                  IN THE COURT OF APPEALS OF TENNESSEE
                             AT KNOXVILLE
                                   October 16, 2003 Session

CARL A. LINDBLAD, M.D., v. PARKRIDGE HEALTH SYSTEM, INC., ET
                              AL.

                      Appeal from the Circuit Court for Hamilton County
                         No. 99C2383     W. Neil Thomas, III, Judge



                                  No. E2003-00221-COA-R3-CV


The Plaintiff resigned his position as Director of the hospital’s emergency services. Parkridge Health
System, Inc. d/b/a East Ridge Hospital, [hereafter “the hospital” or “Defendant”] accepted his
resignation and terminated his staff privileges in accordance with an employment Agreement. The
hospital’s bylaws required notice and hearing, which were not followed. The Plaintiff filed this
action asserting that in failing to observe its bylaws the hospital breached its contract with him since
the bylaws were an integral part of the contract. The Chancellor granted the hospital’s motion for
summary judgment, holding that the Agreement, which provided for termination of staff privileges
controlled the issue. We affirm.

      Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

WILLIAM H. INMAN , SR. J., delivered the opinion of the court, in which HERSCHEL P. FRANKS and
CHARLES D. SUSANO, JR., JJ, joined.

Larry L. Crain, Brentwood, Tennessee, attorney for appellant, Carl A. Lindblad.

Sue E. Scruggs and C. Eugene Shiles, Chattanooga, Tennessee, attorneys for appellee, Parkridge
Health Systems, Inc. d/b/a East Ridge Hospital.

                                              OPINION

       At relevant times the Plaintiff was a licensed physician, and the Director of the Defendant
hospital’s emergency room. He was the sole shareholder of a corporation styled Associates in
Emergency Medicine [hereafter “Associates”], chartered in 1995. His practice was limited to
providing emergency medical treatment at the hospital; he had no private patients, and he neither
sought nor obtained admitting or attending privileges at the hospital.

       In July 1999, he ordered, apparently sub rosa, a quantity of narcotic drugs from Henry
Schein, Inc., a distributor of medical supplies and medications, which were delivered to him, by
parcel post, at the hospital.1 The package was discovered by hospital personnel who opened it, and
examined the contents which were later delivered to the Plaintiff.

        Narcotic drugs are closely regulated by state and federal law, as well as by hospital policy
which prohibits the acquisition or dispensing of drugs except in strict compliance with the applicable
laws, regulations, and policies of the hospital.

        For the purpose of ascertaining from the plaintiff the purpose and intended use of these drugs
a meeting was held, on August 13, 1999, with members of the hospital’s Pharmacy and Therapeutics
Committee in attendance. Present were Brenda Waltz, (CEO of the hospital); Dr. America Jones,
(Director of Pharmacy); Dr. Donald Hartsfield, who was the Chair of the Committee, and the
Plaintiff. The Plaintiff was informed that an explanation of the matter was necessary because, inter
alia, the quantity of the drugs delivered to him exceeded the amount of the same drugs in the
pharmacy’s inventory, and his acquisition of these drugs was violative of hospital policy.

        The Plaintiff stated that he bought the drugs “to keep around the house for family, friends”,
as well as neighbors. Dr. Hartsfield testified that Dr. Lindblad said that he had obtained the drugs
to do his friends a favor. It developed that Dr. Lindblad had previously purchased drugs from the
same source. He admitted in his deposition that he did not establish a doctor-patient relationship
with family, friends or neighbors prior to dispensing drugs/medications and did not maintain any
documentation of his dispensation of drugs. According to Dr. Hartsfield, when the Plaintiff was
informed by the Director of Pharmacy that he could not take delivery of controlled substances at the
hospital, he became defensive and stated that “as a physician he could do what he wanted to with the
drugs.” Dr. Jones described Plaintiff’s response as “belligerent, very angry, defensive and [he]
threatened me.” Dr. Hartsfield testified that “[h]e didn’t give us a clear sense that he was not going
to cease getting controlled substances.” Dr. Jones was concerned because, as she testified, “. . . Joint
Commission for Accreditation of Hospitals makes me solely responsible for every medication that
flows through the hospital”, including samples brought by doctors from their offices.

       The Plaintiff’s response and the hospital’s concern about the large quantity of drugs ordered
by the Plaintiff and delivered to the hospital resulted in Ms. Waltz informing the Plaintiff that he
should find other physicians to take his shifts until the drug situation was clarified, but Associates
continued to provide exclusive services to the hospital’s emergency department. The Plaintiff did
not protest arrangements and agreed that he would not work. Apparently, this temporary
arrangement did not constitute disciplinary action under the bylaws but was taken pursuant to and
consistent with ¶ 1.4 of the Professional Services Agreement [“Agreement”], hereafter discussed.

        On the same day of the Committee meeting, Ms. Waltz contacted Dr. Gary Olbrich, the
Medical Director of the Medical Foundation Physicians Health Program, more commonly known
as the “Tennessee Impaired Physician’s Program”, who agreed to confer with the Plaintiff, and did


        1
           The drugs includ ed 500 X anax 200 mg. tab lets, a Schedule IV drug, 500 hydro cod one ASA P tab lets, a
Schedule II drug, one pint of hydrocodone syrup, and one pint of hydrocodone with homatropine syrup.

                                                       -2-
so, six days later. The initial assessment by Dr. Olbrich included a psychosocial evaluation, as well
as an addiction medicine evaluation, but with no actual drug screening. Dr. Olbrich testified that he
found the Plaintiff to be forthcoming and not an immediate risk to return to work; he testified that
he routinely asks hospitals to give physicians within the program “a medical leave of absence
pending review of the circumstances.” To form a reasoned opinion about the Plaintiff’s conduct and
perhaps facilitate his return to the hospital, Dr. Olbrich had the following discussion with the
Plaintiff:

               Q.      What did you tell Dr. Lindblad as far as your understanding
                       to get back to the hospital administration?

               A.      I asked him - well, we discussed several options. As I told
                       him, that based on the information that I had been able to
                       obtain from him, I saw no particular reason to tell that we had
                       any collating [sic] information to indicate that he might be a
                       substance abuser or have a chemical dependency. There was,
                       however, the allegation that he had received a large amount of
                       mood-altering drugs, for what purpose, we don’t know and
                       that it would be in his best interest to help resolve the
                       difficulty and preserve his reputation if we could establish
                       that beyond just my word and our interview that there was no
                       evidence of chemical dependency. I don’t know – I honestly
                       don’t remember specifically what I discussed with Dr.
                       Lindblad, but the options usually are to ask them – they –
                       someone like this who has a low level of suspicion, I would
                       offer them the opportunity to do random urine drug screens
                       over a period of time, usually a year, to determine – and
                       almost without question if someone is chemically-dependent,
                       we will catch them with the use of – an inappropriate use of
                       a mood-altering drug during that time. An extreme form
                       would be – you know, the ultimate form actually is to go into
                       a 3-5 day residential evaluation where you have a team of
                       assessors. And I’m certain based on the information I
                       received that I did not say he needed that unless he might
                       need that to satisfy people who were concerned about him.

        Questions hovered nevertheless, not only about whether Dr. Lindblad might be a drug abuser,
but whether he might have improperly distributed drugs to others. In an earlier telephone
conversation secretly recorded by the Plaintiff between Dr. Olbrich and himself, Dr Olbrich appeared
to be alarmed about the Plaintiff’s activities:

               Plaintiff:      First off, I wanted to let you know that I don’t have a
                               “problem”. I don’t take drugs, I don’t use alcohol,


                                                 -3-
               although I did have a toasted almond in the Bahamas
               three weeks ago. People may consider that . . .

Dr. Olbrich:   Tell me why so many – such large amounts of drugs
               were ordered.

Plaintiff:     Well, you know, I ordered them because they were
               cheaper to order them that way, that’s the only reason.

Dr. Olbrich:   You ordered them for the Emergency Room:

Plaintiff:     No, no, I just keep them around the use for my
               neighbors, friends, things like that.

Dr. Olbrich:   Well, I’ve got a problem with that, too, but we’ll talk
               about that later.

Plaintiff:     Yeah, okay. Yeah, okay. What – what I didn’t
               understand was that the hospital had turned me in for
               – for what? I mean, is it just the drugs or what?

Dr. Olbrich:   Well, apparently, they were concerned about you.

Plaintiff:     Uh huh.

Dr. Orbrich:   Well, it’s a long, complicated story.

Plaintiff:     Right.

Dr. Orbrich:   It’s not okay to be prescribing for friends, neighbors,
               family and whatever.

Plaintiff:     Uh huh.

Dr. Orbrich:   That’s simply not okay.

Plaintiff:     Right.

Dr. Orbrich:   Particularly in this state. And that’s the antibiotics or
               anything – certainly scheduled drugs.

Plaintiff:     Right.



                                 -4-
Dr. Orbrich:   And they were just real concerned about what was
               going on.

Plaintiff:     Right.

Dr. Orbrich:   It looked like drug trafficking, it could look like there
               was an addiction with you or some member of your
               team.

Plaintiff:     Right

Dr. Orbrich:   They just felt a real – and I would confirm –
               responsibility to investigate it.

Plaintiff:     Well, I’m the one who went to the DEA. I don’t
               know if they called or not, but I went to the DEA,
               myself.

Dr. Orbrich:   Okay.

Plaintiff:     Because I wanted to know if there was some kind of
               legal problem - you know, am I breaking some kind of
               law or something? I mean, if I was . . . .

Dr. Orbrich:   If the Court of Medical Examiners found out you were
               ordering these and giving them to non-patients, your
               license would be in real jeopardy.

Plaintiff:     Right, well, I even told them that I would flush them
               down the toilet for all I care. I mean, it’s not that
               important for me. I don’t need them. I just keep them
               around for the convenience of myself and other
               people. And actually, I guess the reason I even order
               any of that stuff, even the antibiotics and every thing
               else that went with it, of course, was that nobody
               details anything anymore. It used to be everybody
               kept all this stuff around all the time, and now they
               don’t even . . .

Dr. Orbrich:   . . . . in all fairness, Doctor, not in large quantities like
               that.

Plaintiff:     Uh huh.


                                   -5-
               Dr. Orbrich:    You know, they might take some samples home from
                               work, or they might have a prescription for
                               Hydrocodone or might have a little bit of cough syrup,
                               but you know, you’ve got enough there to get a lot of
                               people pretty high.

               Plaintiff:      Well, you know, in retrospect, it was a lot, but it was
                               cheaper to buy them that way, so I got them that way,
                               you know, but . . . .

               Dr. Orbrich:    That’s showing me a lot of naivete.

       The day after Dr. Olbrich met with Dr. Lindblad and discussed the hospital’s legitimate
concerns and how they might be alleviated, including the use of drug testing, the Plaintiff, on behalf
of his corporation voluntarily terminated the Agreement, including the Exclusive Provider
Agreement, for emergency services with the hospital. The effective termination date was August
24, 1999. Thereafter the Plaintiff secreted the drugs and then flushed them down the toilet. In
describing these actions, Dr. Lindblad in his deposition stated:

               A:      Yeah. So I took them home. And, to be perfectly honest with
                       you – I don’t want to be negative, too negative, about this;
                       but, to be perfectly honest with you, I didn’t know what HCA
                       would do, so I hid them. I hid them for about four months.
                       Then I wasn’t going to use them, so I threw them away.

               Q:      Threw them away. Where?

               A:      In the toilet.

       In response to Plaintiff’s cancellation of the Agreements the hospital sent Plaintiff a letter
accepting the termination of the Agreement and, citing the Exclusive Provider Agreement,
(Addendum 1) advising him that his medical staff privileges were terminated. The Exclusive
Provider Agreement provided for the termination of staff membership and privileges of any of
Associates’ representative after the Agreement had been terminated for any reason.

        The Plaintiff had no further contact with the hospital after he terminated the Agreement. He
did not indicate that he considered the termination of his privileges or any other action/position of
the hospital as adverse or disciplinary, and did not request a hearing under the bylaws.

       This action was filed December 27, 1999 as amended on March 25, 2002 to join Associates
in Emergency Medicine as a party Plaintiff, alleging that the Defendant (1) wrongfully revoked his
hospital privileges, (2) deliberately interfered with his livelihood, (3) defrauded him, and (4)


                                                 -6-
breached his contract. He alleged that through his physician group (AEM), he entered into a
Professional Services Agreement to render professional emergency services at the hospital, effective
July 1, 1994, for a period of five years, and that he resigned August 24, 1999.

       He further alleged that he did not forfeit or surrender his clinical privileges as a staff
physician at the hospital, because under the bylaws clinical privileges cannot be terminated without
due process, i.e., notice and hearing, which was not accorded him. He alleged that the Defendant
Waltz sent him a letter terminating his staff membership and clinical privileges effective August 24,
1999.

        He alleged that on August 13, 1999 he was summoned to the office of CEO Baltz who, with
others, confronted him about a package addressed to him which “contained an order of common
medications of the type routinely ordered by physicians.” He was informed by Ms. Baltz that he
could no longer work at the hospital pending an investigation, and that at no time was he afforded
a hearing as required by the bylaws. He learned from Dr. Olbrich that the Defendants accused him
of suspected drug abuse, drug trafficking, and using the hospital’s DEA number to order drugs.

       The Defendants filed an answer alleging that the Plaintiff resigned his position as of August
24, 1999 following which his medical staff privileges were terminated as contractually provided.
The answer was amended to assert that Ms. Waltz was immune from liability pursuant to a specific
provision of the hospital bylaws. Further, the hospital alleged that if its conduct was “adverse”,
within the meaning of its bylaws, the actions barred because the Plaintiff failed to exhaust his
administrative remedies afforded by the bylaws.

       On March 5, 2002 the Defendants filed a joint motion for summary judgment alleging the
absence of any genuine issues of material fact and that the Defendants were entitled to judgment as
a matter of law.

       The trial judge filed a memorandum opinion, which, as excerpted, found:

                       The plaintiff is a licensed practicing medical doctor who was
               the physician director of the emergency room of East Ridge Hospital
               (“East Ridge”). He limited his practice to providing emergency
               medicine at East Ridge and had no private practice or patients of his
               own. His privileges were limited to the practice of emergency
               medicine. The plaintiff was the sole owner of Associates in
               Emergency Medicine (“Associates”), a corporation which in 1995
               contracted with the hospital to be the exclusive provider of
               emergency room services at East Ridge. East Ridge and Associates
               entered into a Professional Services Agreement to provide emergency
               medicine on March 24, 1995, and an Addendum on January 10, 1996
               (hereinafter both of which are referred to as the “Agreement”). The



                                                -7-
term of the Agreement was from July 1, 1994, to June 30, 1999, and
was not renewed. Section 3.2 of the Agreement provides as follows:
Either party may terminate this Agreement, without cause, by
providing no less than 60 (sixty) days’ prior written notice stating the
intended day of termination, which shall occur not sooner than the
first annual anniversary of Effective Date.

The Addendum to the Agreement provides in [S]ection 6 as follows:

       Upon the termination of this Agreement for any
       reason, Facility may terminate or other wise qualify or
       limit the medical staff membership and/or clinical
       privileges of any or all of Contractor’s
       Representatives. Further, upon any severance of the
       affiliation between Contractor and a Contractor’s
       Representative, Facility may terminate or otherwise
       qualify or limit the medical staff membership and/or
       clinical privileges of such Contractor’s
       Representative. The rights of Facility under this
       Section shall supercede any contrary terms as may be
       established in the Medical Staff Bylaws. Contractor
       shall deliver to Facility a written statement form each
       Contractor’s Representative acknowledging and
       agreeing to these concurrent termination provisions.

        In June or July of 1999, the Plaintiff received a package of
drugs, which was addressed to the Plaintiff but which utilized the
hospital’s street address. The drugs purchased by the Plaintiff
included controlled substances such as xanax, benzodiazepine, and
hydrocodone. The delivery ticket for the package was addressed to
Dr. Carl Lindblad, not East Ridge, and at all times it was Dr.
Lindblad’s property. After the discovery of the drugs a meeting was
held among the hospital’s chief executive officer, the pharmacy
director, and the chairman of the Pharmacy and Therapeutic
Committee on August 13, 1999, after which the Plaintiff was placed
on leave. During this meeting the Plaintiff responded to all of the
questions put to him regarding the drugs and stated that the
medications were for his family, friends and neighbors. No records
were kept of medications dispensed to family, friends or neighbors in
need of such medications. After this meeting Brenda Waltz, the chief
executive officer of East Ridge, contacted Dr. Gary Olbhrich [sic] of
the medical foundation known as the “Tennessee Impaired
Physician’s Program,” to “clarify” the situation with Plaintiff’s use of


                                  -8-
drugs. The Plaintiff met with Dr. [Olbrich] on August 19, 1999, and
after this meeting Dr. [Olbrich] assured the Plaintiff that there was
nothing for him to worry about. Aside from his being naive, Dr.
Lindblad was advised that in Dr. [Olbrich’s] opinion there was no
problem which warranted any further action. Dr. [Olbrich] informed
Brenda Waltz of his conclusion on or about August 20, 1999. On
August 20, 1999, the Plaintiff submitted a notice of termination, the
effective date of which was August 24, 1999. That letter reads as
follows:

       This is to inform you that as of 7 a.m. on Tuesday
       August 24, 1999, Associates in Emergency Medicine,
       will no longer be providing Emergency Physician
       Services at East Ridge Hospital.

In response, the Hospital sent the Plaintiff a letter acknowledging the
receipt of his letter, and, citing the Agreement, advised the Plaintiff
that his medical staff privileges were terminated. That letter reads in
part as follows:

       Please be advised that in accordance with the
       provisions of Section 6 of Addendum 1 of the
       Agreement, the Hospital has elected to terminate your
       medical staff membership and clinical privileges
       effective on the date of termination of the Agreement
       as set forth above. The medical staff membership and
       clinical privileges of the other members of the Group
       will continue unaffected. Please note that it is our
       position that termination as set forth here is not a
       reportable action under the Health Care Quality
       Improvement Act and its interpretive regulations.

        The Plaintiff submitted the affidavit of Dr. James H. Creel,
the medical director for the emergency department at Erlanger
Hospital, in opposition to the motion. In his affidavit Dr. Creel states
that the conduct of East Ridge constituted a violation of the medical
staff Bylaws in effect at East Ridge in August of 1999. Dr. Creel
opines that the due process provision of Article 7 of the Bylaws
requires initiation by East Ridge of proceedings to terminate his
privileges. This opinion, however, begs the question of whether the
Bylaws apply to the situation presented in this lawsuit.

                           *   *   *     *   *


                                   -9-
                         The Plaintiff argues that the East Ridge Bylaws constitute the
                  contract, since the Agreement expired by its terms on June 30, 1999.
                  Under [S]ection 3 of the East Ridge Hospital Medical Staff Bylaws
                  each practitioner at East Ridge agreed to abide by the bylaws, rules,
                  and regulations and policies as amended and issued from time to
                  time.

                          The Plaintiff argues that once the formal contract between
                  East Ridge and Associates expired on June 30, 1999, the legal
                  relationship between the Plaintiff and East Ridge was governed
                  wholly under the terms of the East Ridge Bylaws.2 In his brief,
                  however, Dr. Lindblad cites no case to establish that the relationship
                  between two contracting parties is not governed by the contract where
                  the contract has expired.

                          Before deciding whether the Agreement applies or the Bylaws
                  apply the Court will discuss a case relied on by both parties.
                  Lewisburg Community Hospital, Inc. v. Alfredson, 805 S.W.2d 756
                  (Tenn. 1991). In Lewisburg Hospital the Hospital terminated a
                  doctor’s privileges and denied him access. As here, the hospital
                  maintained that its bylaws did not constitute a contract with the
                  doctor and that he was not entitled to a hearing. The doctor argued
                  to the contrary. The Supreme Court held that the bylaws were an
                  integral part of the contract with the doctor. The facts, however,
                  depart from the facts of this case at that point. The doctor’s first
                  contract with Lewisburg Hospital expressly stated that either party
                  could cancel on ninety days’ notice, and, in the event of termination,
                  the clinical privileges would also terminate. The second contract,
                  however, deleted that provision, thereby kicking in the application of
                  the bylaws. The Supreme Court required the hospital to abide by its
                  bylaws and give the doctor a fair hearing. In rejecting the argument
                  of the hospital the Supreme Court held:

                           The Hospital’s argument ignores the fact that it made
                           a business decision when it agreed to delete the
                           automatic termination of Alfredson’s clinical
                           privileges from the 1984 exclusive radiology contract.
                           Had it not made that business decision, Alfredson
                           would have no claim for breach of contract.



         2
          In footnote 5 on page 12 of his brief the Plaintiff concedes the if “the Defendants had automatically extended
Dr. L indblad’s co ntract then the bylaws wo uld no t have contro lled the o utcom e.”

                                                         -10-
               If, therefore, the Bylaws apply, the Plaintiff prevails. If they did not,
               then, as Plaintiff concedes, the Defendants prevail.

                        It now must be determined whether the Agreement applies or
               the Bylaws apply. In doing so the intention of the parties must be
               determined. In that regard, the “ascertainment of the intention of the
               parties to a written contract is a question of law rather than a question
               of fact.” Doe v. HCA Health Services of Tennessee, 46 S.W.3d 191
               (Tenn. 2001); see also, Allman v. Boner, 1993 Tennessee Appeals
               LEXIS 793 (Ct. App.1993).

                       The next issue to be considered, therefore, is whether a
               contract existed between the parties on August 20, 1999, and, if so,
               its terms. Although the Agreement expired by its terms on June 30,
               1999, that does not end the inquiry. If the parties to an expired
               agreement with a definite term continue to perform as if the
               agreement were still in effect, it is presumed that they are serving
               under a new contract with the same terms as the old. Delzell v. Pope,
               294 S.W.2d 690 (Tenn. 1956). In order to make this determination
               the conduct of the parties will be examined. On July 7, 1999, the
               Plaintiff applied for reappointment to East Ridge. Until August 13,
               1999, the Plaintiff continued to provide services to East Ridge, and
               East Ridge accepted those services on an exclusive basis. On August
               20, 1999, it is significant that the Plaintiff gave notice to terminate the
               Agreement between Associates and East Ridge. Finally, Dr. Lindblad
               has testified that he believed the Agreement to be still in effect.
               Accordingly, the Bylaws are not applicable to the termination, and the
               Defendants are entitled to partial summary judgment on this issue.

                                          *   *    *     *   *

                                      The Standard of Review

         The standard of review on appeal of a grant of summary judgment is de novo upon the record
without a presumption of correctness to determine whether the absence of genuine and material
factual issues entitle the movant to a judgment as a matter law. Goodloe v. State, 36 S.W.3d 62, 65
(Tenn. 2001). The movant must either affirmatively negate an essential element of the non-movant’s
claim or conclusively establish an affirmative defense; mere conclusory assertions that the non-
movant has no evidence are insufficient; and if the movant does not negate a claimed basis for the
suit, the non-movant’s burden to produce evidence establishing the existence of a genuine issue for
trial is not triggered and the motion for summary judgment must fail, If, however, the movant
successfully negates a claimed basis for the suit, the non-movant may no longer simply rely upon
the pleadings, but must then establish the existence of the essential elements of the claim or the non-


                                                  -11-
existence of the defense. Finister v. Humboldt General Hosp., Inc., 970 S.W.2d 435, 438 (Tenn.
1998).

        In reviewing the record to determine whether summary judgment requirements have been
met, this Court must view the evidence in the light most favorable to the nonmoving party and must
draw all reasonable inferences in the nonmoving party’s favor. Byrd v. Hall, 847 S.W.2d 208, 210-
11 (Tenn. 1993). A summary judgment may be proper, therefore, only “when there is no dispute
over the evidence establishing the facts that control the application of a rule of law.” Ib. at 214-15:
Tenn. R. Civ. P. 56.

                                              The Issue

        The restated issue is whether summary judgment was properly granted with respect to the
Plaintiff’s claim for breach of contract arising out of his summary suspension from the medical staff
of the Hospital.
                                                Analysis

      The issue is necessarily resolvable either by (1) the bylaws of the Hospital, or (2) the contract
between the parties.

       The contract, described as a Professional Services Agreement, became effective July 1, 1994
and expired June 30, 1999. It provides that

               Either party may terminate this Agreement, without cause, by
               providing not less than 60 days prior written notice stating the
               intended date of termination, which shall occur not sooner than the
               first a annual anniversary of the effective date.

       It further provides that

               Either party may terminate this Agreement at any time in the event
               the other party engages in an act or omission constituting a material
               breach of any term or condition of this Agreement . . . . and upon any
               termination of this Agreement, neither party shall have further right
               against, or obligations to, the other party, except . . . . this Agreement
               . . . . supersedes all prior Agreements, contracts and understandings
               . . . .between the parties.

       Addendum One to the Agreement, Section 6, described as the Exclusive Provider Agreement,
provides

               Upon the termination of this Agreement for any reason, Facility may
               terminate . . . the medical staff membership and/or clinical privileges


                                                 -12-
               of any or all of contractor’s representative. . . . the rights of Facility
               . . . Shall supersede any contrary terms as may be established in the
               Medical Staff By-laws . . .

        The original Bylaws, adopted April 12, 1994 made no provision for a due process hearing,
but in April 1999 the Bylaws were amended to provide that:

               Any practitioner whose contractual engagement by the Hospital
               requires membership on the medical staff shall not have his/her
               medical staff membership or admitting and clinical privileged
               terminated without the right to hearing and appeal. . . .

        Dr. Olbrich informed Ms. Waltz, the Hospital’s CEO, on August 20, 1999 that there was no
problem with the Plaintiff which warranted further action. On that same day, the Plaintiff tendered
his resignation effective August 24, 1999. He wrote

               This is to inform you that as of 7 a.m. on Tuesday, August 24, 1999,
               Associates in Emergency Medicine will no longer be providing
               Emergency Physician Services at East Ridge Hospital.

         The Hospital responded by citing the Agreement and informing the Plaintiff that his medical
staff privileges were terminated in accordance with Section 6 of Addendum 1 of the Agreement.

        The Plaintiff argues that the Agreement expired June 30, 1999 and thus his legal relationship
with the Hospital was governed by its bylaws which required notice and hearing by virtue of the
April 1999 amendment. The Defendant argues that although the formal Agreement expired by its
own terms on June 30, 1999, both parties continued to perform as though the Agreement was still
in effect, thereby giving rise to the presumption that they are performing under a new contract with
the same terms as the old. This is the rule in Tennessee. Delzell v. Pope, 294 S.W.2d 690 (Tenn.
1956); Ward v. Berry and Associates, 614 S.W.2d 372 (Tenn. Ct. App. 1981); McCall v. Oldenburg
382 S.W.2d 537 (Tenn. 1964). We note that the Plaintiff cannot, as is sometimes said, have it both
ways; if he had been instructed to vacate the premises when his Agreement expired, he would have
no justiciable reason whatever to maintain this action. But with the consent of the Hospital he
continued to work, thereby implicating the rule announced in Delzell. The Agreement remained in
effect and was not invalidated by the April 1999 Amendment to the Bylaws. It follow that the
Hospital acted within its contractual rights when it terminated the Plaintiff’s staff privileges. The
judgment is affirmed at the costs of the Appellant.



                                                        ___________________________________
                                                        WILLIAM H. INMAN, SENIOR JUDGE



                                                 -13-
