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Punzak v. McIvor

Superior Court of Massachusetts, Suffolk

April 5, 2019

Stephen PUNZAK, M.D. Plaintiff
Robert MCIVOR; James English, M.D.; Anesthesia Associates of Massachusetts, P.C.; and PR Holdings Company, Inc. f/k/a Plexus Management Group, Inc. Defendants.


          Mitchell H. Kaplan, Justice of the Superior Court

          Plaintiff, Dr. Stephen Punzak, is an anesthesiologist and a former member and shareholder of defendant Anesthesia Associates of Massachusetts, P.C. (AAM). He was also formerly a shareholder of PR Holdings Company, Inc. F/K/A Plexus Management Group, Inc. (Plexus), a corporation formed to provide billing services for AAM. Defendants Dr. James English and Robert McIvor were, respectively, at all times relevant to this action, the president of AAM and the president and CEO of Plexus. Punzak brings this action because his employment with AAM was involuntarily terminated and he was forced to sell his shares in both companies back to each. He asserts claims against the defendants for: Breach of Fiduciary Duty (Count I); Civil Conspiracy (Count II); Intentional Interference with Contractual Relations (Count III); Wrongful Termination (Count IV); Breach of Contract (Count V); and Breach of the Covenant of Good Faith and Fair Dealing (Count VI). The case is before the court on the defendants’ motion for summary judgment dismissing all of the claims. For the reasons that follow the motion is ALLOWED, in part, and DENIED, in part.


          The following facts are taken from the summary judgment record. All inferences have been drawn in favor of Punzak, the non-moving party.

          Punzak was employed as a physician by AAM beginning on August 3, 1992. The offer letter given to Punzak at the time of his employment states:

[w]e know that you understand that we do not consider physicians for corporate participation until they have completed three years of service and it is clear that a good working relationship has been established with our group and the hospital communities we serve .... In years past, we have found that our interview process rarely fails to identify a physician who is not suitable for our group. However, should it appear at any time during that period that the relationship will not be a success, we would expect to terminate our association after suitable notice on our part.

          On September 21, 1993, a memorandum was entered into Punzak’s personnel file based on "numerous complains about Dr. Punzak regarding his relationship with both patients and [nurses]." This memorandum stated that AAM’s vice-chairman had spoken to Punzak at least two times about his behavior. It described Punzak’s approach as "overconfident and cavalier," and his attitude as condescending. Punzak does not recall any meeting with AAM’s vice-chairman and disputes the allegations made in the memorandum.

          Notwithstanding this 1993 memorandum, in January 1995, Punzak became a shareholder of AAM. All AAM shareholders are practicing anesthesiologists, and many of the physician-shareholders refer to each other as "partners." As each physician earns the same annual base pay and shares equally in AAM’s profits, the physicians carefully schedule their time so that the work is spread equally among the "partners," including on-call burdens.

          An examination of the summary judgment record reveals that English, as President of AAM, had significant influence over the composition of AAM’s Board of Directors. The AAM By-Laws specify that the Nominating Committee "shall consist of the President, two stockholders proposed by the President and approved by the Board of Directors, and two stockholders elected by the stockholders...." In consequence, English and the two stockholders that he selects control the Nominating Committee, which in turn selects a slate of directors to be submitted to the stockholders for their vote.

          Punzak, allegedly under the direction of AAM’s then-President Lewis, wrote a letter to the board to raise concerns about another AAM physician. On October 1, 1998, an ad-hoc committee appointed by the AAM board found that Punzak expressed his concerns with an "insensitive disregard ... and lack of respect" and in an "inappropriate" manner. The committee decided against termination of Punzak’s employment, but noted "numerous prior complaints about Dr. Punzak’s interpersonal behavior" that "exceeded complaints against all AA[M] physicians in their frequency, severity, and consistency of problem alleged." The committee recommended Punzak write letters of apology and engage in continuing education.

          In 1990, before Punzak became a shareholder of AAM, a separate corporation was formed to perform billing services for AAM. This corporation, Anesthesia Associates Management Corporation, was renamed Plexus Management Group, Inc. in 2003. Today, this corporation is named PR Holdings Company, Inc.. (for purposes of this decision, this corporation will be referred to as "Plexus"). Although initially formed as a professional corporation entirely owned by AAM’s shareholders, Plexus was converted to a C corporation in October 2012. By December 2013, Plexus had 85 shareholders. At that point, not all of the shareholders of Plexus were also physician-shareholders of AAM.

          On January 1, 2006, Plexus entered into an agreement with AAM which apparently changed the manner in which Plexus would be compensated for the services that it performed for AAM. According to this 2006 Agreement, Plexus received ten percent of AAM’s revenue each year for providing services; the Agreement also set its term thirty years (the 2006 Agreement) AS a consequence of the 2006 Agreement, Plexus was able to generate a profit. Punzak alleges that the 2006 Agreement was executed without a vote of either the AAM board of directors or its shareholders. Moreover, Punzak served on the Plexus board, and he maintains that the board members were not provided with financial statements disclosing the sums being paid by AAM to Plexus.

          In August 2012, HIG, a private equity firm, offered to acquire Plexus for $ 28 million. Punzak contends that is when he first became aware of the 2006 Agreement. He alerted other AAM physician-shareholders by email, raising concerns about both the offer price as well as the management and governance of AAM and Plexus.

          On September 8, 2012, Punzak emailed McIvor a request for AAM and Plexus financial information; McIvor forwarded the email to English. On the same day, English responded to McIvor by email (the "open warfare email"). English wrote that his "opinion is that [Punzak] has finally declared open warfare and we should go on the offensive .... I don’t want to overstate it, but this is not going to end well. It’s him or us ...."

          In response to the critical emails Punzak sent to AAM shareholders, Punzak was allegedly placed on a Performance Improvement Plan ("PIP") on March 5, 2013 by the AAM board. There is evidence in the Summary Judgment record that at least some members of the board were unaware of the PIP.

          On December 13, 2013, an intra-office e-mail announced that AAM was implementing new software that allowed AAM and other on-site personnel to track, within one hundred yards of a medical facility, the location of AAM physicians through the use of the physicians’ cell phones. Punzak sent three reply-all e-mails in response to this announcement. In these emails, Punzak suggested that "[w]hat we are all really waiting for is an app to track management," "[w]e could use the tracking to see who is the long ball hitter, nearest the pin, stays in the fairway most often" and "let’s turn on the front camera to make sure nobody is getting too much sun on the fairways or the Cayman beaches." In the third e-mail, Punzak apologized for the prior two, stating that "[a]pparently a few people who don’t know me well mistook my obvious attempt at a little bit of satirical humor as genuine concern on my part about an invasion of privacy. Just to clarify, I am joking ...."

          On December 20, 2013, Punzak’s employment with AAM was terminated. Defendants allege that the board decided that Punzak violated the PIP when he sent the sarcastic reply-all emails. Punzak maintains that his employment was terminated because he questioned the financial arrangements that English and McIvor had instituted without notice to the AAM doctors. There is evidence that contrary to the defendants’ contentions, the board did not unanimously terminate Punzak’s employment. It is undisputed that neither the implementation of the PIP plan nor Punzak’s termination had anything to do with his clinical abilities as an anesthesiologist.

          There is evidence that after the termination, English contacted physicians at AAM, including Triffin Psyhojos and James O’Ruorke, asking them not to recommend Punzak for future employment. Punzak asserts that some AAM physicians followed these instructions and suggested to local hospitals that they not hire him.

          Following his termination, Punzak’s 100 shares of AAM and 100 shares of Plexus were involuntarily purchased by the corporations. The Defendants contend that under the terms of the AAM and Plexus Stockholder Agreements, he was required to sell his shares to each within 90 days after his ...

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