Greater Houston Radiation Oncology, P.A. v. Sadler Clinic Ass'n

384 S.W.3d 875, 2012 WL 4666577, 2012 Tex. App. LEXIS 8303
CourtCourt of Appeals of Texas
DecidedOctober 4, 2012
DocketNo. 09-11-00460-CV
StatusPublished
Cited by12 cases

This text of 384 S.W.3d 875 (Greater Houston Radiation Oncology, P.A. v. Sadler Clinic Ass'n) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Greater Houston Radiation Oncology, P.A. v. Sadler Clinic Ass'n, 384 S.W.3d 875, 2012 WL 4666577, 2012 Tex. App. LEXIS 8303 (Tex. Ct. App. 2012).

Opinions

OPINION

CHARLES KREGER, Justice.

This is an appeal from a judgment rendered after a jury verdict that awarded Sadler Clinic Association, P.A. tort damages in the amount of $307,935 and Oncology Reimbursement Services, L.P. contract damages in the amount of $57,583. Sadler Clinic Association, P.A., Greater Houston Radiation Oncology, P.A., and Oncology [881]*881Management Services, L.P. were awarded no damages on their breach of contract claims. In multiple issues, appellants contend the trial court erred in construing the Professional Services Agreement, in its charge of the issues to the jury, and in awarding attorneys’ fees. We reverse and remand in part and affirm in part.

I. BACKGROUND

In 2007, Sadler Clinic Association, P.A., began talking with Dr. Kirk Kanady about developing a radiation oncology center. Kanady had been involved in the establishment of several radiation oncology centers in the Houston area. In 2008, Sadler began the process of developing its radiation oncology center. On July 14, 2008, Sadler entered into three agreements to provide for the operation, maintenance, and professional service of its radiation oncology center. Sadler signed (1) a professional services agreement with Greater Houston Radiation Oncology, P.A., (“GHRO”), a physician group of radiation oncologists, (2) a billing and collection services agreement with Oncology Reimbursement Services, L.P. (“ORS”), and (8) a management services agreement with Oncology Management Services, L.P. (“OMS”). On July 18, 2008, Kanady signed all three agreements as president of all three companies (hereinafter referred to collectively as the “Kanady entities”).

The facility for Sadler’s radiation oncology clinic was not complete when Sadler initially entered into the agreements with Kanady. So that GHRO physicians could begin treating Sadler patients, Sadler signed a lease agreement with another clinic, Northwoods Urology (“Vision Park”),1 which was already set up for providing radiation oncology services. The first patient was seen at Vision Park on August 28, 2008. The Kanady entities provided services at Vision Park under the parameters of their agreements with Sad-ler. Cuong (“Chris”) Phan was the primary GHRO physician who provided radiation oncology services pursuant to the professional services agreement (“PSA”) at Vision Park. Because the GHRO physicians were not yet credentialed under Sad-ler’s tax identification number,2 the parties agreed that ORS would begin billing under GHRO’s tax identification number, collect the payments, and then turn the collected funds over to Sadler. Sadler would then, in turn, pay GHRO, OMS, and ORS pursuant to the terms of the agreements.

Sadler’s radiation oncology center, located at Sadler’s clinic (“Pinecroft”)3 was completed and the first patient was seen at Pinecroft on February 5, 2009. At that time, the center had only one Linear Accelerator.4 Chris Phan’s brother, Thinh Phan (“T. Phan”), was the primary GHRO physician who provided radiation oncology services at Pinecroft pursuant to the PSA. Shortly after the Pinecroft clinic opened, T. Phan was introduced to Dr. Jason Beril-[882]*882gen, another radiation oncologist, who was touring Sadler’s Pinecroft radiation oncology center with Sadler’s chief operating officer. At trial, the evidence was disputed regarding the purpose of Berilgen’s initial visit to the facility. T. Phan testified that when he was introduced to Beril-gen at Pinecroft, Berilgen stated to him that he was interviewing for the radiation oncologist position. Berilgen testified that he requested a tour of the facility because he was considering opening his own radiation oncology center. Robert Branstetter, Sadler’s chief financial officer, testified that Berilgen visited at the request of another Sadler physician who thought Beril-gen would enjoy touring the facility. Though Berilgen admittéd at trial that he was interested in employment with Sadler, he testified that he knew nothing was available at that time.

T. Phan discussed Berilgen’s visit with Branstetter to inquire as to whether there was a problem with his performance at Pinecroft, and Branstetter assured him that he was doing well and the physicians were pleased with his performance. Kana-dy also discussed the incident with Bran-stetter who assured Kanady that Berilgen was only at Sadler on a “courtesy visit,” that Sadler was happy with T. Phan, that Sadler was committed to its relationship with the Kanady entities, and that Sadler was not attempting to hire a new radiation oncologist.

Shortly after Berilgen’s visit to the facility, Kanady proposed an amendment to the PSA that extended the contract term for ten years and increased the monetary penalty for early termination. Kanady sent an email to Branstetter in early March 2009 and attached the proposed amendment to the PSA. Kanady’s email stated, “I am not doubting you when you told me that you have no intention of changing billing, management or professional services with us, but I am not so certain about others in your organization.” Sadler’s Management Board5 declined to accept Kanady’s proposed amendment because the term was too long. In April 2009, Kanady proposed a five year extension to the PSA. The Board declined to accept Kanady’s proposed five year extension. Branstetter testified that during this time, he received frequent phone calls from Berilgen expressing his interest in practicing radiation oncology at Pinecroft.

In June 2009, the Board began discussing hiring its own radiation oncologist. One of the Board members suggested asking Berilgen if he was still interested in a position with Sadler. Branstetter testified at trial that Sadler and Kanady had experienced some “rocky patches,” particularly regarding matters related to the billing and collections agreement (“Billing Agreement”) with ORS. Branstetter testified he was concerned that Kanady would decide to leave and leave Sadler’s clinic without a radiation oncologist. In July 2009, the Board hired Berilgen to provide radiation oncology services at Sadler’s Pinecroft radiation oncology center. His official title was medical director of the center. T. Phan testified that prior to Sadler hiring Berilgen, he believed he was the director of the radiation oncology center at Sadler. T. Phan testified that at the time Berilgen was hired, Phan was seeing roughly thirty patients a day in the center. Phan and Kanady both testified that this patient load did not necessitate another radiation oncologist. On July 20, 2009, GHRO’s attorney sent Sadler a demand letter that stated Sadler was in breach of the PSA and gave [883]*883Sadler 15 days to terminate or reassign Berilgen or face potential legal action.

The evidence established that after Ber-ilgen was hired, the referrals from Sadler physicians to T. Phan dropped quickly. Phan testified that by the third or fourth week, his referrals had dropped by more than seventy-five percent. Though Beril-gen was paid a yearly salary by Sadler, the PSA was structured such that GHRO was compensated for its physicians’ services based on collections attributable to the services they provided. If T. Phan did not see patients, GHRO was not compensated. T. Phan testified that in addition to his referrals drying up, one of his patients was “redirected” to see Berilgen by one of the Sadler physicians. When T. Phan confronted the Sadler physician, he was told, “ ‘It has nothing to do with you, it’s business.’” T.

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384 S.W.3d 875, 2012 WL 4666577, 2012 Tex. App. LEXIS 8303, Counsel Stack Legal Research, https://law.counselstack.com/opinion/greater-houston-radiation-oncology-pa-v-sadler-clinic-assn-texapp-2012.