In Michael Cushner, M.D. v. Summit Health Management LLC, Index No. 65930/2024, Justice Gretchen Walsh of the Westchester Commercial Division issued a detailed Decision and Order addressing a motion to dismiss by defendants Summit Health, VillageMD, and City Medical. Dr. Cushner—a former orthopedic surgeon at WestMed—claims he is owed millions under his employment and productivity-based compensation agreements following the acquisition of WestMed by City Medical and its affiliates.

Factual Background

Dr. Cushner alleges that after the acquisition of WestMed in late 2021, he signed both an Employment Agreement and a Productivity Value Unit (PVU) Award Agreement with City Medical. These contracts provided for compensation based on RVU (Relative Value Unit) metrics tied to the volume and complexity of his services. The Employment Agreement advanced him a “Pegged Baseline” salary of $1.89 million, contingent on meeting annual RVU targets (initially set at 35,500 RVUs). Separately, under the PVU Agreement, he stood to earn an additional $1.14 million annually for five years if productivity thresholds were met.

Cushner asserts that his high productivity relied on his use of Advanced Practice Providers (APPs), such as physician assistants, to assist in patient visits. He claims that City Medical initially accepted this practice and confirmed his billing was compliant. However, mid-2022, City Medical allegedly began raising concerns about how APP-assisted visits were coded and then retroactively reduced the number of RVUs credited to him, slashing his 2022 credited RVUs from over 58,000 to roughly 26,800—below the compensation threshold. In 2024, he was terminated without cause.

Dr. Cushner sued, seeking compensation for underpaid 2022 and 2023 RVUs, unpaid PVU bonuses, and future PVU payments. He asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, Labor Law violations, tortious interference, and promissory estoppel.

The Court’s Ruling

Justice Walsh granted in part and denied in part the defendants’ CPLR 3211 motion to dismiss.

1. Breach of the Implied Covenant of Good Faith and Fair Dealing (PVU Payments Post-Termination)

The court dismissed Cushner’s Tenth Cause of Action, which sought future PVU payments despite his termination. The court held that the PVU Agreement unambiguously provided that if Cushner’s employment ended “for any reason,” he forfeited all unpaid PVU payments. Under both New York and New Jersey law, the court explained, an implied covenant cannot override the express language of a contract.

2. Tortious Interference Claims

The court declined to dismiss Cushner’s tortious interference claims against Summit Health and VillageMD. The defendants argued that the “economic interest” defense barred these claims, as the entities shared a business interest in City Medical. However, the court found factual questions as to whether the defendants’ involvement was improper or illegal under New York’s prohibition on the corporate practice of medicine, and whether Summit and VillageMD acted with malice. These issues could not be resolved at the pleadings stage.

3. Breach of Implied Covenant – Compensation Reduction (2022–2023)

The court sustained Cushner’s claim for breach of the implied covenant related to the alleged manipulation of RVU crediting in 2022 and 2023. The court found sufficient allegations that City Medical assured Cushner that his use of APPs would not affect compensation and later changed course after he relied on those assurances.

4. Labor Law § 193 Claim

Cushner’s Labor Law claim survived in part. While the PVU payments were deemed outside the scope of “wages,” the court found that the salary and RVU-based compensation under the Employment Agreement could qualify. Defendants’ argument that the dispute amounted to a mere “calculation disagreement” was rejected at the motion stage.

5. Promissory Estoppel

The court also permitted Cushner’s promissory estoppel claim to proceed. He alleged that defendants promised he would be credited with RVUs even if visits were coded under APPs’ names and that he changed his practices in reliance. The court found this sufficient to state a claim, even if potentially duplicative of the contract claims.

6. Declaratory Relief

Cushner’s request for a declaratory judgment regarding the unenforceability of a restrictive covenant was dismissed as premature. The court found no present controversy, especially given that Cushner had relocated out of state.

Conclusion

Justice Walsh’s decision highlights the court’s careful parsing of employment and compensation-related agreements in complex healthcare mergers. While the PVU agreement’s explicit forfeiture clause barred claims for future bonus payments post-termination, the court found potential wrongdoing in the retroactive reduction of RVUs and misrepresentation of compensation practices. The decision also underscores that management companies operating in the healthcare space may face tort liability where their conduct raises regulatory concerns under New York law.

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