Thomas v. Capital Medical Management
| Decision Date | 07 December 2009 |
| Docket Number | No. 545, September Term, 2008.,545, September Term, 2008. |
| Parties | Dorianne THOMAS, M.D., et al. v. CAPITAL MEDICAL MANAGEMENT ASSOCIATES, LLC. |
| Court | Court of Special Appeals of Maryland |
Julie Glass Martin-Korb of Rockville, and Philip B. Zipin of silver Spring, for appellant.
Catherine H. McQueen and Robert S. Selzer, of Bethesda, for appellee.
Panel: WOODWARD, ZARNOCH and WRIGHT, JJ.
Appellee, Capital Medical Management Associates, LLC ("CMMA"), provides billing services for medical practices. On March 15, 2005, CMMA entered into a Billing Services Agreement ("Agreement") with "Capitol Radiology, DBA Laurel Radiology" ("Laurel Radiology"). Dr. Dorianne Thomas, the principal for Capitol Radiology, LLC, signed the Agreement on the signature line for Laurel Radiology. On May 19, 2006, CMMA discontinued providing billing services, alleging breach of contract.
On July 25, 2006, CMMA filed a one-count complaint for breach of contract, in the Circuit Court for Montgomery County, against "Dorianne Thomas, MD d/b/a Capitol Radiology and/or Laurel Radiology, and Capitol Radiology, LLC" (collectively, "appellants"). On November 1, 2006, appellants filed an answer and counterclaim, alleging breach of contract, negligent misrepresentation, and constructive fraud. A three-day bench trial was held on March 10-12, 2008. On March 19, 2008, CMMA filed a petition for attorney's fees, citing an indemnification provision in the Agreement. On April 14, 2008, the trial court issued an oral opinion, ruling in favor of CMMA and awarding contract damages in the amount of $55,396.83, attorney's fees in the amount of $119,909.80, and costs in the amount of $4,442.53. Appellants timely appealed.
Appellants present four questions, which we have reordered and revised for clarity:1
1) Did the trial court err in finding that appellants were parties to the Agreement?
2) Did the trial court err in finding that, under the Agreement, appellants had a duty to provide demographics and to perform credentialing?
3) Did the trial court err in awarding appellee contract damages for work that CMMA had not yet performed?
4) Did the trial court err in awarding appellee attorney's fees pursuant to the Agreement's indemnification clause?
We answer the first three questions in the negative, and the last question in the affirmative. As such, we affirm the circuit court's judgment in part and reverse in part.
In January 2005, Dr. Dorianne Thomas started her own radiology practice and formed Capitol Radiology, LLC, a limited liability company organized under Maryland law.2 The practice consists of two components: 1) providing radiology services at Laurel Regional Hospital, beginning in February 2005; and 2) providing radiology services at a private office in Laurel, Maryland, beginning in March 2005. Needing assistance in the "start-up process" for her practice, Dr. Thomas hired Snyder, Cohn, Collyer, Hamilton & Associates, P.C. ("Snyder Cohn"), a full-service firm providing management advisory services to businesses. Snyder Cohn directed Dr. Thomas "to look at [CMMA] as a billing company," and therefore, Dr. Thomas scheduled an initial meeting with CMMA.
On March 15, 2005, CMMA entered into the Agreement with "Capitol Radiology, DBA Laurel Radiology." Dr. Thomas signed the Agreement on the line below the name Laurel Radiology, while Jeanne Kohn, the General Manager of CMMA, signed on the line above the name CMMA. Nowhere in the Agreement did it indicate the letters "LLC" after the words "Capitol Radiology" or that Capitol Radiology was a limited liability company.
The Agreement stated, in pertinent part:
2. Duties and Responsibilities of CMMA.
(a) Based upon the demographic and charge [in]formation provided by Capitol Radiology, DBA Laurel Radiology, CMMA shall be responsible for the timely preparation of billing statements and insurance forms.... CMMA will review and post charges within 72 hours of receipt from the client.
(b) CMMA shall in a timely manner forward or distribute all billing statements and insurance forms to the appropriate agency, carrier or patient within 72 hours of receipt of charge information.
(c) CMMA shall bill on behalf of and under the name of Capitol Radiology DBA Laurel Radiology, and will assume responsibility for the collection of all accounts receivable.... CMMA will post all payments within 48 hours of receipt.... CMMA shall not commingle Capitol Radiology, DBA Laurel Radiology's funds with its own funds....
(d) CMMA shall post all payments and adjustments to the patient account records and shall provide monthly reports ....
(e) CMMA shall provide training and support services to the office personnel of Capitol Radiology, DBA Laurel Radiology to assist them in the proper assembly of information for CMMA.
(f) If this billing Agreement is terminated, CMMA will at Capitol Radiology, DBA Laurel Radiology's option, complete all billing activities for services rendered up to and including the termination date. This will include the resolution of Accounts Receivable balances and collections as needed to complete outstanding work up to 90 days past termination date provided that CMMA is paid for its services in a timely manner and at the prevailing rate.
(g) If the relationship between CMMA and Capitol Radiology, DBA Laurel Radiology is terminated, CMMA agrees to cooperate in transferring billing records to the new billing entity, if any.
3. Duties and Responsibilities of Capitol Radiology, DBA Laurel Radiology.
Capitol Radiology, DBA Laurel Radiology shall provide to CMMA on a daily or other mutually agreeable basis all of the demographic and charge information necessary to prepare the billing statements and insurance forms that CMMA is required to prepare under this Agreement and shall permit employees of CMMA to interface with the office personnel of Capitol Radiology, DBA Laurel Radiology to enable the CMMA employees to obtain this information.
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7. Compensation
Capitol Radiology, DBA Laurel Radiology shall pay to CMMA as compensation for the billing services rendered under this Agreement an amount equal to 8.5% of net collections of hospital charges and 7.5% of office charges. CMMA shall bill Capitol Radiology, DBA Laurel Radiology by written invoice on a monthly basis, which invoice shall be payable upon presentation....
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9. Termination and Breach
(a) General Breach In the event that either party should be in default in the performance of any material provision of this Agreement, (non-payment of CMMA's invoice shall be considered a material provision), and such default is not cured within twenty (20) days after receipt of written notice of such default from the other party, the non-defaulting party, at its option, may terminate this Agreement by delivering written notice to such defaulting party within five (5) days after the expiration of said twenty (20) day period.
(b) In the event of termination or in the event of discontinuance of CMMA's business, all records in CMMA's possession which are the property of Capitol Radiology, DBA Laurel Radiology shall be returned to Capitol Radiology, DBA Laurel Radiology within 30 days of said termination.
10. Indemnification
fees) which may result against CMMA as a consequence of: (i) Capitol Radiology, DBA Laurel Radiology, performance of this Agreement, except to the extent caused by the acts or omissions of CMMA; or (ii) which arise out of any alleged medical malpractice, malfeasance or neglect caused by Capitol Radiology, DBA Laurel Radiology, its employees, agents or independent contractors, in connection with the rendering of, or failure to render, any medical or other service to any person.
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14. Miscellaneous
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(e) Entire Agreement This Agreement contains the entire understanding among the parties hereto and with respect to the subject matter hereof, supercedes all prior and contemporaneous agreements and understanding, inducements or conditions, express or implied, oral or written, except as herein contained. This Agreement may not be modified or amended other than by an agreement in writing.
CMMA immediately began providing medical billing services for appellants, the business entity created by Dr. Thomas, following the provisions in the Agreement. In May 2006, CMMA terminated the Agreement, alleging that appellants "fail[ed] to provide CMMA with timely information, fail[ed] to compensate CMMA and fail[ed] to take such necessary steps to ensure that the bills processed by CMMA would be paid by the respective insurance company and/or governmental agency."
On July 25, 2006, CMMA filed a one-count complaint for breach of contract against appellants, "Dorianne Thomas, MD d/b/a Capitol Radiology and/or Laurel Radiology, and Capitol Radiology, LLC." On November 1, 2006, appellants filed an answer as well as a counterclaim, alleging breach of contract, negligent misrepresentation, and constructive fraud. On December 7, 2006, CMMA filed a motion to dismiss Count II (negligent misrepresentation) of appellants' counterclaim. The court denied that motion on September 25, 2007. Thereafter, on December 5, 2007, CMMA filed an amended answer to the counterclaim.
On January 25, 2008, CMMA filed a motion for summary judgment on all counts. On February 14, 2008, appellants filed a motion for preliminary determination of question of law regarding interpretation of contract, pursuant to Maryland Rule 2-502. Specifically, appellants asked the court to "declare that the Agreement did not require Dr. Thomas to input and format the demographic information," that "the Agreement is ambiguous as written on this point," and...
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