Employment Law Matters : Employment Lawyer & Attorney : Ogletree Deakins Law Firm : Labor Law, Human Resources

It is generally understood that employees can bring claims for hostile environment, wrongful termination, or even “constructive discharge” – where an employee claims that an employer made working conditions so intolerable that a reasonable employee would feel compelled to resign. What is less clearly understood is the extent of the economic damages for which a hospital or health care system may be liable in an employment-related lawsuit. Because a successful litigant in an employment case often is entitled to compensatory damages, lost wages and, in some instances, front pay, a lawsuit by a physician-employee can create the potential for large monetary damage awards. In a clear example of this fact, a Texas jury recently awarded more than $3.6 Million to an Egyptian-born physician who claimed that he was forced to resign after race-based comments from another employed physician. Nassar v. Univ. of Texas Southwestern Medical Center at Dallas, N.D. Tex., No. 08-1337, jury verdict, 5/26/10.

Naiel Nassar, a U.S. citizen since 1990, was born in Egypt and attended medical school there. He then did a medical residency and a fellowship in infectious diseases at the University of California, Davis. In 2001, Nassar was hired by the University of Texas Southwestern Medical Center (UTSW) as an Assistant Professor of infectious disease medicine. Part of Nassar’s duties required that he provide patient care at the Amelia Court clinic, an outpatient HIV/AIDS clinic affiliated with UTSW.

In 2004, UTSW hired Dr. Beth Levine as the chief of its infectious disease program. In that role, Levine directed that Nassar begin billing for the services he provided to the HIV clinic. Nassar objected to the directive, arguing that his salary for clinical services was fully funded by a federal grant, and stating that billing the patients therefore would be “double dipping.” Nassar claimed that Levine also began to “harass” him, making derogatory statement about his race and his Muslim religion, including one comment that “middle easterners were lazy.” His allegations were supported by a clinical supervisor, whose affidavit described a “disconnect between Dr. Levine’s statements and the reality of Dr. Nassar’s work.” Based on his concerns about Levine, Nassar ultimately applied for employment at Parkland Health & Hospital System in 2006. Parkland made preparations to hire Nassar, even drafting a job offer letter, but never formally hired Nassar. Nassar contended that UTSW retaliated against him by blocking the offer from Parkland. Nassar ultimately filed a lawsuit in federal court alleging discrimination and retaliation. Levine strongly disputed Nassar’s allegations, as did UTSW.

At trial, the jury was presented with only two questions: (1) Whether Nassar was constructively discharged because of his race, national origin, or religious preference; and (2) Whether UTSW retaliated against Nassar by blocking or objecting to his employment by Parkland after Nassar complained about his treatment at UTSW. After one hour of deliberations, the jury answered “Yes” to both questions. Two days after the May 24, 2010 verdict, the same jury awarded $3.2 Million in compensatory damages and $438,000 in lost back pay to Nassar. The court now will determine whether Nassar’s claim for lost front pay – which could range from $200,000 to $4 Million – should be paid as part of the award. In addition, Nassar has made a claim for attorney fees, which also will be heard by the court. UTSW has already stated that it will be appealing the verdict and the resulting judgment.

Hospital and healthcare entities that are contemplating direct hiring of physicians should take the time to read the jury instructions and verdict sheet on which the decision in the jury’s decision was based. (Find a copy on my blog at www.employmentlawmatters.net.) Most notable is the court’s instruction in which it defines “constructive discharge” as a resignation from working conditions “so intolerable that a reasonable employee would feel compelled to resign.” The court goes on to point out that to prove constructive discharge, Nassar “need not show that his race, national origin, or religions preference was the sole or even the primary motivation for [UTSW’s] conduct.” He simply had to prove that his protected characteristics “played a motivating part in [UTSW’s] conduct, even though other factors may also have motivated [UTSW].

Employers, including health care entities, should ensure that supervisors and managers are trained to recognize and remedy discriminatory conduct, to assure that such conduct does not become viewed as a “motivating part” of any adverse employment action taken by the employer.
 

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Under certain circumstances, 42 U.S.C. §1981 (Section 1981) creates a federal cause of action for individuals claiming intentional racial discrimination. To support such a claim, a plaintiff must allege that he is a member of a racial minority, and that he was discriminated against within a particular group of activities set forth in the statute. Those activities include the right to “make and enforce contracts . . . as is enjoyed by white citizens.” The 11th U.S. Circuit Court of Appeal recently dismissed the claims of a physician who claimed that the suspension of his medical staff privileges violated rights protected by Section 1981, holding that such privileges did not constitute contractual rights as defined by the statute. Jimenez v. Wellstar Health System, 11th Cir., No. 09-10917, February 18, 2010.

Dr. Omar F. Jimenez, an African-American physician with a specialty in neurosurgery, held medical staff privileges at Wellstar Health System in the state of Georgia. In January 2006, Jimenez was asked to appear before Wellstar Surgery Department’s Medical Care Evaluation Committee to address a number of complaints received by the Committee regarding Jimenez’ medical performance. The complaints included allegations that Jimenez had failed to respond promptly to emergency room calls, had failed to make patient rounds in a timely manner, and had failed to manage certain surgeries appropriately. Based on those allegations, Wellstar suspended Jimenez’ medical staff privileges, which meant that Jimenez was precluded from treating patients at Wellstar’s hospitals. Although Jimenez initially requested a hearing on the suspension, a year went by within which no hearing was held, for reasons for reasons not explained in the Court’s opinion. At that point, Jimenez withdrew his request.

Jimenez ultimately filed a federal law suit, including a claim under Section 1981 alleging race discrimination based upon contractual rights. He claimed that Wellstar discriminated against him when it suspended his privileges and when it delayed a hearing on that suspension, and that those privileges established a contract between Jimenez and Wellstar. The district court dismissed the lawsuit for Jimenez’ “failure to state a claim,” and the case was appealed. The Eleventh Circuit upheld the dismissal, finding that the suspension of Jimenez’ medical staff privileges did not violate rights protected under Section 1981.

Wellstar’s policies include specific language that membership on the system’s medical staff “does not create a contractual relationship between Wellstar or any Medical Staff and the Medical Staff Member.” In addition, medical staff members at Wellstar must meet certain minimum objective criteria, and failure to do so can result in automatic termination of medical staff privileges, which runs counter to a typical contractual relationship. Importantly, under Georgia state law, medical staff bylaws do not create a per se contractual right to the continuation of medical staff privileges. According to the Court, interpreting the bylaws as a contract in Jimenez’ case would run counter to the state’s policy of allowing a hospital to suspend or withhold privileges from doctors that it believes are unqualified to serve on its medical staff. Therefore, Jimenez did not the possess the contractual relationship necessary to support his Section 1981 claim.

It is noteworthy that because Jimenez was not an employee of Wellstar, he was unable to base his claim for racial discrimination on Title VII of the Civil Rights Act, the federal “anti-discrimination” statute which prohibits race and national origin discrimination (as well as gender and religious discrimination) by employers against employees. Had Jimenez been a direct employee of the hospital system, the fact that his medical staff privileges did not constitute a contract would not have precluded a federal claim by Jimenez, because Title VII would have been available to him. Health care providers that are moving toward an employment model with physician staff members should take this issue into consideration and should assure that managers and supervisors are trained to recognize and resolve complaints of discrimination when they arise, in order to avoid legal liability under Title VII, regardless of whether Section 1981 applies.
 

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In an unpublished opinion, the 3d U.S. Circuit Court of Appeals has reminded employers of the importance of acting consistently with written policies, and of documenting that action. Coleman v. Blockbuster, Inc., 3d Circ., No. 08-4056, November 17, 2009. In that case, the Court upheld summary judgment in favor of an employer on the basis of the company’s ability to support its proffered “legitimate business reason” for the termination of a company manager for closing a store early and leaving the premises for a family emergency.

Tyra Coleman, an African American female, was hired by Blockbuster in September 2003 and was promoted to the position of store manager a few months later. However, after a series of disciplinary actions, Coleman was fired on June 22, 2004. In April 2004, Coleman had received two written “Corrective Action Reports” (CARs) for her store’s poor operational performance. On June 11, she received a third CAR when she missed a mandatory team meeting, and brought her two-year-old grandson to work with her. The third CAR was treated as a last chance agreement and read, in part, “Failure to improve will result in termination of employment.” On June 15, 2004, Coleman closed the store early and left the premises, ostensibly because of a medical emergency involving her minor son. Her employment was terminated the following week.

Coleman ultimately filed a lawsuit, claiming that the actual reason for her termination was race discrimination. The district court granted summary judgment in favor of Blockbuster; that decision was upheld on appeal.

Employment discrimination claims typically are analyzed under a “burden shifting” framework which requires an employer to offer a legitimate business reason for its action. In this case, Blockbuster argued that it acted pursuant to its written policy of progressive discipline. Coleman countered that the company acted “too harshly” when it fired her for her son’s emergency, and asserted that such harshness was an indication that the firing was racially motivated.

The Third Circuit pointed to the fact that whether or not Coleman believed her termination to have been “harsh,” she was unable to demonstrate that Blockbuster treated her less favorably than other, non-minority employees. To the contrary, the Court found that “Blockbuster came forward with solid evidence to demonstrate that the reason for Coleman’s termination was her dereliction of duty.” The Court pointed out that the company’s operating procedures allow the company certain discretion in its disciplinary measures, including the application of “more stringent penalties” for an employee – like Coleman - who already is in the progressive disciplinary system at the time of an additional infraction. While Coleman disputed certain factual evidence, she was unable to show any evidence that even suggested that her termination was motivated by her race, and not by her “dereliction of duty,” as stated by the company.

There is no doubt that Blockbuster’s documentation of its disciplinary actions, and its compliance with its progressive disciplinary policy (which gave it broad discretion to accelerate disciplinary measures when deemed appropriate) were the keys to its success against Coleman’s claims of discrimination in this case.
 

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Courts typically have dismissed discrimination claims under Title VII if those claims were made by an independent contractor, rather than by an “employee” of the company. However, 42 U.S.C. §1981 (“Section 1981”), which prohibits racial discrimination in the formation of contracts, states that “all persons” shall have the same right “to make and enforce contracts as is enjoyed by white citizens.” In a case of first impression for the 3d U.S. Circuit Court of Appeals, that court has followed prior decisions of three sister-appellate courts in holding that an independent contractor may sue for race discrimination under Section 1981. Brown v. J. Kaz, Inc. d/b/a Craftmatic of Pittsburgh, 3d Circ., No. 08-2713, Sept. 11, 2009.

Craftmatic is a distributor of adjustable beds that sells its product through sales representatives. Those representatives schedule their own appointments to visit potential customers’ homes, provide their own equipment and means of transportation for those sales calls, and are paid on commission. Each sales person signs an “independent contractor” agreement with Craftmatic.

In 2006, Kimberly Brown, an African-American female, responded to an ad in which Craftmatic was seeking sales representatives, and then registered for a three-day training and an interview session in Pittsburgh with the company. Brown traveled by bus to Pittsburgh from her home in Cleveland for the session – she testified that the reason was that she preferred not to drive in unfamiliar places. She attended the training with two male applicants, neither of whom was African-American. Regarding his initial meeting with Brown, Craftmatic’s recruiting manager, Jay Morris, later stated that he knew that she was “going to be a headache” because she “asks a lot of questions.”

On the final day of training, Morris approached the applicants, and extended his hand to all three. He shook hands with the two men and exchanged pleasantries with them. For unexplained reasons, Brown refused to shake Morris’ hand. Morris responded with a remark, the content of which is disputed. Brown states that the remark was a racial slur, while Morris says that he was expressing his disappointment that Brown refused to shake hands, equating it to a racial rebuff. This exchange was followed by some heated words, during which Morris stated that if he had any voice in the decision, Brown would not work for Craftmatic. With input from Morris, the company ultimately decided not to use Brown as a sales representative.

Brown ultimately sued Craftmatic, claiming race discrimination under Title VII, the Pennsylvania Human Relations Act, and Section 1981. The district court dismissed the Title VII and PHRA claims on the basis that Brown was not an employee. That court also ruled that while Brown’s independent contractor status did not preclude her from bringing claims under Section 1981, Brown did not provide evidence sufficient to support her claims under that statute. The Third Circuit disagreed, taking issue with the lower court’s conclusion that Craftmatic would have been equally concerned with Brown’s behavior, even if no racial slurs were made. The appeals court said that instead, the real question was whether the same decision would have been made if Brown’s race was “taken out of the equation” altogether. The Third Circuit then reversed the summary judgment on the Section 1981 claim, allowing that claim to go forward.

The Third Circuit’s decision does not mean that Brown has proven her case of discrimination. What it means, however, is that there are disputed issues of fact, and that those issues should be decided by a jury. The primary take-away from this case is that an independent contractor can bring a racial discrimination claim under Section 1981 against a company that allegedly discriminates in the formation of its contracts, even without an actual employee/employer relationship. Companies that regularly rely on such contractors should be sure that hiring, training, and terminations are done consistently and in a non-discriminatory manner, in order to avoid the issues presented in this case.
 

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When an individual claims to have been racially harassed by co-workers, he or she must show that the employer was negligent either in discovering or remedying the harassment. An employer can avoid liability for co-worker harassment if it takes prompt and appropriate remedial action that is likely to prevent the harassment from recurring. Recently, the 7th U.S. Circuit Court of Appeals analyzed specific actions taken by a company after a noose was found hanging in a workplace, and found those actions to have been sufficient to uphold summary judgment in the company’s favor. Porter v. Erie Foods International, Inc., 7th Cir. No 08-1996, August 7, 2009.

Tremeyne Porter was the only African-American working on the third shift in Erie Foods’ Rochelle, Illinois facility. During his work shift on August 12, 2004, Porter saw a noose, made out of white nylon rope, hanging from a piece of machinery. An on-site supervisor, Santos, directed another employee to take down the noose, and then discussed the matter with Porter. She asked Porter if he knew who was responsible, but he denied knowing who the perpetrator was. Santos then tacked the noose to a bulletin board in her office, which was within sight of individuals passing that office. She later testified that she did so to remind her to follow up on the issue.

Early the next morning, Santos followed up with the first shift supervisor – asking if he had any information about the noose – and then informed her own supervisor (Jacobs) and a member of the human resources department (Goffinet) about the matter. Concerned, Goffinet immediately spoke to his own supervisor about the matter. That evening, Goffinet held a group meeting with Santos, Porter, and the entire third shift, stating that workplace harassment would not be tolerated, and reiterating the company’s anti-discrimination policy. Subsequently, Goffinet spoke privately with nine of the 15 third-shift workers, and held an extensive discussion with Porter. Porter told Goffinet that he “would not say” who made the noose, because he didn’t want anyone to be fired.

Around this same time, another co-worker, Alverez, showed a noose to Porter and to some other employees; Alverez then stated to Porter that if Porter showed the noose to anyone, he would “look for him,” which Porter interpreted as a threat to him and to his family. Shortly after, Goffinet followed up with Porter, asking for additional information on the reported harassment. During that meeting, Porter mentioned that he had been threatened by another employee, but would not identify that person. Goffinet then asked whether Porter wanted to change shifts. Porter declined the offer. Santos also continued to follow up with Porter during subsequent shifts, asking whether he knew who hung the noose, and asking first and second shift supervisors if they had obtained any further information.

On August 14, Porter filed a police report about the nooses, including co-worker names, but stated that he did not want the police to visit the workplace or the individuals – he simply wanted the harassment to stop. On August 16, a locker fell on Porter while he was changing into his work clothes. Porter was hit by the falling locker, but suffered no injury. After Porter reported the incident to Santos, Goffinet had the lockers bolted to the wall within a day.

On August 19, Porter quit his job. He ultimately filed a lawsuit alleging race-based harassment, constructive discharge, and retaliation. The district court granted summary judgment in Erie’s favor. That decision was upheld on appeal by the Seventh Circuit, based largely on the actions taken by Erie during the brief period of Porter’s employment.

Because Title VII is not a “strict liability” statute, an employer can defend against allegations of co-worker harassment by showing prompt and effective response to reports of such harassment. In this case, the Court determined that the steps taken by Santos and Goffinet show that they took the issue seriously and made a reasonable effort to bring the harassment to an end. (However, the Court also labeled Santos’ unfortunate placing of the noose on her bulletin board as “ill advised,” and found that it may have indicated a “lack of recognition of the powerful message of racial hatred that a noose evokes.”) The facts that both of these managers informed their own supervisors of the incident, made attempts to find out who was responsible, reminded employees of company anti-discrimination policies, and followed up with Porter, formed the basis of prompt and effective remedial action sufficient to defend against Porter’s claims of co-worker harassment. Further, because an employee has a duty to reasonably “avail [himself] of the employer’s preventive or remedial apparatus,” Porter’s failure to fully report or cooperate in the investigation of the harassing incidents undermined his claims. According to the Court, an employee’s subjective fears of confrontation or retaliation does not alleviate the duty to alert an employer to alleged harassment.

The important point for employers in this case is the Court’s statement that “In assessing corrective action, our focus is not whether the perpetrators were punished by the employer, but whether the employer took reasonable steps to prevent future harm.” Those “reasonable steps” will differ, depending on the specific facts of the situation being addressed. However, the actions taken by the company in this case should stand as a minimum checklist of a “prompt and effective” reaction to incidents of co-worker harassment.
 

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