Health v. Murphy

• Citation: 373 S.W.3d 269,2010 Ark. 358
• Decision Date: 30 September 2010
• Docket Number: No. 09–1070.,09–1070.
• Parties: BAPTIST HEALTH, Appellant v. Bruce MURPHY et al., Appellees.
• Court: Supreme Court of Arkansas

2010 Ark. 358

373 S.W.3d 269

BAPTIST HEALTH, Appellant

v.Bruce MURPHY et al., Appellees.

No. 09–1070.

Supreme Court of Arkansas.

Sept. 30, 2010.

The Health Law Firm, Little Rock, by: Harold Simpson and Seth Ward, and Barber, McCaskill, Jones & Hale, P.A., by: Robert L. Henry, III, for appellant.

Everett & Wales, by: John C. Everett, Fayetteville, and Williams & Anderson PLC, Little Rock, by: Janet L. Pulliam and Benjamin D. Brenner, for appellees.

Mitchell, Blackstock, Barnes, Ivers & Sneddon, PLLC, Little Rock, by: Michael W. Mitchell and Emily Sneddon, American Medical Association, by: Leonard A. Nelson, and Sidley Austin LLP, by

Jack R. Bierig and Ben J. Keith, for intervenor/appellees.

RONALD L. SHEFFIELD, Justice.

The appellant in the instant case, Baptist Health (Baptist), appeals from the following three orders: (1) a February 2, 2009 order for permanent injunction; (2) an April 13, 2009 judgment entered in favor of the appellees; and (3) an August 14, 2009 order awarding $2305.88 in costs to the appellees. On appeal, Baptist contends that the circuit judge erred in holding that the appellees proved by a preponderance of the evidence their tortious interference and Arkansas Deceptive Trade Practices Act (ADTPA), Ark.Code Ann. §§ 4–88–101 to –115 (Repl.2001), claims. Baptist further maintains that the claims were barred by the doctrine of res judicata, that it was error to strike its demand for a jury trial, and that the circuit judge erred in awarding costs to the appellees. The appellees cross-appeal from an August 14, 2009 order denying their request for attorney's fees. Because this is a subsequent appeal, our jurisdiction is pursuant to Ark. Sup. Ct. R. 1–2(a)(7) (2010). We affirm in part and reverse in part. The cross-appeal is moot.

Baptist is a private, charitable, nonprofit corporation that operates several full-service community hospitals in Arkansas. Appellees Bruce E. Murphy, M.D., et al. (the appellees) are cardiologists and partners in Little Rock Cardiology Clinic, P.A. (LRCC). The appellees hold an indirect interest in the Arkansas Heart Hospital (AHH) because LRCC owns 14.5% of AHH. Appellees Murphy and D. Andrew Henry, M.D., also directly own a percentage of AHH. The appellees are on the medical staff at AHH and are on the professional staff at Baptist Medical Center in Little Rock and admit patients to each facility. The American Medical Association and the Arkansas Medical Society (the intervenors) were granted leave to intervene by the circuit judge.

At its quarterly meeting in May 2003, the Board of Trustees of Baptist adopted an “Economic Conflict of Interest Policy” (Policy), which is the subject of the instant litigation. The Policy mandates the denial of initial and renewed professional-staff appointments or clinical privileges at any Baptist hospital to any practitioner who, directly or indirectly, acquires or holds an ownership interest in a competing hospital. The Policy defines a “competing hospital” as follows: “a hospital licensed in Arkansas or any subsidiary, component, division or other part of any such hospital” and “any entity that, directly or indirectly, holds an ownership interest or investment interest in a competing hospital and any entity that, directly or indirectly, has a management agreement with a competing hospital.” The policy further states that

“[o]wnership or investment interest” means an equity, debt or other interest, including but not limited to, stock, partnership interests, limited liability company memberships, as well as loans, bonds, or other financial instruments that are secured with the competing hospital's property or revenue or a portion of that property or revenue. Excluded from the foregoing definition of “ownership or investment interest” is any interest that was initially acquired on terms and conditions that were available to the general public.

“Ownership or investment interest” also means any interest, directly or indirectly, in real or personal property used by a competing hospital.

Two of the appellees, Doctors Murphy and Beau, had terms of appointment at Baptist that were set to expire on February 26, 2004. Both owned, either directly or indirectly, ownership interests in AHH and, pursuant to the Policy, were deemed ineligible for reappointment by Baptist. The remaining appellees also own a direct or indirect interest in AHH and allege that they would have been similarly affected at the expiration of their terms of appointment.

On February 10, 2004, the appellees filed suit against Baptist in the U.S. District Court for the Eastern District of Arkansas, alleging that Baptist's actions violated various federal and state statutes and tortiously interfered with the doctor-patient relationship. Baptist moved to dismiss the complaint and, on February 24, 2004, an order of dismissal was entered based on a lack of subject-matter jurisdiction. See Murphy v. Baptist Health, No. 4:04CV00112, 2004 WL 1474655 (E.D.Ark. Feb. 24, 2004) (unpublished opinion).

The same day, on February 24, 2004, the appellees filed the instant lawsuit in Pulaski County Circuit Court. The complaint alleged violations of the federal Anti–Kickback Statute, 42 U.S.C. § 1320a—7b(b); the Arkansas Medicaid Fraud Act, Ark.Code Ann. § 5–55–111Repl.2005); the Arkansas Medicaid Fraud False Claims Act, Ark.Code Ann. § 20–77–902 (Repl.2001); and the ADTPA. The complaint also asserted that Baptist's actions constituted tortious interference. The appellees sought a declaratory judgment that the Policy is contrary to federal and state law and to enjoin Baptist, preliminarily and permanently, from enforcing the Policy.¹ The circuit judge held a hearing on February 26, 2004, after which he granted the appellees' motion for preliminary injunction. Baptist brought an interlocutory appeal to this court, and we reversed and remanded for findings in accordance with Arkansas Rule of Civil Procedure 65(e) on the issue of the appellees' likelihood of success on the merits. Baptist Health v. Murphy, 362 Ark. 506, 209 S.W.3d 360 (2005) ( Baptist I ) (the court also ordered rebriefing).

Following Baptist I, the circuit judge entered a more detailed order, again granting a preliminary injunction. Baptist once more brought an interlocutory appeal to this court, arguing specifically that the circuit judge abused his discretion in concluding that (1) the appellees had a likelihood of success on the merits, and (2) the appellees would be irreparably harmed absent a preliminary injunction. While we found that the circuit judge erred with respect to some of the specific findings, we nevertheless held that he did not abuse his discretion in concluding that the appellees would likely succeed on the merits of their tortious interference claim and that they would suffer irreparable harm without a preliminary injunction. Thus, we affirmed the order granting a preliminary injunction. Baptist Health v. Murphy, 365 Ark. 115, 226 S.W.3d 800 (2006) ( Baptist II ).

After Baptist II, but before the instant case was tried, LRCC filed an antitrust lawsuit against Baptist in the U.S. District Court for the Eastern District of Arkansas, alleging various violations of the Sherman Act.² On August 29, 2008, after the instant case was tried to the circuit judge, but before an order or judgment deciding the matter was entered, the federal district court judge dismissed all of the federal claims against Baptist with prejudice. Little Rock Cardiology Clinic, P.A. v. Baptist Health, 573 F.Supp.2d 1125 (E.D.Ark.2008), aff'd,591 F.3d 591 (8th Cir.2009). Later, on September 26, 2008, Baptist moved to reopen the instant case, to admit new evidence, and for directed verdict, on grounds that the dismissal with prejudice of the federal claims had res judicata effect on the pending state claims. On December 16, 2008, Baptist filed an amended answer, raising res judicata as an affirmative defense. The same day, the circuit judge held a hearing on the motion, heard argument of counsel, and permitted Baptist to admit exhibits. However, on December 18, 2008, the judge entered an order denying the motion.

On February 27, 2009, the circuit judge entered an order granting a permanent injunction, and on April 13, 2009, a judgment was entered in the appellees' favor. Finally, the judge entered an order on August 14, 2009, awarding $2305.88 in costs to the appellees and denying their request for attorneys' fees. Baptist filed a timely notice of appeal from the permanent-injunction order on March 25, 2009. On April 14, 2009, an amended notice of appeal was filed from the judgment. Baptist again amended its notice of appeal on September 9, 2009, to include the order awarding costs to the appellees. The appellees filed a notice of cross-appeal on September 10, 2009, from the order denying attorneys' fees.

We address Baptist's arguments on appeal in a different order than they are raised in its briefs. First, we review the circuit judge's decision to deny the motion for directed verdict on res judicata grounds. Next, we turn to the contention that the rule of nonreview applies and precludes judicial review of the Policy. Third, we look to Baptist's argument that the circuit judge erred in denying its request for a jury trial. After resolving these initial arguments, we will review the circuit judge's findings that the appellees proved their claims for tortious interference and under the ADTPA by a preponderance of the evidence. Finally, we address the circuit judge's order granting costs and denying attorney's fees.

I. Res Judicata

We first address Baptist's contention that the decision of the federal district court in Little Rock Cardiology Clinic v. Baptist Health bars the present action pursuant to the doctrine of res judicata. 573 F.Supp.2d 1125 (E.D.Ark.2008), aff'd,591 F.3d 591 (8th Cir.2009). Baptist first raised the affirmative defense of res judicata in a Motion to Reopen Case, Admit New Evidence, and for Directed...