Sherr v. Healtheast Care System

262 F. Supp. 3d 869
CourtDistrict Court, D. Minnesota
DecidedJune 30, 2017
DocketCivil No. 16-3075 ADM/LIB
StatusPublished
Cited by4 cases

This text of 262 F. Supp. 3d 869 (Sherr v. Healtheast Care System) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sherr v. Healtheast Care System, 262 F. Supp. 3d 869 (mnd 2017).

Opinion

MEMORANDUM OPINION . AND ORDER

ANN D. MONTGOMERY, U.S. DISTRICT JUDGE

I. INTRODUCTION

On April 11, 2017, the undersigned United States District Judge heard oral argument on Defendants HealthEast Care System (“HealthEast”), Dr. Margaret Wallenfriedman (“Dr. Wallenfriedman”), Dr. Mary Beth Dunn (“Dr. Dunn”), Dr. Richard- Gregory (“Dr: Gregory”), and Dr, Stephen Kolar’s (“Dr. Kolar”) (collectively, the “HealthEast Defendants”) Motion for Partial Judgment on the Pleadings [Docket No. 24] and Defendants CentraCare Health (“CentraCare”), Dr. Jerone D. Kennedy (“Dr. Kennedy”), and Archie De-fillo’s (“Defillo”) (collectively, the “Centra-Care Defendants”) Motion for Judgment on the Pleadings [Docket No. ,28]. Plaintiff Dr. Gregory Sherr (“Dr. Sherr”) opposes the Motions. For the reasons discussed below, the Motions are granted.

II. BACKGROUND1

Dr, Sherr, a neurosurgeon, alleges that Defendants conspired to eliminate him as a competitor for neurosurgery patients in both the Minneapolis-St. Paul, Minnesota (“Twin Cities”) and the St. Cloud, Minnesota markets. First Am. Compl. (“FAC”) [Docket No. 15] ¶ 3. Dr. Sherr alleges that Defendants colluded to initiate complaints against him during HealthEast’s physician peer review process and improperly secured a summary suspension of his privileges at St, Joseph’s Hospital (“SJH”), a HealthEast hospital in St, Paul, Id. ¶¶ 3, 8, 47, 54, 68, 73. Within days of the summary suspension, Defendants allegedly spread word to the tight-knit neurosurgery community of Sherr’s suspension, destroying his reputation in Minnesota and forcing him' to move to another state to continue his career. Id. ¶¶ 4, 76, 77, 82-83.

Dr. Sherr asserts the following claims: breach of peer review confidentiality under Minn. Stat. § 145.64; common law invasion of privacy; defamation; tortious [875]*875interference with prospective, economic advantage; tortious interference with contract; and violation of federal and state antitrust statutes. Defendants move for judgment on the pleadings as to the breach of peer review confidentiality claim, the invasion of privacy claim, and all antitrust claims. The remaining claims survive.

A. Parties

1. Plaintiff

Dr. Sherr is a Florida resident and licensed-neurosurgeon specializing in treating high-risk patients with poor self-care histories. FAC ¶¶ 19,25.

2. HealthEast Defendants

HealthEast is a non-profit health care provider and hospital management company headquartered in St. Paul, Minnesota. Id. ¶,8. HealthEast owns four hospitals including SJH. Id. Drs. Wallenfriedman, Dunn, and Gregory are Minnesota residents and licensed neurosurgeons employed at HealthEast. Id. ¶¶ 10-12. Dr. Kolar is a Minnesota resident and licensed internal medicine physician who served as HealthEast’s Senior Vice President and Chief Medical Officer in 2015. Id. ¶ 13.

3. CentraCare Defendants

CentraCare is a non-profit health care provider headquartered in St. Cloud, Minnesota with locations throughout central Minnesota. Id. ¶9. CentraCare owns and operates six hospitals including Saint Cloud Hospital (“SCH”). Id. Dr. Kennedy is a Minnesota resident and licensed neurosurgeon employed at CentraCare. Id. ¶ 14. Defillo, is Minnesota resident and an administrator at CentraCare. Id ¶ 15. He serves as the Clinical Director of Neurosci-ences at SCH. Id.

B. Factual Background

,1. Dr. Sherr Begins Neurosurgery Career

Dr. Sherr graduated from medical school in 2004, completed a neurosurgery fellowship and residency in 2010, and joined Central Minnesota Neurosciences (“CMN”), an independent neurosurgery practice serving patients in the St. Cloud area, in 2011. Id. ¶¶ 19-20. He was granted privileges to practice as an attending physician SCH in St. Cloud and at SJH in St. Paul. Id ¶20. Dr. Sherr remained with CMN until late December 2014, when CMN was purchased by CentraCare. Id, ¶¶ 23-24.

2. Dr. Sherr Joins Minnesota Spine & Brain Institute and Opens St. Cloud Clinic

In January 2015, Dr. Sherr joined the Midwest Spine & Brain, Institute (“MSBI”), which was known as the Midwest-Spine Institute until Dr. Sherr was hired and the practice was expanded to include cranial neurosurgery. Id. ¶¶ 26-27. At the time Dr. Sherr was hired, MSBI operated clinics in Apple Valley, Burns-ville,--Elk River, Golden Valley, Maple Grove, Maplewood, Minnetonka, Princeton, and St. Anthony, Minnesota as well as in New Richmond and St. Croix Falls, Wisconsin. Id. ¶ 28.

Upon joining MSBI, Dr. Sherr opened a MSBI neurosurgery clinic in St. Cloud, two blocks away from .SCH. Id. ¶ 37. He staffed the St. Cloud clinic with his former administrative team from CMN and added a neurosurgeon, Dr. David Chang. Id. ¶¶ 35, 37, 39. The group was well connected and familiar with the patient base and referral sources in the St. Cloud area, and the clinic was soon operating very successfully, Id. ¶ 37.

[876]*876During the 15 months that Dr. Sherr practiced with MSBI, he maintained privileges at numerous hospitals, including SCH in St. Cloud and SJH, Fairview Southdale, North Memorial Medical Center, and United Hospital in the Twin Cities. Id. ¶ 29. He performed approximately 500 surgical cases during this time period, including approximately 140 surgeries at SJH. Id. ¶ 30. The majority of the surgeries were complex reconstructive spine surgeries, often for low income, high-risk patients struggling with obesity, poor health habits, or other conditions such as diabetes. Id.

3. Dr. Sherr and MSBI Compete with CentraCare, HealthEast

Dr. Sherr alleges that the opening of the MSBI St. Cloud clinic posed a significant threat to CentraCare and its ability to attract neurosurgery patients at SCH. Id. ¶ 39. According to Dr. Sherr, Dr. Kennedy and Defillo were “deeply disturbed by the establishment of the successful MSBI Neurosurgery Clinic two blocks from SCH, which was dramatically affecting revenues for neurosurgery practice at SCH.” Id. ¶ 44. Dr. Sherr also alleges that MSBI’s addition of Drs. Sherr and Chang to its neurosurgery staff threatened Heal-thEast’s ability to attract and retain the majority of neurosurgery patients who were treated at SJH in St. Paul. Id. ¶ 39.

In February 2015, Drs. Wallenfriedman, Dunn, and Gregory moved their neurosurgery practice from United Hospital, where they had practiced together for more than ten years, to HealthEast, where they became known as the “HealthEast Neuro Group.” Id ¶¶ 33, 41-42. In negotiating this transition, the group initially stated that they would not move their practice to HealthEast unless HealthEast discontinued all use of MSBI physicians for neurosurgery and spine care and removed any MSBI clinic presence from HealthEast. Id ¶ 42. HealthEast executives denied this request but asked MSBI to agree that MSBI physicians would no longer be “on call” in the SJH and St. Joseph’s emergency rooms for neuro or spine cases. Id. ¶ 43. HealthEast also asked MSBI to agree that MSBI physicians would not perform “elective procedures” at HealthEast facilities, but MSBI refused. Id. Although Drs. Wallenfriedman, Dunn, and Gregory were unable to get HealthEast to agree to all of their demands, the group joined Heal-thEast based on assurances that Heal-thEast would not make neurosurgery referrals to MSBI. Id.

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262 F. Supp. 3d 869, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sherr-v-healtheast-care-system-mnd-2017.