Adventist Healthcare v. Behram

322 A.3d 1, 488 Md. 410
Court of Appeals of Maryland·Decided August 27, 2024·No. 16/23·Published·Cited by 7 cases

Opinion

Adventist Healthcare, Inc. v. Steven S. Behram, No. 16, September Term, 2023.

CONTRACT INTERPRETATION – OBJECTIVE THEORY OF CONTRACT INTERPRETATION

Maryland adheres to the objective theory of contract interpretation. Under that approach, unless the language of the contract is ambiguous, we interpret it based on what a reasonable person in the position of the parties would have understood the language to mean rather than the subjective intent of the parties at the time of formation. We do not interpret contractual language in a vacuum. Instead, we interpret that language in context, which includes not only the text of the entire contract but also the contract’s character, purpose, and the facts and circumstances of the parties at the time of execution.

CONTRACT INTERPRETATION – GENUINE DISPUTE OF MATERIAL FACT

The parties, a hospital and a physician, entered a settlement agreement that, among other things, required the hospital to submit a report to a regulatory authority using specific language negotiated by the parties. In submitting its report, the hospital was required by the regulatory authority to select codes that generated text that appeared prominently in the report. The physician alleged that although the hospital could have selected codes that were consistent with the report it had agreed to submit, it instead chose codes that contradicted and were inconsistent with the report it had agreed to submit. In the physician’s action for breach of the settlement agreement, the Circuit Court for Montgomery County awarded summary judgment to the hospital on the ground that the settlement agreement did not restrict the hospital’s selection of codes in submitting its report. The Supreme Court, agreeing with the Appellate Court, held that, considering the text of the settlement agreement as well as its character and purpose and the facts and circumstances of the parties at the time of execution, a reasonable person in the position of the parties would have understood the hospital’s obligation to report to the regulatory authority to preclude it from including additional language that contradicted and was materially inconsistent with the agreed language. Whether the code-generated language added by the hospital breached its obligation under the settlement agreement was a jury question.

CONTRACT INTERPRETATION – RELEASE CLAUSES

A physician’s agreement to release all claims related to a suspension of his clinical privileges released his claim that the hospital failed to provide him a timely hearing to contest that suspension.

Circuit Court for Montgomery County Case No. 483870V IN THE SUPREME COURT Argued: April 9, 2024

OF MARYLAND

No. 16

September Term, 2023

ADVENTIST HEALTHCARE, INC.

v.

STEVEN S. BEHRAM

Fader, C.J.,

Watts,

*Hotten,

Booth,

Biran,

Gould,

Eaves,

JJ.

Opinion by Fader, C.J.

Gould, J., joins in judgment only.

Filed: August 27, 2024

Pursuant to the Maryland Uniform Electronic Legal *Hotten, J., now a Senior Justice, participated in Materials Act (§§ 10-1601 et seq. of the State the hearing and conference of this case while an Government Article) this document is authentic.

active member of this Court. After being 2024.08.27 recalled pursuant to the Maryland Constitution, 10:56:20 -04'00'

Article IV, § 3A, she also participated in the Gregory Hilton, Clerk decision and adoption of this opinion.

In this appeal, we explore when it is appropriate to grant summary judgment in a breach of contract action. Adventist Healthcare, Inc., doing business as Shady Grove Medical Center (the “Hospital”), and Dr. Steven S. Behram entered into a Confidential Agreement, Release and Waiver (the “Settlement Agreement” or “Agreement”) to resolve a dispute about the Hospital’s suspension of Dr. Behram’s clinical privileges. 1 The parties agreed, among other things, that the Hospital would reinstate Dr. Behram’s clinical privileges in full, and Dr. Behram would then promptly resign those privileges. The parties also agreed to specific language the Hospital would use in subsequently reporting Dr. Behram’s suspension and reinstatement to regulatory authorities. Dr. Behram contends that the Hospital breached the Agreement when it filed reports that, in addition to the agreed language, included language that contradicted and was inconsistent with the agreed language. The additional language was generated by alphanumeric codes the Hospital selected when it filed the reports.

The Circuit Court for Montgomery County granted summary judgment in favor of the Hospital on the ground that the Settlement Agreement did not obligate the Hospital to use particular codes when making its report. The Appellate Court of Maryland disagreed, Behram v. Adventist Health Care, Inc., No. 375, Sept. Term, 2022, 2023 WL 4011686, at *16, *24 (Md. App. Ct. June 15, 2023), as do we. We hold that a reasonable person in the

1 Before us, the Hospital is the petitioner and cross-respondent, and Dr. Behram is the respondent and cross-petitioner. In the circuit court, Dr. Behram was the plaintiff and the Hospital the defendant.

position of the parties would have understood that the Hospital’s obligation to report to regulatory authorities using specific, agreed upon language precluded the Hospital from also reporting contradictory and materially inconsistent language in the same report, regardless of how that language was generated. On this record, whether the additional language added by the Hospital materially breached that obligation is a jury question.

Dr. Behram also contends that the Hospital breached its medical staff bylaws when it failed to provide him with a timely hearing after it suspended him. The circuit court awarded the Hospital summary judgment on that claim, concluding that Dr. Behram had released that claim in the Settlement Agreement. The Appellate Court agreed with the circuit court, id. at *16, *24, as do we.

Accordingly, we affirm in full the judgment of the Appellate Court.

BACKGROUND

A. Factual Background The background to this contractual dispute lies in a lengthier dispute, which the parties intended the Settlement Agreement to resolve. Dr. Behram is an obstetrician who previously had clinical privileges to practice at the Hospital. He also had professional relationships with other Hospital-affiliated doctors, including some in leadership, that were not harmonious.

In 2019, the Hospital’s Medical Executive Committee twice voted to suspend Dr. Behram. The Hospital contends that the suspensions arose from concerns about Dr. Behram’s patient care. Dr. Behram alleges that the Hospital never had real concerns

about his patient care. Instead, he claims that Hospital and medical staff leadership suspended him for anticompetitive reasons and out of personal animus. 2 The resolution of that dispute is irrelevant to the issues now before us because the parties subsequently entered into the Settlement Agreement, in which each party agreed to undertake certain actions and to release certain claims. Our review of the factual background is limited to those facts necessary to provide context for the parties’ undertakings in the Settlement Agreement.

1. Suspension, Reinstatement, and Fair Hearing Disputes On both occasions that the Hospital’s Medical Executive Committee voted to suspend Dr. Behram, the letters notifying Dr. Behram cited “significant concerns about the quality of [his] care of patients at [the] Hospital, which [were] deemed to represent an immediate risk of harm or an immediate or imminent risk of danger to patients.” In each letter, the Hospital identified a single case in which Dr. Behram was alleged to have provided deficient patient care. Dr. Behram disputes the allegations in both letters as well as the Hospital’s good faith in making them. 3

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Adventist Healthcare v. Behram, 322 A.3d 1, 488 Md. 410 (Md. 2024).

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