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Jackson Hospital Corporation v. United Clinics of Kentucky, LLC

Court of Appeals of Kentucky

March 9, 2018

JACKSON HOSPITAL CORPORATION D/B/A KENTUCKY RIVER MEDICAL CENTER APPELLANT
v.
UNITED CLINICS OF KENTUCKY, LLC APPELLEE

         APPEAL FROM BREATHITT CIRCUIT COURT HONORABLE FRANK ALLEN FLETCHER, JUDGE ACTION NO. 13-CI-00457

          BRIEF FOR APPELLANTS: Sean Ragland Matthew A. Piekarski Louisville, Kentucky.

          BRIEF FOR APPELLEES: Patrick E. O'Neill Louisville, Kentucky.

          BEFORE: ACREE, CLAYTON, AND J. LAMBERT, JUDGES.

          OPINION

          LAMBERT, J., JUDGE

         Jackson Hospital Corporation d/b/a Kentucky River Medical Center (the Hospital) has appealed from the summary judgment of the Breathitt Circuit Court in favor of United Clinics of Kentucky, LLC (the Practice) related to the breach of a contract of employment for Dr. Hadi Abu Rasheed to practice medicine at the Hospital. Because we hold that the circuit court erred as a matter of law in granting summary judgment in favor of the Practice and not the Hospital, we reverse.

         The underlying matter began with the filing of a complaint by the Hospital on November 12, 2013. In the complaint, the Hospital set forth the supporting facts, which we shall summarize: In 2011, the Practice approached the Hospital about its desire to employ Dr. Rasheed and asked the Hospital to help facilitate his recruitment to the Jackson, Kentucky, area. The three entered into a recruitment agreement on July 18, 2011, and an amended agreement the following month (the agreement). Dr. Rasheed agreed to relocate his practice to Jackson and practice medicine on a full-time basis for 36 months beginning September 15, 2011. Under the terms of the agreement, "[a]ny material breach of this Agreement by Physician and/or Practice, or a failure by Physician and/or Practice to fulfill any material provisions of this Agreement shall entitle Hospital, at its option, to terminate this Agreement immediately." The Practice agreed to be jointly and severally liable for any amounts owed to the Hospital in the event of any breach by the Practice or Dr. Rasheed. Section D 12 of the standard terms and conditions provides, "[t]he Practice and Physician shall be jointly and severally liable for the terms and conditions in this Agreement, including but not limited to, repayments of any monies due to and owed to Hospital under this Agreement."

         The agreement detailed the financial arrangements related to Dr. Rasheed's employment and included a guarantee period for cash collections. The agreement established that the practice commitment period was 36 months, with a guarantee period of 12 months and a continuation period of 24 months. Dr. Rasheed's monthly cash collections guarantee amount was $23, 350.00. The Hospital advanced $180, 187.43, [1] to the Practice and Dr. Rasheed as cash collections guarantee payments during the 12-month guarantee period, an amount that the Practice and Dr. Rasheed were jointly and severally liable to repay at the end of the guarantee period pursuant to § G:

During the Term of this Agreement, Physician and Practice are jointly and severally responsible for reimbursement to Hospital for the sum of the Total Cash Collection Guarantee Payments and/or any other payments made under this Agreement by Hospital regardless of whether the payment was made directly to Physician, jointly to Physician and Practice, directly to Practice to cover Physician's Additional Incremental Expenses, and/or directly to Practice as a pass through to Physician and/or for any reasons whatsoever.

         The agreement provided that the debt would be completely or partially forgiven if Dr. Rasheed continued to practice full-time in Jackson for two years at the end of the guarantee period pursuant to § E 9:

During the Cash Collections Continuation period, which shall begin on the day following the last day of the Cash Collections Period and continue for the number of months set forth as the Continuation Period on the Cover Page, Hospital agrees that it will cancel (amortize) one twenty-fourth (1/24th) of the Total Cash Collection Guarantee Payments made by Hospital under this Agreement for each full month Physician remains in the Full-Time Private Practice of Medicine, in Physician's Specialty, in the Community. In the event Physician fails to maintain a Full-Time Private Practice of Medicine in the Community during the Cash Collections Continuation Period, Physician and/or Practice shall immediately reimburse to Hospital the unamortized amount of the Total Cash Collections Guarantee Payments paid hereunder.

         In addition, § E 8 provides:

Should the Physician fail to maintain a Full-Time Private Practice of Medicine in the Community during the Cash Collections Guarantee Period, Physician and/or Practice shall immediately reimburse to Hospital the total sum of the Total Cash Collections Guarantee Payments and/or any other payments made by Hospital under this Agreement to Physician and/or Practice to date.

         In addition to the amount paid above, the Hospital advanced Dr. Rasheed a commencement bonus of $10, 000.00, which was also supposed to be repaid but would be partially or completely forgiven depending ...


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