United States District Court, D. Minnesota
Dr. Gregory Sherr, Plaintiff,
HealthEast Care System, CentraCare Health, Dr. Margaret Wallenfriedman, Dr. Mary Beth Dun Dr. Richard Gregory, Dr. Stephen Kolar, Dr. Jerone D. Kennedy, and Archie Defillo, Defendants.
Lawrence P. Schaefer, Esq., and Peter Christian, Esq.,
Schaefer Halleen, LLC, Minneapolis, MN, on behalf of
Falknor, Esq., and William R. Stoeri, Esq., Dorsey &
Whitney LLP, Minneapolis, MN, on behalf of Defendants
HealthEast Care System, Dr. Margaret Wallenfriedman, Dr. Mary
Beth Dunn, Dr. Richard Gregory, and Dr. Stephen Kolar.
L. Greer, Esq., Hughes Mathews Greer, P.A., St. Cloud, MN, on
behalf of Defendants CentraCare Health, Dr. Jerone D.
Kennedy, and Archie Defillo.
MEMORANDUM OPINION AND ORDER
MONTGOMERY, U.S. DISTRICT JUDGE
April 11, 2017, the undersigned United States District Judge
heard oral argument on Defendants HealthEast Care System
(“HealthEast”), Dr. Margaret Wallenfriedman
(“Dr. Wallenfriedman”), Dr. Mary Beth Dunn
(“Dr. Dunn”), Dr. Richard Gregory (“Dr.
Gregory”), and Dr. Stephen Kolar's (“Dr.
Kolar”) (collectively, the “HealthEast
Defendants”) Motion for Partial Judgment on the
Pleadings [Docket No. 24] and Defendants CentraCare Health
(“CentraCare”), Dr. Jerone D. Kennedy (“Dr.
Kennedy”), and Archie Defillo's
(“Defillo”) (collectively, the “CentraCare
Defendants”) Motion for Judgment on the Pleadings
[Docket No. 28]. Plaintiff Dr. Gregory Sherr (“Dr.
Sherr”) opposes the Motions. For the reasons discussed
below, the Motions are granted.
Sherr, a neurosurgeon, alleges that Defendants conspired to
eliminate him as a competitor for neurosurgery patients in
both the Minneapolis-St. Paul, Minnesota (“Twin
Cities”) and the St. Cloud, Minnesota markets. First
Am. Compl. (“FAC”) [Docket No. 15] ¶ 3. Dr.
Sherr alleges that Defendants colluded to initiate complaints
against him during HealthEast's physician peer review
process and improperly secured a summary suspension of his
privileges at St. Joseph's Hospital (“SJH”),
a HealthEast hospital in St. Paul. Id. ¶¶
3, 8, 47, 54, 68, 73. Within days of the summary suspension,
Defendants allegedly spread word to the tight-knit
neurosurgery community of Sherr's suspension, destroying
his reputation in Minnesota and forcing him to move to
another state to continue his career. Id.
¶¶ 4, 76, 77, 82-83.
Sherr asserts the following claims: breach of peer review
confidentiality under Minn. Stat. § 145.64; common law
invasion of privacy; defamation; tortious interference with
prospective economic advantage; tortious interference with
contract; and violation of federal and state antitrust
statutes. Defendants move for judgment on the pleadings as to
the breach of peer review confidentiality claim, the invasion
of privacy claim, and all antitrust claims. The remaining
Sherr is a Florida resident and licensed neurosurgeon
specializing in treating high-risk patients with poor
self-care histories. FAC ¶¶ 19, 25.
is a non-profit health care provider and hospital management
company headquartered in St. Paul, Minnesota. Id.
¶ 8. HealthEast owns four hospitals including SJH.
Id. Drs. Wallenfriedman, Dunn, and Gregory are
Minnesota residents and licensed neurosurgeons employed at
HealthEast. Id. ¶¶ 10-12. Dr. Kolar is a
Minnesota resident and licensed internal medicine physician
who served as HealthEast's Senior Vice President and
Chief Medical Officer in 2015. Id. ¶ 13.
is a non-profit health care provider headquartered in St.
Cloud, Minnesota with locations throughout central Minnesota.
Id. ¶ 9. CentraCare owns and operates six
hospitals including Saint Cloud Hospital (“SCH”).
Id. Dr. Kennedy is a Minnesota resident and licensed
neurosurgeon employed at CentraCare. Id. ¶ 14.
Defillo is Minnesota resident and an administrator at
CentraCare. Id. ¶ 15. He serves as the Clinical
Director of Neurosciences at SCH. Id.
Sherr Begins Neurosurgery Career
Sherr graduated from medical school in 2004, completed a
neurosurgery fellowship and residency in 2010, and joined
Central Minnesota Neurosciences (“CMN”), an
independent neurosurgery practice serving patients in the St.
Cloud area, in 2011. Id. ¶¶ 19-20. He was
granted privileges to practice as an attending physician SCH
in St. Cloud and at SJH in St. Paul. Id. ¶ 20.
Dr. Sherr remained with CMN until late December 2014, when
CMN was purchased by CentraCare. Id. ¶¶
Sherr Joins Minnesota Spine & Brain Institute and Opens
St. Cloud Clinic
January 2015, Dr. Sherr joined the Midwest Spine & Brain
Institute (“MSBI”), which was known as the
Midwest Spine Institute until Dr. Sherr was hired and the
practice was expanded to include cranial neurosurgery.
Id. ¶¶ 26-27. At the time Dr. Sherr was
hired, MSBI operated clinics in Apple Valley, Burnsville, Elk
River, Golden Valley, Maple Grove, Maplewood, Minnetonka,
Princeton, and St. Anthony, Minnesota as well as in New
Richmond and St. Croix Falls, Wisconsin. Id. ¶
joining MSBI, Dr. Sherr opened a MSBI neurosurgery clinic in
St. Cloud, two blocks away from SCH. Id. ¶ 37.
He staffed the St. Cloud clinic with his former
administrative team from CMN and added a neurosurgeon, Dr.
David Chang. Id. ¶¶ 35, 37, 39. The group
was well connected and familiar with the patient base and
referral sources in the St. Cloud area, and the clinic was
soon operating very successfully. Id. ¶ 37.
the 15 months that Dr. Sherr practiced with MSBI, he
maintained privileges at numerous hospitals, including SCH in
St. Cloud and SJH, Fairview Southdale, North Memorial Medical
Center, and United Hospital in the Twin Cities. Id.
¶ 29. He performed approximately 500 surgical cases
during this time period, including approximately 140
surgeries at SJH. Id. ¶ 30. The majority of the
surgeries were complex reconstructive spine surgeries, often
for low income, high-risk patients struggling with obesity,
poor health habits, or other conditions such as diabetes.
Sherr and MSBI Compete with CentraCare, HealthEast
Sherr alleges that the opening of the MSBI St. Cloud clinic
posed a significant threat to CentraCare and its ability to
attract neurosurgery patients at SCH. Id. ¶ 39.
According to Dr. Sherr, Dr. Kennedy and Defillo were
“deeply disturbed by the establishment of the
successful MSBI Neurosurgery Clinic two blocks from SCH,
which was dramatically affecting revenues for neurosurgery
practice at SCH.” Id. ¶ 44. Dr. Sherr
also alleges that MSBI's addition of Drs. Sherr and Chang
to its neurosurgery staff threatened HealthEast's ability
to attract and retain the majority of neurosurgery patients
who were treated at SJH in St. Paul. Id. ¶ 39.
February 2015, Drs. Wallenfriedman, Dunn, and Gregory moved
their neurosurgery practice from United Hospital, where they
had practiced together for more than ten years, to
HealthEast, where they became known as the “HealthEast
Neuro Group.” Id. ¶¶ 33, 41-42. In
negotiating this transition, the group initially stated that
they would not move their practice to HealthEast unless
HealthEast discontinued all use of MSBI physicians for
neurosurgery and spine care and removed any MSBI clinic
presence from HealthEast. Id. ¶ 42. HealthEast
executives denied this request but asked MSBI to agree that
MSBI physicians would no longer be “on call” in
the SJH and St. Joseph's emergency rooms for neuro or
spine cases. Id. ¶ 43. HealthEast also asked
MSBI to agree that MSBI physicians would not perform
“elective procedures” at HealthEast facilities,
but MSBI refused. Id. Although Drs. Wallenfriedman,
Dunn, and Gregory were unable to get HealthEast to agree to
all of their demands, the group joined HealthEast based on
assurances that HealthEast would not make neurosurgery
referrals to MSBI. Id.
Defendants Allegedly Conspire to Eliminate Dr. Sherr and MSBI
after joining HealthEast, the HealthEast Neuro Group
“began a concerted attack . . . to eliminate MSBI
neurosurgeons from practicing at HealthEast.”
Id. ¶ 44. Dr. Sherr alleges “[u]pon
information and belief” that the HealthEast Neuro Group
“enlisted the participation of [CentraCare's] Dr.
Kennedy and Defillo in this plan, as these physicians shared
the goal of eliminating Dr. Sherr and MSBI as
competitors.” Id. “Upon information and
belief, ” Dr. Sherr asserts that Dr. Kennedy and the
physicians in the HealthEast Neuro Group were “close
friends” because Dr. Kennedy had practiced at United
Hospital with them for ten years until Dr. Kennedy's
resignation from United Hospital in 2012. Id. ¶
Sherr alleges that Dr. Kennedy and Defillo “made no
attempt to hide their disdain for Dr. Sherr and MSBI, their
anger over his clinic, or their intent to destroy his
practice.” Id. ¶ 46. For example, shortly
after MSBI's St. Cloud clinic opened, Dr. Sherr was
informed by physicians in the St. Cloud area that Defillo had
threatened them “by stating that if they continued to
refer patients to Dr. Sherr at the MSBI clinic, Defillo would
ensure their SCH practice would suffer. Defillo informed one
such physician that he would be denied ‘block time'
to follow up with his patients at SCH, which would
essentially preclude him from practicing at SCH.”
Id. ¶ 45. The HealthEast Neuro Group similarly
expressed their disdain for Dr. Sherr by regularly
complaining to SJH operating room nurses about the
significant block time Dr. Sherr's surgery practice
consumed on the SJH operating room calendar. Id.
Sherr alleges “[u]pon information and belief”
that “Defillo and Dr. Kennedy began to communicate,
orally and in writing, with the HealthEast Neuro Group and
other individuals in the neurosurgeon [sic] community,
specifically about the shared desire to force ...