RONALD E. STEVENS, M.D., and HIGH PLAINS ANESTHESIA, P.C., a Wyoming Professional Corporation, Appellants (Defendants),
ANESTHESIOLOGY CONSULTANTS OF CHEYENNE, LLC, Appellee (Plaintiff), and MICHAEL B. DORROUGH, M.D., RONALD W. LeBEAUMONT, M.D., BRUCE M. milmont, M.D., DAVID M. SKOLNICK, D.O., and DANTE RODRIGUEZ-MORVELLI, M.D., Appellees Additional Counterclaim Defendants.
from the District Court of Laramie County The Honorable
Thomas T.C Campbell, Judge.
Representing Appellants: Anna M. Reeves Olson and Weston W.
Reeves, Park Street Law Office, Casper, Wyoming. Argument by
Ms. Reeves Olson.
Representing Appellees: Henry F. Bailey, Jr. and Douglas W.
Bailey, Bailey Stock Harmon Cottam P.C., Cheyenne, Wyoming.
Argument by Mr. Douglas Bailey.
BURKE, C.J., and HILL [*] , DAVIS, and KAUTZ, J J, and FENN,
Appellants, Ronald Stevens and High Plains Anesthesia, P.C.,
appeal from the Judgment on Jury Verdict, Order on
Summary Judgment, and Order Denying Stay and Motion
for Judgment as a Matter of Law. Appellants assert that
the district court improperly granted summary judgment, erred
in refusing to admit certain evidence at trial, and erred in
refusing to grant their post-trial motion for judgment as a
matter of law. We affirm in part, reverse in part, and remand
for further proceedings.
Appellants phrase the issues as follows:
1. Did the District Court err in granting summary judgment to
ACC on the breach of fiduciary duty claims because there were
issues of material fact as to whether the Eye Surgery Center
amounted to a protectable and continuing "corporate
opportunity" for ACC?
2. In the alternative, did the District Court err by granting
summary judgment to ACC on the breach of fiduciary duty
claims because Dr. Stevens had given notice to ACC and ACC
ratified Dr. Stevens' actions and/or rejected the
3. Regardless of whether the Eye Surgery Center amounted to a
"corporate opportunity, " was the arrangement
between Cassandra Rivers and ACC a violation of the Federal
Anti-Kickback law, and is thus illegal and unenforceable as a
matter of law?
4. Did the District Court err in granting summary judgment to
ACC on Dr. Stevens' Defamation claim because there were
issues of material fact regarding whether Dr. Dorrough abused
the conditional privilege and spoke with malice?
5. Did the District Court abuse its discretion and commit
prejudicial error at trial when it refused to admit Dr.
Stevens' December 11, 2013 email and the July 17, 2014
email between Drs. Dorrough and Skolnick?
phrase the issues as follows:
1. The manager of a limited liability company owes a duty of
loyalty to the company that includes a duty not to compete
with, or appropriate an opportunity from, the company. While
a manager of ACC, Dr. Stevens both competed with ACC and
appropriated a company opportunity. Did Dr. Stevens breach
his duty of loyalty to ACC?
2. A company opportunity exists when the company has an
actual or expected interest in, and ability to acquire, the
property or asset. ACC had a longstanding
business-relationship with the Cheyenne Eye Surgery Center as
well as an established history of revenue from the
relationship. Does ACC's longstanding
business-relationship constitute a company opportunity?
3. A manager's duty of loyalty requires him to fully
disclose all material facts relating to company opportunities
he intends to appropriate. Dr. Stevens sent an email to
ACC's billing provider, copying ACC's other managers,
stating he intended to "carve out" certain of his
services from ACC. Did this email referencing a carve-out
constitute full disclosure of all material facts relating to
the appropriation of the company opportunity?
4. A company can only approve, reject, or ratify a
manager's appropriation of a company opportunity if that
opportunity has been fully disclosed to the members of the
company. Dr. Stevens' email to ACC's billing provider
(copied to two managers) did not disclose any material facts
relating to the company opportunity he appropriated. Did ACC
ratify Dr. Stevens' appropriation of the company
5. Privileged or substantially true communications do not
constitute defamation. Dr. Dorrough's statement to his
colleagues that Dr. Stevens had diverted income from ACC was
both privileged and true. Did Dr. Dorrough defame Dr.
6. Irrelevant evidence is inadmissible and evidence that will
confuse or distract the jury can be excluded. The December
11, 2013 Copied-To-Email and the July 17, 2014 Post-Discovery
Emails were irrelevant and would have confused or distracted
the jury. Did the District Court abuse its discretion in
excluding the emails?
7. The failure to raise an issue before the District Court
precludes this Court from considering it on appeal. The
Appellants failed to raise the issue of whether an agreement
between Cassandra Rivers and ACC violated federal
anti-kickback law before the District Court. Should this
Court consider the issue for the first time on appeal?
8. Is the Appellants' argument that an agreement between
Cassandra Rivers and ACC violates federal anti-kickback law
applicable to the facts of this case?
In 1999, a group of anesthesiologists in Cheyenne formed
Anesthesiology Consultants of Cheyenne, LLC
("ACC"). The members of ACC typically provided
anesthesiology services at Cheyenne Regional Medical Center
("CRMC") and High Plains Surgery Center. ACC also
provided services to a group of Cheyenne ophthalmologists,
who generally performed surgery on their patients at either
CRMC or High Plains Surgery Center. Some of the members of
ACC had performed anesthesiology services for the
ophthalmologists even before 1999.
Appellant, Dr. Ronald Stevens, joined ACC in 2001. Dr.
Stevens had previously been an anesthesiologist in Denver,
Colorado, and he had been a manager of a much larger group of
anesthesiologists in that state before relocating his
practice to Cheyenne. Shortly after moving to Cheyenne, Dr.
Stevens met Cassandra Rivers. Ms. Rivers is a certified
registered nurse anesthetist ("CRNA"). Ms. Rivers
often performed work for ACC at CRMC, but she did not have a
written contract with the company. Dr. Stevens and Ms. Rivers
married in 2005.
In 2007, several of Cheyenne's ophthalmologists decided
to open their own eye surgery center. Dr. Stevens, Ms.
Rivers, and possibly other members of ACC assisted the eye
surgeons in selecting the proper equipment and setting up
their surgery center. The Cheyenne Eye Surgery Center (the
"Eye Center") opened in 2008. ACC initially
provided anesthesia services at the Eye Center after it
opened. However, ACC also had a contract with CRMC that
required it to provide a certain number of physicians and/or
CRNAs who would be available to cover the hospital's
anesthesiology cases. Thus, it was sometimes difficult to
have enough anesthesiologists to provide coverage for CRMC,
High Plains Surgery Center, and the Eye Center. This meant
that some cases at the Eye Center were missed. Around the
time the Eye Center opened, Ms. Rivers was looking for a
position that would give her shorter hours. Dr. Stevens
suggested to the members of ACC that Ms. Rivers provide
services at the Eye Center when needed, and continue to work
at CRMC a couple of days each week. ACC would bill for her
work there, pay her an hourly rate, and keep the rest of the
income. ACC accepted this arrangement, and Ms. Rivers started
providing services at the Eye Center in April of 2008. Ms.
Rivers was scheduled to be at the Eye Center three days a
week and at the hospital the other two days. There was no
written agreement either between ACC and the Eye Center or
between ACC and Ms. Rivers. However, for the next several
years, ACC billed for Ms. Rivers' services at the Eye
Center, paid her an hourly rate, and kept the rest of the
income. On average, ACC kept slightly more than half of the
income that was generated at the Eye Center.
ACC gave Ms. Rivers minimal, if any benefits, other than
providing billing services. Ms. Rivers' work was directly
supervised by the ophthalmologists at the Eye Center. In May
2009, Ms. Rivers became an employee of Dr. Stevens'
company, High Plains Anesthesia, P.C. When this change
occurred, ACC paid Ms. Rivers' hourly wage to High Plains
Anesthesia instead of directly to Ms. Rivers. High Plains
Anesthesia then paid Ms. Rivers an hourly rate. High Plains
Anesthesia paid Ms. Rivers' worker's compensation and
unemployment premiums and it issued her a W-2 for the income
she received. ACC continued to retain roughly half of the
income from the services Ms. Rivers provided at the Eye
In 2013, the members of ACC executed the Restated Operating
Agreement of Anesthesiology Consultants of Cheyenne, LLC
("Operating Agreement") and a Distribution
Agreement. At the time these documents were executed, Dr.
Stevens was a manager of ACC, along with Dr. Skolnick and Dr.
Wallace. These documents provided that patients would be
assigned to a member of ACC on a random, rotating basis. The
physicians would then pool all of the money they collected
from their cases, and after adjustments were made for group
expenses, the physician members would be paid $25 for every
one "unit of work." The Distribution Agreement set
out how many units of work a physician would be paid for a
certain type of procedure. This system was designed to allow
the physicians to share in the available revenue and
eliminated any incentive to avoid patients in low-paying
categories or to seek out only the best paying cases.
Some anesthesiologists, like Dr. Stevens, receive training in
pain management. Dr. Stevens' practice with ACC included
traditional anesthesia services, as well as pain management.
Most of Dr. Stevens' pain patients were Medicare patients
or patients who were on disability, and ACC was not able to
collect full payments for many of these cases. This meant
that pain management cases were not very profitable for ACC
and did not generate as much income as other types of
procedures. In November of 2013, one of the members of ACC
suggested that the pain management practice should be
divorced from or "carved out" of ACC's shared
A meeting to discuss this "carve out" was held on
November 25, 2013. Prior to the meeting, Dr. Stevens told Dr.
Dorrough that he did not want to carve out the pain practice,
and that he did not believe the members could vote to change
the Distribution Agreement to carve out a specific class of
procedures. Dr. Stevens also expressed this opinion to the
group at the meeting. He proposed that another option would
be for the group to limit the shared revenue to that received
from procedures done at CRMC and High Plains Surgery Center.
He may have also said that Ms. Rivers was "leaving a lot
of money on the table." No official vote was taken at
this meeting, but it was clear that several of the members
believed that the pain practice should be carved out.
On December 10, 2013, Amy Hayes of the Office Assistant,
ACC's billing provider, sent an email to the managers of
ACC, Drs. Stevens, Dorrough, and Skolnick, asking whether the
pain practice was going to be carved out and, if so, what
date that was to begin. She recommended a transition date of
January 1, 2014. Dr. Stevens replied to Ms. Hayes and copied
Drs. Dorrough and Skolnick. He wrote:
In light of the consistent and persistently expressed wishes
of the rest of the group members, and for the purpose of
expressing this to you clearly, I have decided to implement
the "carveout" as follows: I will continue to
personally provide services, through my PC, to the group.
This will encompass all work done at the hospital under the
contract, as well as "traditional" anesthesiology
services at High Plains Surgery Center. All other practice
areas, including "the pain practice", and provision
of services done by myself or employees elsewhere, will be
billed and collected directly through my long-standing
corporation, High Plains Anesthesia, PC, which will make its
own arrangements for contracting, billing, and collecting.
January 1, 2014 will mark the beginning of this separation.
appears that neither Dr. Dorrough nor Dr. Skolnick read this
email when it was initially sent. Dr. Stevens later asked
them if they had received his email and had any questions
about it. They told him that they had received it, and that
everything was okay. Drs. Dorrough and Skolnick later
testified that they believed this email only involved the
voluntary carve out of the pain practice, and they were
amenable to that being carved out as of January 1, 2014.
On January 1, 2014, ACC stopped receiving the income from the
Eye Center, and it was deposited into High Plains
Anesthesia's account. Ms. Rivers continued to work at
CRMC on Mondays and Fridays, and she submitted her invoices
to ACC for this work. These invoices no longer showed her
work at the Eye Center on Tuesdays, Wednesdays, and
Thursdays. The invoices were submitted as they had been in
the past, and they were signed either by Drs. Stevens,
Dorrough, or Skolnick.
On June 20, 2014, Dr. Dorrough noticed that ACC was no longer
receiving the income from the Eye Center. He approached Dr.
Stevens to ask why Ms. Rivers had stopped sending her
invoices for this work to ACC. In response, Dr. Stevens
reminded Dr. Dorrough about his December 11, 2013 email. Dr.
Stevens printed this email for Dr. Dorrough and underlined
the section where he had told them that he would be carving
out all work done by his employees. Dr. Dorrough then
admitted that he had not read the email when it was
originally sent. Dr. Dorrough told Dr. Stevens that he was
going to schedule a meeting so that the situation could be
discussed with all of the members of ACC.
After speaking with Dr. Stevens, Dr. Dorrough went to some of
the members and told them that Dr. Stevens had diverted the
money from the Eye Center to his personal PC without notice.
After speaking with Dr. Dorrough, some of the members
believed that Dr. Stevens had committed a criminal act. The
members held a meeting on July 8, 2014, to discuss the
situation, and they voted 9-3 to expel Dr. Stevens from ACC.
After Dr. Stevens had been expelled from ACC, he informed Dr.
Dorrough that he and Ms. Rivers would like to keep the
business from the Eye Center. Dr. Dorrough wrote an email to
Dr. Skolnick which read in relevant part:
3) Eye Center- [Dr. Stevens] and Cassie would like to keep
the eye center and are wondering what our intentions are? I
see this as not a major deal because in order to make the eye
center profitable for us, we would have to recruit another
CRNA. If we have to bring in more locums in order to keep the
eye center staffed, it may not be much of a benefit to us,
and would certainly generate more friction. (Locums might be
$2, 000/day and the eye center is worth about $1300/day).
Skolnick responded as follows:
I think it's okay to give [Dr. Stevens] the Eye Center,
but I think we still need to keep our hat in the rink. I will
give them a call and clearly state that we don't want to
take over, but if they ever need help or [are] unhappy with
[their] current arrangement that we would maybe be able to
work something out. Thoughts?
In August of 2014, ACC sent Ms. Rivers a letter that her
services were no longer needed at CRMC. After her work with
ACC ceased, Ms. Rivers continued to provide services at the
Eye Center. High Plains Anesthesia continued to bill for her
work, paid her an hourly wage, and kept the rest of the
income. ACC did not actively pursue the Eye Center's
business after expelling Dr. Stevens from the group. One or
more members of ACC did contact the Eye Center to let them
know that ACC was willing to provide anesthesiology services.
However, these communications were characterized as
"advertisements" by Dr. Dorrough, and no one from
ACC ever contacted the Eye Center to inform them that ACC
thought it had an exclusive arrangement with the Eye Center,
and that it was a violation of this agreement to use Ms.
Rivers' services. In addition, ACC did not attempt to
replace Ms. Rivers with another CRNA who could have covered
the Eye Center.
After Dr. Stevens was expelled from ACC, he was no longer
placed on the rotation at CRMC, and he was only allowed to
perform services there if a patient or physician expressly
requested him. In addition, some of the members of ACC
actively discouraged other physicians from requesting Dr.