Jack Nelson Jones Professional Association
December 9-15, 2019
Johnson v. Pope Emergency Group, LLC, 2019 Ark. App. 544 (Nov. 20, 2019)
This case came on appeal from Pope County Circuit Court, Honorable Dennis Charles Sutterfield presiding. It involved the court’s grant of summary judgment to Pope Emergency Group (Pope), dismissing Dr. Carroll Johnson’s (Dr. Johnson) suit against Pope for breach of contract and wrongful termination. In 2014, Pope had an arrangement with St. Mary’s Regional Medical Center in Russellville (St. Mary’s) whereby Pope agreed to supply physicians to staff the hospital’s emergency department (“ER”). In February 2014, Pope entered into an agreement with Dr. Johnson, to provide such services as an independent contractor. On June 30, 2014, Dr. Johnson’s confrontation with a nurse led St. Mary’s to request that Pope remove him from the staff of the ER, whereupon Pope terminated its contract with Dr. Johnson.
Dr. Johnson sued alleging that Pope and its parent company, Schumacher Group of Arkansas (Schumacher), were liable for breach of contract and wrongful termination. He also sued Russellville Holdings, LLC, which owns and does business as St. Mary’s. Dr. Johnson alleged that the hospital tortiously interfered with his contract with Pope and Schumacher. Pope filed a counterclaim for breach of contract alleging that Dr. Johnson had failed to return a $30,000 signing bonus as required by the terms of their agreement.
Pope, Schumacher, and St. Mary’s all filed motions for summary judgment, whereupon Dr. Johnson nonsuited all his claims against them. Pope chose to pursue its counterclaim, and the circuit court granted summary judgment in its favor. Dr. Johnson then appealed.
Dr. Johnson is a physician who specializes in emergency medicine who had previously worked in the ER at St. Mary’s. In late 2013, he returned to St. Mary’s, although the prospect of his return was initially met with hesitation by the administration of St. Mary’s and officials at Pope and Schumacher because some patients and hospital staff had complained that Dr. Johnson was “rude,” “arrogant,” and “condescending” during his previous tenure in the ER.
Nevertheless, on in January 2014, Dr. Johnson and Pope executed a “Physician Agreement” (Agreement) whereby Dr. Johnson agreed to provide physician services in the ER at St. Mary’s. The Agreement became effective on Feb. 17, 2014, and it had a one-year term that would automatically renew every year that Dr. Johnson “worked at least one (1) clinical shift.” It also provided, however, that Pope could terminate the contract “immediately” and “without written notice” for a number of reasons, including when “Hospital Administration requests the removal of [Dr. Johnson] or reports that [he] is being disruptive, unprofessional, or unreasonably uncooperative with the medical or administrative staff of [the] Hospital.” Additionally, Dr. Johnson would have to return a $30,000 signing bonus if he failed to meet any of the terms and conditions of the Agreement, including his obligation to “maintain membership in good standing on the Medical Staff of [St. Mary’s] and abide by the bylaws, rules, and regulations of the Medical Staff[.]”
Dr. Johnson began working at St. Mary’s on March 8, 2014. A couple of months later, Dr. McLane Simpson, the ER medical director for Pope and Schumacher, learned of two incidents in which Dr. Johnson and ER nurses had clashed over the use of nurse-initiated order sets, which authorized the nurses to order – in the physician’s name – certain medical tests and medications. After discussing the issue with Dr. Johnson and hearing his objections, Dr. Simpson ordered the nursing staff to avoid using the order sets during Dr. Johnson’s shift in the ER.
In June, Jayme Smalley, the nurse manager in the ER, learned that one of Dr. Johnson’s patients had a complaint about the care that he had received. The patient was suffering from an infection, and a nurse, acting according to one of the order sets, had placed an IV. The patient told Ms. Smalley that he believed that he should be admitted to the hospital and treated with IV antibiotics. Dr. Johnson, however, administered intramuscular injections of antibiotics and discharged the patient. According to Ms. Smalley, the patient and his family “simply wanted an explanation,” and, if the patient ultimately was not going to be admitted into the hospital, they wanted to “talk to the physician one more time to find out why.” Ms. Smalley responded that she would ask Dr. Johnson to speak to the family and explain his decision.
Ms. Smalley approached Dr. Johnson while he sat in a physicians’ work area at the nurses’ station. She explained the concerns of the patient and his family and requested that Dr. Johnson return to the patient’s room to explain his decision to give an intramuscular injection and discharge him. Dr. Johnson believed that Ms. Smalley was questioning his medical judgment, and he refused to go explain himself to the patient. A loud and heated argument ensued. Ms. Smalley testified in a deposition that at one point in the altercation, Dr. Johnson got “uncomfortably close to [her],” and “pointed his finger at [her] towards [her] sternum.”
Ms. Smalley immediately reported the incident to Dr. Simpson and the administration of St. Mary’s, eventually telling the hospital’s chief operating officer (the COO), “what [had] happened, that the patient actually . . . went home, and Dr. Johnson never went back into the room to talk to the patient or family.” It was thereafter decided that the incident with Ms. Smalley, as well as Dr. Johnson’s reputation from his previous tenure at St. Mary’s, warranted contacting Pope and Schumacher to request that they stop scheduling shifts for Dr. Johnson in the ER.
On June 30, 2014 the COO emailed Dr. Simpson stating that the administration “[did] not want Dr. Johnson working in [its] ER” because “[t]he behavior that he displayed [with Ms. Smalley] was unacceptable.” Dr. Simpson forwarded that email to Schumacher’s general counsel, who found that the request warranted immediate termination of Dr. Johnson’s contract. On Nov. 12, 2014, Dr. Johnson filed a complaint against Schumacher, Pope, and St. Mary’s in the Circuit Court of Pope County, describing the use of nurse-initiated order sets in the ER at St. Mary’s and alleged that Dr. Johnson “believed this practice was illegal, unethical, and fraudulent; and was placing him in a position of condoning malpractice.” The complaint further alleged that nurses continued using the order sets during his shift in the ER even after Dr. Simpson “told the nurses verbally that Dr. Johnson does not want nurses ordering in his name.” Dr. Johnson also alleged that his view of nurse-initiated order sets “became a constant point of contention” with the nurses and that he “was told that he was disruptive/disrespectful of the nurses.” He asserted that this negative atmosphere culminated in a “hostile confrontation” with Ms. Smalley that “was about an admission of a patient to the hospital and Dr. Johnson ‘not getting with the program.’” Dr. Johnson claimed that Pope and Schumacher breached the Agreement “by terminating the contract based on [his] refusal to violate the law” or, alternatively, that Pope and Schumacher wrongfully terminated him “because of [his] refusal to violate the public policy of the State of Arkansas”.
Pope filed a counterclaim against Dr. Johnson alleging that it had paid him a $30,000 signing bonus, that the Agreement “provided that the entire signing bonus sum shall be forfeited and returned to Pope Emergency Group within thirty (30) days of his last shift worked, if the terms and conditions of the [Agreement] are not complied with at any time during the commitment term.” According to Pope, Dr. Johnson stopped providing services at St. Mary’s on July 1, 2014, and “all of his physician hospital privileges were revoked.” As a result, “[Dr. Johnson] was in breach of contract and was required to return the signing bonus.”
Pope, Schumacher, and St. Mary’s filed motions for summary judgment, whereupon Dr. Johnson voluntarily nonsuited his claims. Pope however elected to proceed with its counterclaim against Dr. Johnson, alleging that it was entitled to summary judgment because the undisputed facts demonstrated that “Dr. Johnson breached the Agreement by failing to return the $30,000 signing bonus within 30 days.” The circuit court agreed and granted summary judgment on that issue.
On appeal, Dr. Johnson first contended that, while he did not return the $30,000 signing bonus, he produced “substantial evidence” that Pope was the first to breach the Agreement by wrongfully terminating him in violation of public policy because he objected to St. Mary’s use of nurse-initiated order sets in a manner that violated public policy against the unlicensed practice of medicine. Second, he argued that the circuit court erred by granting the motion for summary judgment because Pope failed to show the absence of a genuine issue of material fact regarding his affirmative defense of fraud in the inducement.
While Dr. Johnson conceded that cognizable wrongful-discharge claims had been limited to at-will employees, he argued that “there is no reason” that the doctrine should not be extended to independent contractors like himself. He further contended that he put forth evidence that created genuine issues of material fact regarding whether St. Mary’s use of nurse-initiated order sets violated an established public policy in Arkansas. Pope responded that the circuit court correctly ruled that Dr. Johnson could not claim that he was wrongfully discharged because wrongful-discharge claims had been limited to at-will employees in Arkansas, and it was undisputed that he was an independent contractor and not an employee. Finally, Pope asserted that Dr. Johnson failed to show that he was terminated because of his objections to the nurse-initiated order sets.
The Court declined to decide whether claims of wrongful termination based on violations of public policy should be extended to independent contractors like Dr. Johnson, finding that Dr. Johnson failed to make sufficient argument to the circuit court on an issue of first impression and only made the argument for the first time on appeal.
The Court noted that Dr. Johnson testified he never communicated his objections regarding nurse-initiated order sets to anyone in the administration at St. Mary’s. The COO also testified that “[i]t would not be St. Mary’s policy or procedure to discipline or remove a physician who was unwilling to use the nurse-initiated order sets.” Rather, Dr. Johnson’s history of unacceptable conduct toward the staff and patients at St. Mary’s was the reason that officials at the hospital no longer wanted him in the ER. The COO further explained Dr. Johnson acted inappropriately by not going back and being an advocate for that patient and discussing the situation and why he treated [the patient] the way he did. The Court found that the evidence demonstrated Pope terminated the agreement only because St. Mary’s requested his removal which request was precipitated by Dr. Johnson’s unacceptable conduct. Accordingly, it affirmed the lower court’s decision on that issue.
Dr. Johnson argued that there remained a genuine issue of material fact regarding whether he was fraudulently induced to execute the Agreement by its express term providing that Pope “shall not exercise any control or direction over the methods by which [Dr. Johnson] shall perform [his] professional work and duties while on duty.” The circuit court rejected this argument, ruling that he did not state a cognizable claim of fraud in the inducement because he “based [his] argument . . . on language in the Agreement itself” rather than “on a statement made prior to the execution of the Agreement.” The Court affirmed this determination as well.