A consulting company agreed to perform cost-reduction work for a hospital. The agreement it had with the hospital specified that the hospital could hire the consultancy to perform additional work outside of the scope of the agreement. The hospital did so, hiring the consultancy to prepare an RFP document and negotiate with a potential equipment supplier. After the process was completed, the hospital refused to pay the consultancy for the additional work. The consultancy sued, and the trial court determined that a contract implied in fact existed between the two companies and the hospital was required to pay for the additional work. The appellate panel determined that the trial court had not erred, and it affirmed the decision.
In 2014, Northwest Community Hospital hired ESP Global, an equipment maintenance consultancy company, to assist Northwest in reducing its equipment expenses. Peter Vincer, the president and owner of ESP testified that his company typically assists clients using a two-step approach: first ESP conducts an initial assessment of the client’s equipment service expenditures, and then it recommends cost-reduction strategies accordingly. During the second step, ESP assists the client in implementing the prior recommendation. ESP charges a flat fee for the first step and a contingency for the second step, which is calculated based on the client’s actual savings.
The two parties entered into a contract in June 2014. ESP completed the initial assessment required by the contract in early July 2014, and Northwest paid ESP $10,000. After this, Northwest expressed interest in obtaining additional services from ESP. Specifically, the hospital wanted assistance with a request for proposal that it intended to send to equipment suppliers. The two companies communicated over emailed and agreed to prepare an RFP draft, in exchange for 10% of Northwest’s savings from the RFP over a five-year period. Vincer later sent the RFP draft to Jac Higgins, the interim executive director of Northwest’s supply chain. After Northwest approved the RFP, ESP distributed it to the prospective vendors. Higgins’ employment with Northwest was later terminated. Continue reading ›