SHRM Court Report

Aug 1, 2008
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HR Magazine August 2008 coverA jury awards $8.24 million for misleading references; parents fired after son got cancer prevail; more.

Rave References Prove Costly

Kadlec Medical Center v. Lakeview Medical Center, 5th Cir., No. 06-30745 (May 8, 2008). .

In a case with importance in health care law and employment law, the 5th U.S. Circuit Court of Appeals reversed a lower court decision that would have required a hospital to affirmatively disclose that a physician with privileges to practice at that hospital had left his practice based on performance issues related to drug use. But it upheld a hefty jury award against Louisiana Anesthesia Associates (LAA) for two of its doctors’ glowing job references about the physician.

Kadlec Medical Center and its insurer filed a lawsuit against Lakeview Medical Center and LAA. The lawsuit was based on the termination of Dr. Robert Berry -- a member of LAA with privileges to practice at Lakeview. LAA terminated Berry after he was found to have been impaired while under the influence of prescription drugs. Berry’s drug use was not disclosed in reference letters written by Lakeview Hospital and members of LAA.

Berry subsequently applied to work as a temporary physician at Kadlec Hospital in Washington state. In October 2001, Kadlec began its credentialing process and sent a request to Lakeview for information about Berry.

Although the request included a detailed questionnaire and a signed consent for release of information, the hospital responded with a short letter that stated, “Our records indicate that Dr. Robert L. Berry was on the active medical staff of [Lakeview] in the field of anesthesiology from March 4, 1997, through Sept. 4, 2001.” The letter did not disclose any information about Berry’s on-duty drug use, the investigation into that use or Berry’s termination.

Two LAA physicians also submitted letters to Kadlec, one stating that Berry was an “excellent clinician” and would be an “asset” to any anesthesia practice, and the other recommending him “highly” as an anesthesiologist. Kadlec then credentialed Berry.

In November 2002, a patient for whom Berry acted as anesthesiologist at Kadlec suffered complications related to anesthesia and is now in a permanent vegetative state. The patient’s family sued Kadlec and Berry, and the case was settled for more than $7 million.

Kadlec and its insurer filed a lawsuit against Lakeview, LAA and the individual doctors who supplied the favorable reference letters. A jury awarded $8.24 million to the plaintiffs, and judgment was entered against Lakeview and LAA. The judgments against the individual doctors were ascribed to LAA.

On appeal, the 5th Circuit upheld the judgment against LAA but reversed it as to Lakeview. The court analyzed the claims of intentional misrepresentation and negligent misrepresentation against the defendants. It found that to prove either, the plaintiff first must establish an affirmative duty to disclose information.

The appeals court began by stating that after choosing to write reference letters, the defendants “assumed a duty not to make affirmative misrepresentations” in their letters. It concluded that the LAA defendants made misleading statements, while Lakeview did not.

The court also examined whether the defendants had an affirmative duty to disclose negative information about Berry in the reference letters and concluded that no such duty existed. Based on this analysis, the 5th Circuit reversed the judgment against Lakeview while upholding the judgment against LAA and its physicians.

By Maria Greco Danaher, an attorney with Ogletree Deakins in Pittsburgh.

Discharged Parents of Son With Cancer Sue

Trujillo v. PacifiCorp, 10th Cir., No. 06-8074 (May 7, 2008).

The 10th U.S. Circuit Court of Appeals let a discharged couple proceed to trial with their claim that they were fired in violation of the Americans with Disabilities Act (ADA) after their son suffered a relapse of his brain cancer.

William and Debra Trujillo worked for PacifiCorp in Sweetwater County, Wyo. Mr. Trujillo had worked for the company for more than 25 years. Mrs. Trujillo had worked for the company for eight years. They participated in the company’s self-insured health insurance plan, and their son was covered by the plan.

Their son had the relapse on May 30, 2003, and his cancer treatments for the next six weeks cost more than $60,000. The son died in 2004.

Mr. Trujillo was terminated on June 19, 2003, and Mrs. Trujillo was discharged on Aug. 25, 2003. The reason given for both terminations was time theft -- that they each had put down more hours of work than they had actually worked. The time theft allegedly occurred during a period when all employees’ work schedules were modified because of scheduled maintenance of machinery and while the Trujillos’ son was going through the cancer treatment.

The district court granted summary judgment to the company, ruling that the Trujillos had failed to raise a reasonable inference that the disability of their son was a determining factor in the company’s decision to terminate them.

The 10th Circuit reversed and sent the case back to the trial court. The court ruled that sufficient evidence was presented so a jury could reasonably infer that the company had discriminated against the Trujillos because of their cancer-stricken son. The facts showed that the company was concerned generally with the rising costs of health care and that the insurance costs were factored into the plant’s budget line item for labor costs of each employee. Specifically, the company considered the son’s illness a high-dollar claim and monitored it closely. Moreover, the timing between the son’s relapse and the termination of the Trujillos was deemed significant, as Mr. Trujillo was terminated within three weeks of the relapse and Mrs. Trujillo was terminated within eight weeks.

Further, the court reviewed the company’s legitimate business reason for the terminations -- time theft -- and ruled that the evidence presented by the Trujillos was enough for a jury to reasonably infer that the company’s reasons were pretextual.

By Steve Nakashima, an attorney with Marr Jones & Wang, a Worklaw Network member firm in Honolulu.

Commuting Time Was Not Compensable

Singh v. City of New York, 2nd Cir., No. 06-2969-cv (April 29, 2008).

Although New York City pushed the limits on the burdens an employer may impose on its employees during a commute before it must pay for the time, carrying a briefcase, even a heavy one, without other employment-related activities does not transform commuting time into “work” so as to be compensable under the Fair Labor Standards Act (FLSA), according to the 2nd U.S. Circuit Court of Appeals.

Rajkumar Singh and his fellow field inspectors within New York City’s Fire Alarm Inspection Unit (FAIU) were required to perform five scheduled and 16 unscheduled fire alarm inspections each week. The inspectors were paid for a 35-hour workweek and usually conducted inspections Monday through Thursday. On Fridays, the inspectors reported to FAIU headquarters to return completed inspection files and pick up files for the upcoming week’s inspections.

The briefcase containing the files inspectors had to carry while commuting from home to the first inspection site of the day and back home in the evening typically weighed 15 to 20 pounds. To fulfill their duties, inspectors were required to report to their initial inspection site each morning with all the documents in tow and sign out at the end of the day at the nearest firehouse. Inspectors who failed to report to their inspection sites with the proper files or who neglected to keep the files safe were subject to discipline.

Singh and his fellow inspectors filed suit under the FLSA seeking compensation for the commuting time on the theory that as a consequence of transporting the briefcase and keeping its contents safe, they were slowed and occasionally missed a train or bus. Importantly, the inspectors did not assert that the city assigned them any other employment-related tasks during their commutes.

The district court was not persuaded by the inspectors’ plea and granted summary judgment in favor of the city. The inspectors appealed the judgment to the 2nd Circuit, which determined that the inspectors were not entitled to compensation for their entire commute because “carrying a briefcase during a commute presents only a minimal burden on the inspectors, permitting them freely to use their commuting time as they otherwise would have without the briefcase.”

By Lawrence Peikes and Meghan D. Burns, attorneys with Wiggin and Dana LLP.

Editor’s Note: These articles should not be construed as legal advice.

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