In the Matter of: Steven Cyr

CourtCourt of Appeals for the Fifth Circuit
DecidedDecember 15, 2020
Docket20-50348
StatusUnpublished

This text of In the Matter of: Steven Cyr (In the Matter of: Steven Cyr) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In the Matter of: Steven Cyr, (5th Cir. 2020).

Opinion

Case: 20-50348 Document: 00515674462 Page: 1 Date Filed: 12/15/2020

United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

FILED December 15, 2020 No. 20-50348 Lyle W. Cayce Clerk

In the Matter of: Steven Jeffrey Cyr

Johnny Lee White, M.D.,

Appellant,

versus

Stephen Jeffrey Cyr,

Appellee.

Appeal from the United States District Court for the Western District of Texas USDC No. 5:18-CV-1287

Before Davis, Stewart, and Oldham, Circuit Judges. Per Curiam:* Dr. White agreed to provide pain management services to patients of Orthopaedic & Spine Institute L.L.C. (“OSI”). OSI agreed to pay him fifty percent of gross revenue collected from patients and third-party payers. Dr.

* Pursuant to 5th Circuit Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Circuit Rule 47.5.4. Case: 20-50348 Document: 00515674462 Page: 2 Date Filed: 12/15/2020

No. 20-50348

Cyr owns OSI. When OSI failed to pay Dr. White, he sued both OSI and Dr. Cyr in state court. Dr. Cyr filed for bankruptcy, and a federal court stayed the state court proceedings accordingly. Dr. White then filed a complaint to have Dr. Cyr’s debt to him declared non-dischargeable under 11 U.S.C. § 523(a). The bankruptcy court dismissed Dr. White’s complaint, and the district court affirmed that dismissal. WE AFFIRM. I. FACTS AND PROCEDURAL HISTORY Dr. Johnny White is an anesthesiologist who owned his own practice, Disability and Pain Consultants of Texas, P.A. 1 His practice’s primary location was in Dallas, Texas. He and his practice established relationships with healthcare organizations throughout the state of Texas. The organizations referred patients to Dr. White, and he would travel at his own expense to treat patients around the state. In 2014, Dr. White became a preferred provider at Victory Landmark Hospital in San Antonio, Texas. Dr. Cyr, the owner of OSI, also provided services at that hospital, and the two doctors met in June 2014. Shortly thereafter, Dr. Cyr asked Dr. White about the possibility of forming a relationship between their two businesses. On July 9, 2014, Dr. White met with Dr. Cyr and Linda D’Spain, OSI’s CEO, about affiliating with OSI. Dr. Cyr and D’Spain expressed interest in having Dr. White treat OSI’s patients because the previous pain management physician “unexpectedly departed.” Dr. Cyr and D’Spain made several representations to Dr. White that OSI was profitable and would be able to pay him his negotiated compensation packages, that OSI had an

1 Since this is an appeal of a motion to dismiss, we assume all of White’s factual statements are true. See In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007).

2 Case: 20-50348 Document: 00515674462 Page: 3 Date Filed: 12/15/2020

existing management system with computerized billing, that OSI had practices and relationships with third-party payers that allowed for timely payment, that OSI’s reimbursement rates were consistent with those in the community, and that OSI would timely apply for Dr. White’s credentials so that he could receive prompt payment. Dr. Cyr and D’Spain proposed an arrangement where Dr. White would be managed by OSI, Dr. White would be paid a percentage of the net billings for services performed, and OSI would receive a percentage for its role in administrative services and billing patients. Dr. White rejected the proposal as economically unfeasible, instead proposing that he and OSI share the gross billings revenue equally, with payment due on the first of the month following collections. Dr. Cyr orally agreed to Dr. White’s proposal on behalf of himself and OSI. Dr. White began treating OSI’s patients shortly thereafter. Dr. White met with OSI’s pain management team, and D’Spain “explicitly or implicitly” reiterated the representations from their July 9 meeting. On July 17, 2014, Cyr and D’Spain emailed Dr. White a written agreement containing the net billings agreement that he had already rejected. He again rejected it, and Dr. Cyr and D’Spain “indicated that the draft had been provided in error and reiterated the oral agreement to the 50/50 gross collections compensation model . . . .” Dr. White kept treating OSI’s patients. Dr. White maintained his own billings records while affiliated with OSI. On September 5, 2014, he requested payment of his share of the revenues collected. D’Spain told him that payment would be forthcoming but delayed because OSI used a third-party to distribute checks. On October 7, Dr. White was issued a check for a mere $82.21. On October 22, he texted D’Spain about the discrepancy between the amount of his check and the amount he was owed, and she promised to email him accounting reports that

3 Case: 20-50348 Document: 00515674462 Page: 4 Date Filed: 12/15/2020

day. She did not provide the reports. Dr. White’s staff requested the reports again on October 24 and learned that OSI did not begin Dr. White’s credentialing process until October 1. OSI assured Dr. White that he would receive a “significant payment” in November, and he received a check for approximately $7,500.00. He also received a billing report that verified that he was paid fifty percent of the gross billings during the relevant time period. He received a December payment in excess of $10,000. He did not receive a January payment, however, and he contacted Dr. Cyr and D’Spain. On January 6, he texted them about the money that he was owed and OSI’s lack of transparency. D’Spain apologized and said that OSI was working hard to credential and pay Dr. White. Dr. White’s staff again requested monthly reports containing information about billings, and the staff learned that Dr. White was still not credentialed. At this point, D’Spain requested that Dr. White sign and return the contract she previously sent. Dr. White reminded her that the contract was incorrect and that he had not received the correct version. Dr. White received a $13,300.00 payment in February. He again asked for the reports, D’Spain said they were coming, and she never sent them. Frustrated by the back and forth, Dr. White texted Dr. Cyr on March 6 and requested a meeting; they agreed to meet when Dr. Cyr returned from vacation. On March 10, Dr. White received a payment for $17,076.77. D’Spain sent Dr. White the correct version of the contract, and he requested an electronic copy that he could forward to his attorney for review. From April to June 2015, Dr. White did not receive prompt payment at the beginning of the month. His staff would request payment, D’Spain would promise him that a deposit was forthcoming, and he would receive a payment between $16,000-$17,100. D’Spain never sent him the electronic copy of the contract, and on June 12, 2015, he “indicated that enough was

4 Case: 20-50348 Document: 00515674462 Page: 5 Date Filed: 12/15/2020

enough.” OSI cancelled Dr. White’s upcoming patient appointments, and Dr. Cyr texted Dr. White that paying him was a priority. Dr. Cyr admitted that it was too expensive to run the practice based on the 50/50 gross billings agreement and that he knew that it would be too expensive at the time he entered the agreement. Dr. Cyr also said this knowledge was what prompted OSI to send the incorrect version of the contract (with the net billings payment scheme) initially. Dr. White hired an attorney to collect the money OSI owed him. That effort failed. He then sued OSI in state court in January 2015 for breach of contract, quantum meruit, and common law fraud/promissory estoppel. On January 20, 2018, Dr.

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In the Matter of: Steven Cyr, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-the-matter-of-steven-cyr-ca5-2020.