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     Memorandum Opinion and Order Granting in Part and Denying in Part the Defendant’s Motion for Partial Summary Judgment and Denying the Plaintiff’s Motion for Partial Summary Judgment. The Court considered cross-motions for summary judgment on three claims: breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair or deceptive acts or practices. All three claims in this matter arose from the Defendant’s alleged conduct as required under the Management Service Agreement (the “MSA”) between the two parties.
     In addressing the breach of contract claim, the Court first considered the scope of duties and performance standard under the MSA. Based on the language of the MSA, the Court found that the Defendant must perform the responsibilities listed in Section 3 of the MSA in a manner “consistent with the standards of the healthcare industry for an independent management company contracting on an arm’s length basis to provide comprehensive management services….” Despite being defined within the MSA, the Court determined that, due to its ambiguity and reference to technical benchmarks, the meaning of the performance standard required further factual development at trial.
     Next, the Court addressed the Defendant’s assertion that Randolph Health waived the Defendant’s obligations. The Court found that, because the Randolph CEOs and COOs were the Defendant’s employees and subagents under the MSA, their acts or communications, standing alone, failed to satisfy the requisite intent by Randolph Health to waive the Defendant’s duties. The Court was unable to determine whether Randolph Health, through its Board of Directors, knowingly and intentionally waived potential breaches or the Defendant’s ongoing obligations when it continued to pay the Defendant’s management fees and other expenses without sending a notice of default.
     The Defendant also sought judgment as a matter of law on nine of twelve specifically alleged breaches of the MSA. After review of the evidence, the Court found in favor of the Defendant for two of the nine alleged breaches – pertaining to Sections 3(a) and (e) – but was unable to determine the remaining seven alleged breaches – pertaining to Sections 3(b), (c), (g), (h), (i), (k), (n) – as the Court found that the Plaintiff produced sufficient evidence to create genuine issues of material fact.
     The Court next evaluated the alleged breach of the implied covenant of good faith and fair dealing.  Depending on the ultimate determination of disputed material facts at trial, the Court determined it was possible to find that the Defendant’s conduct breached the implied covenant by wrongfully recruiting vulnerable physicians it knew Randolph Health expressed interest in, thereby undercutting Randolph Health’s attempts to implement the recruitment plan and obtain benefits owed under the MSA. However, at summary judgment, the Court was unable to make credibility determinations regarding the Defendant’s intentions in recruiting physicians and denied both summary judgment motions with respect to the breach of the implied covenant claim.
     The Court then assessed whether the Defendant violated the North Carolina Unfair and Deceptive Act or Practice statute (the “UDP”). Although North Carolina permits a plaintiff to assert a breach of contract claim and a UDP claim, the “plaintiff must allege substantial aggravating circumstances.” In re Charlotte Com. Grp., Inc., No. 01-52684C-11W, 2003 WL 1790882, at *3 (M.D.N.C. Mar. 13, 2003). The Court found that, despite the Plaintiff’s claims that the Defendant was misleading or secretive, its conduct was too bound up with its rights and duties under the MSA and was not attended by sufficiently egregious or aggravating circumstances to warrant a finding that such conduct was unfair or deceptive under the UDP.
     Although not raised by the Defendant, the Court also observed that the Plaintiff’s claim was likely barred by the learned profession exemption. The UDP prohibits “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.” N.C. Gen. Stat.§ 75-1.1(a). Although “commerce” under the UDP “includes all business activities,” it “does not include professional services rendered by a member of a learned profession.” N.C. Gen. Stat.§ 75-1.1(b). The Court first found that, as an operating hospital, the Defendant qualified as a “medical professional” for purposes of the learned profession exemption. The Court further found that the Defendant’s physician recruitment efforts and its allegedly anticompetitive conduct related to the provision of medical services in Randolph County and fell squarely within the learned profession exemption. As such, the Court granted the Defendant’s motion for summary judgment as to the Plaintiff’s UDP claim.

UCC & Non-Bankruptcy Law Issues, Published No

     Order Overruling in Part and Sustaining in Part Objection to Expert Reports. Defendant objected to the admission and consideration of the Plaintiff’s expert reports, arguing that the opinions and proposed testimony failed to satisfy the reliability and relevancy requirements of Federal Rules of Evidence 401 and 702 and should be excluded from consideration on summary judgment.
     The Court conducted the reliability and helpfulness analysis mandated by Rule 702, specifically addressing the four main points of objection raised by the Defendant. First, the Court found that the expert’s opinion would be helpful to determining the applicable healthcare industry standard contained within the parties’ contract. Second, the Court found the Plaintiff’s expert had the qualifications and knowledge necessary to testify under Rule 702 and the Defendant’s assertion that her experience was insufficiently related to the specific circumstances of the proceeding went to the credibility of the expert’s testimony, not its admissibility. Third, the Court found that the majority of the report and proposed testimony was firmly within the realm of permissible ultimate-issue testimony, but determined it would strike and disregard any statements or opinions that ventured too close to impermissible legal conclusions. Fourth, the Court found that, although there were no authoritative, published industry standards that could be directly applied, the expert’s extensive knowledge and training in the healthcare field provided a sufficiently reliable basis under Rule 702 for forming opinions on the contract’s performance standard. The Court further found that the expert adequately based her opinions on depositions and other documentary evidence in the record; the Defendant’s challenges to any of the expert’s assumptions went to the credibility of her testimony and could be addressed through cross-examination at trial.
     The Court, therefore, overruled in part and sustained in part the Defendant’s objection, allowing the expert reports and proposed testimony while excluding those statements constituting legal conclusions as to the Defendant’s responsibilities under the contract or its alleged breaches.

Evidence, Published No
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