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James H. Oury v. Rapid City Regional Hospital

September 24, 2012


The opinion of the court was delivered by: Karen E. Schreier Chief Judge


Plaintiff, James H. Oury, brought this action against defendants,*fn1 Rapid City Regional Hospital, Inc. (Regional Hospital), Cardiology Associates, P.C., a/k/a The Heart Doctors (the Heart Doctors), and Regional Health Physicians (Regional Physicians). Dr. Oury alleges that Regional Hospital and Regional Physicians violated the Age Discrimination in Employment Act (ADEA). He also includes the supplemental state-law claims of defamation, breach of contract, tortious interference with a business relationship, and violation of South Dakota statutory peer review laws against various defendants. Docket 36.

Regional Hospital and the Heart Doctors move for summary judgment on all claims alleged against them. Docket 112; Docket 132. Regional Physicians argues that Dr. Oury's ADEA claim fails against it because Dr. Oury did not report it to the EEOC in a timely manner and did not obtain a right to sue letter prior to commencing this action. Regional Hospital argues that Dr. Oury's ADEA claim fails because he cannot rebut its reason for not hiring Dr. Oury-that his medical practice was not financially profitable. Regional Physicians argues that if the court grants summary judgment on the ADEA claim, then the court should dismiss without prejudice the remaining state-law claims pursuant to 28 U.S.C. § 1376(c)(3). Docket 172 at 3. Dr. Oury does not oppose Regional Physicians' motion for summary judgment on the ADEA claim, but he denies that Regional Hospital is entitled to summary judgment on this claim.

Regional Hospital, the Heart Doctors, and Regional Physicians move for summary judgment on all the remaining claims. Dr. Oury resists these motions and states that there are genuine issues of material fact that preclude summary judgment.

Dr. Oury moves for partial summary judgment on the breach of contract claim. Docket 108. Regional Physicians resists that motion and also moves for summary judgment on the breach of contract claim. Docket 129.


The facts viewed in the light most favorable to Dr. Oury, the nonmoving party on defendants' motions for summary judgment, are as follows:

Dr. James Oury is a cardiac surgeon. Regional Hospital is the main healthcare provider in Rapid City, South Dakota. Regional Physicians and the Heart Doctors are medical groups that employ physicians who provide medical services to the Rapid City community through their own offices and through the physicians' staff privileges at Regional Hospital. In 2003, Dr. Oury and Regional Hospital entered into a professional services agreement, and Dr. Oury was named director of cardiac surgery, among other duties. Soon after the agreement was signed, the hospital terminated Dr. Oury's contract. Dr. Oury did not have a contract with Regional Hospital after 2004.

Dr. Oury then signed a contract to work as a cardiovascular surgeon for Regional Health Network, Inc., which was effective July 1, 2005. Regional Health Network immediately transferred all its rights to Dr. Oury's Physician Employment Agreement to Regional Physicians. Dr. Oury was 67 years old at the time. Dr. Oury's employment contract was for a three-year term that automatically renewed if neither party gave notice of termination, notice of non-renewal, or notice of intent to negotiate new terms. Section 1.2 of Dr. Oury's employment contract stated that either party had the right to terminate the agreement without cause on a 90-day written notice. Docket 111-1 at 2. If one of the parties gave notice of its intent to negotiate "then the parties agree[d] to immediately enter into negotiations with respect to the contract terms and conditions for which renegotiation is requested." Docket 111-1 at 2.

In December of 2007, Regional Physicians sent a letter to Dr. Oury and its other physicians stating that it was developing a new physician compensation model and the letter was to serve as formal written notice of the change pursuant to section 1.2 of their employment agreements, which was the section that discussed termination, non-renewal, and negotiation. In November of 2008, the CEO of Regional Physicians, James Keegan, sent Dr. Oury a letter that said the new compensation model was nearing final approval, and Regional Physicians wanted to convert all physicians to the new agreements or compensation model as soon as possible with an outside date of June 1, 2009. That letter, however, also gave formal written notice of Regional Physicians' termination of its physicians' employment contracts "without cause" for those physicians whose employment agreements ended on or after June 1, 2009.

During the time period of this correspondence, it was common knowledge that Regional Physicians was no longer offering an in-house cardiology service line, was no longer going to employ cardiovascular physicians at all, and both cardiology and cardiac surgery were moving to Regional Hospital. Docket 131 at 3. Regional Physicians directed Dr. Oury to negotiate any future job opportunities with Regional Hospital. Regional Physicians offered to extend Dr. Oury's contract until July 15, 2009, but Dr. Oury rejected that extension and asked that his contract expire on June 1, 2009. Docket 111-5. In the fall of 2008, Regional Hospital offered Dr. Oury an employment contract that had a compensation model based on his surgical production. Dr. Oury rejected the contract and proposed his own counter-terms in response. Regional Hospital rejected Dr. Oury's counterproposal.

One of the main issues in this case stems from Dr. Oury's peer review that occurred in 2008 and 2009. All physicians must obtain staff privileges*fn2 at a hospital to provide care to patients in a hospital setting. Doctors at Regional Hospital, including Dr. Oury, were subject to recredentialing or the reappointment process to maintain their privileges at the hospital. Reappointment is done to determine the competency of practitioners to provide high-quality and safe patient care. Docket 134 at 4. Per South Dakota law, doctors must be certified for reappointment at least every two years.*fn3 All Regional Hospital physicians over the age of 65 require reappointment to the medical staff every year. Docket 135-8 at 6; Docket 135-18 at 13.

In April of 2008, Dr. Oury was up for reappointment and submitted his reappointment application. The Medical Staff Office handles credentialing and peer review at Regional Hospital. Once an application for reappointment is submitted, the chief of staff assembles the necessary information and gives it to the applicant's department chair. Carly Elliot assembled the data for Dr. Oury's reappointment as part of her regular duties as Quality Review Coordinator.

Elliott prepared a Physician Performance Report for Dr. Oury based on criteria preset by the medical staff as she would for every surgeon up for reappointment. Docket 134 at 5-6. The performance report data forms a spreadsheet that is populated by the hospital's computer system based on delineated performance criteria. Elliott gave Dr. Oury's report to the chair of the surgery department, Justin Green. Normally, the department chair gives the Credentials Committee the physician's report and recommendation on reappointment. Then the Credentials Committee makes a recommendation on the reappointment and transmits it to the Medical Executive Committee. The Medical Executive Committee reviews the file and makes a recommendation to the Regional Hospital Board of Trustees.

In Dr. Oury's case, Dr. Green reviewed Dr. Oury's application for reappointment and recommended reappointment for three months while the Medical Staff Quality Review Committee determined if there were any quality concern issues. The Credentials Committee recommended reappointing Dr. Oury for three months and referred the case to the Medical Staff Quality Review Committee. At this stage of his review, Dr. Oury disputed some of the data included in his report, and the Quality Review Committee was aware*fn4 of Dr. Oury's concerns. The Quality Review Committee reviewed the quality data and found that there could be a quality of care concern. The committee determined that a Focused Professional Practice Evaluation may be necessary and relayed these concerns to the Cardiovascular ...

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