Health Law Daily Wrap Up, HEALTH CARE EMPLOYMENT ISSUES—S.D. W. Va.: Physician cannot apply WV Patient Safety Act retaliation claim to non-healthcare entity, (May 20, 2024)

By Justin Marcus Smith, J.D.

The physician contractor also did not have a public policy claim, but the physician otherwise properly pleaded a civil conspiracy claim against healthcare and non-healthcare entities alike.

An independent contractor physician could not bring a retaliation claim against a non-healthcare entity under the West Virginia Patient Safety Act (PSA), held a federal district court in West Virginia. The Supreme Court of Appeals of West Virginia had already conspicuously omitted construing a non-healthcare entity as a “person” under the PSA. The court also held the physician did not have a West Virginia public policy claim because that claim was not available to independent contractors, only at-will employees. The court dismissed those two claims on one defendant’s motion for failure to state a claim. On a different defendant’s motion for judgment on the pleadings, the court ruled the physician did not have a West Virginia public policy claim for wrongful discharge, independent of the physician’s PSA claim, because the PSA both enshrined the public policy and provided a statutory remedy. However, the physician otherwise properly pleaded a conspiracy against all of the defendants for tortious interference with his business relationships (Davis v. Appalachian Regional Healthcare, Inc., 5:23-cv-00672 (S.D. W. Va. May 15, 2024)).

Background. A physician had been providing healthcare services as an independent contractor to various entities through Beckley Emergency Physicians, LLC (BEP), but after the physician allegedly filed multiple patient safety reports and complaints, BEP terminated him. The physician then sued BEP and various of the other entities in West Virginia state court asserting the following claims: 1) retaliation in violation of the PSA; 2) termination in violation of West Virginia public policy; 3) civil conspiracy; 4) intentional interference with business relations; and 5) breach of contract.

After BEP removed the matter to federal court, one of the defendant entities, TSG Resources, Inc. (TSG) moved to dismiss for failure to state a claim. TSG contended it did not do anything wrong, the complaint did not plead sufficient facts for a claim against TSG, and the PSA did not apply because the complaint did not identify TSG as a “healthcare entity.” About a month later, BEP moved for judgment on the pleadings arguing that it had a right to terminate the physician without notice at the request of one of the entities that BEP served. BEP also argued the physician’s public policy claim failed inasmuch as there was a statutory remedy available.

PSA claim. The court held the physician failed to state a PSA claim against TSG because the complaint did not contain any facts, beyond TSG’s corporate ownership interest in BEP, asserting that TSG had the status as a provider of health care services within the meaning of the PSA. The physician had contended, to the contrary, that: 1) the PSA vested health care workers with a right of action against health care entities and the “persons” believed to have violated the PSA; and, pertinent here, 2) TSG qualified as a “person.”

The court specified that the physician’s argument failed “for at least two reasons.” First, the Supreme Court of Appeals of West Virginia, in a 2021 case construing the PSA, omitted whether a non-health care entity in that matter qualified as a PSA “person” when it specified that the entity was not a provider of “health care services” under the PSA. See In State ex rel. Grant County Commission v. Nelson, 244 W. Va. 649, 856 S.E.2d 608 (2021). The instant court viewed that as a telling omission.

Second, the U.S. Court of Appeals for the Fourth Circuit had admonished, in multiple opinions, that federal courts are to stick to ruling on state laws, as they exist, without expanding them. The court noted here that the physician’s interpretation of the PSA “would, at a minimum, appreciably expand liability under the PSA.” The court concluded that “binding precedent counsel[ed] restraint.” The court accordingly dismissed the physician’s PSA claim against TSG, with prejudice.

Public policy. The court held next that the physician did not have a West Virginia public policy claim, often called a Harless claim. See generally Harless v. First Nat’l Bank in Fairmont, 162 W. Va. 116, 246 S.E.2d 270 (1978). Here, TSG contended Harless did not apply because the physician was an independent contractor, not an at-will employee. The physician countered that Harless was not limited to at-will employees and did not preclude West Virginia public policy violations in other employment settings.

As to these arguments, the court observed, first, that West Virginia wrongful discharge public policy claims were typically framed as “exceptions” to at-will employment. Second, at least one of the district court’s other judges had already concluded, in an unpublished opinion, that Harless would not be available in an analogous setting, it would only be available to at-will employees unless and until a state court might expand its applicability to independent contractors. The court found that unpublished authority persuasive because it based its analysis and ruling on a recent Supreme Court of Appeals of West Virginia precedent in a separate matter. The court concluded Harless was not available on the instant facts; therefore, it dismissed the physician’s public policy claim against TSG.

Civil conspiracy. The court held the physician’s civil conspiracy claim survived dismissal. As asserted against TSG, the physician did not plead civil conspiracy as a stand-alone claim. Instead, the physician alleged that TSG conspired with others to commit other wrongful acts, i.e., that they had all collectively agreed and conspired to commit the conduct set forth in the complaint and thereby tortiously interfered with his business relationships.

TSG argued, to the contrary, that the physician failed to plead any facts that would permit a finding that TSG was liable for civil conspiracy. In response, the court said TSG misapprehended civil conspiracy jurisprudence insofar as a party need not commit the tort itself to have conspired in its commission. The court further observed that a conspiracy may produce one or more torts, and if it does, every conspirator is liable for that tort, including conspirators that promoted but did not commit the tort. Accordingly, the court denied TSG’s motion to dismiss the civil conspiracy claim.

Judgment on pleadings. The court held BEP’s motion for judgment on the pleadings was “without merit” in all respects but one: the physician did not have a public policy claim against BEP because the physician had a statutory remedy available under the PSA. The PSA was both the source of applicable public policy and provided a corresponding claim for relief; therefore, resorting to Harless was forbidden. The court granted BEP’s motion for judgment only with respect to the physician’s public policy claim.

The case is No. 5:23-cv-00672.

Judge: Volk, F.

Attorneys: Amanda J. Taylor (Taylor, Hinkle & Taylor, Inc.) for Matthew Davis. Anders W. Lindberg (Steptoe & Johnson) for Appalachian Regional Healthcare, Inc. d/b/a Beckley ARH Hospital. Andrew Maunz (Jackson Lewis P.C.) for Beckley Emergency Physicians, LLC and TSG Resources, Inc. d/b/a SCP Health.

Companies: Appalachian Regional Healthcare, Inc. d/b/a Beckley ARH Hospital; Beckley Emergency Physicians, LLC; TSG Resources, Inc. d/b/a SCP Health

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