Morrison, M.D. v. Delray Medical Center, Inc

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 23-CV-80512-BER

JOHN F. MORRISON, M.D. and

MORRISON CLINIC, P.A.,

Plaintiffs,

v.

DELRAY MEDICAL CENTER, INC., et. al.

Defendants.

__________________________________________/

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S

MOTION FOR PARTIAL JUDGMENT ON THE PLEADINGS (ECF No. 117)

Plaintiffs Dr. John Morrison and his medical practice, Morrison Clinic, P.A.,

(collectively “Dr. Morrison”) sue Delray Medical Center, Inc. (“the Hospital” or

“DMC”) for breach of contract (Count I), FDUTPA (Count II), breach of implied

covenant of good faith and fair dealing (Count III), tortious interference with

prospective business relationships (Counts IV and V), unfair competition (Count

VIII), defamation (Count IX), injurious falsehood (Count X), fraudulent inducement

(Count XI), fraud (Count XII), civil conspiracy (Count XIII), and retaliation for

protected activity under the False Claims Act (Count XIV). ECF Nos. 52 (redacted

Amended Complaint), 166 (revised redactions), 57 (sealed, unredacted).1

1 On April 12, 2024, I reconsidered my prior orders allowing the parties to file certain

documents under seal, which resulted in some filings being unsealed entirely and for

those that remained sealed, significantly reducing the scope of the information that

could be redacted. ECF Nos. 156, 157. In accordance with my order, counsel refiled

The Hospital’s Answer to the Amended Complaint asserted 38 affirmative

defenses. ECF Nos. 65 (redacted Answer), 161 (revised redactions), 69 (sealed,

unredacted). As relevant here, the Twenty-Fifth Affirmative Defense says, “Plaintiffs’

claims are barred, in whole or in part, by the release of such claims in a Settlement

Agreement.” ECF No. 65 at 48. Without waiving its argument that Dr. Morrison’s

claims were released under the Settlement Agreement, the Hospital asserted, in the

alternative, counterclaims against Dr. Morrison for fraudulent inducement and

fraudulent misrepresentation. ECF No. 65 at 51-65.

The Hospital moves for judgment on the pleadings on Counts II, IV, V, VIII,

IX, X and XIII of the Amended Complaint. ECF Nos. 117 (redacted), 162 (revised

redactions), 119-1 (sealed, unredacted). The Hospital says that Dr. Morrison released

these claims as part of a settlement agreement in July 2022.

Dr. Morrison says the Hospital fraudulently induced him into the settlement

agreement, so it should be rescinded. Alternatively, he argues that the settlement

agreement is unenforceable because there was no consideration for the release.

Finally, he says issues of fact preclude a judgment on the pleadings. ECF Nos. 121

(redacted), 168 (revised redactions), 124 (sealed, unredacted).

The Hospital says Dr. Morrison’s assertion that he was fraudulently induced

to sign the settlement agreement fails as a matter of law and as a matter of fact, that

these documents with limited redactions. ECF Nos. 159-163, 165-168.

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Dr. Morrison is estopped from seeking rescission, that there was valid consideration

for the settlement agreement, and that there are no disputed material facts.

I have reviewed the Amended Complaint, the Answer, the Motion, the

Response, the Reply [ECF No. 133-1], the Sur-Reply [ECF No. 137] and the Sur-Sur-

Reply [ECF No. 140]. I held an oral argument on March 20, 2024. I am fully advised

and this matter is ripe for decision. For the following reasons, the Motion for

Judgment on the Pleadings is GRANTED IN PART.

JUDGMENT ON THE PLEADINGS

In ConSeal Int'l Inc. v. Neogen Corp., Judge Bloom thoroughly explained the

law that applies to a Motion for Judgment on the Pleadings:

Federal Rule of Civil Procedure 12(c) states that: “After the pleadings

are closed — but early enough not to delay trial — a party may move for

judgment on the pleadings.” Fed. R. Civ. P. 12(c). “Judgment on the

pleadings is appropriate where there are no material facts in dispute

and the moving party is entitled to judgment as a matter of law.”

Cannon v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001);

see also Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014);

Palmer & Cay, Inc. v. Marsh & McLennan Cos., 404 F.3d 1297, 1303

(11th Cir. 2005); Riccard v. Prudential Ins. Co., 307 F.3d 1277, 1291

(11th Cir. 2002). “A motion for judgment on the pleadings admits the

plaintiff's factual allegations and impels the district court to reach a

legal conclusion based on those facts.” Gachette v. Axis Surplus Ins. Co.,

No. 19-cv-23680, 2020 WL 2850587, at *1 (S.D. Fla. Apr. 1, 2020)

(quoting Dozier v. Prof'l Found. for Heath Care, Inc., 944 F.2d 814, 816

(11th Cir. 1991)).

“Judgment on the pleadings is appropriate only when a party ‘fails to

offer any pertinent defense,’ not when one defense out of many is

challenged.” Pete Vicari Gen. Contractor LLC v. Ohio Cas. Ins. Co., No.

17-23733-CIV, 2018 WL 6308695, at *1 (S.D. Fla. Sept. 27, 2018)

(quoting Vann v. Inst. of Nuclear Power Operations, Inc., No. 1:09-cv-

1169-CC-LTW, 2010 WL 11601718, at *2 (N.D. Ga. July 15, 2010)).

Indeed, “federal courts are unwilling to grant a judgment under Rule

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12(c) unless it is clear that the merits of the controversy can be fairly

and fully decided in this summary manner.” Id. (internal quotation

marks omitted). However, “[i]f it is clear from the pleadings that the

plaintiff is not entitled to relief under any set of facts consistent with the

complaint, the district court should dismiss the complaint.” King v.

Akima Glob. Servs., LLC, 775 F. App'x 617, 620 (11th Cir. 2019) (citing

Horsley v. Rivera, 292 F.3d 695, 700 (11th Cir. 2002)); cf. United States

v. Khan, No. 3:17-cv-965-J-PDB, 2018 WL 6308678, at *1 (M.D. Fla.

Sept. 26, 2018) (“A court must deny a motion for judgment on the

pleadings if a ‘comparison of the averments in the competing pleadings

reveals a material dispute of fact.’ ” (quoting Perez, 774 F.3d at 1335)).

In rendering judgment, a court may consider the substance of the

pleadings and any judicially noticed facts. Cunningham v. Dist.

Attorney's Office for Escambia Cty., 592 F.3d 1237, 1255 (11th Cir.

2010); see also Melendez v. Bank of Am. Corp., No. 17-cv-60542, 2018

WL 1092546, at *1 (S.D. Fla. Feb. 2, 2018) (“The Court may consider all

of the pleadings, including the complaint, answer, counterclaim, and

answer to the counterclaim.” (citing Fla. Evergreen Foliage v. E.I.

DuPont de Nemours & Co., 165 F. Supp. 2d 1345, 1350 (S.D. Fla. 2001))).

“Pleadings include the complaint and answer. Written instruments that

are exhibits to a pleading are considered a part of the pleading.” Pyure

Brands, LLC v. Nascent Health Sci. LLC, No. 1:18-cv-23357, 2019 WL

7945226, at *2 (S.D. Fla. Mar. 4, 2019) (citing Fed. R. Civ. P. 7(a); Fed.

R. Civ. P. 10(c)). “A court may consider documents attached to the

complaint or incorporated by reference without converting the motion

into a motion for summary judgment if the documents are: (1) central to

the complaint, and (2) the documents’ authenticity is not in dispute.”

Eisenberg v. City of Miami Beach, 54 F. Supp. 3d 1312, 1319 (S.D. Fla.

2014) (citing Day v. Taylor, 400 F.3d 1272, 1275-76 (11th Cir. 2005)). “In

particular, the Court may ‘take judicial notice of and consider documents

which are public records.’” Id. (citing Day, 400 F.3d at 1275-76).

Moreover, where a movant relies on or sets forth allegations [that] “were

not presented or contained in the pleadings, including new exhibits, the

Court cannot consider them without converting the motion into a motion

for summary judgment.” Bernath v. Seavey, No. 2:15-cv-358-FtM-99CM,

2015 WL 13805064, at *1 (M.D. Fla. Sept. 29, 2015).

“A motion for judgment on the pleadings is governed by the same

standard as a Rule 12(b)(6) motion to dismiss.” Guarino v. Wyeth LLC,

823 F. Supp. 2d 1289, 1291 (M.D. Fla. 2011). “In determining whether a

party is entitled to judgment on the pleadings, [courts] accept as true all

material facts alleged in the non-moving party's pleading, and [ ] view

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those facts in the light most favorable to the non-moving party.” Perez,

774 F.3d at 1335 (citing Hawthorne v. Mac Adjustment, Inc., 140 F.3d

1367, 1370 (11th Cir. 1998)). A complaint must provide “more than

labels and conclusions, and a formulaic recitation of the elements of a

cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

555 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining

that Rule 8(a)(2) “demands more than an unadorned, the-defendant-

unlawfully-harmed-me accusation”). Nor can a complaint rest on

“‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, 556

U.S. at 678 (quoting Twombly, 550 U.S. at 557). “To survive a motion to

dismiss a complaint must contain sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting

Twombly, 550 U.S. at 570).

ConSeal Int'l Inc. v. Neogen Corp., No. 19-CV-61242, 2020 WL 4736203, at *2–3 (S.D.

Fla. Aug. 14, 2020) (brackets in original).

When a document appended to a pleading conflicts with the allegations in the

Complaint, the document controls. Int'l Star Registry of Illinois v. Omnipoint Mktg.,

LLC, 510 F. Supp. 2d 1015, 1022 (S.D. Fla. 2007) (citing Fayetteville Investors v.

Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991)).2

FACTS3

Dr. Morrison applied for, and received, clinical privileges at the Hospital in

2019. Over the next year, he asked repeatedly to be included in the trauma call. The

2 At oral argument, the parties agreed that the Court could consider any documents

appended to the pleadings or the motion papers. Despite this agreement, and to avoid

converting the pending Motion into a Motion for Summary Judgment, I have only

considered the Amended Complaint, the Hospital’s Answer and Affirmative Defenses,

and the documents attached to them.

3 Unless otherwise noted, these facts are taken from the Amended Complaint and are

viewed in the light most favorable to Dr. Morrison. Citations to paragraphs (“¶”) refer

to the Amended Complaint, ECF No. 52.

5

Hospital and others gave multiple, conflicting, and false reasons to keep him off the

trauma call.

Meanwhile, Dr. Morrison “observed that [other neurosurgeons] engaged in a

practice of diverting patients covered by Medicaid” because those patients were less

lucrative. ¶50. “Dr. Morrison reported these concerns to several [Hospital]

representatives, including but not limited to,” the Chief Medical Officer and the Chief

of the Medical Staff. Id. He also “made reports regarding an inappropriate

relationship between [the Hospital’s] preferred neurosurgery medical device

distributor and the Zucker Defendants.” ¶59. Specifically, he “reported his concerns

that [the Hospital] was submitting false claims for payment to the federal

government to several of his supervisors at [the Hospital], including, but not limited

to the DMC Operating Room Director,” the Chief Medical Officer, the Chief of the

Medical Staff, and the Chief Operating Officer. ¶76.

On June 2, 2022, the Chief of the Medical Staff sent Dr. Morrison an email

declining to meet about Dr. Morrison’s being excluded from trauma call. ¶78. That

same day, Dr. Morrison responded by lodging a report to the Chief of the Medical

Staff and the Chief Medical Officer that he was being unfairly targeted and to report

“Dr. Zucker’s illegal and unethical practices.” ¶81. At that time, Dr. Zucker was the

Hospital’s Chief of Neurosurgery. ¶79.

On or about June 24, 2022, the Hospital sent Dr. Morrison a letter notifying

him that the previous day the Medical Executive Committee (MEC) had imposed a

summary suspension of his Hospital privileges under Section 10.9.1 of the Medical

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Staff Bylaws, based in part on patient care issues. ¶¶83, 85, 86; ECF No. 69-6 at 2-3.

The letter said:

This summary suspension of your clinical privileges is temporary and

effective until the MEC takes action to either terminate, modify, or

continue the suspension, which it will do within 29 days (on or before

Saturday July 23, 2022), pursuant to Sections 10.9.2 and 10.9.4 of the

Bylaws. Consistent with Section 10.9.3 of the Bylaws, you are entitled

to an informal interview with the MEC during and related to your

suspension, where you can provide your position with regard to the

conduct and circumstances at issue.

ECF No. 69-6 at 3. Bylaws Sections 10.9.2 and 10.9.4 had to do with deadlines and

notice. ECF No. 52-1 at 42-43. Section 10.9.3 is captioned “Investigation.” It says:

The MEC, before taking further action, shall conduct the investigation

it deems necessary, which shall include offering the Practitioner an

opportunity to meet with the MEC to respond to the suspension or

restriction and explain his or her position with regard to the conduct or

circumstances at issue. Neither the investigation nor any other

activities of the MEC in determining whether to terminate, modify or

continue the summary suspension or restriction shall constitute a

hearing; they shall be informal, and none of the fair hearing rights under

the Bylaws shall apply. In the event the affected Practitioner resigns his

or her Medical Staff membership or privileges during the course of an

investigation, such resignation shall be reported to the required

regulatory authorities in accordance with state and federal law.

Id. at 42. The letter also said that one basis for the suspension was that the Hospital

had learned material information that Dr. Morrison had not previously disclosed.

¶86, ECF No. 69-6 at 2-3.

On July 7, 2022, DMC’s lawyer “engaged in discussions with” Dr. Morrison’s

lawyer. She said Dr. Morrison was under investigation, and “suggested that the

outcome of the investigation was predetermined against Dr. Morrison, and as a

result, Dr. Morrison should accept a settlement.” ¶89. DMC’s lawyers also sent an e-

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mail to Dr. Morrison’s lawyer, which said “the Medical Executive Committee began

an investigation for issues related to professional competence.” ¶89.

On July 8, 2022, the Chief of Staff invited Dr. Morrison to an informal meeting

with the MEC “to respond to the suspension of your medical staff privileges and to

explain your position with regard to the conduct and circumstances at issue.” ¶91,

ECF No. 69-9 at 2. The letter also said, “Additionally, as part of the MEC’s

investigation pursuant to Section 10.9.3 of the Medical Staff Bylaws, the MEC is

reviewing [an additional patient care issue].” Id.

After the July 8, 2022, invitation to informally respond to the summary

suspension, the Hospital “never corrected the false statements made by [its lawyers].”

¶92. Rather, on July 14, DMC’s lawyer “engaged in another discussion with Mr.

Monaghan in which she continued to press the false premise that Dr. Morrison was

under Investigation.” ¶¶92, 244.

On July 15, 2022, the parties signed a Settlement Agreement. ¶93. The terms

of the agreement included:

• Dr. Morrison waived any rights to hearings or other relief under the

Hospital Bylaws.

• Dr. Morrison agreed to resign from the Hospital Staff by July 20, and

the Hospital agreed to promptly accept the resignation.

• The parties agreed to keep the terms of the settlement and all related

documents confidential from third parties.

• Neither party admitted fault or liability.

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• Dr. Morrison was given an advance copy of a letter that the Hospital

was required to send to government authorities.

• The parties mutually released all claims “known or unknown, in law or

in equity, which [they] ever had, now has, or hereafter can, shall or may

have against [each other], directly or indirectly, from the beginning of

time to the present, solely regarding” Dr. Morrison being given and

potentially losing Hospital privileges and any reporting to governmental

authorities.

• “[N]o promises, representations or warranties of any nature or kind

whatsoever, other than those that maybe specifically set forth herein,

have been made by any Party to any other Party in connection with the

negotiation and execution of this Settlement Agreement.”

ECF No. 69-11 at 3-4. That same day, Dr. Morrison resigned his Hospital privileges.

¶93. On July 21, 2022, the Hospital notified the NPDB that Dr. Morrison had

voluntarily surrendered his privileges. ECF No. 69-2.

DISCUSSION

Fraudulent Inducement

Under Florida law, fraudulent inducement occurs when a party: (1) makes a

false statement of material fact; (2) that it knew or should have known was false, (3)

intending that another person rely on the false statement, and (4) the other party

justifiably relied on the false statement to its detriment. E.g., Prieto v. Smook, Inc.,

97 So. 3d 916, 917 (Fla. Dist. Ct. App. 2012). Fraudulent inducement excuses a party

9

from its obligations under a contract. Mazzoni Farms, Inc. v. E.I. DuPont De Nemours

& Co., 761 So. 2d 306, 313 (Fla. 2000) (“It is axiomatic that fraudulent inducement

renders a contract voidable, not void.”).

Dr. Morrison alleges he justifiably and detrimentally relied on three Hospital

misrepresentations:

• DMC stated that Dr. Morrison was under an Investigation pursuant to

the Bylaws when he was not (FAC ¶¶89-93, 242, 244; Morrison Answer

¶42, Exhs. C, F);

• DMC falsely stated that the outcome of any proceeding would be

predetermined against him, when in reality DMC possessed evidence

exonerating Dr. Morrison (FAC ¶¶89-93, 242, 244; Morrison Answer

¶42, Exhs. C, D, F); and

• DMC was in possession of an independent peer review medical report

clearing Dr. Morrison of any alleged wrongdoing, yet fraudulently

omitted the report to induce Dr. Morrison to sign the Settlement

Agreement (FAC ¶¶89-93, 242, 244; Morrison Answer ¶42, Exhs. C, D,

F).

ECF No. 124 at 13-14. The Hospital denies making any false statement, but says in

the alternative that Dr. Morrison could not have justifiably relied on these

statements, as a matter of law.

Because any reliance on the other party’s false statement must be justifiable,

“[t]o be remediable, a representation must have been of such a nature and made

under such circumstances that the injured party had a right to rely upon it.”

Columbus Hotel Corp. v. Hotel Management Co., 116 Fla. 464, 485-86 (1934)

(emphasis in original).

There can be no ground for complaint against representations where the

hearer lacked the right to rely thereon, because he had reason to doubt

the truth of the representation, as where the transaction was entered

10

into upon the express understanding of both parties that a material fact

might exist of which one of them was ignorant, or where a party has

expressly said that he would not be bound by his representations, or was

obviously hostile to the hearer and interested in misleading him. 12

Ruling Case Law, 352; 26 Corpus Juris, 1141, 1142; Smith v.

Hollingsworth, 85 Fla. 431, 96 So. 394. Even where a representation is

made, if at the time thereof it is accompanied by a qualified statement

which shows that the person making it does not intend that it shall be

relied on, and which is reasonably calculated to suggest independent

inquiry on the part of the person to whom it is made, the latter has no

right to rely on it, and, on being deceived, claim that it was fraud. Am.

& Eng. Ency. of Law, vol. 14, p. 117.

Misrepresentation amounting to fraud that will invalidate a contract

must be made by one contracting party to another in reference to a

matter affecting the contract. The person to whom it is made must not

only believe the false representation to be true, but must be so situated

with respect to what is represented that he, at the time, has the right to

rely upon the truth of the representation as made. This is so, because

the false representation must be material to the contract and must have

induced the contract to be made. When dehors the contract, a false

representation cannot be said to have induced its making, when it was

so made as to carry on its face no right on the part of any one to rely on

its credence. Zavala Land & Water Company v. Tolbert (Tex. Civ. App.)

165 S. W. 28.

Id. at 486–87.4

The Hospital says the Columbus Hotel principle applies to a settlement of any

dispute or controversy. ECF No. 132 at 7. Dr. Morrison says it applies only where

there was actual or threatened litigation. And, Dr. Morrison says there is no evidence

that he threatened the Hospital with litigation involving fraudulent or dishonest

conduct:

4 “Dehors” means “outside the scope of.” DEHORS, Black's Law Dictionary (11th ed.

2019).

11

There is not a single allegation in the FAC (or any of Dr. Morrison’s

pleadings) of any pending or threatened litigation that was settled as

part of the Settlement Agreement, let alone litigation that specifically

involved fraud or dishonesty. The FAC clearly alleges that the

Settlement Agreement arose out of DMC’s purported investigation of Dr.

Morrison’s performance as a doctor—and not anything to do with fraud,

dishonesty, or threatened litigation. (FAC ¶¶ 83- 86, 93).

ECF No. 124 at 20.

The Hospital replies that Dr. Morrison reads the prior precedent too literally

and that the pre-settlement negotiations here included Dr. Morrison’s claims that the

Hospital was acting dishonestly toward him by denying him trauma privileges and

the Hospital was violating the False Claims Act through its billing practices. ECF

No. 132 at 7-8.

Columbus Hotel announced the legal principle that, in some situations, an

alleged fraud victim cannot, as a matter of law, justifiably rely on the alleged

fraudster. Like any other claim or defense, the lack of justifiable reliance can be

proven by circumstantial evidence. Columbus Hotel said circumstantial evidence of

an alleged victim’s lack of justifiable reliance can include (1) the alleged victim

knowing that material facts have not been disclosed, (2) the adverse party saying not

to rely on any representations, (3) the adverse party having a motive to mislead, (4)

the adverse party saying to conduct an independent investigation. Id., 116 Fla. at

486-87.

Applying the Columbus Hotel rule to settlement agreements, a line of binding

Eleventh Circuit cases holds that, as a matter of law, a person represented by counsel

cannot justifiably rely on a statement made by an adverse party who that person has

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accused of fraud or dishonesty. See, e.g., Pettinelli v. Danzig, 722 F.2d 706, 710 (11th

Cir. 1984) (“When negotiating or attempting to compromise an existing controversy

over fraud and dishonesty it is unreasonable to rely on representations made by the

allegedly dishonest parties.”); Green Leaf Nursery v. E.I. DuPont De Nemours & Co.,

341 F.3d 1292, 1305 (11th Cir. 2003) (“Because Plaintiffs were represented by

counsel, were in an antagonistic and distrusting relationship with DuPont, and

settled litigation that included accusations of fraud and other dishonest conduct by

DuPont, Plaintiffs could not reasonably or justifiably rely on any of DuPont's

misrepresentations.”); Mergens v. Dreyfoos, 166 F.3d 1114, 1118 (11th Cir. 1999) (no

justifiable reliance where plaintiff was sophisticated litigant represented by counsel,

parties had an adversarial relationship, and parties were settling a potential lawsuit

that would have included allegations of fraud); Affliati Network, Inc. v. Wanamaker,

847 F. App’x 583, 586-87 (11th Cir. 2021) (“[W]hat was central to our analysis in

[Mergens and Green Leaf] was that the plaintiffs were represented by counsel, ‘in an

antagonistic and distrusting relationship’ with the defendants, and had settled

litigation, or threatened litigation, ‘that included accusations of fraud and other

dishonest conduct.’”). These cases looked to circumstantial evidence such as whether

the parties were represented by counsel, the plaintiff was told not to rely on any

representations, the parties had an adversarial relationship, and whether the

settlement agreement included a merger clause. Although they involve litigation,

several cases talk about the parties resolving a “controversy,” Mergens, 166 F.3d at

1118, or a “dispute.” Affliati, 847 Fed. Appx at 586 (quoting Green Leaf).

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Taken together, these cases stand for an unsurprising proposition — whether

a party justifiably relied on a false representation is evaluated under the totality of

the circumstances and can be established through circumstantial evidence. Accord

M/I Schottenstein Homes, Inc. v. Azam, 813 So. 2d 91, 95 (Fla. 2002) (In deciding

whether justifiable reliance exists, courts should consider “the totality of the

circumstances surrounding the type of information, the nature of the communication

between the parties, and the relative positions of the parties.”). Although pending or

threatened litigation is one piece of circumstantial evidence, it is not required in every

case.

The Eleventh Circuit’s most recent decision, Affliati, provides additional

support for the conclusion that Dr. Morrison reads Columbus Hotel too narrowly. In

Affliati, the parties settled a filed lawsuit in which there had been counterclaims

based on alleged fraudulent advertising practices and misappropriation of

intellectual property. The plaintiff later sued for breach of the confidentiality and

non-disparagement provisions of the settlement agreement. The defendant filed a

counterclaim to void the settlement agreement based on fraudulent inducement, in

particular, allegedly false statements by plaintiff’s counsel during discovery. The trial

court dismissed the counterclaims based on Columbus Hotel.

The Eleventh Circuit affirmed. It reaffirmed “the well-established and common

sense principle of law espoused in Columbus Hotel and its progeny: generally, adverse

parties negotiating a settlement agreement in an attempt to avoid litigation cannot

rely upon the representations of one another.” Affliati, 847 Fed. Appx. at 588 (quoting

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Moriber v. Dreiling, 194 So. 3d. 369, 374 (Fla. Dist. Ct. App. 2016). Affliati also said

it was not necessary to have “an exact parallel between the fraud claims resolved by

a settlement agreement and those alleged to have induced the settlement.” Id., at

587. It noted, “What was central to our analysis in [Mergens and Green Leaf] was that

the plaintiffs were represented by counsel, ‘in an antagonistic and distrusting

relationship’ with the defendants, and had settled litigation, or threatened litigation,

‘that included accusations of fraud and other dishonest conduct.’” Id. Notably, the

Eleventh Circuit never said that these factors were necessary in all cases; it merely

said they were sufficient in Mergens and Green Leaf.

So, the question before this Court is whether, viewing the pleadings in the light

most favorable to Dr. Morrison, he could have justifiably relied on the Hospital’s

alleged misrepresentations. As a matter of law, he could not.

This case fits squarely within the Mergens/Green Leaf framework. First, Dr.

Morrison was represented by counsel. Second, he was in an antagonistic posture to

the Hospital. Third, a sufficient “dispute” or “controversy” existed. When the

Settlement Agreement was negotiated, Dr. Morrison was clearly in an antagonistic

and distrusting relationship with the Hospital. He had accused the Hospital of

violating the False Claims Act, ¶76, and had told the Hospital that Dr. Zucker was

engaging in illegal and unethical practices, ¶81. Although he had not overtly

threatened to file a qui tam action, the Hospital reasonably could have inferred that

threat.

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Additionally, the Hospital had initiated a peer review process under its Bylaws

that was analogous to litigation in a court. Dr. Morrison had been formally notified

that his Hospital privileges were at risk. He had been invited to provide evidence at

an informal meeting. Had that process proceeded, it potentially included a hearing

with sworn testimony, a right to be represented by counsel, appeal procedures within

the Hospital, and judicial review. See ECF No. 52-1, Articles 10 and 11; see also, e.g.,

Genchi v. Lower Fla. Keys Hosp. Dist., 45 So. 3d 915, 917 (Fla. Dist. Ct. App. 2010)

(doctor sued hospital for wrongfully terminating staff privileges). This situation

independently was a sufficient “dispute” or “controversy.”

Additional circumstantial evidence also weighs against a finding of justifiable

reliance. The Settlement Agreement contained a non-reliance clause and a merger

clause. Dr. Morrison believed that the Hospital was conspiring to keep him off of

trauma call and was giving him false reasons why he could not have that call. The

Amended Complaint clearly pleads that Dr. Morrison believed the Hospital was

dishonest and was making untruthful statements.

Even when viewed in the light most favorable to Dr. Morrison, the totality of

the circumstantial evidence compels a finding that he had no right to rely on the

Hospital’s alleged false representations. Dr. Morrison cannot rescind the Settlement

Agreement based on fraudulent inducement.

Consideration

Dr. Morrison argues that even if the Settlement Agreement cannot be

rescinded, it is unenforceable because it lacked consideration. He says he has

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plausibly alleged a lack of consideration. ECF No. 121 at 25-26. In the alternative, he

says the existence (or not) of consideration is a disputed issue of fact that precludes

judgment on the pleadings.

“For there to be an enforceable contract, ‘there must be an offer, an acceptance,

consideration, and sufficient specification of terms so that the obligations involved

can be ascertained.” W. Const., Inc. v. Fla. Blacktop, Inc., 88 So. 3d 301, 304 (Fla.

Dist. Ct. App. 2012) (citation omitted). “A promise, no matter how slight, qualifies as

consideration if the promisor agrees to do something that he or she is not already

obligated to do.” Cintas Corp. No. 2 v. Schwalier, 901 So. 2d 307, 309 (Fla. Dist. Ct.

App. 2005) (further citation omitted). Consideration also exists if a person agrees not

to do something they otherwise would have the right to do, or agrees to modify the

existing legal relationship between the parties. See, e.g., Consideration, Black's Law

Dictionary (11th ed. 2019) (“Something (such as an act, a forbearance, or a return

promise) bargained for and received by a promisor from a promisee; that which

motivates a person to do something, esp. to engage in a legal act.”); Restatement

(Second) of Contracts § 71 (1981) (“The performance may consist of (a) an act other

than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction

of a legal relation.”).

In the Settlement Agreement, Dr. Morrison released

[any claims] which Morrison ever had, now has, or hereafter can, shall

or may have against DMC, directly or indirectly, from the beginning of

time to the present, solely regarding the Credentialing and Peer Review

Activities and the Summary Suspension, and including the expiration of

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Dr. Morrison's Medical Staff membership and the Hospital's resulting

report(s) to the National Practitioner Data Bank.

ECF No. 69-11 ¶7. The Hospital’s Motion says Dr. Morrison received the following

consideration: (1) the Hospital released any present or future claims against him,

including the claims now asserted as Counterclaims in this litigation,5 (2) he received

an advance copy of the NPDB report, and (3) the Hospital promptly accepted his

resignation. ECF No. 119-1 at 32-38.6

The Amended Complaint makes three arguments why there was no

consideration for this release. It alleges “DMC had no actual or potential claims

against Dr. Morrison that were released or could have been released by virtue of the

Settlement Agreement. In addition, Dr. Morrison received no benefit through the

NPDB reporting process . . . [because] Dr. Morrison had no influence whatsoever over

5 As part of the Settlement Agreement, the Hospital released any past, present, or

future claims it might have against Dr. Morrison:

[DMC releases claims it] ever had, now has, or hereafter can, shall or

may have against Morrison, directly or indirectly, from the beginning of

time to the present, solely regarding the Credentialing and Peer Review

Activities and the Summary Suspension, and including the expiration of

Dr. Morrison's Medical Staff membership and the Hospital's resulting

report(s) to the National Practitioner Data Bank.

ECF No. 69-11 ¶8.

6 At oral argument, the Hospital said other consideration existed beyond what was

listed in the Motion. The Court will not consider these additional alleged

considerations because they were not raised in the Hospital’s briefing. See Lanier v.

City of Miami, No. 23-CV-22510, 2023 WL 8527177, at *9, n.4 (S.D. Fla. Dec. 8, 2023)

(declining to consider arguments raised for the first time in post-briefing hearing).

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the content of any report to the NPDB.” ¶94. It further pleads, “Dr. Morrison also did

not gain the benefit of avoiding Investigation by the Settlement Agreement. Had Dr.

Morrison simply resigned on July 15 without an accompanying Settlement

Agreement, further administrative action under the Bylaws would have stopped and

the same NPDB reporting requirements would have applied.” ¶95.

Dr. Morrison also points to the following statements in Paragraph 94 of the

Amended Complaint:

• “the Settlement Agreement does not provide Dr. Morrison with any

consideration and is thus unenforceable for lack of consideration.”

• “DMC had no actual or potential claims against Dr. Morrison that were

released or could have been released by virtue of the Settlement

Agreement.”

ECF No. 121 at 25 (quoting FAC ¶94). He says the latter statement creates a disputed

issue of fact that precludes judgment on the pleadings. He also notes the Hospital did

not allege its current Counterclaims during the settlement negotiations. Id. at 26. He

further argues that the Hospital’s counterclaims lack merit. ECF No. 121 at 26-27.

Finally, Dr. Morrison says that seeing the NPDB report beforehand is not

consideration because that action predated the Settlement Agreement. As such, “Dr.

Morrison already had the alleged ‘benefit’ before even signing the Settlement

Agreement and such benefit could not, therefore, constitute consideration for entering

into the Settlement Agreement.” ECF No. 124 at 28.

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In its Reply, the Hospital says (1) the allegations in paragraph 94 of the

Amended Complaint are legal conclusions not entitled to the assumption of truth, (2)

its potential claims against Dr. Morrison were objectively colorable, so agreeing to

forego them was sufficient consideration, (3) “purchasing peace” by extinguishing any

past and future claims is sufficient consideration, and (4) the timing of the benefit is

irrelevant if it is understood by the parties to be part of the negotiated bargain. ECF

No. 132 at 12-17.

The allegation in Paragraph 94 of the Amended Complaint that “the

Settlement Agreement does not provide Dr. Morrison with any consideration and is

thus unenforceable for lack of consideration” is a legal conclusion not entitled to the

assumption of truth. I need not resolve whether the other allegation in Paragraph 94

creates a disputed issue of fact because there is consideration even if the Hospital has

no current claims against Dr. Morrison.

It is irrelevant to the consideration question whether the Hospital has current

actual or potential claims against Dr. Morrison. The parties negotiated a broader

release. The Hospital gave up its right to sue Dr. Morrison for any claim it “ever had,

now has, or hereafter can, shall or may have . . . solely regarding the Credentialing

and Peer Review Activities and the Summary Suspension, and including the

expiration of Dr. Morrison's Medical Staff membership and the Hospital’s resulting

report(s) to the National Practitioner Data Bank.” This release “purchased peace” for

Dr. Morrison because he got the bargained-for right not to have to incur the cost and

time of litigating against the Hospital in the future. For the same reason, I reject Dr.

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Morrison’s argument that there is no consideration because the Hospital’s

counterclaims are meritless. Whether or not they are meritless, Dr. Morrison

bargained for the right not to have to litigate them, which was a benefit to him and

was valid consideration for his release.

The Hospital allowing Dr. Morrison to see the NPDB report before it was filed

was also valid consideration for his release. The Hospital was not required to show

the report to Dr. Morrison in advance.

The fact that Dr. Morrison saw the report before the Settlement Agreement

was finalized does not affect whether seeing it was valid consideration. Dr. Morrison

was notified of his suspension on June 24, 2022. ECF No. 69-6. By July 7, the parties

were negotiating a settlement. ECF No. 69-12 at 5. That day, the Hospital’s counsel

sent Dr. Morrison’s counsel proposed NPDB reporting language. Id. Thereafter, as

part of a thread of settlement negotiation emails, on July 13, the lawyers exchanged

proposed NPDB language. Id. at 4. On July 14, in an email marked “For Settlement

Purposes Only,” the Hospital’s counsel sent Dr. Morrison’s counsel a draft of the

NPDB Report that would be filed if Dr. Morrison resigned. Id. at 7. The Settlement

Agreement was executed the next day, on July 15, and included a term relating to

the NPDB Report:

The Parties agree and understand that the Resignation constitutes a

reportable event to federal and state authorities. The Parties further

understand that the Hospital has solely determined the form and

content of the report and has communicated the language of the report

to Dr. Morrison’s legal counsel in a separate correspondence, which shall

be considered a part of this Settlement Agreement.

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ECF No. 69-11 ¶6. Clearly, the right to see the NPDB Report in advance was

negotiated as part of the overall settlement discussions and was then memorialized

by Settlement Agreement. See Andrade v. Blueware, Inc., No. 6:13-CV-1507-ORL-41,

2015 WL 2415690, at *2 n.3 (M.D. Fla. May 20, 2015).

Valid consideration existed for Dr. Morrison’s release, so that release is

enforceable.

Scope of Release

Although the Release is enforceable, the Amended Complaint plausibly pleads

some claims that fall outside the scope of the Release. To recap, the Release covered:

Dr. Morrison, and his heirs, executors, personal representatives, agents,

attorneys, accountants, successors, assigns, and other representatives

(collectively "Morrison"), for and in consideration of the promises and

mutual agreements contained in this Agreement, received from or on

behalf of the Hospital, and its present and former officers, directors,

employees, agents, attorneys, accountants, auditors, predecessors, and

its Governing Board, Administration, Medical Executive Committee and

Medical Staff (collectively "DMC"), the receipt whereof is hereby

acknowledged, hereby remises, releases, covenants not to sue, acquits,

satisfies, and forever discharges DMC, of and from all, and all manner

of action and actions, cause and causes of action, suits, debts, dues, sums

of money, accounts, reckonings, bonds, bills, specialties, covenants,

contracts, controversies, agreements, promises, variances, trespasses,

damages, judgments, executions, claims and demands whatsoever,

known or unknown, in law or in equity, which Morrison ever had, now

has, or hereafter can, shall or may have against DMC, directly or

indirectly, from the beginning of time to the present, solely regarding

the Credentialing and Peer Review Activities and the Summary

Suspension, and including the expiration of Dr. Morrison's Medical Staff

membership and the Hospital's resulting report(s) to the National

Practitioner Data Bank. This Agreement is not intended to release and

does not release any other claims, causes of action, obligations, rights,

liabilities, statutory or contractual duties and/or obligations of any kind

or nature whatsoever, including, but not limited to, any potential

malpractice claims, liabilities, causes of action, lawsuits, or any other

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proceedings arising from the care and treatment of patients at the

Hospital, including, without limitation, Dr. Morrison's care and

treatment with respect to Medical Record numbers 671496, 713109,

668176, 687919, and 717126.

ECF No. 69-11 at 3-4. As relevant here, it is limited to matters “regarding the

Credentialing and Peer Review Activities and the Summary Suspension, and

including the expiration of Dr. Morrison's Medical Staff membership and the

Hospital's resulting report(s) to the National Practitioner Data Bank.”

Count II alleges that the Hospital violated FDUTPA by excluding Dr. Morrison

from trauma call, filing a false NPDB Report, retaliating against Dr. Morrison for

filing complaints, fraudulently inducing Dr. Morrison to resign from the Hospital

staff, and not referring certain non-Medicaid patients to Dr. Morrison. ¶133. Any

FDUTPA claim based on the NPDB Report and Dr. Morrison’s resignation were

released. I cannot say on the present record that the remaining FDUTPA claims fall

within the scope of the release. At a minimum, there are disputed issues of fact on

that question.

Counts IV and V allege tortious interference based on fraudulently inducing

Dr. Morrison to resign and filing false reports with the NPDB. ¶¶ 154, 167. These

claims were released.

Count VIII alleges the Hospital and others conspired “to abuse the peer review

process . . . to initiate sham proceedings against Dr. Morrison based on a false premise

and then use fraud to coerce Dr. Morrison to resign.” ¶195. It further alleges that the

Hospital and others falsely told patients that Dr. Morrison was intoxicated in the

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operating room and was arrested for driving while intoxicated. Id. Any unfair

competition claim based on the peer review process and Dr. Morrison’s resignation

were released. I cannot say on the present record that the remaining unfair

competition claims fall within the scope of the release. At a minimum, there are

disputed issues of fact on that question.

Count IX alleges that the Hospital defamed Dr. Morrison by submitting false

reports to the NPDB. ¶201. It further alleges that the Hospital falsely told patients

that Dr. Morrison was intoxicated in the operating room and was arrested for driving

while intoxicated. ¶213. Count X alleges injurious falsehood based on the same facts

alleged in Count IX. ¶¶220, 229. Any defamation or injurious falsehood claim based

on the NPDB reporting was released. I cannot say on the present record that the

remaining defamation and injurious falsehood claims fall within the scope of the

release. At a minimum, there are disputed issues of fact on that question.

Count XIII alleges the Hospital was part of a civil conspiracy. One object of the

alleged conspiracy was to file a false report with the NPDB. ¶258 (incorporating ¶¶

96-104). The other object was to pretextually exclude him from trauma call. Id.

(incorporating ¶¶ 39-66). Any civil conspiracy based on the NPBD reporting was

released. I cannot say on the present record that Dr. Morrison released a civil

conspiracy claim based on being pretextually excluded from trauma call. At a

minimum, there are disputed issues of fact on that question.

Although not entirely clear, it also appears that Count XIII incorporates all

other counts in the Amended Complaint as objects of the conspiracy. To the extent

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Count XIII says that Counts II, IV, V, VIII, IX, and X are objects of the conspiracy,

the rulings above for those Counts apply equally to Count XIII.

CONCLUSION

Judgment on the Pleadings is GRANTED IN PART AND DENIED IN PART

on the Hospital’s 25th Affirmative Defense. Counts IV and V are dismissed with

prejudice.

DONE and ORDERED in Chambers this 19th day of April, 2024, at West

Palm Beach in the Southern District of Florida.

BRUCE E. REINHART

UNITED STATES MAGISTRATE JUDGE

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