Physician Not a Party/Beneficiary to Hospital–Clinic PSA; Loss of Call-Rotation Eligibility Is Material Breach Justifying For-Cause Termination

1. Introduction

This appeal arises from a breakdown in a trauma-call coverage arrangement that linked (1) a hospital’s trauma-call rotation, (2) a professional services agreement (“PSA”) between the hospital and a physician group, and (3) an individual surgeon’s employment agreement with that group. Plaintiff-appellant Sheila Garvey, a surgeon employed by Ogden Clinic Professional Corp. (the “Clinic”), performed emergency trauma surgery on a rotating on-call basis at Columbia Ogden Medical Center, Inc. (the “Hospital”) through the Clinic’s PSA with the Hospital.

After the Hospital received multiple complaints about Garvey’s behavior, it barred her from participating in the trauma-call rotation (without revoking her hospital privileges). The Clinic then terminated her employment, citing her inability to meet the employment agreement’s call-schedule requirements. Garvey sued both entities, alleging Utah contract and tort claims and federal discrimination claims (Title VII and the ADEA). The district court granted summary judgment on all claims, and the Tenth Circuit affirmed.

2. Summary of the Opinion

The Tenth Circuit affirmed across the board, concluding Garvey failed to raise a genuine dispute of material fact on any claim. In doing so, the court articulated several practical rules with particular importance for hospital-physician group arrangements:

• PSA enforceability: Garvey was neither a party to the PSA nor an intended third-party beneficiary under Utah law; she could not sue the Hospital for breach of the PSA.
• For-cause termination: The employment agreement’s “call-schedule requirements” necessarily implied the ability to participate in the call schedule; once the Hospital barred her from trauma call, she materially breached that term, giving the Clinic cause to terminate.
• Implied covenant limits: The implied covenant of good faith and fair dealing could not be used to impose a new duty on the Clinic to investigate the Hospital’s decision or explore alternatives before terminating for a material breach.
• Tortious interference: Garvey failed to show “improper means,” and even a deliberate breach of contract—standing alone—does not constitute improper means under Utah law.
• Discrimination claims: Garvey waived any argument that the Hospital was her employer by failing to apply the Tenth Circuit’s employer tests; as to the Clinic, she failed to show pretext because her proposed comparators had temporary absences, while her inability to take trauma call was not shown to be temporary or reversible.

3. Analysis

3.1 Precedents Cited (and How They Shaped the Result)

A. Summary judgment and appellate review

• Lazy S Ranch Props., LLC v. Valero Terminaling & Distrib. Co. — supplied the de novo standard of review and summary-judgment framing, including viewing facts and inferences in the nonmovant’s favor.
• Adler v. Wal-Mart Stores, Inc. — provided the “genuine issue” definition (sufficient evidence for a rational trier of fact to resolve the issue either way).

B. Erie/supplemental jurisdiction: applying Utah law

• Lytle v. City of Haysville — directed the federal court to apply the forum state’s substantive law and predict how Utah’s highest court would rule on Utah claims.

C. Contract enforcement by nonparties (PSA claim against the Hospital)

• Holmes Dev., LLC v. Cook — stated the baseline rule: only parties to a contract can sue on it, with limited exceptions.
• Orlando Millenia, LC v. United Title Servs. of Utah, Inc. — framed the third-party beneficiary exception: only an “intended” (not incidental) beneficiary may enforce.
• Wagner v. Clifton (quoting Broadwater v. Old Republic Sur.) — imposed the stringent intent requirement: contracting parties must have “clearly intended to confer a separate and distinct benefit” on the plaintiff, and courts look to the written contract to assess status.
• Carmona v. Travelers Cas. Ins. Co. of Am. (quoting SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., Inc.) — reinforced that knowledge or expectation that someone may benefit is insufficient; the contract must be undertaken for the plaintiff’s direct benefit and must affirmatively make that intention clear.

These authorities anchored the court’s conclusion that a physician working under a group’s PSA is not automatically a contracting party and is not a third-party beneficiary absent clear contract language conferring a direct, separate benefit.

D. Preservation doctrines (forfeiture/waiver)

• Richison v. Ernest Grp., Inc. — supported the finding that Garvey forfeited an implied-in-fact contract theory by not raising it below.
• Savant Homes, Inc. v. Collins — supported waiver when a forfeited issue is not argued under plain-error review on appeal.
• Simpson v. T.D. Williamson Inc. — supported waiver for inadequate briefing (used regarding Garvey’s attempt to treat the Hospital as an “employer”).

E. Contract interpretation and “inability to perform” as breach justifying termination

• Co-Diagnostics Inc. v. HuKui Tech. Inc. — supplied a Utah contract-law reference point for breach analysis.
• Saunders v. Sharp — supported that contract interpretation is a question of law.
• Bonneville Distrib. Co. v. Green River Dev. Assocs., Inc. — critical to the Clinic’s defense: a breach resulting from inability to perform can be “adequate legal justification” for the other party to stop performing (here, to terminate for cause), even where the breaching party’s inability stems from circumstances outside its control.

F. Implied covenant of good faith and fair dealing

• S.S. ex rel. Shaffer v. IHC Health Servs., Inc. — affirmed the covenant inheres in every contract under Utah law.
• Bear v. LifeMap Assurance Co. (quoting Backbone Worldwide Inc. v. LifeVantage Corp.) — described the covenant’s protective function: preventing intentional injury to the other party’s contractual benefits and preventing obstruction of performance.
• Oakwood Vill. LLC v. Albertsons, Inc. — supplied the limiting principle that proved dispositive: the covenant cannot create new rights or duties the parties did not agree to.

G. Tortious interference with economic relations (improper means)

• Harvey v. Ute Indian Tribe of Uintah & Ouray Rsrv. (quoting Eldridge v. Johndrow) — provided the three elements: intentional interference, improper means, and injury.
• Harvey (quoting Anderson Dev. Co. v. Tobias) — defined improper means as conduct contrary to statutory, regulatory, or common law, or in violation of established trade/professional standards.
• Leigh Furniture & Carpet Co. v. Isom (quoting Top Serv. Body Shop, Inc. v. Allstate Ins. Co.) — offered examples of improper means and supplied the key rule applied here: a deliberate breach of contract, by itself, is not “improper means,” absent an immediate purpose to injure the other contracting party.

H. Discrimination frameworks: “employer” status, McDonnell Douglas, and pretext

• Bennett v. Windstream Commc'ns, Inc. — stated the ultimate burden of proving intentional discrimination and set up the circumstantial evidence framework.
• Knitter v. Corvias Mil. Living, LLC — identified the three tests for determining “employer” status in different contexts: the hybrid test, the joint-employer test, and the single-employer test.
• Bristol v. Bd. of Cnty. Comm'rs — cited within Knitter to explain the single-employer concept (two entities effectively constituting one employer).
• McDonnell Douglas Corp. v. Green — provided the three-step burden-shifting framework for circumstantial discrimination claims.
• Riggs v. AirTran Airways, Inc. (quoting Rivera v. City & County of Denver) — provided the definition of pretext (weaknesses/implausibilities/inconsistencies such that a factfinder could find the stated reason unworthy of credence).
• Riggs (quoting George v. Leavitt and Mandell v. County. of Suffolk) — guided the comparator analysis at summary judgment: while “similarly situated” is often a fact question, the plaintiff must produce enough evidence of sufficient similarity to support an inference of discrimination.

3.2 Legal Reasoning

A. The Hospital did not breach a contract enforceable by Garvey

Garvey’s lead theory was that the Hospital breached the PSA by removing her from trauma call. The court rejected it at the threshold: the PSA was “entered into between [the Hospital] and [the] Clinic,” was executed by their representatives, and Garvey was neither a named party nor a signatory. The court then rejected Garvey’s attempt to treat herself as a third-party beneficiary because the PSA did not affirmatively show that the contracting parties “clearly intended to confer a separate and distinct benefit upon” her; it primarily structured service delivery by a corporate “contractor” through its “representatives.”

The court also disposed of a second Hospital contract theory—an implied-in-fact contract arising from Hospital policies—on preservation grounds: Garvey did not raise it below, and did not seek plain-error review on appeal.

B. The Clinic’s termination for “cause” was justified by loss of call-rotation eligibility

The employment agreement required Garvey to “meet the performance standards and clinic and call[-]schedule requirements” for her specialties. The court agreed with the district court that this necessarily included the ability to participate in the call schedule. Once the Hospital barred her from trauma-call participation, she could not satisfy a material term of the employment agreement. Under the agreement’s for-cause provisions, that material breach entitled the Clinic to terminate immediately, even if her prior performance was otherwise satisfactory.

The court rejected alternative-performance arguments (hiring another surgeon, other surgeons covering her shifts, or the Hospital reversing course) because: (1) Garvey pointed to no contractual provision requiring the Clinic to explore alternatives to termination; and (2) she did not produce evidence creating a genuine dispute that the Hospital’s trauma-call decision was temporary or likely to be reversed. The fact that privileges were not revoked did not imply future reinstatement to the trauma-call rotation.

C. The implied covenant could not be used to create a duty to investigate or “fight” the Hospital’s decision

Garvey argued the Clinic acted in bad faith by failing to investigate and consider alternatives before terminating her. The court relied on the Utah principle that the implied covenant “cannot be read to establish new, independent rights or duties to which the parties did not agree.” Because the Clinic terminated her for material breach of the agreement (not for alleged misconduct requiring investigation), the court found no contractual basis for a pre-termination investigation duty in that circumstance. Garvey’s reference to noncompete provisions did not supply such a duty; the court found no textual hook for an obligation to challenge the Hospital’s decision.

D. Tortious interference failed for lack of “improper means”

Even if the Hospital’s message to the Clinic (remove Garvey from the trauma-call panel to continue the PSA) was an intentional interference with Garvey’s relationship with the Clinic, the claim still required proof of “improper means.” Garvey attempted to characterize the Hospital’s conduct as violating an implied contract, the PSA, or the performance improvement plan (PIP). The court concluded that—even assuming arguendo some breach-like wrong—Utah law does not treat a deliberate breach of contract, standing alone, as “improper means.” And Garvey did not argue (or show) the Hospital acted with the immediate purpose of injuring her, which is the narrow circumstance in which breach can become “improper means.”

E. Discrimination claims: the Hospital “employer” issue was waived; the Clinic’s reason was not shown pretextual

As to the Hospital, the district court granted summary judgment because Garvey produced no evidence the Hospital employed her. On appeal, Garvey did not engage the governing “employer” tests identified in Knitter v. Corvias Mil. Living, LLC; she instead cited control over trauma-call participation, removal request, and credentialing policies without legal analysis. The Tenth Circuit deemed the argument inadequately briefed and waived.

As to the Clinic, the court applied McDonnell Douglas. The district court found (and the court of appeals did not disturb) that Garvey established a prima facie case and that the Clinic articulated a legitimate, nondiscriminatory reason: she was in breach of her employment agreement after the Hospital disallowed her from participating in trauma call. The case turned on pretext.

Garvey’s comparator evidence failed because the physicians she identified were unavailable due to parental leave and military deployment—temporary absences—while her exclusion from the trauma-call rotation was not shown to be temporary. Without evidence of a similarly situated male or younger physician who was also barred from the trauma-call rotation yet treated more favorably, the court held no reasonable jury could infer pretext.

3.3 Impact

A. Hospital–group PSAs: individual physicians typically cannot sue on the PSA absent clear beneficiary language

The opinion reinforces a drafting-and-litigation reality: when a hospital contracts with a physician group entity, individual physicians working under that umbrella are ordinarily neither parties nor intended beneficiaries. Plaintiffs in Garvey’s position must identify explicit PSA language that the agreement was undertaken for their direct benefit, not merely that they will foreseeably perform services and receive indirect economic benefit as employees or shareholders.

B. Employment agreements tying compensation/continued employment to call obligations carry significant “external risk”

The decision treats “call-schedule requirements” as practically inseparable from continued eligibility to take call at the relevant facility. When a third party (here, the Hospital) removes a physician from a call rotation central to the job, that event can amount to inability to perform and a material breach, triggering for-cause termination if the contract is written that way. The case therefore incentivizes:

• Physicians to negotiate clearer protections (e.g., cure periods, reassignment rights, investigation requirements, or “facility action” clauses).
• Groups to define call obligations, alternatives, and termination triggers with precision (including what happens if a hospital restricts call participation).

C. Implied covenant claims in Utah: courts will not use “good faith” to add procedural requirements to termination rights

The court’s reliance on Oakwood Vill. LLC v. Albertsons, Inc. underscores that, in Utah, implied covenant theories cannot manufacture new pre-termination processes where the contract does not reasonably imply them—especially when termination rests on a discrete contractual trigger (material breach) rather than a discretionary or fault-based judgment (misconduct) where internal policies might matter.

D. Tortious interference: “improper means” remains a high bar, particularly where the alleged wrong is contract-adjacent

By reiterating Leigh Furniture & Carpet Co. v. Isom, the opinion signals that plaintiffs must identify statutory/regulatory violations, recognized torts, or trade-standard violations—or show breach “for the immediate purpose of injur[]ing” the other party—rather than relying on asserted contractual violations alone.

E. Employment discrimination litigation: briefing discipline and comparator specificity

• Employer status: The Hospital portion is a cautionary tale—failure to apply Knitter v. Corvias Mil. Living, LLC (hybrid/joint/single employer tests) can doom claims on appeal through waiver.
• Comparators: The Clinic portion emphasizes that comparators must match the salient feature that motivated the employer’s action. Here, temporariness mattered: temporary leave is not comparable to an apparently indefinite removal from a core job duty.

4. Complex Concepts Simplified

• Summary judgment: A court may end a case before trial if no genuine dispute of material fact exists and the movant is entitled to judgment as a matter of law.
• Third-party beneficiary: A nonparty can enforce a contract only if the contract clearly shows it was made for that person’s direct benefit, not merely that they will incidentally benefit.
• Implied-in-fact contract: A contract inferred from conduct/policies rather than explicit written terms; here, the theory failed because it was not raised in the district court.
• Forfeiture vs. waiver (appeal): Forfeiture is failing to raise an issue in time; waiver is giving it up (including by not arguing plain error after forfeiture or by inadequate briefing).
• Implied covenant of good faith and fair dealing: A background rule requiring parties not to sabotage the other party’s contractual benefits, but it cannot add brand-new duties not grounded in the contract.
• Tortious interference—“improper means”: Interference becomes actionable only when done through wrongful methods (e.g., defamation, threats, deceit, statutory violations); a breach of contract alone usually is not enough.
• McDonnell Douglas framework: In circumstantial discrimination cases: (1) plaintiff makes a prima facie showing; (2) employer offers a legitimate reason; (3) plaintiff must show that reason is pretext.
• Pretext and comparators: A plaintiff may show pretext by proving similarly situated employees outside the protected class were treated better—but the “similarly situated” match must be meaningful on the key facts driving the decision.

5. Conclusion

Garvey v. Ogden Clinic Professional Corp. affirms a set of contract-and-employment principles with real operational consequences in healthcare: individual physicians generally cannot enforce hospital–group PSAs absent clear intended-beneficiary language; call-coverage eligibility can be treated as a core contractual requirement, such that loss of eligibility may constitute a material breach justifying for-cause termination; and Utah’s implied covenant will not be used to impose extra-contractual investigatory or alternative-accommodation duties. On the tort side, the decision reaffirms that “improper means” is a demanding element not satisfied by contract-violation allegations alone. Finally, the opinion underscores the importance of properly briefing “employer” status tests and producing genuinely comparable comparators to survive summary judgment in discrimination cases.