Dutta v. St. Francis Regional Medical Center, Inc.

• Decision Date: 16 April 1993
• Docket Number: No. 67446,67446
• Citation: 850 P.2d 928,18 Kan.App.2d 245
• Parties: S. Sakuntala DUTTA, M.D., Appellee/Cross-Appellant, v. ST. FRANCIS REGIONAL MEDICAL CENTER, INC., Appellant/Cross-Appellee.
• Court: Kansas Court of Appeals

Page 928

850 P.2d 928

18 Kan.App.2d 245

S. Sakuntala DUTTA, M.D., Appellee/Cross-Appellant, v. ST. FRANCIS REGIONAL MEDICAL CENTER, INC., Appellant/Cross-Appellee.

No. 67446.

Court of Appeals of Kansas.

April 16, 1993.

Review Granted June 18, 1993.

Syllabus by the Court

1. Under the facts of this case, plaintiff's termination from her radiology position at the hospital did not adversely affect her appointment to or status as a member of the medical staff or her exercise of clinical privileges, thus triggering the fair hearing procedure of the hospital bylaws.

2. Under the facts of this case, the hospital's entry into an exclusive contract with a physician radiologist to provide radiology services upon termination of plaintiff radiologist's contract is held to be a managerial decision not subject to the fair hearing procedure of the hospital bylaws.

3. Harmless error is error which does not prejudice the substantial rights of a party. It affords no basis for a reversal of a judgment and must be disregarded.

4. The language in a contract is ambiguous if the words in the contract are subject to two or more possible meanings. The determination of whether a contract is ambiguous is a question of law.

5. Under the facts of this case, the meaning of the phrase "mutually acceptable" is found to be ambiguous in the contract in which it was used.

6. The verdict must be supported by competent substantial evidence.

7. When damages are mitigated by a plaintiff, the amount of the verdict must reflect the extent of mitigation.

Richard C. Hite, of Kahrs, Nelson, Fanning, Hite & Kellogg, and Charles E. Hill, Wichita, for appellant/cross-appellee St. Francis Regional Medical Center, Inc.

John P. Woolf and Eric B. Metz, of Triplett, Woolf & Garretson, Wichita, for appellee/cross-appellant S. Sakuntala Dutta, M.D.

Jeffrey O. Ellis and Laura J. Bond, of Lathrop & Norquist, Overland Park, and Thomas L. Bell, of The Kansas Hosp. Ass'n, Topeka, for amicus curiae The Kansas Hosp. Ass'n.

Ronald Williams, of Morrison & Hecker, Wichita, Paul G. Gebhard, Barry Sullivan, and Jeffrey T. Shaw, of Jenner & Block Chicago, IL, and Thomas W. Greeson, of The American College of Radiology, Reston, VA, for amicus curiae The American College of Radiology.

Before LARSON, P.J., LEWIS, J., and BARRY A. BENNINGTON, District Judge, assigned.

BARRY A. BENNINGTON, District Judge, assigned:

This action by S. Sakuntala Dutta, M.D., against St. Francis Regional Medical Center, Inc., (hospital) seeks damages for an alleged breach of an employment contract. Before trial, the trial court granted the hospital's motion for summary judgment, finding the doctor was not entitled to a "due process hearing" under the provisions of the hospital bylaws, and the doctor cross-appeals from this ruling. The jury awarded Dutta $552,756 for breach of the written contract, and the hospital appeals this award. Dutta cross-appeals the summary judgment granted to the hospital on her due process claim.

Dutta is a radiologist who began working in the radiology department of the hospital July 1, 1987, as an employee of Dr. Maurice Krause, the medical director of the hospital's radiology department. The hospital terminated Dr. Krause's employment as medical director on August 5, 1988, but encouraged Dutta to remain with the hospital. On August 8, 1988, Dutta and the hospital entered into a written employment contract with a primary term of 90 days. If a new medical director had not been hired by the hospital within the 90-day period, the agreement was to be automatically extended for a second 90-day period.

Following a period of recruitment and interviews, the hospital offered Dr. Donald Tan the position of medical director of the radiology department on October 5, 1988. Dr. Tan and the hospital executed a contract on April 24, 1989, making Dr. Tan the medical director of the radiology department. The contract granted Dr. Tan the right "to provide radiation oncology services on an exclusive basis" subject to the exception of allowing Dutta to continue her practice of radiation oncology at the hospital. On April 24, 1989, the hospital notified Dutta the 90-day contract had expired and Dr. Tan was the new medical director. The letter provided in part:

"It is our intent at this time to establish an exclusive contract with Dr. Donald C-S Tan for medical direction and radiation therapy services at SFRMC. Your medical staff privileges to practice radiation therapy at SFRMC will not be affected by this action. You will be allowed to maintain your current office space for radiation oncology activities; however, you should make alternative arrangements for your billing and collection activities."

Dutta and Dr. Tan practiced independently of each other in the same facility, but Dr. Tan was unhappy with this arrangement. Dr. Tan requested exclusive privileges on October 13, 1989, stating he could not continue as medical director without exclusivity.

An exclusive contract was authorized by the hospital and Dutta was notified on February 2, 1990, she would not be permitted to provide radiation therapy services at the hospital after May 1. By letter, Dutta twice requested a hearing on the hospital's decision to revoke her right to use hospital facilities. Both requests were denied.

Dutta's last day at the hospital was May 1, 1990. Just before she left the hospital, she began working two days per week at a hospital in Halstead. While at Halstead, Dutta learned of an opening at the Hutchinson Clinic in Hutchinson. Dutta interviewed for the position and agreed to work three days a week at the clinic. Dutta signed an agreement with the Hutchinson Clinic on June 18, 1990. Sometime in August of 1990, she terminated her employment at Halstead. Dutta worked full time at the Hutchinson Clinic from August of 1990 through June of 1991. At that time, although her work had been satisfactory, the Hutchinson Clinic replaced Dutta with another physician.

Dutta presented evidence about the purpose of the requirement in her contract with the hospital that the new medical director be mutually acceptable to both parties. Dutta stated she informed Douglas Stanley, the attorney who represented her in contract negotiations with the hospital, that the new medical director "has to be compatible, you know, I have to like that person, I should feel comfortable to work with him." Doug Stanley testified the "mutually acceptable" language in Dutta's contract referred to "her entering into a business relationship, a partnership with the person coming in. That was the whole discussion in terms of mutually acceptable. There was never any discussion ... about medical credentials of the person." Lynn Zatzkin, a hospital administrator testified the parties included the phrase "mutually acceptable" in the contract because "[w]e both agreed that we wanted the person being recruited to be compatible with Dr. Dutta."

Dutta admitted she understood her contract with the hospital obligated her to negotiate a business relationship with the new director in good faith. Dutta further indicated it is standard practice among physicians who are establishing business relationships to set up an employer-employee relationship for at least a year before a partnership is formed. Dutta emphasized, however, at the time of the negotiations with the hospital, she had already been employed by Dr. Krause for a year and had discussed forming a partnership with him. Dutta believed, based on her prior year of service at St. Francis, the new medical director should be required to form a partnership with her immediately.

The facts regarding Dutta's compensation are these: When Dutta began working at the hospital as an employee of Dr. Krause, her contract provided a salary of $150,000 per year. The August 1988 agreement with the hospital provided Dutta was to receive $2,000 per month from the hospital and be allowed to retain all of the billings she generated through the treatment of patients. Dutta's tax accountant, Gary Freeman, testified Dutta's earnings between August of 1988 and May of 1990 averaged $30,880 per month or $370,560 per year. Dutta's accountant estimated she earned $286,512 during the year she worked at Hutchinson.

Dr. Carl Bogardus, Chairman of the Department of Radiation Therapy at the University of Oklahoma, testified regarding Dutta's probable loss of future income. Bogardus indicated as a result of her termination, Dutta would suffer approximately $648,480 in lost income. Bogardus' opinion was it would take Dutta at least one year to find comparable employment to that which she had lost at the hospital and during that year she would have no income. In response to a question about Dutta's probable earnings after finding a job, Dr. Bogardus replied:

"Well, it obviously is a steadily increasing number. You start on day one with no income and the income gradually builds up. By the end of your first year you would be making about half your potential income. By the end of the second year you would probably at least be making three-quarters and on into full income by the end of your third year."

The appeal and cross-appeal present five issues for this court to resolve.

DENIAL OF DUE PROCESS HEARING

Count I of plaintiff's petition alleges: "Medical Center, in failing to grant Dr. Dutta a hearing pursuant to the Medical Staff Bylaws, has denied Dr. Dutta due process, in violation of the United States Constitution, the Constitution of the State of Kansas, and by common law." The trial court granted the hospital's motion for summary judgment, dismissing count I of plaintiff's petition before trial. Did the trial court err in granting the hospital's motion for summary judgment?

The rules governing the availability of summary judgment are well known and were most recently stated in Mills v. City of Overland Park, 251 Kan. 434, 436, 837 P.2d 370 (1992).

"Summary judgment is proper where the pleadings,...