David Henry v. Adventist Health Castle Med. ( 2020 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DAVID E. HENRY, M.D., No. 19-16010
Plaintiff-Appellant,
D.C. No.
v. 1:18-cv-00046-
JAO-KJM
ADVENTIST HEALTH CASTLE
MEDICAL CENTER, DBA Castle
Medical Center, OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the District of Hawaii
Jill A. Otake, District Judge, Presiding
Argued and Submitted July 9, 2020
Honolulu, Hawaii
Filed August 14, 2020
Before: John B. Owens, Michelle T. Friedland,
and Ryan D. Nelson, Circuit Judges.
Opinion by Judge Owens
2 HENRY V. ADVENTIST HEALTH CASTLE MED. CTR.
SUMMARY *
Employment Discrimination
The panel affirmed the district court’s grant of summary
judgment in favor of the defendant in a Title VII action
brought by a surgeon who provided on-call service in a
hospital emergency department.
The panel held that Title VII did not protect the surgeon
because he was an independent contractor, not an employee
of defendant Adventist Health Castle Medical Center. The
panel considered the surgeon’s payment arrangement, his
limited obligations to Castle, and his description as an
independent contractor in the parties’ contracts. The panel
concluded that other factors, including the surgeon’s high
skill level, Castle’s provision of assistants and medical
equipment, and its mandatory professional standards, did not
weigh strongly in the surgeon’s favor.
COUNSEL
John Winnicki (argued) and Dennis W. King, Deeley King
Pang & Van Etten, Honolulu, Hawaii, for Plaintiff-
Appellant.
Brian W. Tilker (argued), J. George Hetherington, and Erik
A. Rask, Torkildson Katz Hetherington Harris & Knorek,
Honolulu, Hawaii, for Defendant-Appellee.
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
HENRY V. ADVENTIST HEALTH CASTLE MED. CTR. 3
OPINION
OWENS, Circuit Judge:
Dr. David Henry appeals from the adverse grant of
summary judgment against his Title VII lawsuit. We have
jurisdiction under 28 U.S.C. § 1291, and we affirm.
I. BACKGROUND
A. Henry and His Relationship with Castle 1
Henry, a white male, is a board-certified general and
bariatric surgeon licensed to practice medicine in Hawaii.
He joined the staff of Adventist Health Castle Medical
Center (“Castle”) in 2015, and, with clinical privileges,
performed surgeries at Castle’s facility located in Kailua,
Hawaii.
Henry entered into two agreements with Castle: (1) the
Physician Recruitment Agreement (“Recruitment
Agreement”), and (2) the Emergency Department Call
Coverage and Uninsured Patient Services Agreement (“On-
Call Agreement”). The Recruitment Agreement provided
that Henry would operate a full-time private practice of
medicine. The On-Call Agreement obligated Henry to five
1
The facts summarized below are undisputed. Henry supports his
arguments on appeal with facts from his post-judgment declaration that
were not part of the summary judgment record. In reviewing orders
granting summary judgment, we limit our review to the facts before the
district court at the time it made its ruling. See Kirshner v. Uniden Corp.,
842 F.2d 1074, 1077–78 (9th Cir. 1988) (explaining that documents
submitted to the district court after it made the ruling challenged on
appeal are excluded from the record). Therefore, we do not consider
Henry’s post-judgment declaration in assessing whether summary
judgment was appropriate.
4 HENRY V. ADVENTIST HEALTH CASTLE MED. CTR.
days of on-call service in Castle’s emergency department per
month. Both agreements set forth that Henry “shall at all
times be an independent contractor.”
While on call, Henry was not required to be present at
Castle’s facility unless an emergency intervention was
needed. If he arranged backup emergency coverage, he
could use that time to perform elective surgeries instead.
Henry also leased space from Castle for elective surgeries on
non-Castle patients. Henry was not required to refer his
general surgery patients to Castle. In addition to his bariatric
surgeries at Castle, he undertook non-bariatric surgeries at a
competing hospital, where he also had clinical privileges.
Castle decided which surgical assistants would support
Henry, supervised their performance and pay, and
determined which medical record system would be used for
care provided at Castle. It also required Henry to comply
with its “Code of Conduct,” “Corporate Compliance
Program,” and other regulations and bylaws.
Castle paid Henry $100 per 24-hour on-call shift if there
was no emergency intervention, or $500 for each emergency
that he handled. It issued Henry a 1099 tax form (an IRS
form for independent contractor income)—never a W-2 (an
IRS form for employee income). He reported his Castle
earnings (which were only 10% of his 2016 income) on a
Form 1040, which self-employed individuals use. Castle did
not provide him any employee benefits, such as medical
insurance or retirement.
B. Procedural History
Henry complained of discrimination at Castle, which
initiated a review of his past surgeries. This assessment led
to his precautionary suspension, and, later, Castle’s Medical
HENRY V. ADVENTIST HEALTH CASTLE MED. CTR. 5
Executive Committee recommended that Henry’s clinical
privileges be suspended until he completed additional
training and demonstrated competency in various areas of
concern. After an internal appellate process upheld the
suspension, Henry filed suit in February 2018 for alleged
violations of Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-2 (“Title VII”), for racial discrimination
and retaliation. 2
Castle moved for summary judgment, arguing that
because Henry was an independent contractor, and not an
employee, he did not enjoy Title VII’s protections. See
Adcock v. Chrysler Corp., 166 F.3d 1290, 1292 (9th Cir.
1999) (“Title VII protects employees, but does not protect
independent contractors.”). After oral argument, the district
court granted that motion. It highlighted how Henry was
paid, his lack of typical employee benefits, and his tax
treatment, as well as how both contracts characterized his
status as an independent contractor and his ability to work at
competing hospitals. While some factors weighed in
Henry’s favor—including how Castle handled the
management of assistants and the high skill level and tools
required to perform his surgeries—most of the evidence
pointed towards Henry being an independent contractor.
2
Henry was “pro se” until local counsel appeared on his behalf the
day before the summary judgment hearing was initially scheduled. But
it soon became clear that separate mainland counsel (who was not
admitted in Hawaii) had been, at least to some degree, ghostwriting
Henry’s submissions since the complaint’s filing.
6 HENRY V. ADVENTIST HEALTH CASTLE MED. CTR.
II. DISCUSSION
A. Standard of Review
We review de novo a district court’s decision to grant
summary judgment. Folkens v. Wyland Worldwide, LLC,
882 F.3d 768, 773 (9th Cir. 2018). Summary judgment is
appropriate only if “there is no genuine dispute of material
fact” after “viewing the evidence in the light most favorable
to the nonmoving party.” Id. (citation omitted). Whether an
individual is an employee under Title VII is a question of
law, assuming the material facts are undisputed. See
Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465,
1469 (9th Cir. 1983), overruled on other grounds by Garcia
v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985);
see also Cilecek v. Inova Health Sys. Servs., 115 F.3d 256,
261 (4th Cir. 1997).
B. Henry Was Not an Employee of Castle
To determine if an individual is an employee under
Title VII, we evaluate “the hiring party’s right to control the
manner and means by which the product is accomplished.”
Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323
(1992) (citation omitted); see also Murray v. Principal Fin.
Grp., Inc., 613 F.3d 943, 945 (9th Cir. 2010). 3 A non-
exhaustive list of factors we consider include:
3
Henry appears to argue the economic realities test should apply.
We explained in Murray that there is “no functional difference” between
the economic realities test and the Supreme Court’s common-law test in
Darden, and to the extent there is one, the Darden analysis controls.
613 F.3d at 945. Thus, we limit our discussion to the Darden
formulation.
HENRY V. ADVENTIST HEALTH CASTLE MED. CTR. 7
- the skill required;
- the source of the instrumentalities and
tools;
- the location of the work;
- the duration of the relationship between
the parties;
- whether the hiring party has the right to
assign additional projects to the hired
party;
- the extent of the hired party’s discretion
over when and how long to work;
- the method of payment;
- the hired party’s role in hiring and paying
assistants;
- whether the work is part of the regular
business of the hiring party;
- whether the hiring party is in business;
- the provision of employee benefits; and
- the tax treatment of the hired party.
Darden, 503 U.S. at 323–24 (citation omitted); see also
Restatement (Second) of Agency § 220 (1958). These
factors confirm what the district court concluded—Henry
was an independent contractor, not an employee.
8 HENRY V. ADVENTIST HEALTH CASTLE MED. CTR.
First, we follow the money. Castle paid Henry for his
on-call time—$100 per shift, or $500 per emergency
intervention—which only accounted for 10% of his
earnings. This arrangement is emblematic of an independent
contractor relationship. See Cilecek, 115 F.3d at 261(concluding that physician was an independent contractor in
part because physician’s hours varied, and he did not receive
a uniform salary). Henry did not receive any typical
employee benefits from Castle. See id. (holding that
doctor’s lack of employee benefits weighed in favor of
independent contractor status); Alexander v. Rush N. Shore
Med. Ctr., 101 F.3d 487, 493 (7th Cir. 1996) (same). Henry
and Castle reported Henry’s earnings to the IRS not as if
Henry were a Castle employee, but as if he were an
independent contractor. Castle issued him a 1099 tax form,
not a W-2. See Shah v. Deaconess Hosp., 355 F.3d 496, 500
(6th Cir. 2004) (holding that doctor was an independent
contractor in part because he never received a W-2); Cilecek,
115 F.3d at 261 (holding that doctor was an independent
contractor in part because he was taxed like one). And
Henry reported his Castle earnings on a Form 1040 for self-
employed individuals. See Murray, 613 F.3d at 946(concluding that insurance agent who reported as self-
employed to the IRS was an independent contractor);
Alexander, 101 F.3d at 493 (concluding the same for doctor).
We agree with our sister circuits’ assessment of these
factors. Henry was paid, taxed, and received benefits like an
independent contractor, and these factors weigh in favor of
treating him as one.
Second, Henry’s obligations to Castle were limited,
providing him the freedom to run his own private practice.
This arrangement is inconsistent with employee status.
Henry was required to be on call in Castle’s emergency
department only five days per month, and under the On-Call
HENRY V. ADVENTIST HEALTH CASTLE MED. CTR. 9
Agreement, Castle was required to prioritize Henry’s
obligations when scheduling him. Henry was free to be
elsewhere during his on-call shifts unless an emergency
arose, and he could perform elective surgeries during his
shifts if he coordinated backup coverage—both of which are
consistent with independent contractor status. See Barnhart
v. N.Y. Life Ins. Co., 141 F.3d 1310, 1313 (9th Cir. 1998)
(determining insurance agent was an independent contractor,
as he “was free to operate his business as he saw fit without
day-to-day intrusions”); see also Murray, 613 F.3d at 946(insurance agent, like in Barnhart, was free to “decide[]
when and where to work, . . . maintain[ed] her own office,
where she [paid] rent,” and “schedule[d] her own time off”).
Henry also leased Castle space for elective surgeries on his
own patients, performed general surgeries at a competing
hospital, and could refer his patients to any hospital of his
choosing. Employees normally do not have this level of
work freedom. See Shah, 355 F.3d at 500 (concluding
doctor was an independent contractor where he treated his
own patients, engaged with other hospitals, and did not have
to accept patients referred to him from the hospital); Cilecek,
115 F.3d at 261 (“Cilecek had freedom to do other work, not
only for himself but also for other health care facilities[.]”).
In sum, Henry’s duties do not exhibit the level of control
present in employment relationships, but rather evidence
Henry’s professional independence from Castle in treating
his patients. See Alexander, 101 F.3d at 493 (concluding
anesthesiologist was an independent contractor “because the
details concerning performance of the work remained
essentially within the [doctor’s] control” (citation omitted)).
Third, the contracts between Castle and Henry described
him as an independent contractor, a fact that our court and
others have found significant. See Barnhart, 141 F.3d
at 1313 (“The contract Barnhart signed contained clear
10 HENRY V. ADVENTIST HEALTH CASTLE MED. CTR.
language stating that Barnhart would be considered an
independent contractor, not an employee.”); Cilecek,
115 F.3d at 261 (“The parties expressly set out from the
beginning to create an independent contractor
relationship[.]”).
In arguing that he was an employee, Henry cites the high
skill level that his surgeries require, Castle’s provision of
assistants and medical equipment, and Castle’s mandatory
professional standards as factors weighing strongly in his
favor. In certain lines of work, these facts might be
persuasive. Yet, as our sister circuits have observed, in the
physician-hospital context, “[t]he level of skill required,
location of the work, and source of equipment and staff are
not indicative of employee status because all hospital
medical staff are skilled and must work inside the hospital
using its equipment.” Alexander v. Avera St. Luke’s Hosp.,
768 F.3d 756, 763 (8th Cir. 2014). As the Tenth Circuit
explained, “[w]hen a physician shows up to work in today’s
world—either as an independent contractor or a full-fledged
employee—he no longer is likely to carry all relevant
medical instruments in a black satchel.” Tsosie v. United
States, 452 F.3d 1161, 1164 (10th Cir. 2006). “Instead, it is
expected that he will make full use of the hospital’s physical
facilities during the course of his service.” Id. 4
It is also no surprise that Castle subjected Henry to
regulations, as hospitals are responsible for maintaining a
4
See also Diggs v. Harris Hosp.-Methodist, Inc., 847 F.2d 270, 273
(5th Cir. 1988) (concluding physician was an independent contractor
because “[w]hile the hospital supplies the tools, staff and equipment
utilized by Diggs in delivering medical care at the hospital, and while it
imposes standards upon those permitted to hold staff privileges, the
hospital does not direct the manner or means by which Diggs renders
medical care”).
HENRY V. ADVENTIST HEALTH CASTLE MED. CTR. 11
certain standard of care and safety for their patients. As the
Fourth Circuit has recognized, “[i]f the hospitals did not
insist on such details in the performance of professional
services by doctors at their facilities, they would be exposing
themselves to recognized professional liability.” Cilecek,
115 F.3d at 262; see also Wojewski v. Rapid City Reg’l
Hosp., Inc., 450 F.3d 338, 344 (8th Cir. 2006) (noting
hospital “could take reasonable steps to ensure patient safety
and avoid professional liability” and that such steps did not
turn all affected doctors into employees). Thus, rather than
evidencing a right to control the manner and means of
Henry’s practice, the regulations reflect a shared
“professional responsibility to cooperate with the hospitals
to maintain standards of patient care, to keep appropriate
records, and to follow established procedures.” Cilecek,
115 F.3d at 262. They are therefore consistent with an
independent contractor relationship.
Henry heavily relies on Mitchell v. Frank R. Howard
Memorial Hospital, in which this court held that a physician
had sufficiently pled a Title VII claim. 853 F.2d 762, 766–
67 (9th Cir. 1988). Notably, Mitchell was decided on a
motion to dismiss under the now abrogated “no set of facts”
standard. Id. at 766 (quoting Conley v. Gibson, 355 U.S. 41,
45–46 (1957), abrogated by Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007)). Further, the physician alleged that she
treated the hospital’s patients (not her own), she did not work
at any other hospital, and the hospital paid her 40% of the
department’s gross receipts—which was enough to support
the claim at the motion to dismiss stage that the hospital
controlled the manner and means of her performance. Id.at 766–67. Unlike in Mitchell, Henry treated his own
patients in addition to Castle’s patients, had clinical
privileges at another hospital, and only received 10% of his
12 HENRY V. ADVENTIST HEALTH CASTLE MED. CTR.
compensation from Castle. Thus, Mitchell, a very different
case, does not help Henry.
Henry also points to Salamon v. Our Lady of Victory
Hospital, in which the hospital intensively reviewed nearly
all the physician’s cases on a continuous basis over several
years as part of an escalating course of performance reviews.
514 F.3d 217, 230–31 (2d Cir. 2008). Not only did the
hospital monitor her patient treatment outcomes, it mandated
the performance and timing of certain procedures, dictated
which medicines to prescribe, and recommended practice
changes based on financial impact. Id. While the Second
Circuit noted that hospital peer review programs often “do
not constitute exercises of control over the manner and
means of physician practice,” it held that “a reasonable fact-
finder could conclude from the present record that the
quality assurance standards extended beyond mere health
and safety concerns or ensuring [the physician’s]
qualifications.” Id. at 231.
Here, Castle did not even approach the level of
micromanagement detailed in Salamon. For example, while
Henry explained that Castle controlled how he inserted chest
tubes and when to perform laparoscopic surgery, those
standards relate to “health and safety concerns.” Id. He fails
to identify anything in his case “beyond mere health and
safety concerns,” such as the considerations that drove the
decision in Salamon. Id. Thus, unlike in Salamon, Henry
did not create a genuine issue of material fact as to whether
the peer review process created an employment relationship.
On balance, the undisputed facts clearly show that Henry
was Castle’s independent contractor and thus not entitled to
HENRY V. ADVENTIST HEALTH CASTLE MED. CTR. 13
Title VII protections. The district court properly granted
summary judgment. 5
AFFIRMED.
5
Henry raises several other issues on appeal, but each lacks merit.
First, the district court did not abuse its discretion in denying Henry’s
request for a continuance to conduct further discovery and/or supplement
the record under Federal Rule of Civil Procedure 56(d) and (e), as Henry
failed to “identify by affidavit the specific facts that further discovery
would reveal, and explain why those facts would preclude summary
judgment.” SEC v. Stein, 906 F.3d 823, 833 (9th Cir. 2018), cert. denied,
140 S. Ct. 245 (2019) (internal quotation marks and citation omitted).
Second, the district court did not abuse its discretion in denying Henry’s
motion for reconsideration under Federal Rule of Civil Procedure 59(e)
because the motion and Henry’s belated declaration improperly
attempted to introduce additional evidence that “could reasonably have
been raised earlier in the litigation.” Kona Enters., Inc. v. Est. of Bishop,
229 F.3d 877, 890 (9th Cir. 2000). Lastly, the district court did not abuse
its discretion in denying Henry’s motion to amend his complaint to add
new claims: “once judgment has been entered in a case, a motion to
amend the complaint can only be entertained if the judgment is first
reopened under a motion brought under Rule 59 or 60.” Lindauer v.
Rogers, 91 F.3d 1355, 1357 (9th Cir. 1996).