Appeals Court Affirms Breach of Recruitment Agreement Against Physician

The U.S. Court of Appeals (8th Circuit) recently affirmed the grant of summary judgment by the District Court for the Western District of Arkansas to Johnson Regional Medical Center (“JRMC”) in a breach of contract action against Dr. Robert Halterman, a former employee physician.  Halterman was ordered to pay JRMC $64,931.81 in principal, interest, attorney fees, and additional costs for breaching a recruitment agreement (including an employment agreement and a promissory note) entered into with JRMC.

JRMC and Halterman entered into a recruitment agreement in which JRMC provided Halterman with a $50,000.00 signing bonus, payable in monthly installments. The monthly payments were to be forgiven so long as Halterman remained an employee of JRMC and remained in full compliance with the terms of the recruitment agreement.  Under their terms, the recruitment agreement and the promissory note obligations were to remain in effect until the final payment on the note was either made or forgiven.

Halterman worked for JRMC for a short period prior to resigning, due to an alleged shoulder injury and an alleged misrepresentation by JRMC regarding on-call obligations of the position.  Upon his resignation, JRMC informed Halterman that the monthly forgiveness of the promissory note would cease and that he was obligated to begin making payments on the principal amount of the note ($37,894).   Halterman did not make any payments toward this obligation and JRMC brought a lawsuit against him for breach of contract. The trial court ruled in favor of JRMC and issued a judgment in the amount of $64,931.82 (principal, interest, attorney fees and additional costs) against Halterman.

Halterman appealed the trial court’s decision, alleging that JRMC fraudulently induced him into signing the agreements by misrepresenting the on-call requirements of the OB-GYN position. He also claimed that his performance under the agreements was excused due to his shoulder injury, which impaired his ability to perform his duties as an OB-GYN.  The latter claim was contradicted by the fact that he accepted employment as an OB-GYN shortly after resigning from JRMC.

The Eighth Circuit rejected Halterman’s arguments, holding that he was contractually obligated to return the remainder of the principal amount of $37,894. The court also affirmed the lower court’s award of attorney fees and costs against Halterman, based on the promissory note provision allowing JRMC to collect reasonable costs and expenses incurred in collecting the balance due thereunder.

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