Hamby v. Health Management Associates, Inc.

Cite as 2015 Ark. App. 298

ARKANSAS COURT OF APPEALS

DIVISION II
No.CV-14-667

JEFFREY D. HAMBY, M.D. Opinion Delivered MAY 6, 2015
APPELLANT
APPEAL FROM THE CRAWFORD
V. COUNTY CIRCUIT COURT
[NO. CV-2010-593(II)]

HEALTH MANAGEMENT HONORABLE LYNN WILLIAMS,
ASSOCIATES, INC. JUDGE
APPELLEE
AFFIRMED IN PART; REVERSED
AND REMANDED IN PART

DAVID M. GLOVER, Judge

Appellant Dr. Jeffrey Hamby brings this appeal from an order dismissing his claims

against appellee Health Management Associates, Inc. (HMA) pursuant to Arkansas Rules of

Civil Procedure 8(a) and 12(b)(6). The sole issue on appeal is the legal sufficiency of Dr.

Hamby’s claims against HMA as presented in his second amended complaint (SAC). Because

we conclude that the trial court abused its discretion by dismissing a portion of Dr. Hamby’s

claims against HMA, we affirm in part and reverse and remand in part.

HMA is the operator and part-owner of Summit Medical Center in Van Buren,

Arkansas. Pursuant to a contract with HMA, Emcare Physician Providers, Inc. (Emcare)

provided emergency-medical services to Summit Medical Center. Emcare hired Dr. Hamby

to serve as an emergency-medical physician at Summit Medical Center. His contract was

effective on October 1, 2009, and had a one-year term. Several months into the term of the
Cite as 2015 Ark. App. 298

contract, in May 2010, Emcare officials notified Dr. Hamby that his contract was being

terminated for cause.

As a result of his termination, Dr. Hamby sued HMA, Emcare, Dr. Joni Carmack, and

Dr. Michael Wheelis.1 He amended his complaint twice, and his SAC is the operative

pleading for our review. The SAC sets forth three causes of action against HMA: (1) tortious

interference, (2) violations of the Arkansas Deceptive Trade Practices Act (DTPA), and (3)

violations of the Civil Action by Crime Victims Act (CACVA). Dr. Hamby’s general

theory of his case set forth in the SAC is that HMA was engaged in a scheme to increase its

profit by unnecessarily and improperly performing medical tests and admitting patients. He

alleges that when he refused to be complacent in this scheme, Emcare prematurely

terminated his employment at the behest of HMA.

HMA petitioned the trial court to dismiss the claims against it. The trial court

entertained arguments on this motion and ultimately granted the motion to dismiss in its

entirety pursuant to Arkansas Rules of Civil Procedure 8(a) and 12(b)(6). Dr. Hamby timely

appealed.

I. Standard of Review

Our standard of review for the granting of a motion to dismiss is whether the trial

court abused its discretion. Dockery v. Morgan, 2011 Ark. 94, 380 S.W.3d 377. In reviewing

a trial court’s decision on a motion to dismiss, we treat the facts alleged in the complaint as

true and view them in the light most favorable to the party who filed the complaint. Id. All

reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be

1
Drs. Carmack and Wheelis are agents and employees of Emcare.
Cite as 2015 Ark. App. 298

liberally construed. Id. However, our courts consistently hold that a complaint must state

facts, not mere conclusions, in order to entitle the pleader to relief. Born v. Hosto & Buchan,

PLLC, 2010 Ark. 292, 372 S.W.3d 324.

II. Tortious Interference

Dr. Hamby alleges in his SAC that HMA tortiously interfered with his employment

contract with Emcare. A meritorious claim for tortious interference requires (1) the

existence of a valid contractual relationship or business expectancy, (2) knowledge of the

relationship or expectancy by the interfering party, (3) intentional interference inducing or

causing a breach or termination of the relationship or expectancy, and (4) resulting damage

to the party whose relationship has been disrupted. Baptist Health v. Murphy, 2010 Ark. 358,

373 S.W.3d 269. HMA does not challenge that Dr. Hamby has sufficiently pled these

elements in his SAC.

In addition to these requirements, the interfering party’s conduct must be improper.

Id. The parties dispute whether Dr. Hamby has alleged facts demonstrating that HMA’s

conduct was improper. Impropriety is determined by (1) the nature of the actor’s conduct,

(2) the actor’s motive, (3) the interests of the other with which the actor’s conduct interferes,

(4) the interests sought to be advanced by the actor, (5) the social interests in protecting the

freedom of the action of the actor and the contractual interests of the other, and (6) the

proximity or remoteness of the actor’s conduct to the interference and the relations between

the parties. Id. The actor’s conduct is to be considered in light of what is fair and reasonable

under the circumstances. Hayes v. Advanced Towing Servs., 73 Ark. App. 36, 40 S.W.3d 800

(2001). The determination of whether the interference is improper is ordinarily left to the
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jury. Id.

As a preliminary matter, HMA contends that any interference it had with Dr.

Hamby’s employment contract was necessarily proper because of privilege. Privilege is an

affirmative defense that HMA bears the burden of proving. AMI Civ. 403 (2014). When

reviewing a motion to dismiss pursaunt to Ark. R. Civ. Pro. 12(b)(6), the trial court must

look only to the complaint. Moore v. Wallace, 90 Ark. App. 298, 205 S.W.3d 824 (2005).

Any discussion of HMA’s privilege to interfere is not ripe for our review, and we need not

consider this argument.

Turning our attention to the SAC, Dr. Hamby generally contends that, due to

interference by HMA, he was prematurely terminated by Emcare because he refused to take

part in HMA’s scheme to increase its revenue by improperly increasing patient admissions

and medical testing in the emergency department. Dr. Hamby alleges that in September

2008, HMA appointed Gary Newsome as president and CEO, and he announced that he

would improve HMA’s financial performance by improving its emergency-department

operations. Several months later, in April 2009, internal correspondence from HMA

indicated that Newsome was disappointed in the admission numbers at Summit Medical

Center. Emcare began overseeing emergency-department physicians’ benchmarks and

admission rates in October 2009. Several months later, in March 2010, Emcare officials

chastised the emergency-department physicians for missing opportunities to order additional

billable testing. And eventually, Emcare began implementing quality reviews of Dr. Hamby’s

charts.

The “smoking gun” linking HMA to the termination of Dr. Hamby’s employment
Cite as 2015 Ark. App. 298

with Emcare comes from an April 2010 email from Pam Tahan, the CEO of Summit

Medical Center. In that email, she wrote to Emcare officials, “We continue to have issues

with low ER metrics from Dr. Hamby and [another physican]. Please send me your plan for

how this will be resolved.” An Emcare representative responded that Dr. Hamby would be

terminated, and his termination formally occurred in May 2010.

In reviewing an order granting a motion to dismiss, we must treat the facts alleged by

Dr. Hamby as true, construe the pleadings liberally, and resolve all reasonable inferences in

favor of the complaint. Dockery, supra. The facts alleged by Dr. Hamby indicate that HMA

intended to increase revenue in its emergency departments and had input into ensuring that

the staff at Summit Medical Center was pursuing this goal. According to the SAC, Dr.

Hamby’s work was criticized because of his failure to conform to HMA’s objective. The

email by Pam Tahan, when read with the preceding allegations, is sufficient to raise a factual

question of whether HMA improperly interfered with Dr. Hamby’s employment contract

with Emcare. The trial court abused its discretion in dismissing the tortious-interference

claim, and we reverse and remand on this issue.

III. Deceptive Trade Practices Act

Dr. Hamby also sued HMA for violations of the DTPA. Specifically, he contends that

HMA knowingly took advantage of a consumer who is reasonably unable to protect his or

her own interest because of physical infirmity. Ark. Code Ann. § 4-88-107(a)(8)(A) (Repl.

2011). Additionally, he claims that HMA violated the catch-all provision of this statute by

engaging in an unconscionable, false, or deceptive act or practice in business, commerce, or

trade. Ark. Code Ann. § 4-88-107(a)(10).
Cite as 2015 Ark. App. 298

We have previously determined that, for purposes of the review of a motion to

dismiss, Dr. Hamby sufficiently alleged facts to establish that HMA was engaged in a scheme

to increase revenue in its emergency departments. As a result of this alleged scheme, HMA

officials began overseeing the operations of the emergency department at Summit Medical

Center with an emphasis on increasing its revenue, and this oversight occurred irrespective

of the fact that Emcare managed the emergency department at Summit Medical Center.

According to Dr. Hamby’s SAC, HMA’s oversight created pressure to increase admissions

and medical testing. This pressure manifested itself when Emcare officials chastised

emergency-department physicians for failing to perform all possible billable testing and

conducting quality reviews of Dr. Hamby’s patient charts. These facts, taken as true, support

Dr. Hamby’s allegations that HMA was valuing earnings over patient care. Accordingly, we

conclude that Dr. Hamby has sufficiently alleged a violation of the DTPA. This alleged

conduct by HMA takes advantage of physically infirm customers and is an unconscionable

business practice. Ark. Code Ann. § 4-88-107(a)(8)(A) & (10).

We must also consider whether Dr. Hamby suffered damages as a result of the alleged

DTPA violations. Actual damages are required for a private right of action for a DTPA

violation. Baptist Health v. Murphy, 2010 Ark. 358, 373 S.W.3d 269; Ark. Code Ann. § 4-

88-113(f). Dr. Hamby contends that he was damaged because there was harm to his

physician-patient relationships and because his termination resulted in him losing income in

the amount of $265,500. According to his SAC, Dr. Hamby was terminated because of his

resistance to take part in HMA’s scheme to increase revenue. Consequently, Dr. Hamby has

alleged actual damages sufficient to withstand a motion to dismiss.
Cite as 2015 Ark. App. 298

Therefore, we conclude that the trial court abused its discretion in dismissing Dr.

Hamby’s DTPA claim and reverse and remand on this issue.

III. Civil Action by Crime Victim Act

Dr. Hamby also pursues a claim against HMA for a CACVA violation. This statute

is codified at Arkansas Code Annotated section 16-118-107(a)(1) (Supp. 2013) and provides

that “any person injured or damaged by reason of conduct of another person that would

constitute a felony under Arkansas law may file a civil action to recover damages based on

the conduct.” In order to prevail on a motion to dismiss, Dr. Hamby must allege facts to

show that HMA engaged in felonious conduct that proximately caused him injury.

The felonious conduct allegedly committed by HMA includes a theft of public

benefits2 and violations of the Medicaid Fraud Act.3 In each instance, Dr. Hamby alleges that

HMA’s scheme to increase revenue by increasing patient admissions and medical testing

resulted in HMA making false statements or misrepresentations in order to receive public

benefits. The success of the CACVA claim is contingent upon Dr. Hamby alleging facts in

his SAC that indicate that HMA improperly received public funds.

We need not consider the theft-of-public-benefits claim and Medicaid Fraud claim

separately because each is without merit. The SAC includes no allegation that Dr. Hamby

unnecessarily or improperly admitted patients or performed medical testing that resulted in

fraudulent billing for public funds. Rather, his allegations are that emergency-department

physicians were pressured to do so and that he was terminated when he refused to succumb

2
Ark. Code Ann. §§ 5-36-201 et seq. (Repl. 2013).
3
Ark. Code Ann. §§ 5-55-101 et seq. (Repl. 2005 & Supp. 2013).
Cite as 2015 Ark. App. 298

to the pressure. Additionally, he does not allege that any other medical provider engaged in

this conduct. Dr. Hamby’s CACVA claim requires us to speculate that patients were

unnecessarily and improperly tested and admitted and that this resulted in fraudulent demands

for payment from public funds.

Arkansas is a fact-pleading state, and Arkansas Rule of Civil Procedure 8(a)(1) requires

that a complaint state facts, not mere conclusions, in order to entitle the pleader to relief.

Born, supra. While facts alleged in a complaint are treated as true, the plaintiff’s theories or

speculation are not. Worden v. Kirchner, 2013 Ark. 509, 431 S.W.3d 243. Without any

factual support for Dr. Hamby’s theory that public benefits were fraudulently received by

HMA, we cannot say that the trial court abused its discretion by dismissing the CACVA

claim. Accordingly, we affirm the dismissal of Dr. Hamby’s CACVA claim.

Affirmed in part; reversed and remanded in part.

KINARD and HIXSON , JJ., agree.

Robertson, Beasley & Ford, PLLC, by: Mark E. Ford; and
Williams & Anderson PLC, by: Peter G. Kumpe, Marie-B Miller, and Alec Gaines, for
appellant.

Robinson, Staley & Duke, P.A., by: Thomas B. Staley; and
Gass Weber Mullins, LLC, by: J. Ric Gass, Pro Hac Vice, for appellee.