Opinion
Civil No. 00-576-KI
May 30, 2002
Bernard Jolles, Chris Hilgenfeld, Jolles Bernstein, P.C., Portland, Oregon, Attorneys for Plaintiff
Steven K. Blackhurst, Leslie G. Bottomly, Lori Irish Bauman, Ater Wynne LLP, Mark H. Wagner, Michael J. Wiswall, Hoffman Hart Wagner LLP, Portland, Oregon, Attorneys for Defendants
OPINION
Plaintiff Dr. William Bennett, a tenured professor at defendant Oregon Health Sciences University ("OHSU"), alleges that he was forced to retire when he refused to provide a copy of part of his tax return sought by defendants to confirm his outside income, as provided in a partnership agreement. Bennett alleges a claim for wrongful discharge and constitutional claims for violations of his right to privacy, freedom of speech, freedom to petition the government for redress of his grievances, and due process rights. Before the court is defendants' motion for summary judgment (#29) and defendant Loriaux's motion for summary judgment (#34). For the reasons below, I grant summary judgment against all of Bennett's claims.
FACTS
OHSU is a public corporation. Dr. Lynn Loriaux is the Chairman of the Department of Medicine at OHSU, and the Managing Partner of the Department of Medicine Practice Group ("Partnership"). Dr. Peter Kohler is the President of OHSU. Dr. Joseph Bloom is the Dean of the School of Medicine at OHSU. James Walker is the Chief Financial Officer and Executive Vice President of OHSU. Dr. William Bennett was a faculty member at OHSU beginning in 1970, a member of the Department of Medicine specializing in nephrology, and was a tenured full professor at the time of his retirement on November 30, 1999. Faculty members must be a member of an approved OHSU practice plan.
Since the early 1990s, Bennett was concerned about what he considered the inappropriate or illegal practice of considering the partners as both employees and independent contractors, and the implications on his retirement plans. He raised the issue for several years and in 1996 was to be on a committee to consider designing a university-wide practice plan.
The Dean's office has a practice plan agreement with each department. Each department then decides how to practice as a group. The Department of Medicine decided to practice as a partnership but this is not the case with all of the departments.
The Partnership adopted a new agreement on November 4, 1996, which Bennett signed on January 14, 1997. Bennett states that he signed the agreement under duress because Loriaux withheld his paycheck until he signed. The agreement requires all Department of Medicine faculty who engage in medical professional practice to be partners in the Partnership. The agreement also "taxes" outside professional income generated by the partners. To verify the amount of this income, the agreement states that each partner must provide the Partnership's accountants with his entire set of federal income tax forms, or at a minimum the Schedule C. No other practice group at OHSU requires the submission of the Schedule C. The members of the Partnership approved the Schedule C disclosure requirement by a large majority. There was a widespread belief among the partners that "everyone else" was under reporting outside professional income.
Bennett never submitted his Schedule C, even after being asked to do so by both Loriaux and Don Glazier, the Partnership's chief financial officer. Bennett, as well as other Department of Medicine partners who were late in reporting, received correspondence requesting the forms for the 1997 and 1998 tax years. At the time of his retirement, Bennett was the only partner who had not complied with the requirement. His objection was not to reporting the outside income but to the method of reporting. Bennett considered providing his Schedule C form an invasion of his privacy.
On January 8, 1997, Bennett sent Bloom an e-mail telling him that he had prepared an SS-8 form seeking clarification of his status. Bennett planned to file the form with the Internal Revenue Service ("IRS") by February 1 if OHSU did not clarify the situation. Bloom asked Bennett to refrain from filing the SS-8 until OHSU had time to work on the problem.
Bennet recommended an alternative method for the Partnership to verify outside income. The Advisory Committee unanimously recommended to Loriaux that he allow the alternative method. Loriaux believed that the Advisory Committee was wrong. He did not want to treat Bennett differently from any of the other partners so he did not accept the recommendation.
On April 8, 1998, Bennett submitted the SS-8 form because he had not seen adequate progress.
On May 28, 1998, OHSU requested an audit between OHSU-related entities and Clinical Research Group, a company in which Bennett's family owned a half interest. At this time, OHSU did not believe that Bennett had filed the SS-8.
The IRS contacted the Partnership in July 1998 seeking information concerning Bennet's query. This is the first time that anyone associated with OHSU knew that Bennett had filed the SS-8.
On October 30, 1998, two Legacy doctors exchanged e-mail discussing Bennett's contact with one of them discussing his possible interest in joining the Legacy system and what type of transplant program he would like to start there.
Bennett took a sabbatical beginning November 1, 1998, to perform the duties of president of the American Society of Nephrology. He intended to return to OHSU on December 1, 1999, and concedes his sabbatical was entirely voluntary. On December 1, 1998 Bennett wrote Loriaux to clarify what he expected his duties to be on his return. Bennett also stated that he had not and would not help other hospital systems set up competing transplant programs.
In a letter dated July 6, 1999, and addressed to his colleagues, Bennett stated that he would be leaving his OHSU position and would become the medical director of the Legacy Transplant Program. He hoped to maintain an appointment at OHSU to follow his previous patients there. This letter apparently was not sent to any of his colleagues at OHSU. Bennett testified that the first time he told anybody at OHSU that he would be the medical director of the Legacy Transplant Program was in a letter dated November 1, 1999.
The Partnership agreement specifies provisions for expelling a partner from the Partnership. The Partnership's Advisory Committee makes a nonbinding recommendation to the managing partner, who has final discretion on all sanctions, including expulsion.
Because of his tenure, Bennett could not be discharged from the faculty without cause. Before there can be a finding of cause, OHSU provides procedural safeguards, including written notice of the administrative charges, a hearing on the charges before an impartial committee of faculty members, the right to be represented by counsel, and the right to call witnesses and cross-examine any other witnesses who testify at the hearing. If the faulty committee finds merit in the charges, it recommends an appropriate sanction. If that sanction is termination from the faculty, the President of OHSU has the authority to accept or reject the committee's recommendation. The faculty member has the right to appeal the President's decision to the OHSU Board of Directors under three grounds: (1) procedural error of the committee; (2) the decision is not supported by substantial evidence or (3) the decision conflicts with an applicable rule or law. The Board decides whether to accept or reject the request for a review.
In a letter dated September 3, 1999, Glazier sent Bennett a letter on behalf of Loriaux, informing Bennett that effective in 30 days, he was expelled from the Partnership for failure to comply with the Schedule C requirement. The letter also stated that it was a notice to the Dean that as of that date, Bennett would not be in compliance with the requirements of his Notice of Appointment to the faculty to maintain membership in an approved practice plan.
In a letter dated October 1, 1999, Kohler told Bloom that he had determined that there was cause to terminate Bennett's faculty appointment. He asked Bloom to make a last attempt to resolve the matter prior to the initiation of formal dismissal proceedings.
Bennett resigned from the Partnership and retired from OHSU, effective November 30, 1999, prior to being expelled from the Partnership or being terminated by OHSU. He testified:
The only thing that prompted me to retire was they told me I couldn't be on the faculty if I didn't give them my Schedule C. I went and sought other departments that I could join, talked to the Dean [defendant Bloom] about it.
There are examples at OHSU of people who have disagreed with departments, neurosurgery going to neurology, or neurology going to neurosurgery, I went to the Department of Surgery, John Barry, transplant surgeon, asked, Couldn't I be a member of your department because of this thing?
He said, Fine, if the Dean says it's okay. And the Dean didn't say it was okay. So I couldn't do that. I couldn't be a member of the faculty because I wouldn't give my Schedule C, and therefore couldn't be in the Practice Plan. There was nothing else to do.
Kohler testified that he believed, but was not certain without checking the policy, that a doctor can remain on the faculty after being expelled from the Partnership but that he could not see patients. Loriaux testified that Bennett's notice of appointment as a tenured professor of medicine depended on his remaining a member in the Partnership, which agrees with Bennett's understanding.
Bennett Depo. at 84. Bennett also sought a transfer to the Department of Urology but Bloom would not approve it.
As of December 1999, Bennett began working for Northwest Renal Clinic and became the medical director of renal transplantation at Legacy Good Samaritan Hospital. After his retirement from OHSU, Bennett wished to remain on the faculty and to retain privileges there so that he could finish research obligations. In its discretion, OHSU refused to appoint Bennett as an Emeritus Professor. This was the only way for Bennett, as a retired professor from the Department of Medicine, to remain on the faculty and retain privileges.
LEGAL STANDARDS
Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). The initial burden is on the moving party to point out the absence of any genuine issue of material fact. Once the initial burden is satisfied, the burden shifts to the opponent to demonstrate through the production of probative evidence that there remains an issue of fact to be tried. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). On a motion for summary judgment, the evidence is viewed in the light most favorable to the nonmoving party. Robi v. Reed, 173 F.3d 736, 739 (9th Cir.), cert. denied, 528 U.S. 375 (1999).
DISCUSSION
I. Withdrawn Claims
At oral argument, Bennet withdrew two of his constitutional claims: (1) that defendants deprived him of his liberty interest without due process when they damaged his reputation by spreading erroneous information regarding his leaving OHSU and accusing him of financial impropriety; and (2) that his free speech rights were violated by retaliation for inquiring about his employment status in filing the SS-8 form. Summary judgment is granted against both claims.
II. Other Constitutional Claims
Bennett retains two other constitutional claims: (1) that he was deprived of the property interest in his tenured faculty position without due process when he refused to provide his Schedule C; and (2) that his right to privacy was violated by the Partnership's threat of expulsion unless he provided his Schedule C, which would lead to eventual termination from the OHSU faculty.
Section 1983 does not create any substantive rights but is a vehicle through which plaintiffs can challenge actions by governmental officials. To prove a case under § 1983, the plaintiff must demonstrate: (1) the action occurred under color of state law; and (2) the action resulted in the deprivation of a constitutional right or federal statutory right. Jones v. Williams, 286 F.3d 1159, 1162-1163 (9th Cir. 2002). "Action taken by private individuals may be under color of state law where there is significant state involvement in the action. Although section 1983's under-color-of-state-law requirement is technically separate from the Fourteenth Amendment's state-action requirement, the two inquiries are closely related. Because Plaintiffs are required to establish state action for purposes of their constitutional claims, we treat the under-color-of-state-law requirement and the state-action requirement as equivalent." Johnson v. Knowles, 113 F.3d 1114, 1118 (9th Cir.) (internal quotation and citations omitted), cert. denied, 522 U.S. 996 (1997). The Supreme Court uses four tests to determine when the actions of a private individual amount to state action: (1) the public function test; (2) the joint action test; (3) the state compulsion test; and (4) the governmental nexus test. Id.
Typically, these tests are applied when a plaintiff is trying to assert liability for a constitutional violation against a defendant who is a private party with some sort of government connection. See Johnson v. Knowles, 113 F.3d 1114 (9th Cir.) (ousted homosexual member of the county's central committee of the Republican party brings § 1983 claim against other committee members but the court finds defendants did not act under color of state law), cert. denied, 522 U.S. 996 (1997);George v. Pacific-CSC Work Furldugh, 91 F.3d 1227 (9th Cir. 1996) (employee brings § 1983 claims against his employer, a private entity that operated a correctional facility for a county but the court finds defendants did not act under color of state law).
Bennett's situation is a twist on the usual. He alleges no claims against the Partnership and does not contend that the Partnership acted under color of state law. Instead, Bennett bases his constitutional claims on the Partnership's actions concerning the Schedule C requirement, and those actions' probable effect on his employment at OHSU. Rather than trying to prove that the conduct of a private party has "sufficiently received the imprimatur of the State" so as to make the private conduct state action, Blum v. Yaretsky, 457 U.S. 991, 102 S.Ct. 2777 (1982), Bennett is arguing the opposite: that the private entity's conduct should be attributed to the State. Consequently, the tests listed above do not quite fit the situation.
Blum does provide us some guidance, however, because the Court realized that it also was not a typical "state action" case. Plaintiffs were Medicaid patients residing in private nursing homes who could be discharged or transferred to a lower level of care without notice or the right to challenge the decision in a hearing. Plaintiffs alleged procedural due process violations against New York state officials who administered the Medicaid program even though they did not make the discharge or transfer decisions. The Court held that plaintiffs failed to establish "state action" in the nursing homes' decisions to discharge or transfer the Medicaid patients to lower levels of care. Id. at 1012. In coming to this conclusion, the Court reviewed some of the fundamental principles for determining state action:
The complaining party must also show that there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself. The purpose of this requirement is to assure that constitutional standards are invoked only when it can be said that the State is responsible for the specific conduct of which the plaintiff complains. The importance of this assurance is evident when, as in this case, the complaining party seeks to hold the State liable for the actions of private parties.
Second, although the factual setting of each case will be significant, our precedents indicate that a State normally can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State. Mere approval of or acquiescence in the initiatives of a private party is not sufficient to justify holding the State responsible for those initiatives under the terms of the Fourteenth Amendment.Id. at 7004 (emphasis in the original). The Court went on to explain the flaw in the Court Appeal's reasoning:
The court reasoned that state action was present in the discharge or transfer decisions implemented by the nursing homes because the State responded to those decisions by adjusting the patient's Medicaid benefits. [Plaintiffs,] however, do not challenge the adjustment of benefits, but the discharge or transfer of patients to lower levels of care without adequate notice or hearings. That the State responds to such actions by adjusting benefits does not render it responsible for those actions. The decisions about which respondents complain are made by physicians and nursing home administrators, all of whom are concededly private parties. There is no suggestion that those decisions were influenced in any degree by the State's obligation to adjust benefits in conformity with changes in the cost of medically necessary care.Id. at 1005.
Here, Bennett's constitutional claims are based on the Partnership's requirement of providing the Schedule C. OHSU did not institute this requirement. No other OHSU department has the requirement. OHSU did not ask the Partnership to enforce the requirement against Bennett and the few other stragglers who eventually provided the form OHSU's actions regarding his possible termination all flowed from the Partnership's decision. That is in the nature of an acquiescence to the conduct of a private party, such as the State's response in Blum to adjust Medicaid benefits once the transfer/discharge decision was made by the private parties.
Bennett argues that Bloom refused to let him transfer to another department until he resolved his dispute with the Department of Medicine. There is no evidence, however, that Bloom coerced or encouraged the Partnership to enact or enforce the Schedule C requirement. I cannot say that OHSU is responsible for the specific conduct of which Bennett complains. I hold as a matter of law that there is no state action on which to base the § 15983 claims and grant summary judgment against them.
III. Wrongful Discharge Claim
Bennett alleges a claim against OHSU that he was constructively wrongfully discharged in retaliation for refusing to provide his Schedule C. Defendants contend that a wrongful discharge claim is not available to Bennett because he has an adequate remedy in § 1983 for the constitutional violations regarding the same conduct.
The tort of wrongful discharge is not available in Oregon if (1) an existing remedy adequately protects the public interest in question; or (2) the legislature intentionally abrogated the common law remedies by establishing an exclusive remedy, regardless of whether the courts perceive the remedy to be adequate. Draper v. Astoria School District No. 1C, 995 F. Supp. 1122, 1130-31 (D. Or. 1998) (surveying the Oregon cases and their inconsistencies). The purpose of the tort is not to vindicate the individual interests of the employee by giving the person the maximum possible recovery. Instead, the tort acts to protect important public policies by punishing conduct that thwarts those interests. Consequently, the question is not whether the statutory remedy is the best possible one or is identical to the tort remedy. The court must determine if the remedy is sufficient to adequately protect the employment-related right.Id. at 1130, 1134.
Absent a contractual, statutory, or constitutional requirement, the general rule is that an employer may discharge an employee at any time and for any reason. Patton v. J.C. Penny Co., 301 Or. 117, 120, 719 P.2d 854, 856 (1986). Two exceptions exist. The first is when an employee is discharged for fulfilling a societal obligation. Nees v. Hocks, 272 Or. 210, 536 P.2d 512 (1975) (employee discharged for serving on jury duty); Delaney v. Taco Time Intl, 297 Or. 10, 681 P.2d 114 (1984) (discharged for refusing to sign a false and arguably tortious statement). The second is when the plaintiff is discharged for pursuing private statutory rights related directly to the employee's role as an employee and of important public interest. Brown v. Transcon Lines, 284 Or. 597, 588 P.2d 1087 (1978) (discharged for filing a workers compensation claim).
Bennett contends being constructively discharged for refusing to give up his constitutional right to privacy falls within the second exception of pursuing a private statutory right. Thus, I have to decide whether Bennett had a constitutional privacy right which was violated by the Schedule C requirement.
The Supreme Court has found two types of constitutionally-protected privacy interests. The first is the individual interest in avoiding disclosure of personal matters, known as informational privacy. The second is the interest in independence in making certain kinds of important decisions, such as marriage, procreation, and family relationships. In re Crawford, 194 F.3d 954, 958 (9th Cir. 1999), cert. denied, 528 U.S. 11893 (2000). The right to informational privacy is not absolute but may be infringed on a showing of proper governmental interest. The court must weigh competing interests, considering the following factors:
the type of record requested, the information it does or might contain, the potential for harm in any subsequent nonconsensual disclosure, the injury from disclosure to the relationship in which the record was generated, the adequacy of safeguards to prevent unauthorized disclosure, the degree of need for access, and whether there is an express statutory mandate, articulated public policy, or other recognizable public interest militating toward access.Id. at 959.
Based on these standards, several informational privacy cases have been litigated. In Crawford, a nonattorney bankruptcy petition preparer objected to the public disclosure of his Social Security number ("SSN") required on the petitions he helped to prepare. The preparer's objection was based on a fear that an identity thief would attack his credit after obtaining the SSN. The court balanced the risk of and harm from an identity theft against the widespread fraud and unauthorized practice of law in the bankruptcy petition preparer industry which the SSN requirement was meant to attack. The court also considered the long-recognized principle of public access to judicial proceedings. In light of this balance, the court concluded that the speculative possibility of identity theft did not trump the important governmental interests backing the SSN requirement. It held that the statutes and regulations allowing the public disclosure of the SSN did not violate the Constitution. Id. at 959-60. The court did not express an opinion on whether the collection of the SSN invaded a legally-protected interest.Id. at 957-58.
Another plaintiff, a doctor who performed annual physical examinations on FBI agents, fared no better in Doe v. Attorney General of the United States, 941 F.2d 780 (9th Cir. 1991). After the FBI received information from a third party, it asked the doctor to reveal whether he had AIDS and discontinued sending agents to him for their physicals when he refused to disclose the information. The court held that information regarding HIV status or AIDS diagnosis was constitutionally protected but concluded that with the steps the FBI intended to take to safeguard the confidentiality of the information and the needs to protect its agents, the FBI agent making the decision was entitled to qualified immunity.
When the dispute arose in 1988, the medical community had little experience with the question of transmission of the HIV virus by a health care provider. Id. at 796 n. 23.
Likewise, plaintiffs did not prevail in Bertoldi v. Wachtler, 952 F.2d 656 (2nd Cir. 1991 (using an intermediate scrutiny analysis, no constitutional violation in a state ethics law requiring extensive financial disclosures by court clerks, with much of the information available to the public) and Statharos v. New York City Taxi Limousine Commission, 198 F.3d 317 (2nd Cir. 1999) (using an intermediate scrutiny analysis, the court affirmed denial of a preliminary injunction by finding that plaintiff shareholders in closely-held corporations owning taxi medalhons, who contended that the financial disclosure law and public access to the information violated their constitutional right to privacy, had failed to demonstrate a likelihood of success on the merits).
The state must show that the disclosure is designed to further a substantial governmental interest and "does not land very wide of any reasonable mark in making its classifications." Id. at 659.
The disclosures included offices, directorships, business or professional positions held, interests in state or local government contracts, political party offices, gifts and reimbursements and their sources, trust interests, post-employment agreements, deferred compensation agreements, nature and sources of income, assignments of income, securities, real property, notes, accounts, and liabilities for the employee, the employee's spouse, and unemancipated children. The values of holdings and liabilities were reported in broad categories which were not available for public inspection. There was a procedure to request exemptions from filing or from disclosing particular information. Id. at 657-58.
Plaintiff, a teacher in an intensive program for high school dropouts, fared better in Denius v. Dunlap, 209 F.3d 944 (7th Cir. 2000). His contract was not renewed when he refused to sign a broad release of information which would have given access to medical and financial information, among other things. The school director borrowed a release used for extensive background checks of applicants for employment with the state police, although the director only intended to perform a more limited routine criminal background check. The court held that the "sweeping disclosure requirement, lacking any safeguards against misuse or further disclosure, and supported by no justification, infringes [plaintiffs] right of privacy in confidential information." Id. at 958.
Bennett's claim is one for informational privacy. This circuit uses the balancing test quoted above to determine if the government interest outweighs the privacy right.
The tax form required by the Partnership contains the doctor's outside income, information which typically is not disclosed to others in our society. This is balanced by the fact that the majority of members of the Partnership voted in the requirement. The potential harm from a subsequent nonconsensual disclosure could be in the form of possible embarrassment from the amount or source of the income, some of which would be nonmedical income in which the Partnership has no interest. It is possible that others might not want their business relationships with the doctors disclosed, and might withdraw from the relationship. There is no evidence that this risk is more than minimal. The Partnership tried to reduce the risk of subsequent disclosure by having the doctors provide the Schedule C to an outside firm of accountants, who do not work for OHSU and who by training and professional ethics have an obligation to keep the information confidential. Only the resulting "tax" on the outside income would be reported back to the Partnership. The public would have no access to the information, other than through a leak, again with only a minimal risk. The Partnership voted in the requirement because the members did not that that everyone was reporting outside income fully. Although this is a legitimate concern, there is little or no public interest among people outside of the Partnership in whether the doctors acted responsibly in fulfilling their financial obligations to each other.
Balancing the factors listed above, I give most weight to the fact that the Partership voted in the requirement, that it took steps to keep the information confidential, and that there is no provision for public disclosure. I conclude that these factors outweigh the fact that there are few, if any, public policy reasons for the disclosure. Thus, I conclude that Bennett's informational privacy interest was not infringed. This is fatal to Bennett's wrongful discharge claim.
Bennett's wrongful discharge claim suffers from another flaw. Because he was not terminated, he must prove that he was constructively discharged.
The Oregon Supreme Court clarified that to establish a constructive discharge claim, a plaintiff must prove the following:
(1) that the employer intentionally created or intentionally maintained specified working condition(s); (2) those working conditions were so intolerable that a reasonable person in the employee's position would have resigned because of them; (3) the employer desired to cause the employee to leave employment as a result of the working conditions or knew that the employee was certain, or substantially certain to leave employment as a result of those working conditions; and (4) the employee did leave the employment as a result of those working conditions.McGanty v. Staudenraus, 321 Or. 532, 557, 901 P.2d 841 (1995) (emphasis in the original).
Bennett argues in his brief that the intolerable situation that forced him to retire was fear of remaining on the OHSU faculty until it went through the process to terminate him.
During this time he contends that it would be intolerable to be a "partial doctor," one who could teach but could not practice medicine. Bennett's testimony, however, is that he retired when he was told that he could not be on the faculty if he did not provide his Schedule C. Again, the crux of Bennett's difficulties with both OHSU and the Partnership was his refusal to provide his Schedule C. Because all the other members of the Partnership complied with the Schedule C requirement, no jury could conclude that this working condition was so intolerable that a reasonable person would resign because of it.
I grant summary judgment against the wrongful discharge claim.
CONCLUSION
Defendants' motion for summary judgment (#29) is granted. Defendant Loriaux's motion for summary judgment (#34) is moot. This action is dismissed with prejudice.