Tredrea v. Anesthesia & Analgesia, P.C.

Genesis Medical Center (Genesis) was a hospital in Davenport, Iowa, that employed 15 anesthesiologists. After receiving negative evaluations from the Iowa Board of Medical Examiners, Genesis decided to hire a single anesthesiology group to provide anesthesiology services. Genesis entered into a contract with Anesthesia & Analgesia, P.C. (A & A) (defendant) that made A & A Genesis’s exclusive provider of anesthesiology services. Seven of Genesis’s on-staff anesthesiologists were employed by A & A, and nine were not. Because A & A did not have enough anesthesiologists in its group to cover Genesis’s needs, the contract provided that Genesis could hire Genesis’s current anesthesiologists as independent contractors so long as Genesis entered into agreements with those anesthesiologists no later than January 31, 1995. Additionally, the contract provided that A & A could not unreasonably withhold its consent to any extensions that Genesis might request to the January 31 deadline. On January 10, Genesis made offers of employment to its eight on-staff anesthesiologists who did not work for A & A. The deadline for the doctors’ acceptance was January 25, 1995. All eight initially refused the terms of their offers. Genesis extended its deadline to February 2, then February 10, then February 15. On February 17, doctors Colin Tredrea and Douglas Wells (plaintiffs) accepted Genesis’s offer. A & A agreed to the first two extensions, but refused to consent to the third extension. Doctors Tredrea and Douglas sued A & A and other defendants claiming, among other things, that they were third-party beneficiaries of the contract between Genesis and A & A, and that contract had been breached by A & A. The jury found in favor of Tredrea and Wells, awarding them more than $300,000 each in damages. A & A appealed, arguing that Tredrea and Wells lacked standing to sue because they were not third-party beneficiaries under the contract, and that A & A did not breach the contract.