Kloster v. Hancock (In re Rockhill Pain Specialists, P.A.)
| Citation | 412 P.3d 1008,55 Kan.App.2d 161 |
| Decision Date | 22 December 2017 |
| Docket Number | No. 115,620,115,620 |
| Parties | IN RE ROCKHILL PAIN SPECIALISTS, P.A., Daniel R. Kloster, M.D., Appellee, v. Dan L. Hancock, M.D., Appellant. |
| Court | Court of Appeals of Kansas |
Eric G. Kraft, of Eric Kraft Law, LLC, of Olathe, for appellant.
Timothy R. West and Nick J. Kurt, of Berkowitz Oliver LLP, of Kansas City, Missouri, for appellee.
Before Arnold-Burger, C.J., Pierron and Green, JJ.
This case represents a tragic story of two highly gifted and respected physicians, Dr. Dan Hancock and Dr. Daniel Kloster, who specialize in pain management care. They maintained a highly successful practice and each made over a half million dollars a year. They were like brothers to each other, until a dispute over money sent their friendship and their practice into a death spiral.
Following a dispute over the proposed distribution of income, Hancock began broadcasting complaints regarding Kloster's patient care to several state agencies, hospitals, and ultimately—when he believed the other entities were not responding quickly enough or in the manner he hoped—to the Kansas City Star. He alleged that Kloster was either killing or hastening the death of his patients. None of the complaints bore fruit. After hundreds of hours defending his reputation Kloster successfully sued Hancock for defamation, breach of fiduciary duty, fraud, and conversion. Hancock appeals that verdict.
On appeal, Hancock argues that the district court misapplied the statutory privilege in K.S.A. 65-4925, which provides that reports and records of state licensing agencies are confidential, by admitting evidence that two state agencies had cleared Kloster of any wrongdoing. Although we find that the district court did not err in admitting evidence that the state licensing agencies cleared Kloster of wrongdoing, it did err in holding that Kloster's submissions to the state licensing agencies were privileged. However, the error was harmless because Hancock had other ways of discovering the information. Hancock also argues that there was insufficient evidence to support the jury's damages awards for Kloster's defamation and nondefamation claims. But, the jury had a sufficient evidentiary basis to support its award of damages on all claims. Finally, Hancock argues that the damages for Kloster's defamation claim should have been capped under K.S.A. 2016 Supp. 60-19a02(b), which provides a statutory cap of $250,000 for noneconomic damages in personal injury cases. However, defamation is not a personal injury action. Additionally, he did not object to the jury's failure to itemize damages, a failure that is fatal to his claim. Accordingly, we affirm.
Dr. Daniel Kloster and Dr. Dan Hancock are anesthesiologists specializing in pain management. They formed Rockhill Pain Specialists, P.A. (Rockhill) in 2001. Their practice included, among other pain management procedures, the implantation of pain pumps in terminally ill cancer
patients for end-of-life pain management. At that time, they were "good friends, like brothers." Rockhill was an S-corporation, and as Kloster and Hancock were the only two shareholders of Rockhill they split all profits evenly. Kloster brought in about two-thirds of the patients while Hancock brought in the other third. Hancock handled Rockhill's business, and served as Rockhill's president, director, and compliance officer.
The doctors' relationship began deteriorating in 2011. The doctors had different ideas about why this occurred. Hancock maintained that he was concerned about Kloster's patient care. Kloster argued that the doctors had a monetary dispute sparked by a job offer he received from a company called Assured Pharmacy.
In 2011, Assured Pharmacy approached Kloster about a potential position as its national medical director. Kloster described the position as a business advisory role. The position entailed about 35 to 40 hours of work per month. Kloster thought he would not be expected to split profits from this position with Hancock because their agreement was only to split money earned in the practice of medicine. Hancock, however, thought that the position entailed the practice of medicine because the employment contract specified that the employee had to be a licensed physician and anesthesiologist who specialized in pain management. Kloster asked Rockhill's corporate counsel, Randy Schultz, whether he would have to share profits from the Assured Pharmacy position with Hancock. Schultz told him that he would not have to share because the position was unrelated to the practice of medicine.
Kloster and Hancock went out to dinner in December 2011. They continued to disagree over whether Kloster's earnings from Assured Pharmacy should go to Kloster or to Rockhill. Kloster said he would look at Rockhill's books and discuss the issue again with Hancock at a later point in time. Kloster had not looked at Rockhill's books before because that aspect of the business was managed by Hancock. When Kloster looked at Rockhill's books, he realized that he had brought in twice as much business as Hancock had for the previous five years.
The doctors met for another dinner in January 2012. Kloster alleges that Hancock "just went off" and started screaming at him. Kloster said that Hancock accused him of working with Schultz to deprive Rockhill of the Assured Pharmacy money and that Hancock screamed, Hancock denied threatening Kloster or Schultz at this meeting, and said that Kloster actually threatened him by saying he would kill Hancock if he did anything to injure Kloster's wife or children.
The parties met again briefly in March or April of 2012. Kloster asked Hancock if he would be open to a different compensation system where, instead of splitting profits evenly, they would split profits based on production. Hancock refused.
Due to the parties' disagreement on compensation, Kloster recommended that they cease receiving any distributions from Rockhill beyond their base pay. Direct deposits of $15,000 per month were given to Kloster during this time period, just like Hancock, but Kloster returned them to the corporation. Hancock continued to take distributions from Rockhill. Schultz instructed Rockhill's bookkeeper to cease making distributions until the doctors could agree on a compensation model. But Hancock emailed the bookkeeper and said that "as president of Rockhill Pain Specialists, I am instructing you to make the monthly distributions for May as you have every month for the past 4-5 years."
On June 14, 2012, Kloster called a special meeting of Rockhill's board of directors. Kloster, Hancock, and Schultz attended. Kloster and Hancock each brought a private attorney as well. Kloster raised the issue of distributions again, but Hancock continued to receive them. The parties also discussed a production-based compensation arrangement, and Kloster's attorney agreed to "prepare a proposed compensation arrangement that was partially based upon a production formula while taking into consideration any special administrative duties being provided by the parties."
After discussing compensation, Hancock raised the issue of Rockhill's billing and coding practices. The special meeting minutes state that Hancock requested a third-party review of Rockhill's billing and coding activities. The minutes also state that Hancock agreed to provide Schultz with the names of two to three physicians who could conduct an independent review of Rockhill's practice. During the trial, Hancock denied that he agreed to do this. At the time of the special shareholder's meeting, neither Kloster nor Schultz knew why Hancock raised an issue with Rockhill's billing.
Although he did not disclose it at the special shareholder's meeting, Hancock had been investigating Rockhill's billing practices for several months. Hancock testified that he began having concerns with Kloster's patient care in 2011. Hancock's primary concern was with Kloster's implantation of intrathecal pain pumps in patients. These pumps are about the size of a hockey puck and are inserted under a patient's skin. Pumps provide a powerful way to deliver medicine into patients with severe pain. Hancock thought that patients receiving pumps were dying at a faster rate than usual. He thought Kloster was "either choosing patients that [were] inappropriate to receive pumps or that the concoction that he was using was hastening their demise."
Hancock was also concerned with the pain pump issue from a compliance standpoint. Medicare asks doctors to certify that they have a reasonable certainty that a patient will survive for 90 days after implantation of a pump. Hancock thought that if Kloster was selecting inappropriate patients for pump procedures that Rockhill might be subject to a Medicare audit or sanction.
In January 2012, shortly after the doctors' monetary dispute began, Hancock met Vicki Myckowiak at a conference in Scottsdale, Arizona. Myckowiak is an expert in fraud and abuse in medical billing. Hancock told Myckowiak that he had concerns over Rockhill's billing practices and Kloster's use of pain pumps. Hancock hired Myckowiak on behalf of Rockhill to conduct a review of some of Rockhill's files. Hancock sent Myckowiak records from 12 patients of Kloster's who had died within 90 days of their pump placements. These were records that Rockhill maintained for billing purposes, and did not include operating room notes or nursing notes.
On June 6, 2012, Hancock provided Kloster with a peer review reference. Hancock certified that he would recommend Kloster without reservations. Hancock strongly agreed that Kloster provided appropriate patient assessments, evaluations, and surgical procedures.
Shortly after the June 2012 special shareholder meeting, Myckowiak hired Dr. Andrea Trescot as an expert to conduct additional review of the records. After reviewing the records, Trescot prepared...
To continue reading
Request your trial
-
Flaherty v. CNH Indus. Am., LLC
...any matter that is relevant to a party's claim or defense, evidentiary privileges are to be strictly construed." Rockhill Pain Specialists v. Hancock , 55 Kan. App. 2d 161, Syl. ¶ 7, 412 P.3d 1008 (2017). But as Justice Powell wrote in United States v. Nobles , 422 U.S. 225, 237, 95 S. Ct. ......
-
Marcus v. Swanson
... ... Skepnek, of The ... Skepnek Law Firm, PA", of Lawrence, for appellant ... \xC2" ... Gobin , 232 Kan. at 4-5; Rockhill Pain ... Specialists v. Hancock , 55 Kan ... ...
-
State v. Smith
...damages for alleged defamation.’ Davis v. Hildyard , 34 Kan. App. 2d 22, 30, 113 P.3d 827 (2005)." Rockhill Pain Specialists v. Hancock , 55 Kan. App. 2d 161, 185, 412 P.3d 1008 (2017), rev. denied 308 Kan. 1595 (2018). The stipulated facts and exhibits raise no reasonable inference that Sm......
-
Hernandez v. Pistotnik
...controversy before the court, and the public interest in forbidding discovery. [Citations omitted.]" Rockhill Pain Specialists v. Hancock , 55 Kan. App. 2d 161, 182, 412 P.3d 1008 (2017).Yudi argues that because the information in the settlement agreements was crucial to and "likely disposi......