Optimus Hospitalists & Pediatric Subspecialists, Ltd. v. Franciscan All., Inc.
| Decision Date | 14 September 2020 |
| Docket Number | No. 16 C 7760,16 C 7760 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | OPTIMUS HOSPITALISTS & PEDIATRIC SUBSPECIALISTS, LTD d/b/a MIDWEST NEOPED ASSOCIATES, LTD., an Illinois limited company, Plaintiff, v. FRANCISCAN ALLIANCE, INC. d/b/a FRANCISCAN ST. JAMES HEALTH f/k/a SISTERS OF ST. FRANCIS HEALTH SERVICES, INC. d/b/a ST. JAMES HOSPITAL AND HEALTH CENTERS, an Indiana corporation, Defendant. |
MEMORANDUM OPINION AND ORDER
Plaintiff Optimus Hospitalists & Pediatric Subspecialists, Ltd. ("Optimus") contracted with Defendant Franciscan Alliance, Inc. ("Franciscan") in 2011 to provide certain medical services at two of Franciscan's hospitals.1 The parties amended the agreement in 2013; disputes concerning the amendments resulted in this lawsuit, in which Optimus charges Franciscan with breaching the amended contract in two ways. First, Franciscan allegedly permitted another provider of similar medical services, Signature Healthcare Solutions ("Signature"), to operate at Franciscan's hospital in Chicago Heights, in violation of Optimus's exclusive rights under the contract. Second, Optimus claims the agreement required Franciscan to schedule its physicians to be on-call at Franciscan's emergency department in Chicago Heights at least four days per week, but Franciscan failed to maintain that schedule. Defendant Franciscan denies having breached thecontract and alleges in a counterclaim that it is Optimus who did so, by failing to provide contractually required services for which it was paid in December 2015.
In an earlier ruling on the parties' cross-motions for summary judgment, the court found the language of the parties' 2013 amended contract ambiguous and concluded that extrinsic evidence offered by the parties did not clarify the meaning of the ambiguous language. See generally Optimus Hospitalists & Pediatric Subspecialists, Ltd. v. Franciscan All., Inc., No. 16 C 7760, 2018 WL 3970146 (N.D. Ill. Aug. 20, 2018) (hereinafter "Optimus I"). Franciscan now again seeks summary judgment [101] on Optimus's claims, arguing that discovery has revealed new evidence that does effectively clarify the parties' agreement. Franciscan also seeks summary judgment on its counterclaim. For the reasons explained below, the court denies Franciscan's motion for summary judgment on Optimus's claims. The motion for summary judgment on Franciscan's counterclaim is granted in part and denied in part.
Optimus provides medical services to hospitalized patients at facilities in the state of Illinois (Def.'s Local R. 56.1 Statement of Facts ("Def.'s SOF") [103] ¶ 1), including two hospitals owned by Franciscan Alliance, one in Chicago Heights ("FAI Chicago Heights"), and one in Olympia Fields ("FAI Olympia Fields"). (Id. ¶ 2.) This case involves a dispute between Plaintiff Optimus and Defendant Franciscan over the terms of an amended contract between the parties that took effect in February 2013. Because the terms of a January 2011 contract between Optimus and Franciscan inform the meaning of the 2013 agreement, the court will begin bydescribing the 2011 contract ("Initial Agreement").3 As relevant here, the parties agreed that Optimus would be the exclusive provider of certain hospitalist4 services at FAI Olympia Fields and FAI Chicago Heights. (See Ex. B to Initial Agreement [103-3], Ex. 3 to Def.'s SOF.) Recitals to the contract make clear that the purpose of the agreement was to address a shortage of physicians specializing in neonatal and inpatient care. The recitals explain, further, that the agreement granted Optimus certain rights to exclusivity in order to promote efficient and effective use of Franciscan's resources and to ensure a consistent quality of care. (Id. at 1.)
Exhibit B to the Initial Agreement lists the services Optimus would provide at FAI Chicago Heights and FAI Olympia Fields. Specifically, as stated in Exhibit B, Optimus agreed to provide certain hospitalist services including, in the first bullet point, a physician "on-site at each Facility 24 hours per day, seven days per week to serve as the 'Urgent Hospitalist'5 to provide house coverage, to be generally available to address the needs of patients and staff of the acute-care Facility." (Id.) In a separate subsection of Exhibit B (the fifth bullet point), Optimus agreed to provide "on-site hospitalist service at the Facility located in Chicago Heights for clinical duties 24 hours per day, 365 days per year and to provide a Hospitalist to make daily rounds and to beavailable on-call at the Facility located in Olympia Fields." (Id.) Optimus also agreed to accept "any and all unassigned patients"6 who came to each facility's emergency department ("ED") requiring inpatient admission, and who Franciscan assigned to Optimus "pursuant to the ED call schedule" (hereinafter, "ED call provision"). (Id.)
Section I of the Initial Agreement contained provisions governing Optimus's right to exclusivity under the contract. Optimus would be the exclusive provider of the services listed in Exhibit B, "as long as Corporation [Optimus] is not in material breach of any of its obligations under this Agreement, has a sufficient number of hospitalists and neonatologists and is providing all Services required by the Hospital, as provided in this Agreement." (Id. § 1.2.) The provision continues that "Hospital will not during the term of this Agreement extend Medical Staff privileges to any other hospitalist or neonatologist who is not affiliated with Corporation to provide Services at Facility," except for temporary privileges in emergency circumstances when "there is an immediate need for such Services and Corporation is unable to fill the need and/or supply such specialists." (Id. §§ 1.2-1.3.)
Optimus and Franciscan amended portions of the Initial Agreement in 2013 ("Amended Agreement"). (Am. Agreement [103-4], Ex. 4 to Def.'s SOF; Def.'s SOF ¶ 25.) Optimus signed the Amended Agreement in March 2013 and Franciscan signed it in April 2013 (see Am. Agreement at 9), but it took effect retroactively beginning on February 28, 2013. (Def.'s SOF ¶ 51.) The recitals to the Amended Agreement report that Optimus was experiencing "material unforeseen circumstances" such that "the professional fees collected by Corporation . . . have not been sufficient to enable Corporation to continue providing services pursuant to the terms of the Agreement." (Am. Agreement at 1.) In particular, due to factors including a "higher than mutually anticipated level of uninsured and underinsured patients," and "increasing compensation/scarcityof Hospitalists willing to cover night shifts," Optimus was suffering net financial losses under the Initial Agreement and had "recent staff attrition and retention problems" that complicated its ability to fulfill its obligations under the Initial Agreement. (Id.)
The parties amended Exhibit B to modify the hospitalist services that Optimus agreed to provide and to make a change in the ED call provision. The parties dispute the implications of these changes but agree that Optimus physicians would no longer provide hospitalist services at FAI Olympia Fields under the Amended Agreement. Specifically, with regard to hospitalist services at FAI Chicago Heights, Optimus would provide:
24 hour 365 days a year in house adult and pediatric physician coverage by Board Certified / Board Eligible Physicians dual board certified in Internal Medicine and Pediatrics or at Corporation's sole cost, qualified Internal Medicine, Family Practice and Pediatric Physicians to attend to the needs of patients requiring urgent or immediate care at the Chicago Heights Campus of the Facility including but not limited to the [sic] responding to any adult or pediatric codes. All physicians providing the Services shall be designated as "Urgent Hospitalists."
(Id. § 3.1.) This single provision, included as subsection one to amended Exhibit B, replaced the first bullet point in the parties' Initial Agreement. The amendments also removed the fifth bullet point from the original Exhibit B, which had spelled out Optimus's on-site responsibilities at FAI Chicago Heights and "rounding" duties at FAI Olympia Fields. The new ED call provision stated that Optimus would accept "any and all unassigned patients who come to the ED and require admission a minimum of two (2) days per week through March 31, 2013 increasing to four (4) ED days a week, effective April 1, 2013." (Id. § 3.7.)
The parties also amended the language of the contract's exclusivity provisions by omitting some instances of the word "hospitalist." Similar to the Initial Agreement, except omitting a requirement that Optimus maintain a "sufficient number of hospitalists," the Amended Agreement stated that Optimus would be the exclusive provider of Services (defined as the "professional services described in Exhibit B") "as long as Corporation is not in material breach of any of its obligations under this Agreement, has a sufficient number of neonatologists and is providing all Services required by the Hospital, as provided in this Agreement." (Id. § 2.1.) Using the samewording as in the Initial Agreement, the amended exclusivity provision continues that "Hospital will not during the term of this Agreement extend Medical Staff privileges to any other hospitalist or neonatologist who is not affiliated with Corporation to provide Services at Facility." (Id.) The Amended Agreement did, however, modify an exception to that provision. Whereas the Initial Agreement stated that the Hospital "may extend temporary privileges to other hospitalists or neonatologists unaffiliated with Corporation to perform Services in emergency circumstances where there is an immediate need for such services and Corporation is unable to fill the need and/or supply such specialists" (Initial Agreement § 1.2), the Amended Agreement omitted the word "...
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