Insel v. Solomon

WILNER, Judge. We have before us a disagreement between two ophthalmologists (Dr. Insel and Dr. Solomon) over the termination of their corporate practice. Unable to resolve their differ ³⁸⁷ enees amicably, each sought the assistance of the Circuit Court for Prince George’s County, which found in favor of Dr. Solomon. Dr. Insel appealed.

The parties began their professional association in 1973, when Dr. Solomon became an employee of the older Dr. Insel. In 1976, they entered upon a new arrangement. By contract dated June 30, 1976, it was agreed that the practice would be carried on through a professional association, that the two physicians would each own half of the outstanding common stock, and that each would have an equal voice in the management of the corporation. This equality as to management was largely reflected in paragraph 4 of the contract, which provided, in relevant part, that the two would have equal representation on the board of directors and that, “Each Physician agrees that (i) the management of the Corporation’s affairs shall be carried out through a continuous process of consultation and agreement between them in which process they are to be completely co-equal, and (ii) no material action regarding the operation of the Corporation’s practice or business shall be taken by either of them without prior consultation with and agreement of the other.

Neither Physician shall be accountable to the other for his medical decisions.” Several provisions in the contract dealt with termination of the mutual venture. Paragraph 8 provided, in relevant part, that if Dr. Insel retired “following the third year of Dr. Solomon’s employment,” the corporation would purchase all of his stock “paying therefor an amount equal to five (5%) percent of the gross income of the Corporation for the ensuing three (3) years.” If Dr. Solomon died or became disabled after three years, the corporation agreed to repurchase his stock for an amount equal to 10% of his average gross monthly income for a period of three years. Paragraph 9 stated, in relevant part: “Dr. Solomon agrees that, upon Dr. Insel’s written request that Dr. Solomon leave the Corporation, and effective upon an equitable division of the Corporation’s ³⁸⁸ practice, assets, and liabilities, Dr. Solomon will resign from the Corporation and surrender all of his stock (or rights thereto) to the Corporation in an exchange which the Physicians shall endeavor to structure in a tax-free manner.” Paragraph 10, dealing with a quite different contingency, provided: “Loss of License, et cetera. Should any physician stockholder or employee lose his medical license, be convicted of moral turpitude or involved in unethical or immoral conduct or embezzlement, his relation to the Corporation will terminate with provisions as above for separation from the Corporation (as in total disability).” On September 30, 1982, Dr. Insel informed Dr. Solomon that he (Dr. Insel) intended to retire “as a partner in the P.A.” effective the next day.

Presumably, that would have brought into operation paragraph 8 of the 1976 agreement. Dr. Insel had prepared a new agreement, however, which he had already signed and which he asked Dr. Solomon to sign. Under this agreement, Dr. Insel was to continue practicing with the corporation “[a]s a contract physician” at a compensation equal to 60% “of his charges.” More important, as part of its purchase of his stock, the corporation was to pay him “for his accounts receivable as received by the P.A.,” which, according to Dr. Solomon, it was not obliged to do under the 1976 agreement. Dr. Solomon refused to sign the new agreement, whereupon Dr. Insel decided not to retire.

The parties attempted on several occasions thereafter to come to terms, but without success. On November 30, counsel for Dr. Insel sent a revised agreement to Dr. Solomon. In a covering letter, he noted that the doctors had “discussed the financial arrangements in a friendly and gentlemanly fashion whereby the manner of [Dr. Insel’s] departure can be effected so that the transition can be fair and orderly to you both as well as the respective patients of the P.A.” On December 6, counsel informed Dr. Solomon that unless the agreement sub ³⁸⁹ mitted on November 30 was signed and returned by December 10, “the proposed agreement is withdrawn and no concessions re earned income shall be considered; also, you may thereafter expect the matter of your interest to be litigated.” (Emphasis added.) In neither of these letters did counsel suggest that Dr. Solomon had conducted himself improperly or that Dr. Insel intended to seek his (Dr. Solomon’s) ouster from the corporation. Nonetheless, on December 16, 1982, Dr. Insel commenced this action (E-82-1858) with a bill for specific performance in which he accused Dr. Solomon of a whole range of misconduct, including engaging in practices “which are illegal relative to the practice of medicine with patients.” By reason of this misconduct, he averred that Dr. Solomon “must consider himself expelled from the Professional Association and be bound by paragraphs 9 & 10 respectively ... and that any and all professional or official positions of the Defendant with the Professional Association, including retirement plans, are terminated.” He asked that Dr. Solomon be enjoined from practicing ophthalmology as a member of the corporation and that the provisions of the 1976 agreement “be specifically enforced relative to the termination of [Dr. Solomon’s] services____” Coupled with this suit, counsel advised Dr. Insel that he need not wait for the court to act — that under the contract “you are authorized ... to cause [Dr. Solomon’s] withdrawal from the said Professional Association forthwith,” that his “participation in the offices of the Professional Association ... may be terminated effective immediately and his right or authority to engage in any phase of the operation and business of the Association or related activities thereof including retirement plans may be terminated as provided in said agreement.” Presumably acting upon this advice, Dr. Insel immediately changed the locks at the College Park office, closed the corporate bank account, removed Dr. Solomon’s diplomas and personal effects from the College Park office, and called Dr. Solomon’s patients and told them that Dr. Solomon was no longer available.

All of this was ³⁹⁰ done after office hours and without advance warning to Dr. Solomon. Dr. Solomon responded with a petition for injunctive relief, docketed as E-82-1866. On December 18, 1982, the court ordered Dr. Insel to provide Dr. Solomon with access to his (Dr. Solomon’s) patients, patient records, and the corporation’s offices in College Park and Bowie and enjoined Dr. Insel from contacting Dr. Solomon’s patients or attempting to delete Dr. Solomon from the corporation’s malpractice insurance. In January, Dr. Solomon filed a counterclaim in E-82-1858 in which he recited what had occurred and asked that the court, (1) declare that, by his actions, Dr. Insel effectively retired from the corporation or, alternatively, had materially breached the 1976 agreement, (2) require Dr. Insel to provide an accounting of income and expenses since December 1, 1982, and (3) award counsel fees.

Dr. Insel continued to press his attack. In August, 1983, he amended his bill of complaint to allege a new range of unethical conduct on the part of Dr. Solomon — appropriating Dr. Insel’s patients, distributing personal business cards, misinforming and fraudulently making material misrepresentations of fact to patients concerning the nature of medical treatment rendered to them, and otherwise engaging “in numerous and continual acts of professional misconduct which are violative of ethical standards existing within the medical community.... ” In October, Dr. Solomon amended his counterclaim to add an averment that the parties were so divided as to how the corporation should be managed that the votes required for action by the board of directors could not be obtained. For that reason and because of the oppressive conduct of Dr. Insel, Dr. Solomon asked that the corporation be dissolved pursuant to Md. Code Ann.Corps. & Ass’ns art., § 3-413. The two cases — claim and counterclaim in No. 1858 and request for injunctive relief in No. 1866 — came to trial on March 8, 1984.

The course of the proceeding, and, in ³⁹¹ essence, the result of it, were determined in an early ruling by the court. Dr. Insel’s case hinged on paragraph 10 of the 1976 agreement. His position was that Dr. Solomon had been “involved in unethical or immoral conduct,” which thereby caused his “relation to the Corporation” to terminate. In an effort to prove the “unethical or immoral conduct,” he (1) caused to be issued a subpoena duces tecum to Doctors Hospital for the complete medical records of eighteen patients, and (2) proposed to call four expert witnesses to testify that certain things allegedly done by Dr. Solomon were unethical.

The hospital resisted the subpoena with a motion to quash, arguing that disclosure of the patient records would violate the confidentiality requirements of Md.Code Ann. Health-Gen. art., § 4-301. Dr. Solomon, through a motion in limine, moved to exclude “any expert testimony pertaining to alleged unethical or immoral conduct on the part of Dr. Solomon____” The bases of that motion were that (1) jurisdiction to determine unethical conduct on the part of a physician was vested exclusively in the State Commission on Medical Discipline, and, on an “exhaustion of administrative remedy” theory, the court had no authority to hear or determine such a matter, (2) paragraph 10 of the agreement did not mean what it seemed to say — that it must be read as applying only to an actual loss of medical license or conviction — and (3) the issue of unethical or immoral conduct was not the proper subject for expert testimony. The court adopted the first and second of Dr. Solomon’s arguments, concluding: “It’s quite clear that paragraph ten is merely a business agreement to provide for the contingency of one of its members losing a license. It does not give this Court jurisdiction to adjudicate the conduct of a doctor at the bequest or request of another doctor under a business association in a contract case, and, therefore, it is quite clear to the Court that there will be no evidence in this case of any kind of medical malpractice, unethical con ³⁹² duct, because that is not what is contemplated by the contract on its face.” On that basis, the court granted the hospital’s motion to quash and Dr. Solomon’s motion in limine.

Accepting the court’s preliminary ruling, Dr. Insel offered no evidence in his case; he proffered his own testimony that in July or August, 1982, he discovered that Dr. Solomon had failed to give one or more patients informed consent advice and had printed and distributed business cards in his own name, but he actually offered no evidence. Accordingly, Dr. Solomon moved for, and the court granted, summary judgment in the case of Insel v. Solomon, and the matter proceeded thereafter on Dr. Solomon’s counterclaim, upon which there was a full evidentiary hearing. We need not recount all of the evidence presented on the counterclaim, some of which was conflicting. It will suffice to say that, once Dr. Solomon refused to accede to Dr. Insel’s proposed changes in the 1976 agreement, Dr. Insel took unilateral and deliberate action which had the effect, if not the intent, of making a harmonious practice, first, difficult, and ultimately impossible.

He attempted to change Dr. Solomon’s work schedule, he discharged the corporation’s attorney, he removed and altered patient records, and, on December 16, 1982, he took the affirmative steps noted above actually to exclude Dr. Solomon from the office, from the patients, and from all patient records. Only by virtue of a court injunction, subsequently extended in a consent order, was Dr. Solomon readmitted to the corporate practice. Thereafter, Dr. Solomon said, they could not agree on anything. On June 26, 1984, the court filed an opinion and order in which it (1) reviewed the history of the dispute, (2) confirmed its earlier determination that any question of unethical or immoral conduct on the part of Dr. Solomon would have to be resolved by the Commission on