Perry v. VHS San Antonio Partners ( 2021 )

Case: 20-50356 Document: 00515774519 Page: 1 Date Filed: 03/10/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
March 10, 2021
No. 20-50356 Lyle W. Cayce
Clerk
Doctor Melvin G. Perry, Jr.,
Plaintiff—Appellant,
versus
VHS San Antonio Partners, L.L.C., doing business as North
Central Baptist Hospital,
Defendant—Appellee.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:18-CV-404
Before Jolly, Stewart, and Oldham, Circuit Judges.
E. Grady Jolly, Circuit Judge:
The man at the center of this employment-discrimination appeal is
Dr. Melvin G. Perry, Jr., an African-American pediatric intensivist. Dr.
Perry treated children in the pediatric intensive care unit of a hospital owned
by VHS San Antonio Partners, L.L.C. under his professional services
agreement with Pediatric Inpatient Critical Care Services (PICCS), which
itself operated under a separate coverage agreement with VHS. PICCS
eventually terminated its professional services agreement with Dr. Perry at
VHS’s request. In response, Dr. Perry sued claiming race discrimination
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under Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981. The
district court granted summary judgment dismissing his claims against VHS,
dismissing his Title VII claim for lack of an employment relationship with
VHS, and his § 1981 claim for lack of a contractual relationship with VHS.
Dr. Perry appeals to us. We hold that Dr. Perry’s Title VII claim fails for
lack of an employment relationship with VHS under either integrated-
enterprise or joint-employment theories. And we further hold that Dr.
Perry’s § 1981 claim fails because Dr. Perry cannot identify an impaired
contractual right enforceable against VHS. Consequently, we affirm the
district court’s partial final judgment. (Dr. Perry’s § 1981 claim against
PICCS is still pending before the district court.) 1
I
VHS is an entity that owns and operates North Central Baptist
Hospital. North Central Baptist is located in San Antonio, Texas and is the
hub for pediatric care for the Baptist Health System in the area. The pediatric
intensive care unit is at the center of this dispute. In December 2014, North
Central Baptist needed physicians to treat patients in that unit. To fill that
need, VHS contracted with PICCS, a professional association owned by
three physicians: Dr. Thomas Gowan, Dr. Hugo Carvajal, and Dr. Nelson
Pedro Chavez. The parties call this agreement the “coverage agreement,”
and we will do the same.
The purpose of the coverage agreement is to ensure that VHS has
enough pediatric intensivists to treat the children in North Central Baptist’s
pediatric intensive care unit. The agreement achieves that goal by making
1
The district court entered a Federal Rule of Civil Procedure 54(b) partial final
judgment authorizing this interlocutory appeal.
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PICCS the “exclusive provider” of pediatric critical care services for North
Central Baptist’s pediatric intensive care unit.
Five features of the coverage agreement bear mention. First, the
coverage agreement says that PICCS and its physicians “are acting as
independent contractors, and shall not be considered employees or agents
of” VHS. Second, the coverage agreement requires PICCS to pay its
physicians fair market value. Third, the coverage agreement sets baseline
qualifications for PICCS physicians; they must (a) be duly licensed and
qualified to practice medicine in Texas; (b) be a participating physician in
Medicare and in Texas’s Medicaid program; (c) be approved for membership
and/or clinical privileges on the medical staff of North Central Baptist; and
(d) be Board Certified (or Board Eligible) in pediatrics. Fourth, the coverage
agreement grants VHS’s CEO the right to “request removal” of any
PICCS physician “if continued service by such [p]hysician could jeopardize
patient care or safety.” Upon such a request, PICCS agrees to
“immediately remove” the physician “in accordance with [North Central
Baptist’s] Medical Staff Bylaws.” Fifth and finally, the coverage agreement
obliges PICCS to appoint a director of the pediatric intensive care unit,
“subject to the prior approval of” VHS’s CEO.
To meet its obligations under the coverage agreement, PICCS
required more physicians. So it placed an advertisement online, soliciting
applications from pediatric critical care specialists. Dr. Perry responded.
One of PICCS’s owners, Dr. Carvajal, found Dr. Perry’s application
“attractive” and invited Dr. Perry to travel to San Antonio for an interview
in January 2015.
The interview went well. Just two months later, Dr. Perry entered
into a professional services agreement with PICCS. Three features of that
agreement are relevant. First, Dr. Perry agreed to “render professional
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medical services in the specialty of pediatric critical care medicine” at North
Central Baptist. Second, Dr. Perry agreed that “the relationship between
[PICCS] and him is that of an independent contractor.” And third, Dr.
Perry agreed to execute a separate “physician agreement” with VHS.
Dr. Perry signed the physician agreement a few weeks later. Under it,
he agreed that he understood that he was bound by the terms of the coverage
agreement between VHS and PICCS. He also agreed that North Central
Baptist’s “Medical Staff Bylaws shall control my termination of Medical
Staff Membership and/or clinical membership.” The physician agreement
was signed only by Dr. Perry, purportedly “[i]n consideration of [his]
approval by [VHS] to provide services” at North Central Baptist. Because
the physician agreement is the basis for Dr. Perry’s § 1981 claim against
VHS, and the language of that agreement informs the analysis to follow, we
set out the agreement in full:
I, Melvin G. Perry, MD, am a member, associate, partner or
employee of or an independent contractor under contract with
Pediatrics Inpatient Critical Care Services, P.A.
(“Group”). I understand that I am bound by all terms and
conditions of the Agreement for Department coverage dated
December 12, 2014 and effective March 1, 2015 (the
“Agreement”) between VHS San Antonio Partners, LLC
dba North Central Baptist Hospital (“Hospital”) and
Group. In consideration of my approval by Hospital to provide
services at North Central Baptist Hospital (“Hospital”),
pursuant to the Agreement, I knowingly and voluntarily agree
to the following.
I understand, acknowledge and expressly agree that it is in the
best interest of Hospital’s ability to provide quality patient care
in a cost-effective and efficient manner for Hospital to contract
with an entity to be the exclusive provider of the Services for
the Department. I further understand, acknowledge and agree
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that upon expiration or earlier termination of the Agreement,
with or without cause, Hospital shall have the right to grant an
exclusive contract for the provision of Services to any person
or entity.
I understand, acknowledge and agree that the Medical Staff
Bylaws shall control any termination of Medical Staff
Membership and/or clinical privileges. I understand,
acknowledge and agree that unless and until such loss of
membership occurs, I am bound by and subject to all provisions
of the Bylaws, Rules and Regulations of Hospital and/or its
Medical Staff.
Without limiting the foregoing in any way, I understand,
acknowledge and agree that if the Agreement expires and/or
terminates for any reason, and I continue to hold Medical Staff
membership and/or exercise clinical privileges thereafter, this
shall not, in any way, waive or restrain the Hospital from
granting an exclusive contract for the provision of Services to
any person or entity.
I agree that if any one or more of the provisions contained
herein shall be held to be invalid, illegal or unenforceable for
any reason, whether in whole or in part, such invalidity,
illegality or unenforceability shall not affect any other provision
hereof, and this Physician Agreement shall be construed as if
such provision had never been contained herein.
BY MY SIGNATURE BELOW, I ACKNOWLEDGE THAT
I HAVE CAREFULLY READ AND UNDERSTOOD THE
ABOVE PHYSICIAN AGREEMENT, AND I HAVE
CAREFULLY READ AND UNDERSTOOD THE
AGREEMENT REFERRED TO ABOVE AND THAT I
KNOWINGLY AND VOLUNTARILY AGREE TO THEIR
TERMS.
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Dr. Perry’s stint at North Central Baptist was a short one. 2 He worked
there under his professional services agreement with PICCS for just 22
months, from April 2015 to February 2017. During Dr. Perry’s tenure, VHS
did not pay his salary, did not bill for his services, did not pay for his
continuing medical education or his membership in professional
organizations, did not pay his malpractice insurance, did not create his
schedule, and did not keep his personnel records.
In January 2017, North Central Baptist President Bill Waechter and
North Central Baptist Chief Medical Officer Dr. Dana Kellis decided to
terminate Dr. Perry’s professional services agreement. Although the
termination, officially, was without cause, Waechter testified that the
contract was terminated because Dr. Perry had created a hostile work
environment that was “putting . . . patient care in jeopardy.”
This occasion was the first—and is the only—time VHS exercised its
contractual right to request removal of a PICCS physician. PICCS
complied with the request and sent Dr. Perry a letter informing him that “the
Board of Directors of PICCS has directed to terminate” the agreement
“without cause pursuant to Section 15.1” and giving Dr. Perry 90 days notice
of the termination. Dr. Perry chose not to work through the full notice period
and treated patients at North Central Baptist only through February 2017.
II
In response to the termination of his contract, Dr. Perry sued both
PICCS and VHS under Title VII and 42 U.S.C. § 1981. He alleged that
PICCS and VHS discriminated against him on the basis of his race and sex
and subjected him to a hostile work environment. Regarding his
2
The reader is reminded that VHS owns and operates North Central Baptist
Hospital.
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employment, he alleged that (a) both PICCS and VHS were his Title VII
“employer,” (b) PICCS and VHS were joint employers, and (c) PICCS
and VHS constituted a single, integrated enterprise.
At the urging of PICCS and VHS, the district court bifurcated
discovery on the employment-relationship issue from discovery on other
issues. The district court ordered limited discovery “on the threshold issues
of whether [Dr. Perry] was an employee of [PICCS] and whether [VHS]
was a joint employer of [Dr. Perry].” The district court stayed discovery on
the merits of Dr. Perry’s claims, pending its ruling on dispositive motions
regarding those threshold issues.
Dipositive motions followed. VHS sought summary judgment
dismissing all of Dr. Perry’s claims, contending the Title VII claim failed
because Dr. Perry did not have an employment relationship with VHS, and
the § 1981 claim failed because Dr. Perry did not have a contract with VHS.
PICCS also moved for summary judgment, but it sought dismissal of the
Title VII claim only. PICCS first contended that Dr. Perry’s Title VII
claim failed on the ground that PICCS did not meet the Title VII definition
of “employer” because PICCS did not employ at least 15 people. See 42
U.S.C. § 2000e(b). PICCS next contended that the claim failed for the
independent reason that application of the “hybrid economic
realities/common-law control test” showed that Dr. Perry was an
independent contractor, not an employee of PICCS. And PICCS last
contended that VHS and it were not joint employers of Dr. Perry; Dr. Perry
was an independent contractor of both entities.
The district court granted both motions for summary judgment in a
lengthy opinion, analyzing the Title VII claims first and the § 1981 claim
second.
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The Title VII analysis was intricate. Starting with the claims against
PICCS, the district court concluded that PICCS, standing alone, did not
qualify as a Title VII “employer” because it did not employ at least 15
people. So PICCS could not be liable under Title VII unless Dr. Perry could
aggregate PICCS’s and VHS’s employees by showing that PICCS and
VHS constituted a single, integrated enterprise. Consistent with Schweitzer
v. Advanced Telemarketing Corp., 104 F.3d 761, 764 (5th Cir. 1997), the district
court began the aggregation analysis by applying a “hybrid economic
realities/common law control” test to determine whether Dr. Perry was an
employee or independent contractor of PICCS. But application of that test
yielded no answer: The district court found fact disputes bearing on Dr.
Perry’s status as a PICCS employee. Having found fact disputes concerning
Dr. Perry’s employment relationship with PICCS, the district court turned
to VHS, asking whether that entity and PICCS constituted a single,
integrated enterprise, such that both could be liable under Title VII. PICCS
and VHS did not constitute an integrated enterprise, the district court
decided, because Dr. Perry failed “to show the requisite degree of
interrelation in daily employment matters.” That conclusion left just one
basis for imposing Title VII liability—joint employment. Again applying the
“hybrid economic realities/common law control” test, the district court
concluded that VHS did not qualify as a joint employer of Dr. Perry because
VHS lacked meaningful control over Dr. Perry and his work. Given the
district court’s conclusions that (1) VHS was not a joint employer, (2) VHS
and PICCS were not a single, integrated enterprise, and (3) PICCS,
standing alone, did not employ enough people to qualify as a Title VII
“employer,” the district court entered summary judgment dismissing all of
Dr. Perry’s Title VII claims.
The § 1981 analysis proved simpler. Dr. Perry’s § 1981 claim against
VHS failed because, according to the district court, Dr. Perry did not have a
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contractual relationship with VHS. Dr. Perry’s “physician agreement” was
not a contract covered by § 1981, the district court reasoned, because the
physician agreement “d[id] no more than restate the fact that the [Medical
Staff] Bylaws control membership and privileges and their termination” and
thus created “no enforceable contract rights against VHS.” In the light of
its conclusion that Dr. Perry did not have a contract with VHS, the district
court entered summary judgment dismissing Dr. Perry’s § 1981 claim against
VHS.
After the district court’s summary-judgment ruling, one claim
remained—a § 1981 claim against PICCS. Not wanting to delay this appeal,
Dr. Perry moved for entry of a partial final judgment under Federal Rule of
Civil Procedure 54(b), thus allowing entry of an appealable judgment on one
or more claims even when trial-court litigation remains for other claims. The
district court granted the motion, entering a partial final judgment dismissing
all of Dr. Perry’s claims against VHS, from which Dr. Perry takes this timely
appeal.
In short, the only matters before us today are Dr. Perry’s Title VII
and § 1981 claims against VHS. His § 1981 claim against PICCS is still
pending in the district court.
III
We review the grant of summary judgment de novo. West v. City of
Houston, 960 F.3d 736, 740 (5th Cir. 2020) (per curiam). Summary judgment
is appropriate if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56(a). A dispute is genuine if “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material if it “might
affect the outcome of the suit.” Id. We view the evidence in the light most
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favorable to the nonmovant and draw all reasonable inferences in that party’s
favor. Adams v. Alcolac, Inc., 974 F.3d 540, 543 (5th Cir. 2020) (per curiam).
Dr. Perry makes three claims. First, he contends that VHS is liable
under an “interference” theory of Title VII liability promulgated in Sibley
Memorial Hospital v. Wilson, 488 F.2d 1338 (D.C. Cir. 1973). Second, he
contends that the district court erred in granting summary judgment
dismissing his Title VII claims for lack of an employment relationship with
VHS. Third, he contends that the district court erred in granting summary
judgment dismissing his § 1981 claim for lack of a contractual relationship
with VHS. We consider his Sibley argument before turning to Title VII and
then to § 1981.
IV
Dr. Perry contends—for the first time on appeal—that VHS is liable
under Sibley’s “interference” theory. 3 We generally do not consider
arguments raised for the first time on appeal. See Stokes v. Emerson Elec. Co.,
217 F.3d 353, 358 n.19 (5th Cir. 2000). But there are exceptions. For
example, we may consider an issue “if the argument on the issue before the
district court was sufficient to permit the district court to rule on it.” In re
Liljeberg Enters., Inc., 304 F.3d 410, 427 n.29 (5th Cir. 2002). That is not the
case here. Because Dr. Perry did not mention Sibley or even suggest the
“interference” theory in the district court, the argument on the issue was not
sufficient to permit the district court to rule on it. So Dr. Perry failed to
3
Under Sibley’s “interference” theory, a plaintiff can bring a Title VII action
against a defendant who is not his “actual” or “direct” employer if that defendant
“control[s] access to” the plaintiff’s employment and “den[ies] such access by reference
to invidious criteria.” 488 F.2d at 1342.
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preserve his Sibley argument, and we decline to consider it. We turn to
consider Dr. Perry’s Title VII claim.
V
The basic premise of a Title VII case is that the plaintiff had an
employment relationship with the defendant. See Muhammad v. Dall. Cnty.
Cmty. Supervision & Corr. Dep’t, 479 F.3d 377, 380 (5th Cir. 2007). Dr. Perry
contends that he had an employment relationship with VHS on the basis of
two alternative theories. First, he contends that VHS and PICCS were
engaged in an integrated enterprise. Second, he contends that VHS was his
joint employer, along with PICCS. We address each argument in turn.
A
Dr. Perry first contends that his evidence is sufficient to show that
VHS and PICCS constituted a single, integrated enterprise. In Title VII
cases, “‘superficially distinct entities may be exposed to liability upon a
finding they represent a single, integrated enterprise: a single employer.’”
Schweitzer, 104 F.3d at 763 (quoting Trevino v. Celanese Corp., 701 F.2d 397,
404 (5th Cir. 1983)). We apply a four-factor test to determine whether two
entities are a single employer for Title VII purposes. Johnson v. Crown
Enters., Inc., 398 F.3d 339, 343 (5th Cir. 2005). The factors are “(1)
interrelation of operations, (2) centralized control of labor relations, (3)
common management, and (4) common ownership or financial control.”
Vance v. Union Planters Corp., 279 F.3d 295, 297 (5th Cir. 2002) (citing
Trevino, 701 F.2d at 403).
The first factor, interrelation of operations, “ultimately focuses on
whether” one entity “excessively influenced or interfered with the business
operations” of the other. Lusk v. Foxmeyer Health Corp., 129 F.3d 773, 778
(5th Cir. 1997). Evidence that one entity is involved in the “daily
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employment decisions” of the other is “central.” Schweitzer, 104 F.3d at
765. The fact that one entity “ultimately benefitted from the activities” of
the other “is irrelevant to whether their operations were interrelated.” Lusk,
129 F.3d at 778. “Attention to detail, not general oversight, is the hallmark
of interrelated operations.” Id. (citing Johnson v. Flowers Indus., Inc., 814
F.2d 978, 982 (4th Cir. 1987)). Evidence suggestive of interrelated
operations includes (1) one entity’s involvement in the other’s daily
decisions relating to production, distribution, marketing, and advertising; (2)
shared employees, services, records, and equipment; (3) commingled bank
accounts, accounts receivable, inventories, and credit lines; (4) one entity’s
maintenance of the other’s books; (5) one entity’s issuance of the other’s
paychecks; and (6) one entity’s preparation and filing of the other’s tax
returns. Id. No such evidence is present here. More broadly, there is no
evidence that VHS “excessively influenced or interfered with the business
operations” of PICCS, which is the “ultimate focus[ ] ” of this factor. Id.Still, Dr. Perry complains that the district court overlooked evidence that
PICCS physicians are necessary to VHS’s business and that VHS
“coached” Dr. Perry by telling him that he needed to improve his conduct.
But those facts do not reflect the degree of interrelatedness Lusk requires:
They do not show VHS’s “attention to detail” or its “excessive[ ]
influence[ ] ” in PICCS’s business. Id. Consequently, this factor disfavors
a finding that VHS and PICCS constitute a single, integrated enterprise.
The second factor, centralized control of labor relations, “has been
called the most important one.” Johnson, 398 F.3d at 343 (citing Schweitzer,
104 F.3d at 764). We have refined the inquiry into one question: What entity
made the final decisions on employment matters regarding the person
claiming discrimination? Id. (quoting Trevino, 701 F.2d at 404). To satisfy
this factor, Dr. Perry points primarily to two items of evidence. First, he
points to the coverage agreement between PICCS and VHS. That
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agreement, as we have explained, grants VHS’s CEO the right to “request
removal” of PICCS physicians and requires PICCS, in turn, to
“immediately remove” the physician “in accordance with . . . Medical Staff
Bylaws.” Second, he points to an email from North Central Baptist Chief
Medical Officer Dr. Dana Kellis to North Central Baptist President Bill
Waechter. 4 In that email, Dr. Kellis states that he met with PICCS’s owner-
directors, and “we reached the decision to tell Dr. Perry that he is being
terminated without cause . . . .” The coverage agreement’s grant of the
power to request Dr. Perry’s removal, and Dr. Kellis’s reference to “we,”
suggest that both VHS and PICCS made the final decision to terminate Dr.
Perry’s professional services agreement. See Trevino, 701 F.2d at 404.
Although VHS’s power to request removal of a PICCS physician was
exercised on only one occasion, such a power generally favors a finding that
VHS and PICCS constitute an integrated enterprise.
The third factor, common management, disfavors a finding that VHS
and PICCS are a single, integrated enterprise. PICCS’s management
consisted of Dr. Thomas Gowan, Dr. Hugo Carvajal, and Dr. Nelson Pedro
Chavez. The VHS-owned North Central Baptist Hospital was managed by
Bill Waechter. There is no overlap of managerial responsibilities.
The fourth and final factor, common ownership or financial control,
also disfavors a single, integrated enterprise. Dr. Perry has not identified any
commonality of ownership of VHS and PICCS, nor has he presented any
evidence of shared financial control.
In sum, the first, third, and fourth factors indicate that VHS and
PICCS do not constitute an integrated enterprise. But the second and most
4
The reader is once again reminded that VHS owns and operates North Central
Baptist Hospital.
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important factor—centralized control of labor relations—as a general rule
favors a finding that VHS and PICCS constitute an integrated enterprise.
Nevertheless, this conclusion raises the question whether Dr. Perry’s
satisfaction of the second factor, such as it may be, standing alone, creates a
genuine dispute of material fact, precluding summary judgment on the
integrated-enterprise theory. The district court thought not, and we agree.
Although we have not confronted this precise question until today, the
Equal Employment Opportunity Commission has offered some guidance. It
has suggested that no single factor is dispositive of the integrated-enterprise
analysis. See EEOC Compliance Manual, Section 2: Threshold
Issues at III(B)(1)(a)(iii)(a), 2009 WL 2966755. Our cases have pointed us
in a similar direction. In Torres v. Liberto Manufacturing Co., we said that the
plaintiff’s reliance on the second factor, standing alone, was “not
persuasive.” 67 F. App’x 252, 2003 WL 21195924, at *3 (5th Cir. 2003) (per
curiam). And in Lusk, we emphasized the need for evidence of “[s]ome
nexus” to “daily employment decisions.” 129 F.3d at 778 (citing Schweitzer,
104 F.3d at 765). The only evidence offered on that point in this case is that
VHS exercised its contractual right to request that PICCS terminate Dr.
Perry’s professional services agreement. Apparently no such or similar event
had occurred before. This singular involvement of VHS in PICCS’s
personnel retention demonstrates that reasonable jurors could not find that
VHS was “so involved in the daily employment decisions of [PICCS] as to
justify treating the two . . . as a single employer.” Id. at 777 n.3 (citations
omitted). Consequently, the district court did not err in concluding that Dr.
Perry failed to create a genuine dispute of material fact on his integrated-
enterprise theory. We now turn to consider Dr. Perry’s next theory—joint
employment.
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B
Dr. Perry contends that even if he fails on his integrated-enterprise
claim, he has surely offered enough evidence to survive summary judgment
on the ground that VHS was a joint employer. We lay the foundation to his
argument, citing its definition: “The term ‘joint employer’ refers to two or
more employers that are unrelated or that are not sufficiently related to
qualify as an integrated enterprise, but that each exercise sufficient control of
an individual to qualify as [his] employer.” EEOC Compliance
Manual, Section 2: Threshold Issues at III(B)(1)(a)(iii)(b), 2009 WL
2966755.
To determine whether an entity exercises enough control over an
individual to qualify as his employer, we apply a “hybrid economic
realities/common law control test.” Deal v. State Farm Cnty. Mut. Ins. Co. of
Tex., 5 F.3d 117, 118–19 (5th Cir. 1993) (quoting Fields v. Hallsville Indep. Sch.
Dist., 906 F.2d 1017, 1019 (5th Cir. 1990) (per curiam), cert. denied, 498 U.S.
1026 (1991)). The right to control the employee’s conduct is the most
important component of determining a joint employer. Id. at 119 (citing
Fields, 906 F.2d at 1019). When examining the control component, we focus
on the right to hire and fire, the right to supervise, and the right to set the
employee’s work schedule. Id. (citing Fields, 906 F.2d at 1020; Mares v.
Marsh, 777 F.2d 1066, 1068 (5th Cir. 1985)). The economic-realities
component of the “hybrid economic realities/common law control test”
focuses on who paid the employee’s salary, withheld taxes, provided benefits,
and set the terms and conditions of employment. Id. (citing Mares, 777 F.2d
at 1068).
It is helpful that we previously have applied this “hybrid economic
realities/common law control test” in the hospital-physician context. See
Diggs v. Harris Hosp.-Methodist, Inc., 847 F.2d 270 (5th Cir. 1988). We held
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in Diggs that an obstetrician-gynecologist with staff privileges at a hospital
failed to establish that she was an employee of the hospital. 5 Id. at 272. The
hospital supplied the tools, staff, and equipment Diggs needed to treat
patients, and the hospital “impose[d] standards” upon Diggs, as it did upon
all physicians with staff privileges. Id. at 273. The hospital even required
Diggs to have a “sponsor” present during surgical procedures. Id. Yet all of
this involvement was insufficient. Id. We emphasized that the hospital did
not “direct the manner or means” by which Diggs rendered medical care; it
did not pay Diggs for her services; and it did not pay her licensing fees,
professional dues, insurance, taxes, or retirement benefits. Id.Applying this test here, we first find that the evidence of control is
weak. To be sure, we already have discussed the only fact that reflects
control—VHS’s limited contractual right to “fire” Dr. Perry by requesting
that PICCS terminate his professional services agreement. The other facts
cut against control. First, VHS did not have the right to hire Dr. Perry. The
coverage agreement delegated to PICCS the task of employing or
contracting with physicians other than the Director of PICCS. Second,
VHS did not have the right to set Dr. Perry’s work schedule. PICCS
created and maintained the work schedule for Dr. Perry. Dr. Perry himself
even retained the right to adjust the schedule set by the PICCS Director.
5
Cases from other circuits have reached the same general conclusion: A physician
with hospital privileges is not a hospital employee for purposes of federal antidiscrimination
law. See, e.g., Henry v. Adventist Health Castle Med. Ctr., 970 F.3d 1126, 1133 (9th Cir. 2020)
(bariatric surgeon), petition for certiorari filed, No. 20-869 (Dec. 30, 2020); Wojewski v.
Rapid City Reg’l Hosp., Inc., 450 F.3d 338, 344 (8th Cir. 2006) (cardiothoracic surgeon);
Shah v. Deaconess Hosp., 355 F.3d 496, 500 (6th Cir. 2004) (general surgeon); Vakharia v.
Swedish Covenant Hosp., 190 F.3d 799, 806 (7th Cir. 1999) (anesthesiologist); Cilecek v.
Inova Health Sys. Servs., 115 F.3d 256, 263 (4th Cir. 1997) (emergency physician).
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For example, Dr. Perry refused to work on dates that he had planned to take
a trip to Australia and New Zealand. During some months, Dr. Perry, at his
choosing, worked only one week at North Central Baptist, and he worked the
rest of the month at Kids Time Pediatric locations in Georgia. Dr. Perry’s
power to determine his own work schedule and to offer his professional
services at other locations suggests that he is an independent contractor, not
an employee of VHS. 6 See Henry, 970 F.3d at 1131 (physician’s freedom to
run his own private practice was “inconsistent with employee status”);
Levitin v. Nw. Cmty. Hosp., 923 F.3d 499, 501–02 (7th Cir. 2019) (physician
who could set her own hours and work at other hospitals was independent
contractor—not employee—of hospital); Cilecek, 115 F.3d at 261 (same).
Thirdly, we ask whether VHS had the right to supervise Dr. Perry or
to interfere with his exercise of professional medical judgment in any
meaningful respect. Although Dr. Perry points to evidence that VHS
provided him with the equipment and facilities he needed to treat his
patients, that fact is insufficient to establish control. See Diggs, 847 F.2d at
273. Dr. Perry also points to “coaching” he received from VHS in response
to complaints that he was “rude and condescending.” The fact that an
unidentified VHS employee “coached” Dr. Perry in a generalized way and
“impress[ed] upon” him the “need to improve” his conduct clearly does not
demonstrate VHS’s power to control Dr. Perry’s exercise of professional
medical judgment. See, e.g., Henry, 970 F.3d at 1132 (physician’s obligation
to abide by hospital regulations did not evidence “a right to control the
manner and means of [his] practice”); Cilecek, 115 F.3d at 261–62
6
Yet Dr. Perry insists that VHS set his schedule, complaining that a VHS employee,
Shannon Herrod, scheduled his pediatric sedations “inappropriately.” Herrod’s
“inappropriate” scheduling of pediatric sedations does not show that VHS set Dr. Perry’s
schedule because, as the district court noted, PICCS Director Chavez scheduled Dr. Perry
on a 12-week cycle, subject to Dr. Perry’s stated availability.
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(physician’s obligation to abide by hospital rules and regulations, “which
regulated his work at the hospitals in substantial detail,” did not transform
him into hospital employee). Dr. Perry also contends that VHS could
require him to treat certain patients over his objections, but the argument
finds only limited support in the record. The argument rests on a single
occasion in which “administration” transferred a pregnant, septic teenager
to North Central Baptist Hospital over Dr. Perry’s objection. Dr. Perry
testified that this was an example of VHS “forcing a patient onto [him].” It
is unclear from the record, however, what entity “forced” the patient on
him, or whether the patient was indeed “forced” on him, given that the
patient was transferred to another hospital at the request of a physician who
agreed with Dr. Perry’s assessment. In any event, this one incident does not
establish that VHS had the power to control Dr. Perry’s exercise of
professional medical judgment. In sum, the evidence offered by Dr. Perry
does not support the control component.
We move on now to address the economic-realities component of the
“hybrid economic realities/common law control test.” As earlier noted, the
economic-realities component focuses on “whether the alleged employer
paid the employee’s salary, withheld taxes, provided benefits, and set the
terms and conditions of employment.” Deal, 5 F.3d at 119 (citing Mares, 777
F.2d at 1068). VHS did none of these things. It did not pay Dr. Perry’s
salary, bill for his services, pay for his continuing medical education courses
or his membership dues to various professional organizations, pay for his
malpractice insurance, create his schedule, or keep his personnel records.
Thus, neither component of the “hybrid economic realities/common
law control” test supports an employment relationship between VHS and
Dr. Perry. Like the hospital in Diggs, VHS ultimately lacked the requisite
control; it did not “direct the manner or means by which [Dr. Perry]
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render[ed] medical care.” 847 F.2d at 273. Consequently, we find no error
by the district court in rejecting the joint-employer argument.
This conclusion coheres with Burton v. Freescale Semiconductor, Inc.,
798 F.3d 222 (5th Cir. 2015), on which Dr. Perry relies. There we considered
whether a temporary employee assigned by a staffing company to a
manufacturer had an employment relationship with the manufacturer under
the “hybrid economic realities/common law control test.” Id. at 227–28.
We held that she did. Id. In so holding, we emphasized that the manufacturer
supervised the temporary employee: The manufacturer “completed
performance reviews” of the temporary employee’s work and “delivered”
“[o]n-the-job corrections and admonishment.” Id. Here, such supervision,
which we emphasized in Burton, is absent. To repeat, VHS did not have the
right to supervise Dr. Perry or to interfere with his exercise of professional
medical judgment in any meaningful respect. So we cannot agree that Burton
requires reversal.
In sum, Dr. Perry did not have an employment relationship with VHS
under either an integrated-enterprise or a joint-employment theory. Unable
to show an employment relationship with VHS, Dr. Perry cannot prevail on
his Title VII claim against VHS. We therefore affirm the summary
judgment dismissing the Title VII claims against VHS, and turn to consider
Dr. Perry’s claim under § 1981.
VI
Section 1981 does not supply “a general cause of action for race
discrimination.” Arguello v. Conoco, Inc., 330 F.3d 355, 358 (5th Cir. 2003).
It bars race discrimination in contracting. See 42 U.S.C. § 1981. It does so by
guaranteeing to all persons within the jurisdiction of the United States the
“same right . . . to make and enforce contracts . . . as is enjoyed by white
citizens . . . .” Id. § 1981(a). It defines the phrase “make and enforce
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contracts” to include “the making, performance, modification, and
termination of contracts, and the enjoyment of all benefits, privileges, terms,
and conditions of the contractual relationship.” Id. § 1981(b).
Section 1981 requires a plaintiff to show that (1) he is a member of a
racial minority; (2) the defendant had an intent to discriminate on the basis
of race; and (3) the discrimination concerned one or more of the activities
enumerated in the statute, such as the making and enforcing of a contract.
Bellows v. Amoco Oil Co., 118 F.3d 268, 274 (5th Cir. 1997) (citing Green v.
State Bar of Tex., 27 F.3d 1083, 1086 (5th Cir. 1994)). “Any claim brought
under § 1981 . . . must initially identify an impaired contractual relationship
under which the plaintiff has rights.” Domino’s Pizza, Inc. v. McDonald, 546
U.S. 470, 476 (2006) (cleaned up). A § 1981 claim fails as a matter of law if
the plaintiff lacks “rights under the existing (or proposed) contract that he
wishes ‘to make and enforce.’” Id. at 479–80 (quoting 42 U.S.C. § 1981).
Dr. Perry sued VHS under § 1981 claiming discrimination based on
his race. He has failed, however, to identify in his complaint an “impaired
contractual relationship [with VHS] under which [he] ha[d] rights,” id. at
476, and therefore his complaint failed to state a plausible § 1981 claim. But
VHS did not move to dismiss for failure to state a claim, choosing to move
for summary judgment instead. Dr. Perry opposed that motion on the ground
that his physician agreement created a contractual relationship with VHS.
The district court disagreed, dismissing the § 1981 claim and holding that the
physician agreement did not create a contractual relationship between Dr.
Perry and VHS.
Although we will not specifically disagree with the holding of the
district court, we will affirm the dismissal on a slightly different ground. See
Bluebonnet Hotel Ventures, L.L.C. v. Wells Fargo Bank, N.A., 754 F.3d 272,
276 (5th Cir. 2014) (We “may affirm summary judgment on any ground
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supported by the record, even if it is different from that relied on by the
district court.”) (internal citation and quotation marks omitted). The
physician agreement was signed only by Dr. Perry, who executed the
agreement “[i]n consideration of [his] approval by [VHS] to provide
services” at North Central Baptist Hospital. This language, however, refers
to Dr. Perry meeting privileging credentials, not to any formal approval by
VHS. Under the physician agreement, Dr. Perry agreed that he understood
that he was bound by the terms of the coverage agreement between VHS and
PICCS. He also agreed that North Central Baptist’s “Medical Staff Bylaws
shall control my termination of Medical Staff Membership and/or clinical
membership.” VHS, on the other hand, is not shown to have agreed to
anything. It follows, then, that Dr. Perry failed to identify any right under the
physician agreement that he seeks to “make and enforce” against VHS. So
his § 1981 claim fails.
Our conclusion that Dr. Perry failed to identify an enforceable
contractual right against VHS does not end the discussion. Dr. Perry further
maintains that he can recover against VHS under § 1981 in the absence of a
contractual relationship with VHS. He urges us to hold that VHS has
§ 1981 liability because it “interfered” with his PICCS professional services
agreement by requesting that PICCS terminate that agreement. He
contends that we recognized in Faraca v. Clements, 506 F.2d 956 (5th Cir.
1975), the right of a § 1981 plaintiff to sue a “third party”—that is, a non-
party to the contract at issue—for interference with the plaintiff’s right to
make and enforce a contract. So, for purposes of this case, Dr. Perry argues
that Faraca allows him to bring a § 1981 claim against VHS—a “third party”
to his professional services agreement with PICCS—for interfering with
that agreement.
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But Dr. Perry overreads Faraca. That case arose from the refusal of a
state facility, the Georgia Retardation Center, to hire Dr. Andrew Faraca for
an administrative position because Dr. Faraca, a white male, was married to
an African-American woman. Id. at 958. Although Dr. Faraca was the best-
qualified candidate for the position, the Director of the Center told a hiring
officer not to hire Dr. Faraca because of “concern about the effects of the
racially mixed couple on visitors and possible adverse reactions from state
legislators.” Id. Dr. Faraca was not hired. He responded by suing the
Director for race discrimination under § 1981, claiming that the Director had
interfered with his right to contract with a prospective employer, the State of
Georgia. Id. After a bench trial, the district court held the Director
personally liable to Dr. Faraca under § 1981. Id. at 957. We affirmed. Id.
We did so despite the fact that the Director was, strictly speaking, a third
party: Dr. Faraca did not have a contract with the Director, and the Director
did not have the power to contract or refuse to contract with Dr. Faraca. Id.
Because the Center was a State of Georgia facility, the State was the
employer, and, according to the opinion, only it would have been in a position
to refuse to enter into a contract with Dr. Faraca. Id. at 959.
Since we decided Faraca, however, we have clarified the reason for
the Director’s liability. See Bellows, 118 F.3d at 274. The Director “was only
nominally a third party,” we have explained. Id. Because the Director was
acting on behalf of the State of Georgia when he instructed a subordinate not
to hire Dr. Faraca, the Director and the State “were essentially one and the
same.” Id. Accordingly, we do not read Faraca to recognize, as Dr. Perry
contends, a true third-party-interference theory of § 1981 liability. See id.
Rather, we read Faraca to allow § 1981 liability where the “third party” and
the contracting party are “essentially one and the same.” Id. No evidence
suggests that VHS and PICCS are “essentially one and the same.” It
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follows that Dr. Perry cannot recover against VHS under § 1981 on the
theory initially articulated in Faraca and clarified in Bellows.
VII
We now sum up. In this opinion, we have held that Dr. Perry did not
have an employment relationship with VHS. We have rejected his argument
that an employment relationship arose under either joint-employment or
integrated-enterprise theories. Consequently, the district court did not err
in granting summary judgment dismissing Dr. Perry’s Title VII claims. We
have further held that Dr. Perry has failed to show any contractual right
enforceable against VHS under his “physician agreement” and have thus
concluded that the district court did not err in granting summary judgment
dismissing Dr. Perry’s § 1981 claim. For these reasons, the partial final
judgment of the district court, dismissing all of Dr. Perry’s claims against
VHS, is, in all respects,
AFFIRMED.
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