Dr. Bob Halterman is something of a Midas-in-Reverse. His refusal to pay $38,000 he owed Johnson Regional Medical Center resulted in a $65,000 judgment in favor of the hospital.
When the hospital recruited Dr. Bob, the parties executed three documents: a recruitment agreement, a promissory note for $50,000 plus interest, payable in monthly installments, and an employment agreement. After Bob signed, the hospital advanced him $50,000 as a “Signing Advance.” The recruitment agreement called for forgiveness of the monthly note installments as long as the doctor’s employment continued.
Five months after he started, Dr. Bob sent the hospital a letter resigning, citing a shoulder injury. The hospital responded with a letter accepting the resignation and demanding the $37,895 balance on the note. He didn’t make any payments and began work at another hospital.
When the hospital sued on the note, Dr. Bob removed to federal court. (That’s right: he made a federal case out of it.) His defense was that the three documents were a single contract and that his repayment duty was excused by the hospital’s breach of contract, its fraudulent misrepresentations about on-call requirements, and his shoulder injury. The court gave the hospital summary judgment, awarding it the $37,895 principal, $21,696 in attorneys’ fees, $3,850 in interest, and $1,491 in costs, for a total of $64, 932.
When Dr. Bob appealed, the Eighth Circuit affirmed. Applying Arkansas law, the court ruled that the recruitment agreement and note were a single contract, separate from the employment contract. The court was clearly puzzled by Dr. Bob’s allegations of the hospitals’ breach and misrepresentations and his claim that injury prevented him from performing his employment duties (he had, after all, begun employment at another hospital), but ruled that even if the allegations were true, they didn’t excuse him from repaying the loan. As for the award of attorneys’ fees and costs, the note expressly provided for them.
That’s how you turn a $38,000 debt into a $65,000 debt (not to mention paying your own attorney).
The case is Johnson Regional Med. Center v. Halterman, No. 16-3068 (8th Cir. Aug. 15, 2017).
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