Opinion
No. CV 03 0089697
September 3, 2003
MEMORANDUM OF DECISION
This is an action in which the plaintiff seeks to vacate an arbitration award which overturned the termination by the plaintiff of its contract with the defendant.
I. Facts
The plaintiff maintains a nationwide preferred provider network and the defendant signed a Preferred Provider Agreement with the plaintiff in 1994, thereby becoming a participating physician in the plaintiff's PPO Network.
Dr. Torres, by virtue of his position as a physician with privileges at Charlotte Hungerford Hospital, had access to the doctors' lounge and a computer containing confidential patient information. During a period of approximately two weeks in January 1998, he used this position of trust to bring up on the computer confidential records of various patients who were not his own patients. From the records, he obtained credit card numbers of these patients and using their credit cards, made about twenty long distance calls to "adult" entertainment phone numbers, which were charged to the credit cards of the people whose records he had invaded. In other words, he used his position of authority and trust as a doctor to steal from hospital patients. Dr. Torres' theft and misuse of confidential patient data resulted in his arrest on three criminal charges; Criminal Impersonation, Larceny 5th degree and Computer Crime 5th degree. These actions prompted the Connecticut Department of Public Health to fine him and to issue a reprimand against his medical license. Dr. Torres admitted that his actions were sufficient for disciplinary action to be taken, and he consented to the sanctions imposed, which were a $5,000 fine and a reprimand of his license. The criminal charges were resolved by Accelerated Rehabilitation.
The plaintiff periodically verifies the credentials of doctors who participate in its network. About four years later, as part of this verification process, the plaintiff found out that Connecticut had fined and reprimanded Dr. Torres in 1998 and that he had voluntarily surrendered his New York medical license in 1999. He had not informed the plaintiff of these facts. After reviewing this information, the plaintiff's Credentialing Committee announced that it intended to terminate Dr. Torres from the PPO network "for conduct at variance with normally accepted moral behavior."
The contract provided that Dr. Torres was an independent contractor and that "any controversy or claim arising out of or relating to this agreement, or the breach thereof, shall be settled in accordance with the Rules of the American Arbitration Association." Dr. Torres signed this contract in 1994, and it renewed automatically each year.
Section 2(b) of the contract provided that it would be automatically without notice terminated upon Dr. Torres' "indictment, arrest, or conviction for (i) any felony or (ii) any criminal charge relating to the practice of medicine." Section 6(d)(5) of the contract required Dr. Torres to send written notice to the plaintiff of any such arrest. He did not notify the plaintiff of his arrest for more than four years.
Section 2(a) of the contract provided that the contract terminated "if either party, with or without cause, gives to the other party ninety (90) days written notice thereof."
In addition to the contract, Dr. Torres had to comply with the plaintiffs "general criteria for its selection or termination of health care providers" that Connecticut required preferred provider networks to file with its Office of Health Care Access. Conn. Gen. Stat. 19a-647 (e) (1). The plaintiff's criteria included:
a. "A physician's license history must be acceptable to PHCS."
b. "Physicians with a history of substance abuse or mental illness must provide evidence of rehabilitation."
c. "The physician has an acceptable history of professional sanctions."
d. "The physician has never engaged in conduct that is at variance with generally accepted moral behavior."
e. "The physician has never received publicity that is detrimental to the business needs of PHCS or its customers." Ex. 1X. 1, PHCS 0187-0190, PHCS Physician Credentialing Policy, Sections 3.1, 7, 11, 16 and 18.
The credentialing criteria allow PHCS to terminate any physician who does not meet all of the criteria. PHCS Physician Credentialing Criteria, Policy No. CR-023, Page 5, unnumbered introductory paragraph.
Dr. Torres has continued to practice medicine uninterruptedly throughout the entire period.
By accepting the Joint Statement of Stipulated Facts, the arbitrator found all the facts contained therein, including (paragraphs 2. and 3.) findings that over a period of approximately two weeks in January 1998, Dr. Torres stole confidential patient information to bill patients of Charlotte Hungerford Hospital for about 20 calls that he made to so called adult entertainment phone numbers, and that he was arrested for this theft.
Dr. Torres' modus operandi was to go into the physicians' lounge at the hospital, to which he had access by virtue of the fact that he had privileges there, and then to use the computer to obtain confidential patient records of various hospital patients. He then billed his phone calls to "adult" entertainment numbers to the credit cards he had taken from the patients' records. Dr. Torres was able to commit these acts precisely because he was a trusted physician member of the hospital staff.
The arbitiator overturned "the termination of the agreement by PHCS for the reason it gave," which was for conduct at variance with normally accepted moral behavior, "and any other reason known to date, or for a temporal reason — and I order that Dr. Torres be recredentialed and fully reinstated to the PHCS roster and as a party to the Agreement . . ." (See Award of Arbitrator.)
The arbitrator found the testimony of Dr. Lothstein, a psychologist, to be credible. Dr. Lothstein's diagnosis was that Dr. Torres' behavior during the two week period in question was aberrational, and was caused by a variety of stressors that had come together to bring about a mental illness, which was an emotional illness. The arbitrator also found that PHCS was dismissive of Dr. Lothstein and his opinion. He found as a significant factor that Dr. Torres "entered an approved program shortly after his behavior and that he completed it successfully . . ."
He also concluded that even though the agreement specifically provided that either party could terminate it without cause, they must give a reason or cause as a matter of sound public policy. He further stated that "there is some doubt that the arrest did directly relate to the practice of medicine." He also stated that "Although Dr. Torres is chargeable with knowledge of the contractual provisions and of reasonable credentialing policies filed by PHCS, I do not find a material breach by Dr. Torres of the contract under the circumstances."
With reference to paragraph 16 of the PHCS credentialing criteria, which requires that the physician has not engaged in conduct that is at variance with generally accepted moral behavior, and that determination of that is in the sole discretion of PHCS, the arbitrator stated that this paragraph is potentially absolutist in regard to an undefined and vague standard. He also found that paragraph 16 undermines paragraph 7 on page 7 of CR-023 on physician credentialing, which requires evidence of rehabilitation for physicians with a history of mental illness. He concluded that paragraph 16 is unreasonable and arbitrary in light of paragraph 7.
This led the arbitrator to conclude "that PHCS has violated the convenant of good faith and fair dealing implicit in its agreement with Dr. Torres." He therefore overturned the termination of the agreement by PHCS, for any reason known to date (January 14, 2003).
II. Discussion
In this case the plaintiff claims in Paragraph 16 of its Petition To Vacate that "The award violates Connecticut's explicit, well-defined and dominant public policy against theft by forcing PHCS to continue to contract with a physician who has committed work-related crimes. In this regard, Dr. Torres admitted in Paragraph 3 of Joint Statement Of Undisputed Facts that his "theft and misuse of confidential patient data resulted in his arrest."
The law is clear regarding the court's duty when reviewing an arbitrator award. In the present case it is undisputed that the submission was unrestricted.
We begin our analysis of the defendants' claim by setting forth the general rule regarding arbitration awards. "The standard of review relative to arbitration awards depends on the nature of the challenge. With a voluntary, unrestricted submission to an arbitrator, as is the case before us (footnote omitted), the court may only examine the submission and the award to determine whether the award conforms to the submission . . . In making such a comparison when the submission is unrestricted, the court will not review the evidence or legal questions involved, but is bound by the arbitrator's legal and factual determinations . . .
"Certain conditions do exist, however, under which we conduct a more searching review of arbitral awards. In Garrity v. McCaskey, 223 Conn. 1, 6, 612 A.2d 742 (1992), our Supreme Court reiterated that there are three grounds for vacating an award when the submission is unrestricted. These grounds arise when the award (1) rules on the constitutionality of a statute, (2) violates clear public policy or (3) contravenes one or more of the statutory proscriptions of General Statutes § 52-418." (Citations omitted; internal quotation marks omitted.) State v. AFSCME, Council 4, Local 2663, AFL-CIO, 59 Conn. App. 793, 796, 758 A.2d 387, cert. denied, 255 Conn. 905, 762 A.2d 910 (2000).
Metropolitan District Commission v. Local 184, 77 Conn. App. 832, 838-839 (2003).
Most of the points raised by PHCS in its Petition To Vacate Arbitration Award have to do with factual or legal issues, and since this court is bound by the arbitrator's legal and factual determinations, I shall not review those determinations.
The court will however review PHCS's claim that the award implicates a clearly established public policy and that it violates that public policy.
Both the Connecticut Supreme and Appellate Courts have recently spoken on the issue of when it is proper to vacate an arbitration award on the grounds that the award violates clear public policy.
In Schoonmaker v. Cummings Lockwood of Connecticut, P.C., 252 Conn. 416, 747 A.2d 1017 (2000), our Supreme Court enunciated the proper standard of review for determining whether an arbitral decision violates a clear public policy. It stated: "Where there is no clearly established public policy against which to measure the propriety of the arbitrator's award, there is no public policy ground for vacatur. If, on the other hand, it has been determined, that an arbitral award does implicate a clearly established public policy, the ultimate question remains as to whether the award itself comports with that policy. We conclude that where a party challenges a consensual arbitral award on the ground that it violates public policy, and where that challenge has a legitimate, colorable basis, de novo review of the award its appropriate in order to determine whether the award does in fact violate public policy." Id., 429.
"Recently, this court had the opportunity to clarify the standard annunciated in Schoonmaker. In State v. AFSCME, Council 4, Local 2663, AFL-CIO, supra, 59 Conn. App. 797, we held that Schoonmaker requires[s] a two-step analysis in cases such as this one in which a party raises the issue of a violation of public policy in an arbitral award. First, we must determine whether a clear public policy can be identified. Second, if a clear public policy can be identified, we must then address the ultimate question of whether the award itself conforms with that policy." (Internal quotation marks omitted.) Cheverie v. Ashcraft Gerel, 65 Conn. App: 425, 432, 783 A.2d 474, cert. denied, 258 Conn. 932, 785 A.2d 228 (2001). The court in the present case relied on two separate public policy bases. We must, therefore, determine whether either of the public policy bases relied on by the court for vacating the arbitration award satisfied that two step analysis.
Metropolitan District Commission v. Local 184, supra, pages 839-840.
PHCS has the burden of proving that conflict with public policy is clearly demonstrated.
Therefore this court must first decide whether the plaintiff has identified a clear public policy. Conn. has a clear explicit public policy against theft as evidenced by its statutes making larceny a crime. See Sections 53a-119 et seq. of the Conn. General Statutes, for Larceny. These statues are an unequivocal legislative statement of this public policy, as is the common law of the state of Connecticut.
Since a clear public policy against theft has been established, the court must go on to determine whether the award conforms with that policy.
The public policy exception applies only when the award is clearly illegal or clearly violative of a strong public policy.
Garrity v. McCaskey, supra, 223 Conn. 7.
In this analysis, "the court is not concerned with the correctness of the arbitrator's decision but with the lawfulness of enforcing the award." (Internal quotation marks omitted.) South Windsor v. South Windsor Police Union Local 1480, Council 15, 255 Conn. 800, 816, 770 A.2d 14 (2001). "A challenge that an award is in contravention of public policy is premised on the fact that the parties cannot expect an arbitrator award approving conduct which is illegal or contrary to public policy to receive judicial endorsement any more than parties can expect a court to enforce such a contract between them." Id.
Here Dr. Tortes admitted that he used confidential computerized patient information to bill patients of Charlotte Hungerford Hospital in Torrington, Connecticut, for roughly 20 calls that he made to adult entertainment phone numbers, and that this was theft and misuse of confidential patient data. (Paragraphs 2 and 3 of "Joint Statement of Undisputed Facts.")
What Dr. Torres did was to use his trusted position as a physician to obtain access to confidential hospital records, and then to charge his adult entertainment phone calls to the credit cards of those hospital patients whose records he had unlawfully obtained. This is obvious and egregious conduct, and the fact that the criminal charges were disposed of under Accelerated Rehabilitation rather than conviction changes nothing. He has admitted perpetrating these acts.
Furthermore, a factor that figured prominently in our Supreme Court's determination that reinstatement of the employee in Groton was repugnant to public policy was the fact that the employee in the Groton case held a position of financial trust. Id., 48. The court concluded that requiring the employer to reinstate that employee to such a position undermined the legitimate expectations of the employer, namely, that an employer is entitled to expect that it should be able to trust an employee in a position of financial responsibility and that an employer also is entitled to expect that other employees and members of the public will feel that they can trust that employee. Id., 48-49. In the present case, there is no indication as to the nature of the position held by Rodriquez. Moreover, the cases that have held that a court properly vacated an arbitration award that compelled reinstatement of an employee usually involved some apparent and egregious misconduct on the part of the employee. See id., 35 (employee arrested and convicted of larceny of employer's funds); State v. AFSCME, Council 4, Local 387, AFL-CIO, supra, 252 Conn. 467 (employee arrested for making harassing telephone calls on state telephone during working hours granted accelerated rehabilitation); State v. AFSCME, Council 4, Local 2663, AFL-CIO, supra, 59 Conn. App. 793 (employee, who was driver for department of children and families, arrested and convicted of possession of marijuana, cocaine with intent to sell); Board of Education v. Local 566, Council 4, AFSCME, 43 Conn. App. 499, 683 A.2d 1036 (1996) (employee convicted of embezzling union finds demoted to position where he would not be responsible for publicly owned property), cert. denied, 239 Conn. 957, 688 A.2d 327 (1997); State v. Council 4, AFSCME, 27 Conn. App. 635, 608 A.2d 718 (1992) (employee arrested for stealing state finds granted accelerated rehabilitation.)
Metropolitan District Commission v. Local 184, 77 Conn. App. 832-845, 846 (2003).
Here Dr. Torres was in a position of trust; certainly PHCS and patients in the hospital had every reason to trust that Dr. Torres would not steal confidential records at the hospital and then use this information to steal money from those patients billed for his phone calls.
The arbitrator considered as a factor in his decision his conclusion that Dr. Torres' misconduct was caused by emotional illness brought about by a piling up of a number of stressors (Page 1 of Award of Arbitrator).
The Connecticut Supreme Court has recently addressed this issue.
The trial court then proceeded to the second prong of the analysis: whether the arbitrator's award violated this clear public policy. The court noted that the arbitrator attempted to excuse Frederick's conduct "as the outgrowth of various personal stressors," but did "[find] that he did, in fact, leave the stipulated message for the legislator." Accordingly, the arbitrator justified reinstating Frederick despite his conduct, which violated both statute and department regulations. We agree with the trial court that, in doing so, the arbitrator "minimize[d] society's overriding interest in preventing conduct such as that at issue in this case from occurring." Thus, the award — with its inherent rationalization of conduct stipulated to by Frederick, which was violative of statute and regulations — is in itself violative of clear public policy, As the trial court aptly stated, the termination of Frederick as provided for in the department of correction regulations is "warranted . . . A lesser sanction — a progressive sanction, as suggested by the arbitrator — would, very simply, send the message that stress, or poor judgment, or other factors, somehow renders the conduct permissible or excusable."
State v. AFSCME, Council 4, Local 307, AFL-CIO, 252 Conn. 467, 477 (2000).
The charge in this case was also disposed of by Accelerated Rehabilitation.
It is noteworthy that the variety of stressors which the arbitrator concluded were the cause of Dr. Torres' behavior did not interfere with his surgical practice, which he conducted simultaneously with his larcenous acts.
III. Conclusion
The court finds that PHCS has sustained its burden of proving first that the State of Connecticut has a clear, strong public policy against theft, and secondly, that the arbitrator's Award "that Dr. Torres be recredentialed and fully reinstated to the PHCS roster and as a Party to the Agreement," violates this clear public policy. Just as in the case of State v. AFSCME, Council 4, Local 307, supra, p. 477, this award inherently rationalizes the theft stipulated to by Dr. Torres, and therefore the award itself violates public policy.
The award is vacated.
Richard A. Walsh Judge Trial Referee