Community Health Systems Professional Services Corporation v. Henry Andrew Hansen, II, M.D.
525 S.W.3d 671
| Tex. | 2017Background
- Dr. Henry A. Hansen, II, a cardiovascular surgeon, entered a five‑year employment agreement with Regional Employee Assistance Program (REAP) (June 1, 2007–April 30, 2012); the first three years were terminable only for cause, years 3–5 allowed termination without cause if "annual practice losses" exceeded $500,000 with 60 days’ notice (§10.1).
- Community Health Systems acquired the hospital and REAP; Community Health Systems Professional Services Corporation (PSC) provided operational/financial advice to REAP and hospital management.
- Dr. Hansen’s referrals and surgical volume collapsed after disputes with two cardiologists; REAP/PSC prepared trend reports showing May 1, 2009–April 30, 2010 practice losses of $942,180.
- REAP’s board voted in February 2010 to terminate Dr. Hansen without cause under §10.1; REAP gave a June 1, 2010 letter providing 60 days’ notice (effective July 31, 2010).
- Dr. Hansen sued for breach of contract, tortious interference, and business disparagement; the trial court granted defendants’ summary judgments; the court of appeals reversed in part. The Supreme Court of Texas granted review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether REAP had to prove it terminated "without cause" (not just that the loss condition occurred) | Hansen: REAP needed to show it actually intended a without‑cause termination and follow for‑cause due‑process procedures otherwise | REAP: §10.1 is a condition‑subsequent/termination‑upon‑notice clause; once loss condition met, parties may terminate on 60 days’ notice for any or no reason | Held: REAP not required to prove "grounds"; §10.1 is an unambiguous condition‑subsequent + notice clause—reason for termination irrelevant |
| Whether "annual practice losses" is ambiguous and whether REAP proved the condition | Hansen: Term is ambiguous; could mean hospital service‑line losses or other formulations; expert says ambiguous | REAP: Term refers to REAP’s physician practice revenue minus REAP’s physician expenses (reports and CFO affidavit show $942,180 losses) | Held: Term unambiguous when read in contract; REAP conclusively proved losses exceeded $500,000—no breach as a matter of law |
| Whether Hospital & CEO Jackson tortiously interfered with the contract | Hansen: Jackson/Hospital induced REAP’s decision and were third‑party interferers | Defendants: Jackson acted as REAP’s agent (not a stranger); Holloway requires plaintiff to show agent acted solely from personal motives | Held: Summary judgment for Hospital and Jackson affirmed—record conclusively shows Jackson was REAP’s agent and Hansen produced no evidence Jackson acted against REAP’s interests |
| Whether PSC tortiously interfered or had a privilege/justification defense | Hansen: PSC’s advice/communications exceeded scope or were inaccurate and so unlawful interference; court of appeals rejected some defenses | PSC: PSC had a legal right/agency relationship to advise REAP (justification) and thus may not be liable | Held: Although PSC’s no‑evidence challenge was deficient, PSC conclusively established the justification defense—PSC had a legal right as REAP’s adviser and did not exceed its scope; summary judgment proper |
Key Cases Cited
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (unambiguous contracts construed as written)
- Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793 S.W.2d 660 (Tex. 1990) (termination‑upon‑notice clauses permit termination without regard to motive)
- Holloway v. Skinner, 898 S.W.2d 793 (Tex. 1995) (corporate agent generally not liable for interference unless acting solely for personal interests)
- Prudential Ins. Co. of Am. v. Financial Review Servs., Inc., 29 S.W.3d 74 (Tex. 2000) (justification defense: exercise of one’s legal right defeats interference claim)
- Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211 (Tex. 2003) (summary judgment review standards)