InPhyNet Contracting Services, Inc. v. Soria

33 So. 3d 766, 2010 Fla. App. LEXIS 5284, 2010 WL 1562747
District Court of Appeal of Florida·Decided April 21, 2010·No. 4D08-4922·Published·Cited by 14 cases

Opinion

WARNER, J.

In this litigation over contractual bonus payments to physicians, the trial court certified a class of physicians, all of whom had similar contracts with InPhyNet. While InPhyNet has challenged the certification order on multiple grounds, we need address only one. Because the trial court failed to conduct an appropriate analysis of whether common questions predominated over individual issues, and the proper analysis shows that the common questions do not predominate, we reverse.

This case concerns the propriety of two related orders certifying a class of emergency room physicians currently or formerly employed by appellants, InPhyNet Contracting Services, Inc., and its parent Team Health, Inc., which in this opinion we refer to collectively as “InPhyNet.” InPhyNet contracts with hospitals around the state of Florida to provide physicians to staff hospital emergency rooms. In-PhyNet contracted with appellee, Dr. David Soria, to work as an emergency room physician at Wellington Regional Medical Center. To induce physicians to work in the emergency room, InPhyNet included a “Physician Incentive Plan” (PIP) as part of its contract with each physician it employed. With respect to the bonus payments, Dr. Soria’s contract stated:

We maintain Physician Incentive Plans on a facility-by-facility basis. All facility plans must be approved by our affiliate CEO and are subject to revision without notice to You or Your approval. Amounts to be placed in the bonus pool for any facility shall be at Our sole discretion. To the extent that a bonus pool is established for a facility, eligibility and payment shall be in accordance with the criteria set forth below.

To participate, a physician must work “full time” as defined in the agreement, not be in breach of his or her contract of employment, and have been working at least ninety days prior to the distribution date of the bonus payments. Each physician would be paid a portion of the bonus pool in accordance with a formula based upon various factors including the physician’s performance, productivity, teamwork, and length of service.

Dr. Soria acted as InPhyNet’s Medical Director at Wellington Regional until In- *769 PhyNet’s contract with Wellington was terminated in favor of a competitor who retained Dr. Soria. Because InPhyNet included a covenant not to compete in Dr. Soria’s contract, and InPhyNet believed that Soria had actively engaged with the competitor to terminate InPhyNet’s contract with Wellington Regional, InPhyNet sued Soria for breach of an employment agreement, breach of fiduciary duty, and tortious interference with a business relationship (“Soria I ”).

Soria counterclaimed against InPhyNet in Soria I, raising a class action claim regarding the Physician Incentive Plan (“PIP”). We need not detail the complicated procedural moves in this case, but eventually Soria’s individual claim with respect to the bonus payments remained as a counterclaim in Soria I, and Soria filed a separate class action lawsuit, the present case (“Soria II ”).

Soria alleged in his class action complaint that the contracts of the physicians employed by InPhyNet included Physician Incentive Plans substantially similar to the one contained in Soria’s contract with In-PhyNet. He further alleged that “[u]nder the Physician Incentive Plan Dr. Soria and the other class members were entitled to receive as incentive compensation a percentage of the profits from Defendants’ contract with the respective facilities, including Wellington Regional.” (emphasis supplied). Soria alleged that InPhyNet had failed to pay the class members all of the incentive compensation to which they were entitled, claiming InPhyNet had inflated its expenses through a “phantom” expense line of “Other Physician Benefits” which reduced the profits available for bonus payments.

Soria alleged five different causes of action based upon the foregoing facts. First, he claimed that InPhyNet had breached an implied duty of good faith by failing to properly account for the revenues and expenses generated at each facility, specifically by including the “other Physician Benefits” which reduced the profits for the bonus distribution. This reduced payments to the class members. Second, he claimed that through this conduct InPhy-Net violated the Florida Deceptive and Unfair Trade Practices Act. Third, he alleged that InPhyNet had breached a fiduciary duty or engaged in constructive fraud in creating accounting statements which included the Other Physician Benefits, reducing the bonus pool available for the class members. Fourth, he alleged unjust enrichment on the ground that In-PhyNet retained benefits conferred by the class members but failed to properly compensate them. Finally, he also made a claim for conversion against InPhyNet.

The class Soria identified in his complaint included physicians previously employed by InPhyNet in Florida within the past five years, with some exceptions. The class included well over 100 members. Soria alleged that the common questions of fact or law among all class members involved the establishment of the Physician Incentive Plan at each facility and InPhy-Net’s practice of inflating expenses and reducing profits of each facility through the use of the Other Physician Benefit expense item. His own claim was typical of those of the class, and he alleged that he was an adequate representative of the class. The complaint alleged that common issues would predominate over individual claims.

After much procedural maneuvering and many discovery disputes, Dr. Soria moved to certify the class. InPhyNet requested an evidentiary hearing, contending that there were multiple disputed issues of fact in regard to the class certification. Nevertheless, the court conducted a non-eviden-tiary hearing lasting over two days with *770 additional hearings after the initial ones. The court considered multiple depositions, documents, and affidavits, but took no live testimony.

In the end, the court granted certification of a class consisting not only of the class alleged in Dr. Soria’s complaint but expanding it to include physicians currently employed at any of the InPhyNet facilities. The court’s order addressed each of the threshold requirements of class certification, namely: 1) numerosity, 2) commonality, 8) typicality, and 4) adequacy.

As to the numerosity element, the trial court noted that there were at least 120 physicians who participated or were eligible to participate in appellants’ PIP plan, finding that “this number of proposed class members is sufficient to comply with the numerosity requirement” and that a separate joinder would be impracticable. As to commonality, the court concluded that Dr. Soria satisfied this requirement, reasoning that the putative class members “entered into substantially similar PIP agreements with the defendants” and that their claims “arise from the same course of conduct on the part of the defendants.” Specifically, the court noted that “all of the putative class members’ claims concern or relate to defendants’ use of the allegedly illegitimate expense category, ‘Other Physician Benefits,’ in their income statements, thereby reducing the amount of incentive benefits each physician received.”

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InPhyNet Contracting Services, Inc. v. Soria, 33 So. 3d 766, 2010 Fla. App. LEXIS 5284, 2010 WL 1562747 (Fla. Ct. App. 2010).

33 So. 3d 766 (InPhyNet Contracting Services, Inc. v. Soria) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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