Medical Billing , Inc. v. Medical Management Sciences, Inc.; James F. Thacker; William J. Dezonia , J R.

1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0159P (6th Cir.)
File Name: 00a0159p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
M EDICAL BILLING , INC.,
Plaintiff-Appellee,
R EICH , S EIDELMANN &
J ANICKI,
Plaintiff-Appellee/
Cross-Appellant,
v.
M EDICAL M ANAGEMENT
S CIENCES, INC.; J AMES F.
THACKER; W ILLIAM J.
DEZONIA , J R.,
Defendants-Appellants/
Cross-Appellees.
;>

1
Nos. 98-3561/3564
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 94-01567—Kathleen McDonald O’Malley,
District Judge.
Argued: December 13, 1999
Decided and Filed: May 8, 2000

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2 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
Nos. 98-3561/3564
*The Honorable Sandra S. Beckwith, United States District Judge for
the Southern District of Ohio, sitting by designation.
Before: MERRITT and SILER, Circuit Judges;
BECKWITH, District Judge*.
_________________
COUNSEL
ARGUED: Daniel L. Brockett, SQUIRE, SANDERS &
DEMPSEY, Cleveland, Ohio, for Appellants. Christopher P.
Johnson, BROBECK, PHLEGER & HARRISON, New York,
New York, for Appellees. ON BRIEF: Daniel L. Brockett,
Robin G. Weaver, SQUIRE, SANDERS & DEMPSEY,
Cleveland, Ohio, for Appellants. Christopher P. Johnson,
Caryn G. Mazin, BROBECK, PHLEGER & HARRISON,
New York, New York, for Appellees.
BECKWITH, D. J., delivered the opinion of the court, in
which SILER, J., joined. MERRITT, J. (pp. 16-18), delivered
a separate opinion concurring in part and dissenting in part.
_________________
OPINION
_________________
SANDRA S. BECKWITH, District Judge. Reich,
Seidelmann & Janicki (“RS&J”) is a radiology practice. Until
September 1992, Medical Billing, Inc. (“MBI”), which is
owned by Drs. Reich and Seidelmann, performed billing
services for RS&J and two other small affiliated practices. In
1992, Medical Management Sciences, Inc. (“MMS”) began
soliciting RS&J’s billing business. In September 1992, MBI
and MMS entered into three agreements. The two of those
agreements that are relevant to this appeal are the Billing
Services Agreement and the Asset Purchase Agreement.

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18 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
Nos. 98-3561/3564
The proper standard of review of motions for judgment as
a matter of law in the Sixth Circuit for diversity cases is the
standard for a directed verdict employed by the state whose
substantive law governs the action, in this case, Ohio. See
Potti v. Duramed Pharmaceuticals, Inc., 938 F.2d 641, 645
(6th Cir. 1991). Under Ohio law, a court must consider the
evidence in the light most favorable to the party against whom
the motion is made, and may grant the motion only if, taking
the evidence in this light, there is but one reasonable
conclusion as to the proper verdict. See id.
It is not possible to say that there is only one reasonable
conclusion as to the proper verdict in this case when the
entirety of the evidence which the jury considered is
examined. The decision of the jury should stand because the
evidence shows that not only has neither party demonstrated
that they are clearly in the right, but in fact both parties have
called attention to each other’s numerous mistakes and
ambiguities both in word and in action. The jury heard the
evidence and were in a better position to weigh its credibility
than this court. In fact, the trial judge indicated that based on
her review of the whole record the evidence was “somewhat
equivocal,” and indicated that if the parol evidence were
included, then she believed the decision of the jury should
stand. I agree, and for that reason I would REVERSE the
decision of the district court vacating the jury’s decision.
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Medical Mgmt. Sciences, et al.
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1The calculation of revenue collected was to be performed on the
basis of a unit described in the agreement as a relative value unit or RVU.
Pursuant to the Billing Services Agreement, MMS agreed
to perform billing services for RS&J and the other medical
practices formerly served by MBI. MBI agreed to pay MMS
fifteen percent of the amounts it collected for services
performed by RS&J. That percentage was well in excess of
the market rate of 9.5%. MMS promised to perform billing
and collection services and to remit payments received in a
timely fashion.
Two other provisions of the Billing Services Agreement are
of particular relevance here. MMS promised to pay MBI a
volume bonus for amounts billed by RS&J in excess of their
previous billings (hereinafter, the “Volume Bonus”). MMS
also agreed to guarantee increased revenue collections and to
pay MBI the difference between the amounts it guaranteed
and the amounts it actually collected1 (hereinafter, the
“Collection Bonus”).
Pursuant to the Asset Purchase Agreement, MMS agreed to
pay MBI $2.7 million for its assets, which are described with
particularity in Schedule 1 to the agreement. Then, in
Schedule 9 to the Asset Purchase Agreement, the parties to
the agreement allocated the purchase price as follows:
$10,000 for certain used office furniture and $2.69 million for
a “Covenant Not To Compete in any radiology billing
services activity by MBI, its Shareholders, officers and other
principals.” The Covenant Not To Compete provision of the
Asset Purchase Agreement provides as follows:
Commencing on the Closing Date and ending on the
expiration of the term or upon the termination for
whatever reason of the Billing Services Agreement,
seller, its shareholders and officers and other principals
agree to not, on its own behalf or in conjunction with any
other individual, company or other entity or person,

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4 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
Nos. 98-3561/3564
directly or indirectly, manage, operate, control, be an
agent for, participant in, or be connected in any manner
with the ownership, operation or control of any
corporation, partnership, proprietorship or other business
entity primarily engaged in the provision of collection or
billing services for radiology firms. This Covenant Not
To Compete is the essence of the value of this agreement
to MMS. Of the $2,700,000 payable hereunder,
$2,690,000 is being paid for said Covenant Not To
Compete.
While the Asset Purchase Agreement makes reference to the
Billing Services Agreement, it does not recite that the two
agreements are integrated or in any other fashion suggest that
the terms or recitals of the Billing Services Agreement are
incorporated in the Asset Purchase Agreement.
The agreements became effective in October 1992. The
term of the Billing Services Agreement was 6 years.
In August 1993, sooner than one year after the effective
date of the two agreements, MBI gave notice of termination
of the Billing Services Agreement and accused MMS of
failing to perform services as promised. The parties met to
discuss the notice. One topic of discussion was MBI’s
entitlement to a Volume Bonus and a Collection Bonus.
MMS alleged, and the jury that eventually tried the matter
found, that Defendants Thacker and DeZonia, who are
principals in MMS, induced MBI to withdraw its notice of
termination by promising to abide by Arthur Andersen’s
calculations of RVU’s in the future. In any event, MMS
continued to perform billing services for RS&J after the
meeting, giving rise to an inference, at least, that the Billing
Services Agreement was not terminated in 1993.
In August 1994, Dr. Reich, a principal in both RS&J and
MBI, sent a second notice of termination of the Billing
Services Agreement. He accused MMS of failing to perform
the promised services, in the manner promised, and of
Nos. 98-3561/3564 Medical Billing, et al. v.
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17
Given that I believe the parole evidence was admissible, the
district court’s judgment as a matter of law should have been
reviewed by taking into account all of the information that
was before the jury when they made their determination. No
party to this litigation has articulated to this court a clear
equitable argument that they are in the “right.” Medical
Billing admitted in its paperwork to a potential buyer that the
rate it was being charged under the Medical Management
billing services contract was “above market,” indicating that
the company understood the game it was playing with
Medical Management. In addition, the potential sale of the
Reich, Seidelman & Janicki practice during the same month
as their first attempt to terminate the Medical Management
contract gives an observer pause as to their intentions, not to
mention the evidence that Drs. Reich and Seidelman may
have intended to pocket the $2.7 million and construct a
reason to terminate as soon as possible. Finally, the jury
seems to have found plausible the idea that Drs. Reich and
Seidelman were attempting to hide from their partner Janicki
the fact that they had been receiving premium rates,
essentially skimming off the top of their radiology practice,
and that they therefore wished for Medical Management to
continue to bill at the above-market which they had been
charging in order not to alert Dr. Janicki to the difference in
pricing once the billing was outsourced.
Medical Management, in turn, indicated to the IRS that it
purchased a covenant not to compete and some office
furniture, not a “premium billing contract,” showing their
own knowledge that this was more than a purchase of the
right to bill at a 15% rate--at least in form. The information
which they were sanctioned for not disclosing to Medical
Billing during this litigation also tends to show that they
believed they had purchased a covenant not to compete. And,
importantly, they have working against them a letter
indicating that they understood the risk that they could lose
the $2.7 million purchase price upon termination. The
decision of the jury could not have been an easy one to make.

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16 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
Nos. 98-3561/3564
_____________________________________________
CONCURRING IN PART, DISSENTING IN PART
_____________________________________________
MERRITT, Circuit Judge, concurring in part and dissenting
in part. While I concur in Sections II.B. and II.C., I disagree
with the majority’s holding in Section II.A. that the district
court should have entered judgment for Medical Billing on
the basis that Medical Management was not entitled to the
$1.8 million jury award because the Asset Purchase
Agreement was unambiguous on its face. It is clear from
Ohio law that unless facial ambiguities infected the Asset
Purchase Agreement, parole evidence should not have been
admitted and considered by the jury. It is my contention,
however, that facial ambiguities did indeed infect these two
documents.
The Billing Services Agreement clearly states that the
services provided by Medical Management will be “in partial
consideration for” the Asset Purchase Agreement. It is
unclear from the face of the documents what was intended by
that language. In addition, paragraph three of the section of
the Asset Purchase Agreement outlining the obligations
between the parties is entitled “Billing Services Agreement,”
and describes the billing services arrangement between the
two parties. A jury could reasonably construe the inclusion of
that paragraph as conditioning performance of the Asset
Purchase Agreement on performance of the Billing Services
Agreement, especially when combined with the language
which indicates that the Billing Services Agreement was
“partial consideration” for the Asset Purchase Agreement. I
find the terms to be ambiguous on their face, and thus I would
uphold the jury’s verdict on the basis that it was not error for
the jury to consider the extensive extrensic evidence it had
before it when it concluded that Medical Management was
entitled to a $1.8 million jury award.
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Medical Mgmt. Sciences, et al.
5
2The Billing Services Agreement provided for termination by MBI
upon failure by MMS to pay a Volume Bonus to which MBI was entitled.
3The jury agreed that MMS had failed to pay the Volume and
Collection Bonuses to which MBI was entitled. It awarded MBI damages
in excess of $900,000, and MMS has not appealed that award.
withholding the Volume and Collection Bonuses to which
MBI was entitled under the Billing Services Agreement.2 On
that same date, MBI and RS&J initiated the lawsuit giving
rise to this appeal. They claimed, primarily, that MMS had
breached the Billing Services Agreement by failing to pay the
Volume and Collection Bonuses.3 MBI and RS&J also
claimed that they had been fraudulently induced to withdraw
the first notice of termination by MMS’s officials’ promise to
be bound by Arthur Andersen’s calculation of RVU’s for
purposes of determining the amount to which MBI was
entitled by way of the Collection Bonus. The jury found that
MMS had fraudulently induced MBI to withdraw the notice
of termination and awarded MBI $289,000 in compensatory
damages.
MMS asserted a counterclaim for breach of the Asset
Purchase Agreement. MMS argued that the $2.69 million
payment had been intended as an up-front payment by MMS
of money it would earn back during the six-year term of the
Billing Services Agreement by virtue of the 15% service fee,
which was well in excess of the market rate. MMS alleged
that Drs. Reich and Seidelmann wanted the deal to be
structured in that fashion so that money would go to MBI,
where they would collect it, rather than to RS&J over time in
the form of lower billing services fees, in which case Dr.
Janicki would share it. MMS claimed, on that basis, that it
was entitled to the return of that portion of the payment that
was attributable to the approximately four years remaining on
the Billing Services Agreement when MBI terminated it.
At the summary judgment phase of the proceedings below
and in the post-trial phase, the district court concluded that

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6 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
Nos. 98-3561/3564
the Asset Purchase Agreement was ambiguous. The court did
not specifically identify any ambiguities in the Asset Purchase
Agreement but made references to inconsistencies between
the Asset Purchase Agreement and the Billing Services
Agreement. The court also made special note of the
following provision of the Asset Purchase Agreement, which
the district court termed an “integration clause”:
This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter
of this Agreement and merges or supersedes all prior
discussions, agreements and undertakings of every kind
and nature between them with respect to the subject
matter of this Agreement, and neither party to this
Agreement may be bound by any condition, definition,
warranty or representation other than expressly provided
for in this Agreement.
On that basis, the court permitted a trial on MMS’s
counterclaim at which the parties presented extrinsic evidence
of their intentions regarding the portion of the $2.7 million
payment that was not intended as the purchase price for used
office furniture.
MMS offered evidence that suggested that Dr. Reich, in
particular, wanted an agreement pursuant to which RS&J
would pay exorbitant billing fees that MBI would recoup
through a large up-front payment from MMS. Such an
agreement would inure to the benefit of Drs. Reich and
Seidelmann, who owned MBI, at the expense of Dr. Janicki.
MMS suggested that Drs. Reich and Seidelmann insisted on
the ruse of a payment for a covenant not to compete in order
to hide their true intentions. MMS offered circumstantial
evidence to suggest that Dr. Reich later attempted to
terminate the Billing Services Agreement because he wanted
to sell RS&J’s practice and the higher billing rate was causing
RS&J’s profits to be depressed.
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Medical Mgmt. Sciences, et al.
15
beneficiary of the Billing Services Agreement. The district
court’s decision in that regard is AFFIRMED.
III
For these reasons, the district court’s decision on MBI’s
Rule 50(b) motion is VACATED, in part, and, on remand,
the district court is instructed to enter judgment in favor of
MBI with respect to MMS’s claim for breach of the Asset
Purchase Agreement. The district court’s decision denying
MMS’s Rule 50(b) motion with respect to MBI’s claim for
fraudulent inducement is REVERSED with instructions to
enter judgment in favor of MMS with respect to that claim.
The denial of RS&J’s Rule 50(b) motion with regard to its
claim as an intended third-party beneficiary of the Billing
Services Agreement is AFFIRMED.

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14 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
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5It is, perhaps, noteworthy that RS&J did not object to the form of
the interrogatories to the jury.
C. RS&J’s Claim for Breach of Contract
RS&J asserted a claim for breach of the Billing Services
Agreement against MMS. The basis for the claim was that
RS&J was an intended third-party beneficiary to that
agreement and that RS&J had suffered a loss as a result of the
breach of the agreement by MMS. The district court
submitted the question of whether RS&J was an intended
third-party beneficiary of the Billing Services Agreement to
the jury, which found that it was not. The district court
denied RS&J’s Rule 50(b) motion with respect to its claim for
breach of the Billing Services Agreement.
RS&J contends that the district court should have granted
it a new trial on its breach of contract claim because the jury’s
finding that RS&J was not an intended third-party beneficiary
of the Billing Services Agreement was without support in the
record and contrary to law. We note, however, that the
district court did not merely ask the jury whether RS&J was
an intended third-party beneficiary, but it also asked whether
RS&J suffered any damages from the breach of the Billing
Services Agreement if it was an intended third-party
beneficiary. The jury gave a negative response to that
question. Accordingly, to the extent that the jury’s finding
concerning RS&J’s damages finds support in the record,
RS&J was not prejudiced, even if the jury incorrectly
concluded that RS&J was not an intended third-party
beneficiary of the Billing Services Agreement.5
Because we find support in the record for the jury’s finding
that RS&J did not suffer damages as a result of MMS’s
breach of the Billing Services Agreement, we conclude that
the district court did not err in denying RS&J’s Rule 50(b)
motion with regard to its claim as an intended third-party
Nos. 98-3561/3564 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
7
MBI offered evidence that suggested that the payment was,
in fact, for a covenant not to compete. In any event, however,
the jury was persuaded that the payment had been intended as
an up-front payment in exchange for a higher billing rate and
awarded MMS damages in an amount representing the
“unearned” portion of the up-front payment: $1,868,000.
RS&J also asserted a claim, as an intended third-party
beneficiary, for breach of the Billing Services Agreement by
MMS. At trial, the jury found, in addition to the findings set
forth above, that RS&J was not entitled to damages for
MMS’s breach of the Billing Services Agreement and that
RS&J was not a third-party beneficiary of that agreement.
After the jury returned its verdict, the district court granted
a motion pursuant to Rule 50(b) of the Federal Rules of Civil
Procedure pursuant to which MBI argued that MMS was not
entitled to damages for breach of the Asset Purchase
Agreement. The court continued in its belief that the Asset
Purchase Agreement was ambiguous with respect to the
nature of the $2.7 million payment. The trial judge
concluded, however, that the jury should not have been
permitted to consider all extrinsic evidence but should have
been limited to consideration of the parties’ post-agreement
course of conduct. The court then concluded, based largely
upon MMS’s income tax return and 1993 financial statement,
that MMS believed the payment to be for a covenant not to
compete and not an up-front payment for an increased billing
rate as the jury had concluded. On that basis, the court
concluded that MMS was not entitled to damages for the
breach of the Asset Purchase Agreement. The district court
declined to grant judgment as a matter of law with respect to
RS&J’s claim for breach of the Billing Services Agreement
or MBI’s claim for fraudulent inducement.
I
MBI, MMS, and RS&J have appealed from the district
court’s orders and opinions. The district court permitted

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8 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
Nos. 98-3561/3564
those appeals on an interlocutory basis. The issues are
summarized here for the sake of clarity and ease of
comprehension.
MMS appeals the district court’s ruling on MBI’s Rule
50(b) motion in which the court essentially set aside the jury’s
verdict on MMS’s claim for breach of the Asset Purchase
Agreement. MMS argues that the district court erred by
considering grounds for relief under Rule 50(b) that were not
raised in an earlier motion under Rule 50(a); by substituting
its own judgment for that of the jury regarding which extrinsic
evidence was critical; and by making its decision by
considering only part of the evidence that was submitted at
trial. MMS also appeals the district court’s failure to set
aside, on MMS’s Rule 50(b) motion, the jury’s verdict on
MBI’s fraudulent inducement claim. MMS contends that
MBI failed to submit evidence of tort damages that are
distinct from its damages for breach of the contract that was
fraudulently induced.
RS&J appeals the district court’s denial of its Rule 50(b)
motion for judgment as a matter of law on the jury’s findings
that it was not a third-party beneficiary of the Billing Services
Agreement and did not suffer damages as a result of its
breach. RS&J contends that the jury’s finding concerning its
status as a third-party beneficiary was erroneous as a matter
of law and that the evidence of record does not support the
jury’s finding that RS&J did not suffer damages as a result of
MMS’s breach of the Billing Services Agreement.
II
A. MMS’s Claim for Breach of the Asset Purchase
Agreement
The district court applied Ohio law to the parties’ contract
claims. Under Ohio law, if the language of a contract is clear
and unambiguous, a court may not resort to construction of
that language. See Hybud Equip. Corp. v. Sphere Drake Ins.
Co. Ltd., 64 Ohio St.3d 657, 665, 597 N.E.2d 1096, 1102
Nos. 98-3561/3564 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
13
that the jury was presented with evidence of damages flowing
from the fraud.
The damages MBI identifies did not arise uniquely from
MMS’s fraudulent promise to rely on Arthur Andersen’s
calculations. The Billing Services Agreement entitled MBI to
a Collection Bonus. If MMS failed to pay that bonus,
whether because it manipulated the numbers provided to
Arthur Andersen or for any other reason, it breached the
Billing Services Agreement. MBI’s damages for unpaid
Collection Bonus money flow from that breach. Accordingly,
the damages identified by MBI as supporting the jury’s award
on its fraudulent inducement claim are not of the type
recognized as fraud damages under Ohio law.
This court perceives only one element of damages that
could have arisen uniquely from the fraud. Because MBI was
induced to withdraw its notice of termination of the Billing
Services Agreement, it continued to pay MMS fifteen percent
of the amounts it collected for services performed by RS&J
until it finally terminated the Billing Services Agreement in
1994. To the extent that that rate was in excess of the market
rate for similar services, the difference between fifteen
percent and the market rate would constitute damages arising
from MMS’s fraud that did not also arise from its breach of
the Billing Services Agreement.
MBI has not identified evidence of such damages that was
introduced at trial, nor has it identified any other element of
damages that flowed from the fraud but not from the breach
of contract. Accordingly, the district court erred in denying
MMS’s motion pursuant to Rule 50(b) for judgment with
respect to MBI’s claim for fraudulent inducement. Its
decision in that regard is REVERSED with instructions to
enter judgment in favor of MMS with respect to the
fraudulent inducement claim.

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12 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
Nos. 98-3561/3564
4Those documents include actual collections for the first five months
of 1993 and an estimate for June, giving rise to an inference that MMS
created them after May 31, 1993 and before actual figures for June were
available. An inference that the documents predated the promise upon
which MBI’s fraudulent inducement claim is based is permissible.
MBI contends that the issue is resolved by reference to the
district court’s instructions to the jury. Specifically, MBI
identifies the following instruction:
If you find fraud, however, and you also find that
foreseeable damages flowed from that fraud, you may
award all damages that you find to have been proven by
the greater weight of the evidence, both direct and
consequential. In this regard, I emphasize that any
damages you award on this claim must proximately flow
from the fraud and not from a breach of contract, if any,
that you find occurred.
MBI argues that the district court’s instruction was
sufficiently clear that the jury’s understanding that it could
only award such damages as flowed from the fraud must be
presumed. See Morgan v. Shirley, 958 F.2d 662, 668 (6th
Cir. 1992)(citing Francis v. Franklin, 471 U.S. 307, 324 n.9
(1985)). MBI’s argument is correct if evidence of damages
flowing from the fraud and separate from the damages
flowing from the breach of contract was before the jury.
At trial, MBI introduced internal records from MMS
related to the calculation of RVUs for 1993. Those
documents, which were apparently prepared in mid-19934,
reflect an estimation by MMS that MBI would be entitled to
a Collection Bonus in excess of $700,000 for 1993. MMS did
not pay MBI a Collection Bonus in that amount. MBI argues
that the documents demonstrate that MMS had manipulated
the data it provided to Arthur Andersen before it promised to
rely on Arthur Andersen’s calculations. On the basis of those
documents and certain testimony related to them, MBI argues
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Medical Mgmt. Sciences, et al.
9
(1992), cert. denied, 507 U.S. 987 (1993); Karabin v. State
Automobile Mut. Ins. Co., 10 Ohio St.3d 163, 167, 462
N.E.2d 403, 406 (1984). Only where the language of a
contract is unclear or ambiguous or the circumstances
surrounding the agreement endow the language with special
meaning will extrinsic evidence be considered to give effect
to the parties’ intentions. See Shifrin v. Forest City
Enterprises., Inc., 64 Ohio St.3d 635, 597 N.E.2d 499,
syllabus (1992). Words in a contract must be given their
plain and ordinary meaning unless manifest absurdity results,
or unless some other meaning is clearly evidenced from the
face or overall content of the document. See Alexander v.
Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146,
syllabus ¶2 (1978). This court reviews de novo the district
court’s rulings on Rule 50 motions. See Jackson v. Quanex
Corp., 191 F.3d 647, 658 (6th Cir. 1999).
The Asset Purchase Agreement is not ambiguous as regards
the nature of the $2.69 million payment by MMS. In both
Schedule 9 and the Covenant Not To Compete provision of
that agreement, $2.69 million of the purchase price is allotted
to the covenant not to compete. Moreover, the covenant not
to compete was unambiguously made effective only for the
term of the agreement or until the Billing Services Agreement
was terminated. No provision of the Asset Purchase
Agreement required that a portion of the purchase price be
refunded in the event that MBI terminated the Billing
Services Agreement before the end of its stated term.
Accordingly, the district court should have concluded that
MBI was entitled to judgment with respect to MMS’s claim
for breach of the Asset Purchase Agreement on the ground
that the agreement was unambiguous and did not require that
MBI refund any portion of the purchase price.
In short, the Asset Purchase Agreement unambiguously
provided that the purchase price was for used furniture and a
covenant not to compete. MMS has not argued that MBI
violated the terms of the covenant not to compete while the
Billing Services Agreement was in effect. Accordingly,

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MMS could not, as a matter of law, prove a breach of the
Asset Purchase Agreement by MBI. The district court’s
decision on MBI’s Rule 50(b) motion is VACATED, in part,
and, on remand, the district court is instructed to enter
judgment, consistent with this opinion, in favor of MBI with
respect to MMS’s claim for breach of the Asset Purchase
Agreement.
B. MBI’s Fraudulent Inducement Claim
The jury found that MMS’s principals, Thacker and
DeZonia, fraudulently induced MBI to withdraw its first
notice of termination by promising to be bound by Arthur
Andersen’s calculations of RVU’s for purposes of
establishing the amount of future Collection Bonus payments.
After the trial, MMS moved, pursuant to Rule 50(b), for
judgment as a matter of law with regard to the fraudulent
inducement claim arguing that MBI failed to introduce
evidence of damages arising from the alleged fraud that were
distinct from its damages resulting from the breach of the
Billing Services Agreement. The district court denied MMS’s
Rule 50(b) motion with regard to that claim.
MBI based its claim for fraudulent inducement upon the
promise by MMS to abide by Arthur Andersen’s calculation
of RVUs for purposes of determining the Collection Bonus to
which MBI was entitled. MBI presented evidence at trial
from which the jury could have found that MMS was already
manipulating the data provided to Arthur Andersen for the
purpose of minimizing the Collection Bonus when that
promise was made. On the basis of that evidence, the jury
could well have concluded that MMS omitted to tell MBI that
it intended to provide altered or inaccurate data to Arthur
Andersen, even though that fact would have been material to
MBI in considering whether to exercise its right under the
Billing Services Agreement to terminate that agreement. To
the extent that MBI was able to adduce evidence to show that
it suffered damages as a result of that omission, apart from the
damages it suffered as a result of MMS’s breach of the Billing
Nos. 98-3561/3564 Medical Billing, et al. v.
Medical Mgmt. Sciences, et al.
11
Services Agreement, MBI would be entitled to recover the
damages it proved. See Cohen v. Lamko, 10 Ohio St.3d 167,
169, 462 N.E.2d 407, 409 (1984)(elements of fraud under
Ohio law); Spencer v. Huff, No. 97CA2543, 1998 WL 391948
at *3 (Ohio Ct. App. July 2, 1999)(elements of fraudulent
inducement same as elements of fraud); Binsack v. Hipp, No.
H-97-029, 1998 WL 334223 at *5 (Ohio Ct. App. June 5,
1998)(same).
MMS’s specific contentions on appeal are that MBI did not
adduce evidence at trial from which the jury could properly
have concluded that MBI suffered damages as a result from
the fraudulent inducement that were distinct from its
contractual damages and that MBI did not offer evidence from
which the jury could have determined the amount of those
damages without speculating. In ruling on MMS’s Rule 50(b)
motion, the district court noted that MBI had argued that “it
was virtually impossible to arrive at appropriate calculations
in the face of MMS’s largely untraceable and unreversible
[sic] RVU manipulation.” The court further noted that MBI
had introduced evidence that MMS’s manipulation of the
RVUs was “neither fully traceable nor fully reversible.” The
district court denied MMS’s motion for judgment as a matter
of law pursuant to Rule 50(b) with regard to the fraudulent
inducement claim.
MBI concedes that any award of damages to MBI arising
from the fraudulent inducement must be separate and distinct
from the damages awarded to MBI on its claim for breach of
the Billing Services Agreement. Ohio law goes further by
requiring that fraud damages be limited to the injury actually
arising from the fraud. The tort injury must be unique and
separate from any injury resulting from a breach of contract.
See, e.g., Davison Fuel & Dock Co. v. Picklands Mather &
Co., 54 Ohio App.2d 177, 182, 376 N.E.2d 965, 968 (Ohio
Ct.App. 1977). MMS contends that MBI did not prove any
damages arising from the fraudulent inducement that were
separate from MBI’s contract damages.

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