This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. ' 480A.08, subd. 3 (1994).

STATE OF MINNESOTA
IN COURT OF APPEALS
C1-96-135

Steven John Hartmann, D.C., et al.,
Appellants,

vs.

Northern Services, Inc.,
n/k/a Health Services Management, Inc., et al.,
Respondents.

Filed August 6, 1996
Affirmed
Toussaint, Chief Judge

Washington County District Court
File No. C2-95-2042

Lawrence H. Crosby, Maury D. Beaulier, Crosby & Associates, 25 Empire Dr., St. Paul, MN 55103 (for appellants)

Thomas Fraser, Todd Wind, Fredrikson & Byron, P.A., 1100 International Centre, 900 Second Ave. S., Minneapolis, MN 55402 (for respondents)

Considered and decided by Huspeni, Presiding Judge, Toussaint, Chief Judge, and Foley, Judge.*

U N P U B L I S H E D O P I N I O N

TOUSSAINT, Chief Judge

Appellants, two chiropractors, brought this action challenging the termination of their contractual status as providers with respondent, a chiropractic services provider network. Respondent was granted summary judgment. Because we see no genuine issue of material fact precluding summary judgment and no error of law in the district court's rulings that appellants were at-will employees; that they failed to make claims for restraint of trade, tortious interference with contract, fraud and misrepresentation, RICO violations, and breach of contract; and that respondents were entitled to certain costs and fees, we affirm.

D E C I S I O N

Respondent Northern Services, Inc. (NSI), a chiropractic provider network, has a contract to provide chiropractic services for the PreferredOne plan. [1] Respondent Roman Wieland, CEO and principal shareholder of NSI, engaged appellants Steven Hartmann and Robert Hoffman, chiropractors, to provide these services.

The agreement appellants signed with NSI stated that either party could terminate the agreement at any time without cause; it also permitted appellants to work simultaneously for other networks and to practice independently. The agreement incorporated the contract between NSI and PreferredOne:

A copy of that contract is attached hereto as Exhibit A and incorporated into this Agreement. Provider hereby agrees to comply with all the terms and conditions of that contract to the extent that they directly or indirectly bear upon the subject matter of this Agreement.

The contract between NSI and PreferredOne includes a "Grounds for Termination" paragraph, specifying why PreferredOne may terminate providers; it also states that Providers who contest a PreferredOne decision to terminate them should follow the procedures given in the Minnesota arbitration statute.

Wieland terminated appellants' agreements with NSI. Appellants attributed the termination to Wieland's dissatisfaction with their patient-visit averages, i.e., the fact that they saw patients for more visits than NSI allowed. Wieland maintains that appellants were at-will employees who could be terminated without cause.

Appellants brought this action contesting their at-will status and claiming restraint of trade and antitrust violations, tortious interference, fraud and misrepresentation, breach of contract, and RICO violations. Respondents were granted summary judgment and awarded certain fees and costs. Appellants challenge both the judgment and the award.

1. Summary Judgment

In reviewing summary judgments, this court asks whether there are any genuine issues of material fact and whether there was an error in the application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).

A. Appellants' Status as At-Will Employees

Despite language in their provider agreement that either party could terminate the agreement at will for no cause, appellants claim they were not at-will employees because two other paragraphs defeat their at-will status. One paragraph says that appellants' agreement is in effect for one year and is renewable for successive one-year periods unless terminated; the other is the Grounds for Termination paragraph in the PreferredOne-NSI contract.

Appellants argue that the terminable-at-will provision and the successively-renewable provision cannot be reconciled, that the agreement is therefore ambiguous, and that this ambiguity must be construed against the drafters, i.e., respondents. However, the "unless terminated" phrase in the successively-renewable paragraph shows that the drafters were aware of a possible conflict and resolved it in favor of the terminable-at-will paragraph.

Appellants cite Pine River State Bank v. Mettille, 333 N.W.2d 622, 626-27 (Minn. 1983), holding that an at-will employment agreement may be rendered contractual by the provisions of an employee handbook, to argue that the terminable-at-will status conferred by the agreement was changed to a contractual status by the Grounds For Termination paragraph in the PreferredOne-NSI contract. Pine River, however, is readily distinguishable. There, disciplinary procedures set forth in a handbook given by the employer to the employee were held to change an employee's terminable-at-will status to a contractual status. Id. at 631. Here, appellants invoke a paragraph in a contract to which they are not a party; that paragraph specifies the grounds for which PreferredOne, not NSI, will terminate providers. There is no contractual support for appellants' view that the explicit terminable-at-will provision of the agreement they signed with NSI is superseded by the Grounds for Termination paragraph of the contract between NSI and PreferredOne. We see no error of law in the district court's holding that the terminable-at-will provision is enforceable.

B. Restraint of Trade and Anti-Trust Claims [2]

Although their agreements with respondents left appellants free to engage in private practice or to work for other network providers, appellants argue that by limiting the number of visits per patient, respondents imposed an anticompetitive restriction on their output and denied their patients the treatment they sought. Appellants cite Federal Trade Comm'n v. Indiana Fed'n of Dentists, 476 U.S. 447, 106 S. Ct. 2009 (1986) to support their argument. However, the patients in Indiana Fed'n of Dentists were not demanding dental services; they (and their insurers) were demanding that dentists provide the insurers with the customers' x-rays. Id. at 458, 106 S. Ct. at 2017.

Indiana Fed'n of Dentists sets out two tests for unreasonable restraint of trade: the per se test and the "Rule of Reason" test. Id. at 457-58, 106 S. Ct. at 2017.

[T]he per se approach has generally been limited to cases in which firms with market power boycott suppliers or customers in order to discourage them from doing business with a competitor--a situation obviously not present here. Moreover, we have been slow to condemn rules adopted by professional associations as unreasonable per se * * *.

Id. at 458, 106 S. Ct. at 2018. Here also, there is no indication respondents attempted anything resembling a group boycott of appellants, and appellants are explicitly permitted to supply their services to competitors or to engage in private practice.

[Under] the Rule of Reason [test], the test of legality is:

whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.

Id., 106 S. Ct. at 2017 (quoting Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S. Ct. 242, 244 (1918)). Appellants present no evidence that regulating the number of visits per patient suppresses or destroys competition: In fact, because the number of visits allowed per patient would be a factor considered by those selecting a provider, regulating the number of visits arguably promotes competition.

Appellants also argue that trade was restrained because customers under the PreferredOne plan were "restrained" from obtaining appellants' services after appellants were terminated by NSI. We find this argument unpersuasive, because every managed care medical plan provides financial incentives to use certain providers, thereby "restraining" customers from using other providers.

We conclude that appellants failed to make either an antitrust claim or a restraint of trade claim.

C. Tortious Interference Claim

Appellants claim that respondents tortiously interfered with the alleged contracts between appellants and their patients. However, a contract is a prerequisite to a tortious interference claim, and appellants cannot show that there was a contractual relationship between themselves and their patients.

In Glass Serv. Co., v. State Farm Mut. Auto. Ins. Co., 530 N.W.2d 867 (Minn. App. 1995), review denied (Minn. June 29, 1995), a glass repair company not on the list of State Farm glass repair referrals alleged that State Farm tortiously interfered with its contracts with customers and prospective customers.

[T]here is no evidence that either Glass Serv. or its customers, at the time of scheduling appointments, intended to be legally bound. * * * [We] conclude that making an appointment [to have glass repaired] did not constitute a contract because neither party manifested an intent to be legally bound.

Id. at 870-71.

Appellants attempt to distinguish Glass Serv. by arguing that their customers did not merely make appointments for treatment, but signed contracts. This "contract," however, was actually an "Application for Treatment" on which patients described the type of relief desired and their symptoms, furnished other medical information, assigned payment of medical benefits, and agreed to a release of information and records. The

Application for Treatment does not indicate that the customers intend to be legally bound in a contractual relationship with the chiropractors, and appellants presented no evidence of customers who did consider themselves so bound. Absent a contract, there can be no tortious interference.

D. Fraud and Misrepresentation Claims

A misrepresentation may be made either (1) by an affirmative statement that is itself false or (2) by concealing or not disclosing certain facts that render the facts that are disclosed misleading.

M.H. v. Caritas Family Servs., 488 N.W.2d 282, 289 (Minn. 1992). As examples of alleged misrepresentation, appellants claim respondents told them that they would be reimbursed for services rendered to patients, and that they would be able to practice their profession without undue interference. However, appellants do not show that either of these statements was false at the time it was made or that respondents intended to disavow the terms of the agreement at the time it was made.

A misrepresentation claim also requires a showing that the party seeking to recover suffered damages as a result of reliance on the misrepresentation. Appellants suffered no damages other than the termination of their agreement with NSI, which was terminable at will. We conclude that appellants showed neither the false statement nor the damages required for a misrepresentation claim.

E. Breach of Contract Claim

Appellants' failure to show damages similarly defeats their other breach of contract claim. Appellants assert that they were entitled to arbitration under the contract, but allege only the damages resulting from their termination and do not explain the nexus between these damages and the failure to arbitrate. This failure to show damages is fatal to their breach of contract claim.

F. RICO Claim

RICO imposes civil liability on those who engage in a pattern of racketeering activity; this requires two predicate acts within ten years. H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 229, 109 S. Ct. 2893, 2895 (1989). These acts must be related and must amount to or pose a threat of continued criminal activity. Id. at 239, 109 S. Ct. at 2901. Appellants accuse respondents of three predicate acts: extortion, fraud, and mail fraud.

Extortion is defined as obtaining property from another, with consent, induced by a wrongful use of actual or threatened force, violence, or fear. 18 U.S. C. ' 1951(b)(2). Appellants argue that respondents' threat to terminate their contract if they exceeded the required number of visits per patient was extortion because the threat caused them to fear economic loss. They offer no support for the view that threatening to terminate employment because of failure to comply with an employer's standard is extortion, nor do they say what property was allegedly obtained from them through the use of fear of economic loss.

Appellants base their allegation of fraud on the facts that (1) Wieland claimed patients were being well-treated when, in appellants' opinion, they were not being well treated, (2) because NSI used one fee schedule with its providers and another fee schedule with PreferredOne. Appellants furnish no evidence of patients who were not well-treated, nor do they allege that anyone relied on this statement or was damaged by it. Respondents explain that NSI's income was derived from the difference between what PreferredOne paid for services and what NSI paid to the providers of those services. We see no fraud in either Wieland's statement or the two fee schedules.

Finally, appellants cite Pearlstine Distrib., Inc. v. Freixenet USA, Inc., 678 F. Supp. 133, 136 (D.S.C. 1988), to argue that loss of the right to compete may imply predicate mail fraud acts under RICO. Pearlstine dismissed a RICO counterclaim.

The counterclaim states that Pearlstine sent bills and other writings through the mails, but the connection between sending bills and concealing anti-competitive practices is not apparent to the court, and the term "other writings" certainly does not reflect the specificity sought by [Fed. R. Civ. P. 9(b)].

Id. at 137. We are not persuaded by appellants' argument because it would entitle any provider of medical services not listed by a particular managed care plan to bring a RICO action against that plan for using the mail to publicize its lists of providers. Appellants' claim of mail fraud because NSI used the mail to communicate that appellants were no longer providers deprived them of their right to compete is equally unpersuasive. Appellants are still free to practice as chiropractors, and their former patients are still free to consult them: they have not been deprived of their right to compete. We conclude there was no RICO violation.

2. The Taxing of Costs and Disbursements

Appellants object to the district court's awarding respondents deposition transcript fees, service of process fees, and photocopying charges. Awarding of deposition costs to the prevailing party lies within the discretion of the district court. Romain v. Pebble Creek Partners, 310 N.W.2d 118, 123-24 (Minn. 1981). In every district court action, the prevailing party shall be allowed costs. The district court has discretion in determining which is the prevailing party. In re Gerschow's Will, 261 N.W.2d 335, 340 (Minn. 1977).

Here, the court found that most of the depositions were noticed by appellants, that the depositions were necessary to the parties and the court, and that respondents had been obligated to incur copying costs to provide copies for appellants pursuant to the Rules of Civil Procedure. We see no basis for holding that the district court abused its discretion in making this award.

No genuine issue of material fact precludes this summary judgment; no error of law was made in concluding that appellants failed either to make or to support their various claims and that respondents are entitled to their fees and costs.

Affirmed.


Footnotes

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, ' 10.

[1]NSI is now known as Health Services Management, Inc.

[2]We are aware that appellants' federal antitrust claims are not properly before this court, because federal courts have exclusive jurisdiction over such claims. AMF Pinspotters Inc. v. Harkins Bowling, Inc., 260 Minn. 499, 500, 110 N.W.2d 348, 349 (1961).