Columbus Medical Services Organization, LLC v. Liberty Healthcare Corp.

911 N.E.2d 85, 2009 Ind. App. LEXIS 1058, 2009 WL 2461019
CourtIndiana Court of Appeals
DecidedAugust 12, 2009
Docket82A04-0808-CV-466
StatusPublished
Cited by11 cases

This text of 911 N.E.2d 85 (Columbus Medical Services Organization, LLC v. Liberty Healthcare Corp.) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Columbus Medical Services Organization, LLC v. Liberty Healthcare Corp., 911 N.E.2d 85, 2009 Ind. App. LEXIS 1058, 2009 WL 2461019 (Ind. Ct. App. 2009).

Opinions

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Appellant-defendant Columbus Medical Services Organization, LLC ("Columbus"), appeals from the judgment entered in favor of appellee-plaintiff Liberty Healthcare Corporation ("Liberty") following a bench trial on Liberty's complaint against Columbus. Columbus argues that the trial court erred by entering judgment for Liberty on Liberty's claim of tortious interference with a business relationship. Specifically, Columbus raises the following three issues for our review:

1. Whether the trial court's award of damages to Liberty was based on speculative evidence.
2. Whether Columbus's tortious conduct caused Liberty's damages.
3. Whether the trial court erred in holding that Liberty was entitled to [88]*88recover its attorney's fees and costs under the Crime Victims Relief Act.1

We affirm.

FACTS AND PROCEDURAL HISTORY2

Liberty and Columbus are competing medical recruiting and staffing companies that are based in Pennsylvania. On March 28, 2002, the Indiana Department of Administration ("IDOA"), on behalf of the Family and Social Services Administration's ("FSSA") Division of Mental Health and Addiction ("DMHA"), published Request for Proposal 2-71 ("the RFP"). The RFP was a solicitation for competitive bids for the provision of psychiatric medical staffing services at the Logansport State Hospital ("the Hospital"), which is an institution dedicated to the treatment of mentally ill individuals. The State owns the Hospital and operates it through the DMHA. Since 1994, Liberty had provided medical psychiatric staff services at the Hospital; specifically, there were eight full-time Liberty psychiatrists who worked there.

The RFP and Early Bidding Process

The RFP provided that the contract to be awarded at the end of the bidding process was to be for a term of two years, with the possibility of a renewal at the end of the original term for another two-year term. Section 1.13 of the RFP provided that each bidder "shall submit Curricula Vitae for individuals who would fill each position posted in [the] request or provide letters of commitment for said positions...." Appellant's App. at 307. Section 2.5 provided that twenty-five percent of any submitted proposal would be evaluated based upon the bidder's knowledge and experience, including, among other things, the submission of "Curricula Vitae or letters of commitment for individuals who would fill each position...." Id. at 329.

Liberty, Columbus, and two other vendors-Cumberland Therapy Services ("Cumberland") and The Pennhurst Group («Pennhurst")-prepared and submitted bids in response to the RFP. Liberty's proposal quoted a contract price of $3,219,612 per year and included Curricula Vitae ("CV") and signed Letters of Commitment from twelve qualified individuals who committed to fill the Hospital positions if Liberty was awarded the contract with the State.

Columbus's proposal quoted a contract price of $2,816,144 per year. Its proposal included Appendix C, which consisted of CVs of potential candidates for employment who Columbus represented had "shown an interest in providing services at [the Hospital]." Id. at 376. One of these CVs was that of Roger Jay Pentzien, a psychiatrist who lived in Avon and worked for Liberty. Dr. Pentzien had never spoken with Columbus regarding the RFP nor had he given permission for the use of his CV. The trial court later found that, in fact, Columbus had not had contact with any of the physicians listed in its proposal. At the time Columbus submitted the proposal and for some time thereafter, however, neither Liberty nor any of the State entities was aware of Columbus's misrepresentation.

The FSSA convened a fivemember team to evaluate the submitted proposals. The proposals were evaluated according to the following criteria established by the REP:

[89]*89e Knowledge and Experience of the Applicant at [sic] its Professional Staff (25%)
e Quality of the Technical Approach (20%)
® Overall Management Judgment (15%)
® Total Cost (40%)
© Minority Business Participation Plan (pass/fail)

Id. at 704. After the first round of evaluations, the team gave total scores of 90.61% to Liberty, 89.11% to Columbus, and 81.40% to Pennhurst.3

The First Best and Final Offer

Based on those scores, on June 18, 2002, the IDOA eliminated Cumberland and requested that Liberty, Columbus, and Pennhurst provide a Best and Final Offer ("BAFO") in price. The record reveals that, notwithstanding Pennhurst's inclusion in that request, the evaluation team had already concluded that only Columbus or Liberty would be able to provide all of the services to the Hospital as required by the RFP. Appellee's App. at 149-50. Most of the team members believed that either Liberty or Columbus would be awarded the contract. Id.

The IDOA also requested clarification on several portions of the proposals, including whether the "non-negotiable" Employment Option and Termination Employment option clauses ("the Option Clauses") were acceptable to the applicants. Columbus agreed to accept those clauses but declined to lower its price, which remained at $2,816,144 per year. Pennhurst agreed to the clauses and lowered its price to $2,556,291 per year. Liberty acknowledged its understanding that the clauses gave the State "blanket authority in advance to hire any or all of Liberty's psychiatrists at any time for free" and that the clauses also applied to its psychologists, nurse practitioners, and pharmacists. Appellant's App. at 675. Liberty indicated its intention to seek the removal of the Option Clauses during contract negotiations. Liberty lowered its price to $3,098,004.

The Second BAFO

After receiving these responses, the evaluation team eliminated Pennhurst and gave Liberty an overall seore of 90.61% and Columbus an overall seore of 89.11%. Because those scores were nearly equal, the IDOA sent Columbus and Liberty a second BAFO request on July 18, 2002. The Second BAFO indicated that "the final decision for this solicitation will be based on the lowest cost to provide all services requested." Id. at 696, 698. In response, Liberty reduced its bid to $2,798,302.60 per year and Columbus reduced its bid to $2,759,822 per year.

On July 25, 2002, Columbus was selected for contract negotiations with the State, though the notice stated that, pursuant to Indiana Code Section 4-18-1-19, "a bidder or an offeror does not gain a property interest in the award of a contract unless the bidder or offeror is awarded the contract and the contract is completely executed." Id. at TOT.

Columbus's Misrepresentations

Subsequently, Liberty learned that Columbus had included Dr. Pentzien's CV in its bid without his knowledge or permission. Specifically, Columbus had represented that it had "discussed" with Dr. Pentzien the "services" he would be providing to the Hospital and that Dr. Pent-zien had "shown an interest in providing services" at the Hospital for Columbus if

[90]*90Columbus was selected as the successful bidder. Id. at 376; Appellee's App. at 86-91, 251-52. Dr.

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911 N.E.2d 85, 2009 Ind. App. LEXIS 1058, 2009 WL 2461019, Counsel Stack Legal Research, https://law.counselstack.com/opinion/columbus-medical-services-organization-llc-v-liberty-healthcare-corp-indctapp-2009.