Derderian v. GENESYS HEALTH SYS., Docket No. 245339

• Decision Date: 28 October 2004
• Docket Number: Docket No. 248908.,Docket No. 245339
• Citation: 263 Mich. App. 364,689 N.W.2d 145
• Parties: Dr. Gregory DERDERIAN, Dr. William Liekweg, and Cardiovascular & Thoracic Surgeons, P.C., Plaintiffs-Appellants, v. GENESYS HEALTH CARE SYSTEMS, Genesys P.H.O., L.L.C., and Genesys Regional Medical Center, Defendants-Appellees. Dr. Gregory Derderian, Dr. William Liekweg, and Cardiovascular & Thoracic Surgeons, P.C., Plaintiffs-Appellees, v. Genesys Health Care Systems, Genesys P.H.O., L.L.C., and Genesys Regional Medical Center, Defendants-Appellants.
• Court: Court of Appeal of Michigan — District of US

689 N.W.2d 145

263 Mich. App. 364

Dr. Gregory DERDERIAN, Dr. William Liekweg, and Cardiovascular & Thoracic Surgeons, P.C., Plaintiffs-Appellants, v. GENESYS HEALTH CARE SYSTEMS, Genesys P.H.O., L.L.C., and Genesys Regional Medical Center, Defendants-Appellees.

Dr. Gregory Derderian, Dr. William Liekweg, and Cardiovascular & Thoracic Surgeons, P.C., Plaintiffs-Appellees, v. Genesys Health Care Systems, Genesys P.H.O., L.L.C., and Genesys Regional Medical Center, Defendants-Appellants.

Docket Nos. 245339, 248908.

Court of Appeals of Michigan.

Submitted June 15, 2004, at Detroit.

Decided August 24, 2004, at 9:00 a.m.

Released for Publication October 28, 2004.

Tom R. Pabst, P.C. (by Tom R. Pabst and Michael A. Kowalko), Flint, for the plaintiffs.

Keller Thoma (by Terrence J. Miglio, Frederic E. Champnella, II, Jonathon A. Rabin, and Kristin R. Binkley), Detroit, for the defendants. Before: MARKEY, P.J., and WILDER and METER, JJ.

WILDER, J.

These consolidated cases arise out of a business relationship between plaintiffs, two physicians and their professional corporation, and defendants, recently formed affiliated health care corporations in Grand Blanc. In Docket No. 245339, plaintiffs appeal by right the trial court's orders granting defendants' motions for summary disposition and dismissing plaintiffs' second amended complaint. In Docket No. 248908, defendants appeal by right the trial court's order denying their request for offer of judgment sanctions. We affirm the trial court's decision in Docket No. 245339, reverse the trial court's decision in Docket No. 248908, and remand for further proceedings.

I

In March 1999, plaintiff Dr. Gregory Derderian filed a complaint against defendant Genesys Health Care Systems (GHCS), alleging that GHCS contacted him in 1995 regarding the development of a cardiothoracic and vascular surgery specialty practice group to be located at Genesys Regional Medical Centers (the hospital) in Grand Blanc. Dr. Derderian asserted in count one, breach of contract, that he engaged in contract negotiations with GHCS to establish the practice group and that GHCS promised that the resulting contract would guarantee him at least $500,000 a year in earnings and an exclusive contract for certain referrals and surgeries between Dr. Derderian's practice group and the hospital. Additionally, he alleged that GHCS promised that he would be provided the exclusive authority to recruit surgeons to the practice group and that GHCS required that his practice group work exclusively for the hospital and enter into a contract to provide emergency room services as a prerequisite to becoming the only cardiovascular surgeons at the hospital. Upon his oral agreement to these terms, Dr. Derderian alleged, a contract formed.

Dr. Derderian further alleged that he acted in reliance on GHCS's promises by terminating his practice at other area hospitals, including McLaren Hospital and Hurley Hospital, beginning to work for GHCS, engaging in the emergency room contract, and complying with GHCS's policies. Although the complaint does not specifically address any instance of breach of contract, Dr. Derderian alleged that he incurred a loss of income and loss of enjoyment of his previously vigorous practice.

In count two, "Interference with Advantageous Business Relationship," Dr. Derderian alleged that GHCS breached its duty not to interfere with Dr. Derderian's business relationships by (1) failing to fulfill its promises, (2) leading Dr. Derderian to believe that he would receive more personal satisfaction from a business relationship with GHCS than his previous relationships while knowing that the relationship with GHCS would not come to fruition, and (3) engaging in discussions with other practice groups to compete with or replace Dr. Derderian's practice group. Concurrent with filing his complaint, Dr. Derderian requested a temporary restraining order to prevent GHCS from hiring an additional cardiovascular surgeon. GHCS opposed, and the trial court ultimately denied, this request.

With leave of the trial court, Dr. Derderian filed an amended complaint in November 1999, in which he realleged his claims of breach of contract and tortious interference and added a third claim, "Violation of the Whistleblower[s'] Protection Act and Public Policy." In support of this claim, Dr. Derderian alleged that he is employed by GHCS by virtue of his privilege and referral relationship and emergency room contract with GHCS and that after he advised GHCS personnel of possible incidents of Medicare fraud occurring at the facility, his medical privileges were suspended in September 1999.

The trial court again granted Dr. Derderian leave to amend his complaint in August 2000. The second amended complaint added plaintiffs Dr. William Liekweg and Cardiovascular & Thoracic Surgeons, P.C.,¹ and defendants Genesys P.H.O., L.L.C., and the hospital. The new plaintiffs joined in Dr. Derderian's allegations concerning the factual underpinnings of the business relationship, including the terms of the alleged contract the parties formed. Plaintiffs more specifically alleged that defendants' corporate officers, including Michael Deming, Kathy Lawson, Michael James, and Young Suh, were involved in forming the practice groups for the new health care campus in the 1990s and that defendants' high-ranking officials had confirmed in writing the terms of the contractual relationship.

Count one of the second amended complaint alleged "Fraudulent Misrepresentation & Conduct," and stated, among other things, that defendants allegedly made false representations concerning plaintiffs' potential business relationship with them, upon which plaintiffs detrimentally relied. In count two, plaintiffs alleged a claim of innocent misrepresentation based on defendants' precontract representations. Counts three and four alleged breach of contract and promissory estoppel, respectively, on the basis of defendants' breach of the agreement. In count five, plaintiffs alleged that defendants intentionally interfered with plaintiffs' contractual relations and prospective economic advantage regarding plaintiffs' relationships with patients, other doctors, and "certain" defendants. Plaintiffs alleged in count six that defendants invaded their privacy by placing them in a "false light" by virtue of their conduct and false statements. In count seven, plaintiffs alleged that defendants violated public policy by retaliating against plaintiffs for filing suit against them and protesting Medicaid billing violations. Plaintiffs did not expressly reallege their claim under the Whistleblowers' Protection Act (WPA), MCL 15.361 et seq.

Over two years later, following substantial discovery, defendants filed three motions for summary disposition. In their motion for summary disposition of counts one through five of the second amended complaint, defendants requested dismissal of plaintiffs' claims of fraudulent misrepresentation and innocent misrepresentation (counts one and two) on the basis of MCR 2.116(C)(8) and dismissal of plaintiffs' claims of breach of contract, promissory estoppel, and tortious interference (counts three, four, and five, respectively) on the basis of MCR 2.116(C)(10).

In their "Motion for Summary Disposition Regarding Subject Matter Jurisdiction, Failure to Exhaust Administrative Remedies & Health Care Quality Improvement Act Immunity," defendants asserted that the trial court lacked subject-matter jurisdiction to consider counts one through five and count seven (violation of public policy) of plaintiffs' second amended complaint because plaintiffs based these claims on challenges to a private hospital's staffing decisions, which are not subject to judicial review.² Defendants also argued that, following his suspension, Dr. Derderian failed to exhaust his internal administrative remedies and that his claims were barred by the immunity granted pursuant to the Health Care Quality Improvement Act, 42 USC 11101 et seq.

In their third motion for summary disposition, regarding counts six (invasion of privacy) and seven of the second amended complaint, defendants requested summary disposition of (1) any claims stated in count six on behalf of Dr. Liekweg and the professional corporation because the allegations in the second amended complaint pertained only to Dr. Derderian; (2) Dr. Derderian's claim in count six on the basis of MCR 2.116(C)(10); and (3) plaintiffs' public policy violation claim because, among other deficiencies, plaintiffs were not at-will employees and, therefore, could not allege such a claim.

Plaintiffs opposed defendants' motions.³ After hearing oral arguments, the trial court stated on the record that, as argued by defendants, it lacked subject-matter jurisdiction over counts one through five and count seven of the second amended complaint because the judicial nonintervention doctrine precluded review of these claims. The trial court also addressed some of defendants' alternate grounds for dismissal of these counts of the second amended complaint and concluded that plaintiffs had not presented evidence demonstrating a genuine issue of material fact regarding any of these claims. The trial court ruled in the alternative that summary disposition also should be granted to defendants on count six, plaintiffs' invasion of privacy claim, because the statute of limitations precluded plaintiffs' invasion of privacy claims arising out of the publication of quality evaluation reports from TSI and Medqual, and because plaintiffs failed to establish a genuine issue of material fact on their claims arising from the quality evaluation reports or their claims that they were cast in a false light by defendants. The trial court also concluded that plaintiffs had not revived their Whistleblower's Protection Act claim in the second amended complaint.

The trial court signed orders granting each of defendants' three motions. Its order granting defe...