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

• Decision Date: 28 January 1994
• Docket Number: No. 67446,67446
• Citation: 254 Kan. 690,867 P.2d 1057
• Parties: , 129 Lab.Cas. P 57,774 S. Sakuntala DUTTA, M.D., Appellee, v. ST. FRANCIS REGIONAL MEDICAL CENTER, INC., Appellant.
• Court: Kansas Supreme Court

Page 1057

867 P.2d 1057

254 Kan. 690, 129 Lab.Cas. P 57,774

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

No. 67446.

Supreme Court of Kansas.

Jan. 28, 1994.

Syllabus by the Court

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

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

3. The court being equally divided on the issue of damages, the judgment of the Court of Appeals, reversing the judgment of the district court, is affirmed.

Richard C. Hite, of Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, argued the cause, and Charles E. Hill, Wichita, was with him on the briefs, for appellant.

Eric B. Metz, of Triplett, Woolf & Garretson, Wichita, argued the cause, and John P. Woolf, of the same firm, was with him on the briefs, for appellee.

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, were on the brief, for amici curiae The American College of Radiology and The Kansas Medical Soc.

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

SIX, Justice:

This case arises from an employment contract dispute between an oncological radiologist and the St. Francis Regional Medical Center in Wichita (St. Francis). The jury awarded the radiologist, S. Sakuntala Dutta, M.D., $552,756 as damages for loss of income due to the breach by St. Francis of a written employment contract. The hospital appealed.

The trial court granted the hospital's motion for summary judgment, finding that Dutta was not entitled to a due process hearing under provisions of the hospital's medical staff bylaws. Dutta cross-appealed the due process ruling.

The Court of Appeals set aside the verdict and remanded for a new trial on the damage issue. Trial court rulings and the jury verdict as to all other issues were affirmed. We granted Dutta's petition for review of the two issues now before us: (1) damages, and (2) the denial of a due process hearing. We affirm the Court of Appeals on the due process hearing issue. Justice McFarland has recused. The judgment of the Court of Appeals reversing the district court on the damage issue is affirmed by an equally divided court.

Facts

We recite the facts as stated by the Court of Appeals:

"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.' " 18 Kan.App.2d 245, 246-49, 850 P.2d 928.

Denial of the Due Process Hearing

Count I of Dutta's petition alleged a denial of due process in failing to grant her a hearing under the St. Francis medical staff bylaws. The trial court granted the hospital's motion for summary judgment, dismissing count I before trial. The Court of Appeals observed:

"None of the parties claim any genuine issue of material fact which would bar summary judgment. Whether the bylaws constitute a contract of employment is not an issue in this case as the hospital admits it is bound by its own bylaws. The only issue is whether the hospital bylaws required a hearing before a committee of the medical staff prior to the hospital decision to revoke Dutta's right to use the facilities and equipment of the radiology department." 18 Kan.App.2d at 249, 850 P.2d 928.

The interpretation and legal effect of written instruments are matters of law. Federal Land Bank of Wichita v. Krug, 253 Kan. 307, Syl. p 1, 856 P.2d 111 (1993). Our standard of...