Kent Farnsworth v. Lutheran Medical Group, LLC (mem. dec.)

Citation: Not availableDocket: 19A-PL-1726

Court: Indiana Court of Appeals; December 18, 2019; Indiana; State Appellate Court

Original Court Document: View Document

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The Indiana Supreme Court issued a memorandum decision on December 19, 2019, regarding an interlocutory appeal by Dr. Kent Farnsworth against Lutheran Medical Group, LLC. Dr. Farnsworth claimed that Lutheran breached his employment agreement by eliminating his call-coverage duties at Lutheran Hospital. Alongside his breach of contract claim, he sought a preliminary injunction to prevent enforcement of the agreement's non-compete clause, which the trial court denied. Dr. Farnsworth argued that this denial constituted an abuse of discretion; however, the court affirmed the trial court's decision.

Dr. Farnsworth has been practicing internal medicine in Indiana since 1996 and was employed by Lutheran since 2009 under an agreement that required him to provide professional medical services and on-call coverage for patients after normal business hours, duties which were defined and scheduled by the Practice Management Committee. The call coverage involved significant demands on his time, including managing hospitalized patients outside of regular hours. Additionally, the agreement included a non-competition clause preventing him from practicing within a thirty-mile radius of Lutheran for one year after termination of employment.

In 2017, following the departure of an internist, the remaining members of the Medical Group were split regarding call coverage at the Hospital, leading to a deadlock that was referred to the Finance Subcommittee. The Subcommittee recommended discontinuing call coverage, which was unanimously approved by the Committee on April 20, 2017, and reaffirmed on May 18, 2017. The new call-coverage schedule took effect on October 1, 2017. Dr. Farnsworth noted a significant decrease in his compensation due to this change and, on December 7, 2018, expressed to the Finance Subcommittee that he believed this constituted a breach of his employment agreement. Other internists expressed no desire to resume call coverage.

On February 18, 2019, Lutheran responded to Dr. Farnsworth, asserting that there was no breach of the employment agreement, clarifying that he retained control over patient care, and stating that the agreement did not require a call schedule. On March 29, 2019, Dr. Farnsworth filed a lawsuit against Lutheran for breach of contract and sought a preliminary injunction against the non-competition clause of the agreement. The trial court denied his motion for a preliminary injunction on June 27, 2019. Dr. Farnsworth argued that this denial was an abuse of discretion, highlighting that to obtain a preliminary injunction, he needed to show a likelihood of success, inadequate legal remedies, that the harm to him outweighed the harm to Lutheran, and that the public interest would not be harmed.

Dr. Farnsworth is appealing a negative judgment due to his failure to meet the burden of proof for a claim, necessitating him to show that the trial court's ruling was contrary to law. A judgment is deemed contrary to law only if the evidence unequivocally leads to a conclusion opposite to that of the trial court. The court will affirm if it determines that Dr. Farnsworth did not prove any of the four requirements for a preliminary injunction by a preponderance of the evidence.

The initial focus of the appeal is Dr. Farnsworth’s assertion of a likelihood of success on the merits. To secure a preliminary injunction, the claimant must demonstrate a reasonable chance of prevailing. In contract disputes under Indiana law, the plaintiff must prove the existence of a contract, a breach by the defendant, and resultant damages. Contract interpretation is a judicial matter, with courts required to honor the parties' written intentions.

Dr. Farnsworth contends that the Committee's removal of call coverage breached the Agreement, which mandated him to provide call coverage per a schedule set by the Committee. He does not dispute the Committee's authority to set this schedule but argues that they could not eliminate call coverage entirely. This argument overlooks the Agreement's provision allowing for a schedule to be established "as necessary," indicating that if call coverage was not deemed necessary, it need not be scheduled. Additionally, the Agreement stipulated that Dr. Farnsworth must perform medical services as delegated by Lutheran, which included the potential cessation of call coverage delegation.

Dr. Farnsworth argues that the removal of call coverage violated Section 11 of his Agreement, which prohibits the Committee from directly supervising or controlling his patient treatment. The court concluded that eliminating call coverage did not constitute direct supervision but rather removed a category of patients from his care, which is distinct. Accepting Dr. Farnsworth's interpretation would imply that any adjustments to the call-coverage schedule would breach Section 11. The Agreement explicitly allows the Committee to establish or not establish a call-coverage schedule, and thus, Dr. Farnsworth failed to demonstrate a viable breach-of-contract claim. Consequently, the trial court did not abuse its discretion in denying his request to enjoin the enforcement of his non-compete agreement with Lutheran Medical Group. The judgment of the trial court is affirmed. Additionally, one concurring judge noted that although the elimination of the call schedule could be seen as a breach of the Agreement, Dr. Farnsworth, having voted for its removal as a Committee member, could not show a reasonable likelihood of success on the merits.