 1139
• Decision Date: 11 May 2020
• Docket Number: CAUSE NO. 3:19-CV-00586 DRL-MGG
• Parties: Robert BONZANI, M.D., Plaintiff, v. GOSHEN HEALTH SYSTEMS, INC. and Goshen Hospital Association, Inc., Defendants.
• Court: United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana

459 F.Supp.3d 1139

Robert BONZANI, M.D., Plaintiff,

v.GOSHEN HEALTH SYSTEMS, INC. and Goshen Hospital Association, Inc., Defendants.

CAUSE NO. 3:19-CV-00586 DRL-MGG

United States District Court, N.D. Indiana, South Bend Division.

Signed May 11, 2020

Taylor A. Beaty, Craig R. Patterson, Beckman Lawson LLP, Fort Wayne, IN, for Plaintiff.

Andrew B. Howk, David B. Honig, Jacob Kolisek, Hall Render Killian Heath & Lyman PC, Indianapolis, IN, for Defendants.

OPINION & ORDER

Damon R. Leichty, Judge

Dr. Robert Bonzani practiced urology at Goshen Hospital under an employment agreement with its parent company, Goshen Health Systems, Inc. The agreement contained an arbitration provision. After a patient died during a procedure performed by Dr. Bonzani, Goshen Health terminated his employment through a separation agreement. This agreement lacked an arbitration provision. The parties now debate whether Dr. Bonzani's claims should be arbitrated or dismissed.

The slate of briefing suffers from some inconsistency. Goshen Health and Goshen Hospital seek arbitration based on the employment agreement but concede that the parties terminated that contract through the separation agreement. They offer no explanation for why arbitration should be compelled based on an agreement that no longer exists. No better, Dr. Bonzani opposes arbitration but in the same breath argues that the separation agreement should be rescinded, thereby presumably reactivating the very arbitration requirement he wants to avoid. No authority has been offered to deprive him of the luxury of alternative arguments at this stage, though.

The court, not satisfied on this record that a valid arbitration agreement exists or that claims fall within its scope, denies Goshen Health and Goshen Hospital's motion to compel arbitration and to stay litigation. Their motion to dismiss Dr. Bonzani's amended complaint is granted only in part.

BACKGROUND

The following facts emerge from the amended complaint, which must be assumed as true for purposes of the motion to dismiss. In 2016, Dr. Bonzani began discussing with Goshen Health an opportunity to practice urology at Goshen Hospital. On December 14, 2016, Dr. Bonzani and Goshen Health signed an employment agreement. Goshen Hospital was not a signatory, though the agreement identified it as a subsidiary of Goshen Health. Having privileges at Goshen Hospital was a condition of Dr. Bonzani's employment with Goshen Health.

Among other things, the employment agreement incorporated peer review procedures from the hospital's medical staff bylaws, defined certain termination and separation conditions, and included an arbitration provision. The arbitration provision stated in part that "any dispute or claim between the parties arising out of the interpretation of or performance under this Agreement shall be settled by arbitration." ECF 4 ¶ 22.

Dr. Bonzani began working for Goshen Health on March 15, 2017. In October 2017, a patient died from complications during surgery. Goshen Hospital's Chief Medical Officer suspended Dr. Bonzani's surgical privileges. Goshen Hospital's Medical Executive Committee (MEC) formed an investigation committee to commence a peer review process. The hospital's bylaws, incorporated into Dr. Bonzani's employment agreement, established the MEC's authority to investigate. Id. ¶ 4(g). Dr. Bonzani complied with the peer review process by submitting recommendation letters, providing operative logs from other hospitals where he worked, and tendering proof of board certification.

Fourteen days into his suspension, Dr. Bonzani requested an expedited hearing, a right provided in the bylaws. On his own, he initiated a review of his work and found that, in his opinion, only nine of 96 cases were worth examining. An outside peer reviewer submitted a report to the investigative committee. Dr. Bonzani challenged the report on several grounds. The investigative committee agreed with Dr. Bonzani and ordered a new peer review report.

While that second peer review report was underway, Dr. Bonzani appeared before a hearing committee to discuss the October 2017 incident. The hearing (rescheduled once) occurred 43 days after Goshen Hospital initiated the precautionary suspension. Dr. Bonzani was exonerated. The hearing committee recommended to the MEC that the precautionary surgical suspension be lifted.

The MEC thereafter received the second peer review report, now critical of Dr. Bonzani, and decided to ignore the hearing committee's recommendation. The MEC scheduled a final hearing for January 9, 2018. Seven days beforehand, officers at Goshen Health confronted Dr. Bonzani with the second peer review report and told him it was time to transition out of Goshen Hospital. Dr. Bonzani had two options: voluntarily leave with severance pay or involuntarily leave without severance pay.

During the next several days as Dr. Bonzani weighed his decision, he became despondent and withdrew emotionally and physically. He possessed a firearm with the intent of ending his life, but he asked his medical assistant to take the gun away from him. Except for having someone drive him to his therapist, he did not go outside or perform regular activities.

On January 8, 2018, one day before the final hearing, Dr. Bonzani opened an email from his attorney with a separation agreement from Goshen Health. He says he didn't read the agreement. He printed the signature page, signed it, and sent it back to his lawyer. He signed it because he believed that the MEC would find against him resulting in his involuntary termination without severance pay. He says he had no understanding of the separation agreement's terms when he signed it because of his mental state. The separation agreement defined Goshen Health to include its subsidiaries, and contained provisions addressing confidentiality, non-disparagement, severance pay and benefits, waiver and release, and integration. ECF 5. There was no arbitration provision.

After the agreement was signed, Goshen Health and Goshen Hospital filed a report with the National Practitioner Data Bank (NPDB) related to Dr. Bonzani's employment and termination. The separation agreement made no mention of the NPDB report, so Dr. Bonzani believed no report would be submitted, though that allegation seems troublesome if he never read the agreement. Dr. Bonzani says the NPDB report contained false and misleading statements. To mitigate the damage, he submitted his own statement objecting to it.

Dr. Bonzani alleges five claims against both Goshen Health and Goshen Hospital: (1) declaratory judgment regarding the enforceability of the separation agreement, (2) breach of contract (separation agreement), specifically the confidentiality and non-disparagement clauses, (3) disparagement, (4) defamation, and (5) fraud in the inducement of the separation agreement. And he alleges one additional claim against only Goshen Hospital for breaching its medical bylaws. Goshen Health and Goshen Hospital seek to compel arbitration or alternatively dismiss the claims.

STANDARD

The Federal Arbitration Act (FAA) requires courts to treat written arbitration agreements as "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of a contract." Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 629, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009) (quoting 9 U.S.C. § 2 ). The question of arbitrability—whether the parties must submit a particular dispute to arbitration—is "an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise[.]" AT&T Techs., Inc. v. Commc'ns Workers of Am. , 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).

Under the FAA, three things are needed to compel arbitration: (1) a written arbitration agreement, (2) a dispute within the scope of the agreement, and (3) a refusal to arbitrate that dispute. Zurich Am. Ins. Co. v. Watts Indus., Inc. , 417 F.3d 682, 687 (7th Cir. 2005). "[I]f a dispute presents multiple claims, some arbitrable and some not, the former must be sent to arbitration even if this will lead to piecemeal litigation." KPMG LLP v. Cocchi , 565 U.S. 18, 19, 132 S.Ct. 23, 181 L.Ed.2d 323 (2011). A court may not refuse to compel arbitration on claims merely because some of the claims are not arbitrable. Id.

"The FAA does not expressly identify the evidentiary standard a party seeking to avoid compelled arbitration must meet." Tinder v. Pinkerton Sec. , 305 F.3d 728, 735 (7th Cir. 2002). This circuit has analogized the standard to that required of a party opposing summary judgment under Federal Rule of Civil Procedure 56(e). Id. The opposing party must demonstrate that a genuine issue of material fact warranting a trial exists. "Just as in summary judgment proceedings, a party cannot avoid compelled arbitration by generally denying the facts upon which the right to arbitration rests; the party must identify specific evidence in the record demonstrating a material factual dispute for trial." Id. ; see also Oppenheimer & Co., Inc. v. Neidhardt , 56 F.3d 352, 358 (2d Cir. 1995) (same). In short, the party opposing arbitration must identify a triable issue concerning the agreement's existence or scope to preserve a trial. Saturday Evening Post Co. v. Rumbleseat Press, Inc. , 816 F.2d 1191, 1196 (7th Cir. 1987).

Shifting to the other motion here, with a motion to dismiss under Rule 12(b)(6), the court accepts all well-pleaded factual allegations as true and draws all reasonable inferences in the plaintiff's favor.

Reynolds v. CB Sports Bar, Inc. , 623 F.3d 1143, 1146 (7th Cir. 2010). A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The statement must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face and more than just speculative. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009...