Behavioral Medicine Consulting v. CHG Companies

CourtCourt of Appeals for the Tenth Circuit
DecidedSeptember 19, 2024
Docket23-4047
StatusUnpublished

This text of Behavioral Medicine Consulting v. CHG Companies (Behavioral Medicine Consulting v. CHG Companies) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Behavioral Medicine Consulting v. CHG Companies, (10th Cir. 2024).

Opinion

Appellate Case: 23-4047 Document: 69-1 Date Filed: 09/19/2024 Page: 1 FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit

FOR THE TENTH CIRCUIT September 19, 2024 _________________________________ Christopher M. Wolpert Clerk of Court BEHAVIORAL MEDICINE CONSULTING, LLC, a Montana limited liability company; KEITH BROWN, M.D., an individual,

Plaintiffs - Appellants,

v. No. 23-4047 (D.C. No. 2:19-CV-00967-JNP) CHG COMPANIES, INC., d/b/a (D. Utah) CompHealth, a Delaware corporation,

Defendant - Appellee. _________________________________

ORDER AND JUDGMENT* _________________________________

Before MORITZ, MURPHY, and CARSON, Circuit Judges. _________________________________

When entities contract as part of a business relationship, we generally hold

them to the benefit of the agreed-on bargain even if one party subsequently claims it

expected a deal contrary to the contract’s express, clear, and unambiguous terms.

Plaintiff Behavioral Medicine Consulting, LLC and Defendant CHG Companies,

Inc., d/b/a CompHealth signed a services contract that allowed Defendant to both

place Plaintiff Keith Brown, M.D. (“Dr. Brown”) in an employment position and

* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. Appellate Case: 23-4047 Document: 69-1 Date Filed: 09/19/2024 Page: 2

cancel that placement. Defendant exercised both rights the next week when it placed

Dr. Brown in a position but canceled it shortly afterward. Plaintiffs complain that the

cancelation constituted breach of contract, breach of implied duties, and breach of

fiduciary duty; contradicted Plaintiffs’ justified expectations; conflicted with

Plaintiffs’ economic relations; and contravened public policy. These claims fail

because Defendant merely availed itself of the benefit of its bargain. Our jurisdiction

arises under 28 U.S.C. § 1291. We affirm.

I.

Defendant locates and places medical providers in locum tenens positions—

temporary work assignments at facilities such as hospitals. Defendant agreed to

provide locum tenens staffing services for Western State Hospital in Lakewood,

Washington (“Hospital”). Under this agreement, Defendant located providers for

temporary assignments at the Hospital, subject to the Hospital’s approval, and then

contracted with the providers to create their Hospital assignments. The Hospital

agreed to pay a buyout fee of at least $30,000 if Defendant presented a provider to

the Hospital and the Hospital independently employed the provider within the year

(“Buyout Fee”).

In late June 2019, after learning the Hospital needed a psychiatrist, Defendant

located and presented Dr. Brown—a psychiatrist and the sole member of Behavioral

Medicine Consulting—to the Hospital. The Hospital approved Dr. Brown, and Dr.

Brown agreed to fill a six-month locum tenens position at the Hospital. But before

the relationship between Dr. Brown and the Hospital could move forward, Defendant

2 Appellate Case: 23-4047 Document: 69-1 Date Filed: 09/19/2024 Page: 3

and Plaintiffs had to formalize their relationship. So, on July 10, 2019, Dr. Brown

(signing on behalf of his limited liability company) and Defendant executed a

Professional Services Agreement (“Agreement”) setting the terms under which

Defendant could place Dr. Brown in locum tenens positions.

The Agreement acknowledged Dr. Brown’s status as an independent contractor

and his right to decline opportunities that Defendant offered. The Agreement

required Defendant to send Plaintiffs written confirmation of assignments and

incorporated by reference those confirmation letters. The Agreement also expressly

stated it did not guarantee work for Plaintiffs, and set forth broad reasons under

which Defendant could unilaterally cancel an assignment even after confirmation.

Section Four of the Agreement governed Defendant’s right to cancel a

locum tenens placement. Specifically, Section 4.1 provided the following

terms:

CompHealth may immediately cancel this Agreement or any Assignment without notice or liability to [Behavioral Medicine Consulting] (except for payment of undisputed Services rendered up to the date of cancellation) . . . upon CompHealth’s reasonable determination that [Dr. Brown] is not insurable under CompHealth’s malpractice policy and/or does not meet CompHealth credentialing standards . . .

Section 4.4 provided additional cancelation terms:

CompHealth may terminate this Agreement or any Assignment upon thirty (30) days’ notice to [Behavioral Medicine Consulting]. In the event that CompHealth or Client cancels an Assignment with less than thirty (30) days’ notice for any reason other than those allowed in Paragraph 4.1 above, CompHealth’s maximum liability to Entity shall be the amount of Compensation [Behavioral Medicine Consulting]

3 Appellate Case: 23-4047 Document: 69-1 Date Filed: 09/19/2024 Page: 4

would have earned for [scheduled workdays within thirty days of the cancelation notice].

Section Three of the Agreement governed Plaintiffs’ obligations if Defendant

introduced Dr. Brown to a facility and Dr. Brown subsequently provided services to

the facility outside of his locum tenens placement:

During the Term of this Agreement and for a period of two (2) years after its termination or expiration or pursuant to state law, [Behavioral Medicine Consulting] agrees to: a) immediately notify [Defendant] if [Behavioral Medicine Consulting] accepts a temporary or permanent position with any Client for whom [Behavioral Medicine Consulting] performed, or was introduced to perform, Services; and b) not provide locum tenens services to Clients for whom [Behavioral Medicine Consulting] performed, or was introduced to perform, Services unless such locum tenens services are furnished through [Defendant].

Dr. Brown and Defendant exchanged multiple emails discussing the ongoing

credentialing process. Two days before the parties executed the Agreement,

Defendant informed Dr. Brown it needed materials for the credentialing department.

A few hours after Dr. Brown returned the executed Agreement, Defendant told Dr.

Brown it would send the Agreement to another employee to start the credentialing

process. The next day, Defendant sent Dr. Brown a formal letter confirming his

Hospital assignment “subject to the cancellation provisions of the Agreement.” The

same day, Defendant began a multi-day email exchange with Dr. Brown explaining

that it required additional credentialing information and references, which Dr. Brown

attempted to provide. Dr. Brown does not dispute that he received and read these

communications.

4 Appellate Case: 23-4047 Document: 69-1 Date Filed: 09/19/2024 Page: 5

Consistent with Defendant’s normal procedures, Defendant began its

credentialing process for Dr. Brown soon after receiving the executed Agreement.

Defendant quickly determined that Dr. Brown did not qualify for credentialing in an

inpatient psychiatrist position because he lacked in-hospital psychiatric experience

within the prior two years—a qualification Defendant’s malpractice carrier required

before it would insure Dr.

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