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Washington Regional Medical Center v. Raber

United States District Court, W.D. Arkansas, Fayetteville Division

October 26, 2018




         This matter came before the Court on October 9, 2018 for a bench trial on Washington Regional Medical Center's (“WRMC”) Complaint (Doc.1) against Michael R. Raber, M.D. (“Raber”) for breach of contract (Count 1) and unjust enrichment (Count 2). Before trial, the Court granted WRMC's motion for partial summary judgment (Doc. 14) for breach of contract for a sign-on bonus of $48, 000 and stated it would enter judgment on the $48, 000 following final resolution of all issues. (Doc. 21). Before trial, the Court granted in part and denied in part Raber's motion for partial summary judgment (Doc. 22) and dismissed the claim for unjust enrichment. (Doc. 31). The parties stipulated before trial that Raber breached his employment contract with WRMC (Docs. 29 & 30), and that the remaining issue for trial was the amount of damages. The parties stipulated to some exhibits received into evidence, and the Court overruled Raber's objection to certain exhibits that were also received into evidence. The Court heard the testimony of two witnesses and then took the case under submission. Having considered the testimony of the witnesses and the exhibits received into evidence, and made credibility determinations on the evidence, the Court makes the following findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.

         I. Findings of Fact

         WRMC is a nonprofit corporation organized under the laws of the State of Arkansas with its principal place of business in Fayetteville, Arkansas. Raber is a medical doctor who is a citizen and resident of the State of Texas.

         Raber is a board-eligible neurosurgeon, having graduated from medical school at Wake Forest University. Following his graduation from medical school, Raber did residency training at the University of Arkansas for Medical Sciences (“UAMS”) and Harvard Medical School, and did fellowship training at Johns Hopkins Medical School. After nine years of residency and fellowship training, Raber sought employment with several hospitals as a general neurosurgeon.

         Raber was referred to WRMC by Dr. John Barr (“Barr”), who was a general neurosurgeon at WRMC. Raber and Barr worked together for three years in the residency program at UAMS. Beginning in early 2016, Raber made three visits to WRMC before signing an employment contract with WRMC on December 16, 2016. During the three visits, Raber met with WRMC's management and neurosurgical staff, including Dr. David Ratcliff, director of WRMC's trauma center. He also met with neurosurgeons Barr, Dr. Brandon Evans, and Dr. Larry Armstrong.

         WRMC is a community hospital serving 25 counties in Northwest Arkansas, Southwest Missouri, and Eastern Oklahoma. WRMC is classified by the State of Arkansas as a Trauma II medical center. A Trauma II designation requires the medical center to have 95% on-call neurosurgery coverage in the emergency department. At the time Raber interviewed with WRMC, Drs. Barr, Evans, and Armstrong were providing on-call neurosurgery coverage for WRMC. Two other neurosurgeons provided endovascular coverage, but not general on-call neurosurgical coverage.

         Raber executed an employment contract with WRMC on December 16, 2016. The term of employment was for three years, beginning on July 1, 2017. Raber was to provide general neurosurgical services for WRMC and clinical services at the Northwest Arkansas Neurosciences Institute, a neurological department of WRMC. The contract specifically provided that Raber would provide a minimum of 90 days of annual neurosurgical on-call coverage in the emergency department. Raber would conduct his clinical practice in the separate offices at the Northwest Arkansas Neurosciences Institute.

         Under the employment contract, WRMC would pay Raber a sign-on bonus of $48, 000, which was subject to federal and state taxes. Raber was to receive a base salary of $716, 000, with a quality compensation bonus and additional compensation for any emergency call in excess of the 90 days of on-call coverage in the contract. Total compensation was not to exceed $1, 474, 000. Upon execution of the contract, WRMC paid Raber the $48, 000 sign-on bonus and paid federal payroll taxes in the amount of $3, 672.

         On March 7, 2017, Raber called Larry Shackelford, the chief executive officer of WRMC, and told him that for personal reasons he would not be coming to WRMC. Shackelford told Raber that patient care at WRMC was going to be adversely impacted if he did not honor his commitment because it would create a problem in emergency care coverage. Shackelford followed up with a letter to Raber on March 10, 2017 explaining that his failure to honor his commitment would result in 1/3 of the days in the emergency department without neurosurgical coverage, and that WRMC would have to secure locum tenens neurosurgical coverage at significant cost. Raber did not claim the certified letter which required a return receipt.

         On March 15, 2017, Raber sent a letter to Shackelford confirming his telephone call that he was withdrawing his commitment as a neurosurgeon on July 1, 2017, and that he would make efforts to repay the $48, 000 sign-on bonus. Raber did not take the opportunity to cure his default although WRMC's counsel sent a letter to Raber giving him the opportunity to do so. In a telephone call with Cindy Tabor, nursing director for neurosciences at WRMC, Raber also declined WRMC's offer to work for only one year and then be released from the contract. Shackelford made the same offer to Raber which would give WRMC time to recruit a replacement for Raber. Raber began employment with the Baylor College of Medicine in Houston, Texas on September 5, 2017 as a faculty member with clinic duties.

         The Trauma II facility designation is critical to the mission of WRMC, which is the only medical center in the region providing full time neurosurgery coverage. If WRMC did not provide the Trauma II coverage, patients from the region would have to be transported to Springfield, Missouri or Tulsa, Oklahoma for emergency neurosurgical services. Before execution of the contract, Shackelford explained to Raber the significance of the Trauma II designation and the need to provide emergency neurosurgical coverage.

         Raber would have been the fourth neurosurgeon employed by WRMC which would have given WRMC one in four coverage for emergency coverage. Before Raber's commitment, three neurosurgeons handled the on-call coverage. In January 2017, Dr. John Barr notified WRMC that he would not renew his annual contract when it expired in July 2017. Raber, a friend and resident colleague of Barr, said he did not learn of Barr's decision to leave WRMC until February 2017 when Barr told him of his decision to leave and return to academia at Duke University Medical School. In an email to WRMC staff in January 2017, Shackelford said that Barr's decision to leave WRMC would not impact patient care since Raber's arrival would coincide with Barr's departure.

         During his testimony, Raber downplayed having knowledge and understanding of the critical importance of on-call coverage at WRMC, other than to say he knew it was a “necessary evil.” Raber denied being told by Shackelford that the Trauma II designation required 95% neurosurgery coverage and the significance of the designation for WRMC. Raber testified no one ever talked to him about what on-call coverage would mean in his practice although he met with Dr. Ratcliff, the director of the trauma center and the three neurosurgeons who were handling the on-call coverage. Raber testified that his primary responsibility was to build an elective spine practice with Drs. Barr, Evans, and Armstrong. Raber's testimony that he did not comprehend the significance of his contractual obligation to provide 90 days of on-call neurosurgical services is simply not credible. Raber spent nine years training at top rate medical centers that provided on-call neurosurgical care, and Raber no doubt understood the ...

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