Schultis v. Advanced Healthcare Mgmt. Serv. LLC
| Decision Date | 08 August 2011 |
| Docket Number | Case No. 1:08CV00083 LMB |
| Parties | TRISTAN SCHULTIS, M.D., Plaintiff, v. ADVANCED HEALTHCARE MANAGEMENT SERVICES, LLC, Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
TRISTAN SCHULTIS, M.D., Plaintiff,
v.
ADVANCED HEALTHCARE MANAGEMENT SERVICES, LLC, Defendant.
Case No. 1:08CV00083 LMB
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI SOUTHEASTERN DIVISION
Dated: August 8, 2011
This matter is before the court on the Amended Complaint of Plaintiff Tristan Schultis, M.D. ("Dr. Schultis"), alleging breach of contract claims against Defendant Advanced Healthcare Management Services, LLC ("AHCMS"). AHCMS has filed a counterclaim alleging breach of contract claims against Dr. Schultis. This case has been assigned to the undersigned United States Magistrate Judge pursuant to the Civil Justice Reform Act and is being heard by consent of the parties. See 28 U.S.C. § 636(c).
Several motions are presently pending before the court. Dr. Schultis has filed a "Motion to Strike Answer and Affirmative Defenses and to Dismiss Counterclaim Pursuant to Chambers v. NASCO, for Sanctions, and for Summary Judgment on the Main Demand." (Doc. No. 55). AHCMS has filed Defendant's Motion for Summary Judgment. (Doc. No. 49). AHCMS has also filed Defendant's Motion to File Exhibit Under Seal.1 (Doc. No. 48).
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In his original Complaint for Declaratory Judgment, Damages and other Equitable Relief filed on June 3, 2008, Dr. Schultis states that in a Physician Employment Agreement dated February 10, 2006 ("Agreement"), he agreed to perform services for the benefit of AHCMS in consideration of certain employee benefits set forth under the Agreement, as well as other valuable consideration. (Doc. No. 1). Dr. Schultis states that the Agreement contemplated two one-year terms, for the first of which he was to be remunerated at a fixed compensation of $300,000.00, and for the second of which he was to be remunerated at a fixed compensation of $275,000.00. Dr. Schultis states that, as to both yearly terms, a "variable compensation" formula was established for his benefit. Dr. Schultis states that the parties terminated his employment under the Agreement at the end of the two-year period and plaintiff was entitled to payment in accordance with the terms of the Agreement.
Dr. Schultis alleges that AHCMS underpaid him by a sum exceeding $150,000.00, in violation of the terms of the Agreement. Dr. Schultis states that, as part of the benefits provided for in the Agreement, AHCMS was required to purchase professional liability insurance. Dr. Schultis alleges that the conditions for the purchase by AHCMS of "tail coverage" were met and that AHCMS breached its Agreement by failing to provide tail coverage after the termination of the Agreement. Dr. Schultis seeks a declaratory judgment and an order requiring AHCMS to furnish insurance coverage.
AHCMS filed a Counterclaim for Declaratory Judgment, Damages, and Other Equitable Relief, in which it states that Dr. Schultis failed to provide AHCMS notice that he intended to terminate his employment at least sixty days prior to the initial two-year term expiration, and that pursuant to the terms of the Agreement, it was automatically renewed. (Doc. No. 5). AHCMS
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states that on April 2, 2008, AHCMS provided written notice to Dr. Schultis that his resignation would be accepted despite his failure to provide the required sixty days notice and that his decision to optionally terminate his employment would require that he provide tail end malpractice coverage pursuant to the Agreement. AHCMS states that on April 10, 2008, Dr. Schultis advised AHCMS that he would provide the tail coverage and he signed an Authorization to Bind Coverage on that date. AHCMS alleges that Dr. Schultis has failed to obtain tail coverage in violation of the Agreement. AHCMS alleges that it has been damaged by Dr. Schultis' failure to provide tail coverage as it has been forced to continue Dr. Schultis' active coverage at $3,682.92 per month. AHCMS requests a declaratory judgment that Dr. Schultis breached the Agreement by failing to provide tail coverage and an order requiring Dr. Schultis to furnish said coverage; and that Dr. Schultis be ordered to reimburse AHCMS for the monthly medical malpractice insurance premiums that they have paid on his behalf since Dr. Schultis left their employment.
On September 2, 2009, AHCMS filed an Amended Counterclaim, in which AHCMS asserts the additional allegation that AHCMS inadvertently overpaid Dr. Schultis income pursuant to the "variable compensation" formula in an amount to be determined by further audit of the billing records, but believed to exceed $25,000.00. (Doc. No. 21). AHCMS seeks judgment against Dr. Schultis for reimbursement of the income he was inadvertently overpaid.
On December 8, 2010, Dr. Schultis filed an Amended and Supplemental Complaint for Declaratory Judgment, Damages and Other Equitable Relief. (Doc. No. 40). Dr. Schultis restated the allegations of fact set forth in his original Complaint and stated as a separate cause of action the following alleged violations of the Agreement: (a) AHCMS' failure to pay Dr. Schultis timely and in the appropriate amounts due; (b) AHCMS' failure to pay wages timely and in the appropriate amounts; (c) AHCMS' breach of duty of good faith in connection with all aspects of
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the relationship between Dr. Schultis and AHCMS; (d) AHCMS' wrongful infliction of emotional and other related non-pecuniary damages throughout the term of the relationship between Dr. Schultis and AHCMS, and its aftermath; (e) AHCMS' failure and/or refusal to negotiate in good faith regarding the disputes between the parties; and (f) any and all other violations of duty or by AHCMS to Dr. Schultis as may be shown at the trial of this matter.
As previously stated, Dr. Schultis has filed a "Motion to Strike Answer and Affirmative Defenses and to Dismiss Counterclaim Pursuant to Chambers v. NASCO, for Sanctions, and for Summary Judgment on the Main Demand" ("Dr. Schultis' Motion"), along with a Statement of Uncontested Material Facts (Doc. No. 56). AHCMS has filed Defendant's Memorandum in Opposition to Plaintiff’s Motion for Summary Judgment (Doc. No. 53), along with a Response to Plaintiff’s Statement of Uncontested Material Facts (Doc. No. 52), and a Memorandum in Opposition to Plaintiff’s Motion to Strike Answer and Affirmative Defenses and Motion to Dismiss Amended Counterclaim (Doc. No. 54). AHCMS has also filed Defendant's Motion for Summary Judgment (Doc. No. 49), along with Defendant's Statement of Uncontested Material Facts (Doc. No. 51). Dr. Schultis filed a "Unified (i) Reply to Advanced Healthcare's Opposition to Plaintiff's Motion to Strike Answer and Affirmative Defenses and Motion to Dismiss Amended Counter-Claim and (ii) Opposition to Advanced Healthcare's Motion for Summary Judgment" (Doc. No. 58) ("Unified Reply"). Finally, AHCMS has filed Defendant's Reply in Support of Defendant's Motion for Summary Judgment. (Doc. No. 59).
I. Dr. Schultis' Motion
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In his motion, Dr. Schultis first moves for an order pursuant to Chambers v. NASCO, 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), striking the Answer and all affirmative defenses by AHCMS and dismissing AHCMS' counterclaim. Plaintiff also requests that the court grant summary judgment in his favor on the main demand. The court will discuss plaintiff’s two motions separately.
1. Motion for Sanctions
As previously stated, plaintiff requests that the court issue sanctions pursuant to Chambers v. NASCO, 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), striking the Answer and all affirmative defenses by AHCMS and dismissing AHCMS's counterclaim.
In Chambers, the controlling authority on the imposition of sanctions pursuant to the inherent powers of the Court, the Supreme Court found that "a court may assess attorney's fees when a party has 'acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" 501 U.S. at 45-46, quoting Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 259, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). It is well-settled in the Eighth Circuit that a "district court is vested with discretion to impose sanctions upon a party under its inherent disciplinary power." See Bass v. General Motors Corp., 150 F.3d 842, 851 (8th Cir. 1998); Sylla-Sawdon v. Uniroyal Goodrich Tire Co., 47 F.3d 277, 280 (8th Cir. 1995); Dillon v. Nissan Motor Co. Ltd., 986 F.2d 263, 267 (8th Cir. 1993). "These powers are 'governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.'" Chambers, 501 U.S. at 43, quoting Link v. Wabash R.R. Co., 370 U.S. 626, 630-31, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962). "Because of the potency of inherent powers, ‘ [a] court must exercise its inherent powers with restraint and discretion, and a primary aspect of that discretion is the ability to fashion an appropriate sanction.'" Plaintiffs' Baycol
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Steering Comm. v. Bayer Corp., 419 F.3d 794, 802 (8th Cir. 2005), quoting Harlan v. Lewis, 982 F.2d 1255, 1262 (8th Cir. 1993), citing Chambers, 501 U.S. at 44-45. "Over the years, the Supreme Court has found inherent power to include the ability to dismiss actions, assess attorneys' fees, and to impose...
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