Cpt v. John Deere Health Care
| Decision Date | 12 May 2006 |
| Docket Number | No. 04-1893.,04-1893. |
| Citation | 714 N.W.2d 603 |
| Parties | CLINTON PHYSICAL THERAPY SERVICES, P.C., Appellant, v. JOHN DEERE HEALTH CARE, INC. and John Deere Health Plan, Inc., f/k/a Heritage National Health Plan, Inc., Appellees. |
| Court | Iowa Supreme Court |
Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellant.
Jeffrey D. Martens of Bozeman, Neighbour, Patton & Noe, LLP, Moline, Illinois, for appellees.
In this appeal from a judgment entered by the district court following a jury verdict in a breach-of-contract action, we must primarily consider the parameters within which the district court may resolve and correct inconsistencies in a verdict and reform the jury's answers to questions in the verdict in lieu of granting a new trial. We conclude the district court erred in failing to grant a new trial in this case. We reverse and remand for a new trial on all issues.
Clinton Physical Therapy Services, P.C. (CPT) is an Iowa corporation with its principal place of business in Clinton. It also has offices in DeWitt and Davenport, Iowa and Morrison and Savanna, Illinois. On April 15, 1996, CPT entered into a contract with John Deere Health Care, Inc. (John Deere), a health maintenance organization, to be a "network provider" of physical therapy services to John Deere plan members. The Davenport office was not in existence at the time the contract was executed, and the agreement was silent on which of CPT's offices were covered by the agreement.
The Davenport office, also called the Plaza office, opened in August 1997. CPT notified John Deere of the new Davenport office by letter on August 11 and indicated it wanted the office to be covered by the network-provider contract. John Deere initially paid for services provided at the Davenport office, but claimed it did not realize the payments were for services performed at the office at the time the payments were made. It later took the position that the office was not a covered facility under the contract, and denied claims for services performed at the Davenport office.
John Deere sent CPT letters on April 23 and June 1, 1999 stating the Davenport office was not covered by the contract. Nevertheless, CPT continued to provide services to John Deere plan members at the Davenport office. Ultimately, CPT provided services to approximately 300 John Deere plan members over 2775 visits at the Davenport office without reimbursement from John Deere at the $50-per-visit rate under the contract. This amounted to $138,750 in unpaid services up to August 2001. Of this amount, $128,200 in services were rendered after John Deere notified CPT in writing that services at the Davenport office would not be paid. In August 2001, the parties entered into a new contract. The new contract contained a specific clause indicating that John Deere had discretion to pay for services provided by CPT at a new office location.
In February 2003, CPT brought a breach-of-contract action against John Deere. CPT claimed John Deere breached the 1996 contract by refusing to pay for services provided to John Deere plan members at the Davenport office. John Deere claimed the Davenport office was not covered by the contract. It also claimed that even if it was covered, CPT failed to mitigate its damages by continuing to treat John Deere plan members at the Davenport office after receiving notice from John Deere that the services would not be reimbursed, and not billing the plan members for the services.1
The case was tried to a jury. At trial, CPT offered the 2001 contract into evidence as an aid to interpret the 1996 contract. John Deere claimed the clause pertaining to new locations in the 2001 contract was in the nature of a subsequent remedial measure and was not relevant. The district court excluded the contract from the evidence. The case was submitted to the jury on a verdict form that required the jury to answer a series of questions and determine the amount of damages in the event a breach of contract was established. The form provided:
We find the following verdict on the questions submitted to us:
Question No. 1: Did the terms of the contract allow for the Plaintiff to add its new Plaza or North Scott location by providing written notification to Defendants of the opening of that office?
Answer "yes" or "no."
ANSWER: ____
(If your answer is "no," do not answer any further questions)
Question No. 2: Did the Plaintiff comply with all the terms of the contract that were required unless excused?
Answer "yes" or "no."
ANSWER: ____
(If your answer is "no," do not answer any further questions)
Question No. 3: Did the Defendant breach its contract with Plaintiff?
ANSWER: ____
(If your answer is "no," do not answer any further questions)
Question No. 4: Did the Plaintiff fail to mitigate its damages?
Answer "yes" or "no."
ANSWER: ____
Question No. 5: State the amount of damages sustained by the Plaintiff as to each of the following items of damages:
A. The reasonable value, at the contracted rate, of outstanding charges for treatment provided by Plaintiff in its Plaza facility to Defendants' eligible members from 1997 through July 31, 2001.
$ ___________
B. The reasonable value of Plaintiff's lost profits from the loss of referrals of Defendants' members to its Plaza facility from 1997 through July 31, 2001.
$ ___________
Question No. 6: State the amount of damages which Plaintiff failed to mitigate.
$ ___________
Question No. 7: State the total amount of recoverable damages to the Plaintiff. (The total of the answer to Question 6 minus the total of the answer to Question 7).2
$ ___________
The parties consented to a sealed verdict, which permitted the jury to be discharged after reaching the verdict without reporting its findings in open court in the presence of the parties. See Iowa R. Civ. P. 1.931(3) ().
After a period of deliberations, the jury notified the judge that it had reached a verdict. The judge discharged the jury without notifying the attorneys for the parties. In response to the first three questions in the verdict, the jury found that the network-provider contract did allow CPT to add the Davenport office, that CPT complied with all the terms of the contract, and that John Deere breached the contract. In response to question 4, the jury found that CPT did not fail to mitigate its damages. It then found CPT suffered $138,750 in damages in response to question 5, subpart A. These damages were defined as the reasonable value of the service provided to John Deere members at the Davenport office from August 1997 through July 2001. However, question 6 required the jury to state the amount of damages CPT failed to mitigate. The jury answered $128,200. Finally, the jury found the total amount of damages CPT could recover was $10,550. The district court entered a judgment for $10,550 in favor of CPT.
CPT subsequently filed a motion for a new trial. It claimed the verdict was inconsistent because the answers showed the jury found it did not fail to mitigate damages yet found its damages should be reduced by $128,200. It claimed this inconsistency warranted a new trial under Iowa Rule of Civil Procedure 1.1004(5). CPT also asserted that a new trial was warranted because the district court erred in failing to admit the 2001 contract into evidence.
John Deere resisted the motion for new trial. It argued CPT waived its right to a new trial by agreeing to a sealed verdict and failing to move for resubmission of the case before the jury was discharged. Alternatively, John Deere argued the verdict was not so logically inconsistent that it could not be harmonized.
John Deere claimed that a reasonable explanation existed for the inconsistent answers based on the changes in the damage figures made by the jury on the verdict form. The verdict form revealed the jury originally inserted $10,550 for the total amount of damages sustained by CPT (value of services provided from 1997 to 2001) in response to question 5, subpart A. It also originally inserted zero in response to the request in question 6 to state the amount of damages CPT failed to mitigate. Thus, up to this point, the verdict answers were not inconsistent, and John Deere theorized that the jury had decided that CPT's damages were limited to reimbursement for services it provided prior to the time John Deere notified CPT in 1999 that it would not provide reimbursement. Question 7 then informed the jury to determine the "total amount of recoverable damages" by subtracting the amount of damages CPT failed to mitigate from CPT's total damages (reasonable value of services provided from 1997 to 2001). At this point, John Deere surmises that the jury understood it needed to show its math by subtracting the amount of damages CPT failed to mitigate from the total value of the unreimbursed services rendered over the course of the contract. John Deere believed the jury went back to questions 5 and 6 to show its math, but neglected to return to question 4 to change its answer to "yes," consistent with the procedure required under the instructions to reach the recoverable amount of damages.
The district court determined that CPT did not waive the inconsistency issue by failing to object before the jury was discharged. However, the court denied the motion for new trial on its merits. The court accepted John Deere's explanation that the jury intended for its answers to be consistent. The court then reformed the jury's answer to question 4 ("Did the Plaintiff fail to mitigate its damages?") to "yes" to conform to the remainder of the verdict,...
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