ICJR Wins Appeal Against Former Management Company

Trial Court Ordered to Set a Monetary Award for Breach of Fiduciary Duty

News provided by

International Congress for Joint Reconstruction

Jan 13, 2021, 08:00 ET

TAMPA, Fla., Jan. 13, 2021 /PRNewswire/ -- The International Congress for Joint Reconstruction (ICJR) is pleased to announce that an appellate court ruling in California will allow ICJR to receive monetary restitution from its former management company, Center for Healthcare Education and Research, Inc. (CHE), and the president of CHE, Mark Sacaris, for undisclosed profits obtained while the two were in a fiduciary relationship with ICJR.

In its lawsuit against CHE and Mr. Sacaris, ICJR alleged that they had secretly profited from their relationship with ICJR through undisclosed charges for management services, calculated at more than $1.4 million. The claim was based on the billing practices of CHE and Mr. Sacaris, which ICJR learned of in 2016. The trial court found that ICJR had entrusted management of its affairs to CHE and Mr. Sacaris, and that both betrayed that trust in numerous ways. One of the more significant breaches of trust found by the trial court was CHE and Mr. Sacaris's practice of marking up employee rates (sometimes by as much as 80%) and using ICJR's funds to pay those inflated rates to CHE, all without any disclosure to ICJR.

Upon discovery of these practices (among others), ICJR severed its relationship with CHE and Mr. Sacaris in 2017 and sought disgorgement and restitution of all profits and gains obtained by the illegal and improper acts and omissions of CHE and Mr. Sacaris.

Following a 4-day bench trial in 2019, the judge found that CHE and Mr. Sacaris had breached their fiduciary duties by failing to disclose these significant markups to ICJR. However, the judge ruled that ICJR had failed to prove it suffered monetary damages and was, therefore, not entitled to disgorgement of the secret profits taken by CHE and Mr. Sacaris. ICJR appealed this decision.

The Court of Appeal agreed with ICJR that the trial court had erred in its decision, stating that, "We agree ICJR was not required to show it suffered monetary harm to establish a right to disgorgement of CHE and Sacaris's profits from their undisclosed charges for event management services, and that the trial court erred when it held otherwise."

On this basis, the Court of Appeal reversed the trial court's judgment and remanded the case to the Superior Court of San Diego County for determination of the appropriate monetary award for ICJR. In their decision, the Court of Appeal noted that, "The [trial] court's statement of decision is a scathing indictment of years of misconduct by Sacaris and CHE. On this record, denying ICJR a recovery altogether would fail to recognize the seriousness of their wrongdoing and would fall short of achieving the goal of deterring future misconduct."

No date has been set for the trial court to determine the amount to be awarded to ICJR.

Citation

Center for Healthcare Education and Research, Inc. v. International Congress for Joint Reconstruction, Inc., D076513 (Court of Appeal, Fourth Appellate District, Division One, State of California, November 30, 2020).

About ICJR

ICJR provides quality education for the orthopaedic surgery community through live CME meetings and a website (www.ICJR.net) featuring surgical videos, articles, and news on joint replacement of the hip, knee, and shoulder. Topics we cover include: