Trial against local hospital focuses on doctor's employment contract

By David Yates | Oct 7, 2009

Buck the "good old boy" system and you'll likely find yourself unemployed. That was the argument plaintiff's attorney Gary Cornwell presented to jurors at the start of a trial over a doctor's contract with a local hospital.

Cornwell pulled no punches in his opening arguments on Wednesday, saying Memorial Hermann Baptist Beaumont Hospital unjustly retaliated against his client, Dr. James Grubbs, by terminating his contract after he reported alleged illegal Medicare billing – which he claims was a common practice at the hospital.

The trial began Monday, Oct. 5, in Jefferson County District Judge Donald Floyd's 172nd Court.

Grubbs, a child psychiatrist, was recruited by the hospital in October 2003. The two parties entered into a one year contract wherein the hospital agreed to financially back Grubbs for one full year while he focused on growing his practice, court papers say.

According to Grubbs' lawsuit, around six months into his stint with Baptist his contract was terminated for his alleged failure to use his "best efforts" to bill and collect as outlined in the contract.

Cornwell called his client's alleged breach of contract a "complete sham," and told jurors the doctor's termination was an act of retaliation for reporting that the hospital and staff did not act in the best interest of patients and illegally billed Medicare for doctor visits that never occurred.

Cornwell said Grubbs, disturbed by the hospital's dubious practices, began writing letters to department heads and even contacted state authorities, including the Texas Medical Board.

Shortly after making the reports, Grubbs said he was notified that he was failing to use his best efforts to bill and collect in accordance with his contract.

Thirty days later, Grubbs was fired, court records show.

"These are very serious allegations against good people," said Baptist Hospital attorney David Bernsen during opening remarks.

He reminded jurors that Cornwell's "harsh statements" are not evidence.

Bernsen said for the months of January and February of 2004, Grubbs failed to collect a single cent from patients he treated.

He also told jurors that Grubbs had not spent any of the $10,000 the hospital loaned him to promote and market his practice, insinuating that perhaps Grubbs was not motivated in growing his practice but was content to milk the hospital for the duration of his contract.

The contract, court records show, called for Baptist Beaumont to reimburse Grubbs up to $20,000 a month for one full year.

Hypothetically speaking, Bernsen said, if Grubbs collected $5,000 in the month of February 2004, then the hospital would be on the line to pay him $15,000 – and if Grubbs made nothing, then Baptist Beaumont would be on the hook for the full $20,000.

Jurors will have to decide if Baptist Hospital "maliciously and purposefully" terminated Grubbs' contract in an act of retaliation, or if the hospital was acting within the guidelines of the contract.

Grubbs is asking jurors to award him what could be millions for lost wages and compensatory as well as punitive damages.

Bernsen is attorney for the Beaumont law firm Moore Landrey.

Cornwell has a practice in Beaumont.

Case No. A173-730

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