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Universal Health Services, Inc. v. Thompson

If a contract is subject to two or more reasonable interpretations after applying the ordinary rules of contract construction, the contract is ambiguous.

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Motion for rehearing overruled January 25, 2002.

This contract dispute concerns an innovative concept for the delivery of women’s healthcare services that disappointed its investors. The parties are a group of successful physicians who specialize in obstetrics and gynecology (the Physicians), *fn1 and a corporate investor in the health care field, Universal Health Services, Inc. and its subsidiaries (Universal). Together, the Physicians and Universal launched a project to combine physicians’ offices and a hospital in one facility, to be known as the “Renaissance Women’s Center.” The Renaissance concept was designed to ease the traditional stresses and strains that accompany an OB/GYN’s practice. No longer would an OB/GYN have to lose valuable time by going back and forth between her office to see regularly scheduled patients, and area hospitals to deliver babies; the Renaissance Center offered her the time-saving convenience of seeing patients in her office upstairs and delivering babies in the hospital downstairs.

Under the parties’ agreement, Universal owned the facility, operated the hospital, and leased the offices to the Physicians. While the Physicians profited from this arrangement, Universal’s financial expectations for the Center were never realized; the hospital lost money and Universal decided to close the doors after two years of operation.

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