Justia Contracts Opinion Summaries

On October 4th, SIGA moved for reargument to the remedy ordered in a September 22 Opinion. SIGA contended that the court misapplied the law and misunderstood material facts in awarding PharmAthene an equitable lien on a share of future profits derived from a biodefense pharmaceutical known as ST-246. The court held that it did not misapprehend the law of remedies by imposing an equitable remedy reasonably designed to compensate PharmAthene for its lost expectancy; SIGA had not shown that the September 22 Opinion was the product of either a misapplication of law or a misunderstanding of material fact; and the legal and equitable basis for the structure of the equitable payment stream was the court's authority to provide relief "as justice and good conscience may require" and to remedy in equity what otherwise would amount to unjust enrichment. Accordingly, the court denied SIGA's motion for reargument.

The parties in this case signed an arbitration agreement providing that arbitration would occur in accordance with the National Arbitration Forum (NAF) Code of Procedure, but the NAF became unavailable to administer its Code and the arbitration. Defendants moved the circuit court to appoint a substitute arbitrator under Section 5 of the Federal Arbitration Act (FAA). The circuit court concluded that a substitute arbitrator could not be appointed under Section 5 because the NAF Code of Procedure was integral to the parties' agreement to arbitrate and the NAF was unavailable to administer its Code. The Supreme Court reversed after considering the language of the arbitration agreement, the language of the NAF Code, and the federal policy expressed in the FAA, holding that Section 5 applied, and that absent some other defense, Section 5 required the appointment of a substitute arbitrator.

After Hospital declined to renew the privileges of Physician due to repeated complaints about Physician, Physician sued for damages. Hospital claimed immunity under the Health Care Quality Improvement Act (HCQIA). The circuit court granted summary judgment to Hospital, and the court of special appeals affirmed. The Court of Appeals granted certiorari to answer whether in the context of a summary judgment proceeding, the presumption of HCQIA immunity is rebutted upon the showing of material facts in dispute regarding the physician's reporting of substandard medical care and attempts to improve the quality of the care in the hospital system. The Court affirmed, holding (1) evidence of retaliation will not prevent summary judgment on HCQIA immunity unless it can permit a rational trier of fact to conclude that (i) the defendant failed to comply with the standards for immunity set forth in 42 U.S.C. 11112(a), or (ii) the action was not a "professional review action" under 42 U.S.C. 11151(9); and (2) in this instance, Physician did not produce evidence sufficient to convince a rational trier of fact that Hospital failed to satisfy the standards for immunity set forth in HCQIA, and therefore, summary judgment was warranted.

In 2004, Doctor informed Employer, a medical clinic, that he planned to exercise his rights under Employer's policy that rewarded length of service by giving benefits to physicians who were sixty years old or older and had at least fifteen years of taking night calls. Doctor agreed to postpone exercising his rights under the policy until the next year. In 2005, Employer told Doctor that the policy no longer existed. Doctor later withdrew from taking night call. As a result, Employer reduced Doctor's salary. In 2009, sued Employer for breach of contract and promissory estoppel, claiming Employer breached the policy by refusing to allow him to be exempt from night call without salary reduction. The district court granted Employer's motion to dismiss, holding that the two-year statute of limitations began to run in 2005 when Employer informed Doctor it would not honor its obligations under the policy. The court of appeals reversed, concluding that a new cause of action accrued each time a payment was due but not paid. The Supreme Court reversed, holding that Doctor's cause of action accrued, and the statute of limitations began to run, in 2005, and therefore, Doctor's claim was barred by the statute of limitations.

This action arose out of a dispute between two companies involved in the development of pharmaceuticals. Plaintiff was a biodefense company engaged in the development and commercialization of medical countermeasures against biological and chemical weapons and defendant was also a biodefense company that concentrated on the discovery and development of oral antiviral and antibacterial drugs to treat, prevent, and complement vaccines for high-threat biowarfare agents. The court rejected plaintiff's claim that defendant breached a binding license agreement, but found that defendant did breach its obligations to negotiate in good faith and that defendant was liable to plaintiff under the doctrine of promissory estoppel. The court rejected defendant's claim that plaintiff breached its obligation to negotiate in good faith. The court denied plaintiff's claims for specific performance of a license agreement with the terms set forth in the time sheet or, alternatively, for a lump sum award of its expectation damages. The court concluded, however, that plaintiff was entitled to share in any profits relied on from the sale of the drug in question, after an adjustment for the upfront payments it likely would have had to make had the parties negotiated in good faith a license agreement in accordance with the terms of the term sheet. In addition, plaintiff was entitled to recover from defendant a portion of the attorneys' fees and expenses plaintiff incurred in pursuing the action.

Dane Shattuck died from injuries after being hit by an automobile. Dane received medical care at Hospital for his injuries. Dane was enrolled in a children's health insurance program (CHIP), administered by the department of public health and human services (DPHHS). Hospital submitted the bill for Dane's care to Blue Cross and Blue Shield (BCBS), which served as third-party administrator of the CHIP program for DPHHS. Hospital then asserted a lien for the full bill amount against recoveries Gail Shattuck, as personal representative of Dane's estate, may obtain against third parties. Shattuck sued Hospital, BCBS, DPHHS, and the State, asserting that Defendants unlawfully acted to avoid application of "made whole" rules and that Hospital could not foreclose the lien because Shattuck had not been made whole. The district court granted partial summary judgment to Shattuck. The Supreme Court reversed in part and affirmed in part, holding (1) the district court erred by determining that CHIP constitutes insurance and was governed by the made whole doctrine, and (2) the district court did not err by determining that BCBS was not an insurer in its role here and, therefore, was not subject to the made whole statute. Remanded.

In attempting to enroll his infant daughter, a covered employee failed to complete parts of the form indicating whether the child resided with employee, was dependent upon employee for more than 50 percent support and maintenance, and whether the child qualified to be claimed as a tax exemption on employee's federal tax return. The plan made several inquiries before sending a notice that coverage was denied. The employee did not appeal. The plan sued under the Employee Retirement Income Security Act , 29 U.S.C. 1001, to recover $472,357.84 paid to the medical college and $1,199,538.58 paid to the hospital on behalf of the child. The district court dismissed. The Seventh Circuit affirmed dismissal of the ERISA claim. The plan reserves the right to recover against "covered persons" if it has paid them or any other party on their behalf. Neither the treating entities nor the child are covered persons. Because the plan is not implicated, state law claims were not preempted; the court reversed dismissal of those claims. Plaintiffs' position was not unreasonable; the district court abused its discretion in awarding attorney fees.

Plaintiff and his wife (the Kaplans) filed suit against Mayo Clinic Rochester, Inc., other Mayo entities (collectively, Mayo), and Mayo doctors David Nagorney and Lawrence Burgart, making a number of claims arising out of plaintiff's erroneous diagnosis of pancreatic cancer and plaintiff's surgery based on that diagnosis. The Kaplans subsequently appealed the judgments in favor of Mayo and Dr. Burgart on their negligent-failure-to-diagnose and contract claims. The court held that the error, if any, in admitting a certain medical file, which included insurance documents, into evidence did not affect the Kaplans' substantial rights and the Kaplans were not prejudiced by the district court's decision not to give a limiting instruction. The court agreed with the district court that the Kaplans' assertion that the biopsy slides might have been tampered with was based on rank speculation where they failed to present evidence that the slides had been changed in any way. The court also held that the Kaplans have shown no basis for granting them a new trial on their claim for negligent failure to diagnose. The court held, however, that the district court erred in granting judgment as a matter of law where the Kaplans have offered sufficient evidence in their case-in-chief to support a breach-of-contract claim. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings.

After self-insured Employer filed for bankruptcy, it continued to take payroll deductions from Employees for medical coverage but stopped paying the provider hospital for the covered charges. The hospital then directly billed Employees for services that should have been paid by Employer. Employees filed suit to stop the hospital's attempts to collect payment, seeking relief under the theories of declaratory judgment, injunction, breach of contract, negligent infliction of emotional distress, and bad faith breach of contract. The circuit court granted summary judgment in favor of the hospital on all of Employees' claims. The Supreme Court reversed, holding (1) Employees had standing as third party beneficiaries to enforce the provisions of the hospital agreement and payer agreement; and (2) Employees were not obligated to pay for covered medical services under the agreements. Remanded.

Judith Berry brought negligence and consumer protection claims against defendants National Medical Services and Compass Vision after her urinalysis tests conducted as part of Berry's participation in the Kansas Nurses Assistance Program (KNAP) showed positive results, which meant Berry tested positive for substance abuse in violation of Berry's KNAP agreement. Berry claimed Defendants were negligent in designing, implementing, promoting, and managing their testing protocol and that Defendants knew that because she was a participant in KNAP, her nursing license would be in jeopardy if she tested positive. The district court dismissed Berry's petition with prejudice for failure to state a claim upon which relief may be granted. The court of appeals reversed on the negligence claim, finding that Berry was a foreseeable plaintiff, that the probability of harm was foreseeable, and that there was no public policy against imposing a duty on Defendants. The Supreme Court affirmed, holding (1) Berry was a foreseeable plaintiff and the probability of harm was foreseeable; and (2) there was no public policy to extend protection to Defendants simply because they contracted with a government agency. Remanded.