Thursday, August 3, 2017

Wisconsin Court of Appeals Reverses $2.2 Million Jury Award, Finds Doctor Was an At-Will Employee

A little over a year ago, after a week-long trial, a jury in Madison, Wisconsin awarded former Dean Clinic doctor, Donald Bukstein, M.D., $2.2 million after the circuit court judge denied Dean's motion for summary judgment.  Dean appealed this jury verdict and the judge's denial of summary judgment to the Wisconsin Court of Appeals who reversed this jury verdict and the judge's decision denying Dean's motion for summary judgment.  At issue was whether Bukstein was an at-will employee subject to termination without case or whether Dean had a policy that altered his at-will status and provided him greater employment protection.

Facts

Bukstein was employed as a Dean shareholder from 1981-2012.  In 2008, Dean and Bukstein entered into a written Shareholder Employment Agreement.  This Agreement contains an at-will provision giving Dean the right to terminate its employment relationship with Bukstein "at any time" and "without cause," so long as two conditions were met: 1) Dean provided Bukstein with 90 days' written notice, and 2) at least three-fourths of the members of the Dean Board of Directors voted to terminate his employment "without cause."  Bukstein had a parallel right under the at-will provision to end his employment relationship with Dean--after all, at-will employment is a two-way street!

Three of Bukstein's patients reported to Dean that he had touched them in a sexual manner during the course of examination or treatment, which prompted Dean to conduct an investigation.  After this investigation, there were several meetings of the Dean Board.  Additionally, pursuant to a Dean management policy, committees met to discuss the findings of the investigation.  This management policy is a document that was promulgated after and separate from the employment agreement and Dean followed some of the procedures outlined in this policy.  However, Dean did not terminate Bukstein's employment under this management policy--they terminated him pursuant the at-will provision written into the Shareholder Employment Agreement, without cause, even though the Board initially voted against terminating Bukstein's employment.

Relying on the Dean management policy, Bukstein filed suit in Dane County Circuit Court alleging (1) breach of contract and (2) breach of the duty of good faith and fair dealing.  Dean moved for summary judgment on both causes of action but the circuit court denied Dean's motion.  The matter then proceeded to trial and the jury returned verdict in Bukstein's favor, awarding him $2.2 million.  Dean then promptly appealed this matter to the Wisconsin Court of Appeals.

Breach of Contract Claim

Bukstein's breach of contract claim hinged entirely on Dean's "Physician Practice and Performance Management Policy," which is a two-page document that provided guidelines for Dean investigations into allegations against physician-employees, like Bukstein, that could lead to discipline, including termination.  This policy makes no reference to any provision in the employment agreement, including the at-will provision.  Bukstein argued that this policy changed the employment relationship by creating a "contract separate from or supplemental to the [employment agreement.]"  The Court of Appeals held that the problem with Bukstein's reliance on this policy is that, under controlling case law, the policy does not modify Dean's right to terminate Bukstein under the at-will provision in the employment contract because of the "only when" rule.

The "only when" rule provides that policies alter an at-will relationship "only when" the policy "contains express provisions from which it can be reasonably inferred that the parties intended to bind each other to a different employment relationship" than the established at-will relationship.  Bukstein argued that the Dean policy changed the employment relationship in some manner, which created a triable issue as to whether Dean followed its policy in terminating Bukstein.

The Court of Appeals then addressed how controlling case law applied to the case, distinguishing it from cases Bukstein cited as favorable, and comparing to cases that showed Dean's policy did not alter the at-will relationship.  The court emphasized three points as to why the Dean policy did not alter the at-will relationship:  1)  unlike the employment agreement, neither party signed the Dean policy; 2) the Dean policy is expressly designated a "management policy" and fails to make any reference, explicit or implicit, to the at-will provision in the employment agreement.; and 3)  the Dean policy generally uses permissive language, merely permitting Dean to take certain steps in connection with investigations and potential disciplinary actions, without obligating Dean to take those steps.  Given all of this, the Court of Appeals concluded the "only when" rule was not satisfied under these facts, finding this claim should have been dismissed at summary judgment.

Duty of Good Faith and Fair Dealing

In at-will employment, employers have no duty to terminate employees in good faith because imposing "a good faith duty to terminate would unduly restrict an employer's discretion in managing the work force."  While other cases have embraced this holding, the Court of Appeals noted that this holding might be limited to terminations of employees with at-will contracts.  Because the Court concluded Bukstein was an at-will employee, this claim automatically failed too.

The case is Donald Bukstein, M.D. v. Dean Health Systems, Inc., Appeal No. 2016AP920 (July 20, 2017).

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