Anesthesiologists Associates of Ogden v. St. Benedict's Hospital

852 P.2d 1030, 212 Utah Adv. Rep. 28, 1993 Utah App. LEXIS 74
CourtCourt of Appeals of Utah
DecidedMay 7, 1993
DocketNo. 910368-CA
StatusPublished
Cited by11 cases

This text of 852 P.2d 1030 (Anesthesiologists Associates of Ogden v. St. Benedict's Hospital) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Anesthesiologists Associates of Ogden v. St. Benedict's Hospital, 852 P.2d 1030, 212 Utah Adv. Rep. 28, 1993 Utah App. LEXIS 74 (Utah Ct. App. 1993).

Opinion

ORME, Judge:

In this contract dispute, Anesthesiologists Associates appeals the amount of damages awarded by the trial court and the court’s denial of prejudgment interest, while St. Benedict’s Hospital and its parent corporation (collectively referred to as “the Hospital”) appeal the court’s ruling that it breached the contract in the first place. We affirm in part, reverse in part, and remand.

[1033]*1033FACTS

In 1954 Dr. Garr Merrill began providing anesthesia services at St. Benedict’s Hospital. Dr. Milton Wilcox joined Dr. Merrill in 1955, and, in 1968, Drs. Merrill and Wilcox incorporated as Anesthesiologists Associates of Ogden (“Associates”). Associates hired Drs. Michael Crosby and David Morris in 1979 and 1980, respectively. Since 1955, Associates, or its physician predecessors, provided general surgical and emergency (but not general) obstetrical anesthesia services at St. Benedict’s Hospital.

According to testimony during the liability phase of trial, in early 1980 the Hospital wanted to provide general obstetrical services for its patients in order to maintain its competitiveness in the health care market. For a number of reasons, including lack of formal training in that specialty area, Associates was reluctant to provide general obstetrical anesthesia services. On April 3, 1981, Associates entered into an agreement (“the Surgical Agreement”) with St. Benedict’s Hospital to provide surgical anesthesia services. The Surgical Agreement provided that Associates would not render general obstetrical anesthesia services, but would provide emergency obstetrical anesthesia services and anesthesia for caesarian section surgery. The Surgical Agreement’s three-year term was to run through 1984.

In accordance with the Hospital’s desire to have one physician group providing both surgical and obstetrical anesthesia services, the parties continued negotiations and, on November 17, 1981, signed an agreement (“the Obstetrical Agreement”) whereby Associates would also provide general obstetrical anesthesia services. The Obstetrical Agreement provided, in relevant part:

1. Service Coverage. Associates will provide to Hospital’s patients obstetrical anesthesia services on a seven (7) day per week, twenty-four (24) hour per day, basis pursuant to the terms and conditions of this agreement which is independent of and separate from a contract between the parties dated April 3, 1981, or any other agreements or understanding between the parties.
Full coverage for obstetrical anesthesia shall consist of one anesthesiologist and one “on call” nurse anesthetist. It will consist of (1) epidural block for elective deliveries and (2) emergency obstetrical anesthesia (Caesarian Section). Associates shall have the exclusive right to determine who will or will not participate in obstetrical anesthesia coverage.
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3. Term. The term of this contract will be six (6) years from the date hereof. Associates shall have first right of refusal for renewal of this agreement for an additional six (6) year term from the date hereof. If Associates desire to renew this agreement for an additional six (6) years at that time, they shall notify Hospital in writing of their intention to do so.
4. Amendment of Existing Contract. As partial consideration for this contract, the parties agree that the agreement between them for Anesthesia Services dated April 3, 1981, shall be amended to provide that the term of that agreement shall [be] concurrent with the term of this agreement.
5. Computation of Term. For purposes of determining the six (6) year time period for this contract and the April 3, 1981, contract, the terms shall be deemed to commence at the time that Associates obtained the services of two (2) additional anesthesiologists of Associates’ choice. However, if the parties subsequently agree, the computation of the term of the contract may be deemed to commence when one (1) additional anesthesiologist is employed by Associates. All reasonable efforts shall be made by the parties to obtain the additional anesthesiologists). In any event, the date for commencement of computation of the term of this contract shall be not later than August 31, 1982.
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8. Liquidated Payment for Unilateral Early Termination. If Hospital desires to unilaterally terminate this agreement, it may do so by paying Associates One Hundred Thirty-Five Thousand Dollars [1034]*1034($135,000) for each year or portion thereof that this contract would have been in effect according to its original term, but only until two (2) of the Anesthesiologists Associates have either retired from full time practice, obtained other employment or have died.
9. Termination by Associates. This contract shall remain in full force and effect unless terminated by Associates by giving six (6) months written notice to Hospital of its intention to terminate or upon expiration as provided in paragraph 3 above.
10. Additional Service. If a Certified Registered Nurse Anesthetist (CRNA) employee of Associates is' required to return to the Hospital for performance of services under this agreement on the anesthetist’s call night, Hospital will pay Associates on a monthly basis, Fifty Dollars ($50.00) for each requirement therefor. The Anesthetist on duty shall determine whether or not there is a requirement for the assistance of the on-call CRNA.

In order to provide obstetrical services, Associates hired Dr. Rudolf Madlang on October 2, 1982, and Dr. Richard Rivera in January 1983. The trial court found that the term of the Surgical Agreement, as extended by the Obstetrical Agreement, commenced on October 2, 1982, as did the term of the Obstetrical Agreement.

On July 16, 1985, Associates notified the Hospital that it intended to terminate the Obstetrical Agreement effective January 16, 1986, pursuant to paragraph nine of that agreement. In response, one month later, the Hospital notified Associates that pursuant to paragraph four of the Obstetrical Agreement, the Surgical Agreement would terminate on January 16,1986, along with the Obstetrical Agreement. Associates then attempted to rescind its notice of termination regarding the Obstetrical Agreement, but the Hospital refused and terminated both agreements on January 16, 1986.

After the termination, three of the physician-shareholders, Drs. Morris, Madlang, and Rivera, found employment earning more than they would have made during the remaining period of the agreements with the Hospital. Dr. Crosby, who struggled with a substance abuse problem, earned less in alternative employment than he would have made for the remaining period under the agreements. Dr. Merrill voluntarily retired from practice for reasons unrelated to the termination of the agreements. Dr. Wilcox retired after termination of the agreements even though he would have continued working had Associates continued its relationship with the Hospital.

Associates sued the Hospital for breach of the Surgical Agreement. The parties stipulated that the only issue for the liability phase of a bifurcated trial would be the intent of the parties with respect to the term provisions of the Obstetrical and Surgical Agreement.

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Bluebook (online)
852 P.2d 1030, 212 Utah Adv. Rep. 28, 1993 Utah App. LEXIS 74, Counsel Stack Legal Research, https://law.counselstack.com/opinion/anesthesiologists-associates-of-ogden-v-st-benedicts-hospital-utahctapp-1993.