ravi-sood-md-v-university-of-iowa-and-the-board-of-regents-for-the ( 2014 )

IN THE COURT OF APPEALS OF IOWA
No. 3-1178 / 13-0870
Filed March 26, 2014
RAVI SOOD, M.D.,
Plaintiff-Appellant,
vs.
UNIVERSITY OF IOWA, and THE BOARD OF
REGENTS FOR THE STATE OF IOWA,
Defendants-Appellees,
and
MICHAEL M. GRAHAM, Ph.D., M.D.,
As Director of Nuclear Medicine for the
University of Iowa Carver College of
Medicine, and Individually,
Defendant.
________________________________________________________________
Appeal from the Iowa District Court for Johnson County, Carl D. Baker,
Judge.
Ravi Sood appeals the district court’s ruling that his breach-of-contract
claim against the University of Iowa and the Board of Regents for the State of
Iowa is barred by failure to exhaust administrative remedies. AFFIRMED.
Laura L. Folkerts and Chad A. Swanson of Dutton, Braun, Staack &
Hellman, P.L.C., Waterloo, for appellant.
Thomas J. Miller, Attorney General, and George A. Carroll and Jordan G.
Esbrook, Assistant Attorneys General, for appellees.
Heard by Danilson, C.J., and Vaitheswaran and Mullins, JJ.
2
DANILSON, C.J.
Dr. Ravi Sood appeals the district court’s ruling dismissing for failure to
exhaust administrative remedies his breach-of-contract claim against the
University of Iowa and the Board of Regents for the State of Iowa. Finding no
error in the court’s conclusion that the claim involved covered agency action
subject to exhaustion requirements of the Iowa Administrative Procedure Act, we
affirm.
I. Background Facts and Proceedings.
This case stems from events that occurred in 2008 and 2009. The
following undisputed facts appear in the record.
In a letter dated July 14, 2008, the department of radiology of the
University of Iowa Carver College of Medicine offered Ravi Sood a “full-time non
tenure-track appointment as a Visiting Associate for the period of one year
beginning July 14, 2008” with an annual salary of $100,000. The letter also
stated, “You will have full clinical privileges in Nuclear Medicine,” and “your
appointment may be renewed for one additional year.” Sood accepted the offer
on July 17, 2008.
On June 28, 2008, Sood applied for “initial” clinical privileges for University
of Iowa Hospitals and Clinics’ (UIHC) radiology department. He began working
at the University as a visiting associate in July 2008. On October 1, 2008, the
University Hospital Advisory Committee granted Sood full clinical privileges
“subject to the conditions specified in the Bylaws, Rules and Regulations of the
University of Iowa Hospitals and Clinics and its Clinical Staff.” According to the
Bylaws, “[a]ll initial clinical privileges shall be provisional for the first three
3
months”; and “[i]f . . . termination[ ] of clinical privileges is recommended, the
recommendation shall be handled as provided in Section 6.”
On October 28, 2008, Sood was informed by a letter authored by
Michael M. Graham, Ph.D., M.D. (Director of Nuclear Medicine for the Carver
College of Medicine at the University of Iowa) that Graham “propose[d] that we
reduce your status to that of fellow without clinical privileges, although you will
retain the title of ‘clinical fellow’ and current salary.” The letter noted, “[W]e will
not be renewing your appointment after June 30, 2009.”
Also on October 28, Dr. Graham told Nancy Harney of human resources
that he no longer wanted Sood to have clinical privileges. Harney emailed
Graham’s request to Deb Strabala in the clinical staff office, July Harland in
business office, and Tyler Artz, the director of the radiology department, that they
“need[ed] to make a change in the status of Ravi Sood, M.D., effective
immediately.”
In a letter dated November 3, Sood was informed that his “appointment in
the Department of Radiology ended on October 31, 2008. In accord with the
‘Bylaws of the [UIHC] and its Clinical Staff,’ your clinical staff membership and
privileges at the [UIHC] also end on the same date.”
On November 26, 2008, Sood again applied for “initial” clinical privileges
for the UIHC radiology department, which were granted by the University
Hospital Advisory Committee on January 7, 2009. Sood’s employment with the
University ended June 30, 2009. Sometime in June 2009, Sood learned that an
application he had submitted for employment elsewhere was no longer being
processed due to a “gap” in his privileges.
4
On January 22, 2010, Sood filed a petition against the University of Iowa,
the Board of Regents, and Dr. Graham,1 alleging three counts: breach of
contract, violation of procedural due process, and violation of Iowa Code section
91A.6 (2009) (a provision of the Iowa Wage Payment Collection Law).2 The
breach of contract claim alleged the University had violated the written contract of
employment and as a result Sood had suffered damages.
With respect to the breach of contract, Sood asserted four specific
breaches of the contract at issue here: Sood had not been provided full-time
employment; his status with billing privileges had been changed; he had not been
paid the promised annual salary of $100,000; he was not provided full clinical
privileges; and the defendants had not followed the process and procedures
outlined in the bylaws. In their answer, the defendants raised as one of their
affirmative defenses the failure to exhaust administrative remedies.
On March 1, 2013,3 the University filed a motion for partial summary
judgment as to Sood’s breach-of-contract count. The University asserted the
matters involved in the breach-of-contract count constitute “agency action” within
the meaning of Iowa Code chapter 17A (Iowa Administrative Procedure Act), and
that pursuant to Iowa Code section 262.7(1), Sood’s employment was governed
by the Iowa Board of Regents,4 which had adopted administrative rules and
procedures governing personnel administration. See 681 Iowa Admin. Code
1
Unless otherwise specified, we will refer to the University, the Board of Regents, and
Dr. Graham collectively as “the University.”
2
The third count—the contention that the University had violated Iowa Code section
91A.6—had been dismissed at the time of the hearing on the motion for summary
judgment.
3
The case was continued on at least two occasions due to lack of judicial resources.
4
Section 262.7 sets out the institutions governed by the board of regents, including the
University of Iowa and the UIHC.
5
ch. 3. The University argued that because Sood’s fitness to be employed at the
UIHC was within the board’s administrative purview, Sood’s remedy for his
breach-of-contract claim was through agency action.
Sood resisted, contending chapter 17A does not apply to his breach-of-
contract claim for failure to pay wages because the claim does not involve an
issue normally within the Regents’ expertise. He also argued there are no
available administrative remedies with respect to clinical privileges because the
Bylaws explicitly remove clinical privileges from the grievance procedures of
Section III-29.6 of the University’s operations manual.5
The district court ruled:
There do not appear to be any disputed facts; rather, the
question before the Court is a purely legal one. Is Plaintiff [Sood]
required to exhaust administrative remedies regarding his breach of
contract claim? The Court concludes the answer to this question is
5
The grievance provision of III-29.6 reads in part:
(1) Scope. The procedures described in this section constitute the
exclusive remedy within the University for a faculty member who wishes
to challenge the legitimacy of some University administrative action or
non-action that affects the faculty member, except for a complaint about:
(a) a decision to deny the faculty member tenure,
promotion, or reappointment (which falls under III-29.5) or a
decision to terminate a clinical faculty member, or to deny
promotion or reappointment to a clinical faculty member (which
falls under III-29.9);
(b) any action insofar as it was taken under the Regents
Rules;
(c) any action or non-action insofar as it is subject to the
Iowa Tort Claims Act; or
(d) any action or non-action on any ground other than one
or more of the grounds stated in paragraph (2) below.
(2) Grounds for a Challenge to the Legitimacy of some
Administrative Action or Non-Action. A challenge by a faculty member to
the legitimacy of some University administrative action or non-action that
affects the faculty member may be made through these procedures only
on one or more of the following grounds:
(a) Violation of a University Obligation: that the action or
nonaction is in violation of a written promise to the faculty member
by an authorized administrator of the University, . . . .
6
yes. The agency action in this case was the decision to terminate
Dr. Sood’s clinical privileges and reduce his pay. This action was
taken based upon a perceived below-standard job performance.
Assuming, arguendo, that Dr. Graham failed to follow hospital rules
and regulations in doing so, his action falls within “the performance
of an agency duty or the failure to do so.” Iowa Code Section
17A.2([2]). This case is most like the Papadakis [v. Iowa State
University of Science & Technology, 574 N.W.2d 258 (Iowa 1997),]
case. As in Papadakis, the “personnel issues of the type involved
in the present case have been made the subject of a prescribed
administrative procedure undertaken in conformance with express
statutory authorization.” Papadakis, 574 N.W.2d at 260. The
breach of contract claim stated by [Sood] pertains to his fitness to
be employed at UIHC, and the Board has the right to oversee
[Sood’s] appointment and compensation. The Court finds that this
oversight includes review of the level of care to be exercised by
[Sood] in his employment, as well as the clinical privileges afforded
to [Sood]. [Sood’s] remedy for his breach of contract claim is
through agency action. This case is unlike Hornby [v. State, 559
N.W.2d 23 (Iowa 1997)], in that the action challenged in the case at
bar involves Plaintiff’s job performance, which is an area within the
expertise of the Board of Regents.
Therefore, [Sood’s] breach of contract claim shall be
dismissed because Plaintiff has not exhausted the administrative
remedies available to him.
With respect to the parties’ arguments regarding Plaintiff’s
right to grieve the employment decision, the Court concludes that
because the clinical privileges afforded to Plaintiff were part of his
employment contract, the alleged gap in those privileges upon
which Plaintiff partially relies in stating his breach of contract claim
also is a component of Plaintiff’s employment that is within the
expertise of the Board of Regents. Therefore, all issues relating to
Plaintiff’s clinical privileges also were subject to the exhaustion of
administrative remedies requirement.
The district court entered summary judgment for the University of Iowa and the
Board of Regents on the breach-of-contract count.
Sood filed a motion to enlarge or amend the partial summary judgment
ruling, asserting in part that he had no administrative remedy because the
Bylaws exempt the grievance procedure to claims about clinical privileges. The
district court stated Sood was “correct in asserting that, because the bylaws,
7
rules and regulations were not followed by Dr. Graham, other events did not
occur,” which included a failure to follow the process provided by the bylaws.
The court ruled,
Dr. Sood was granted full clinical privileges in Nuclear
Medicine when he was hired in 2008. The University’s failure to
follow the Article IV procedure is agency action as defined in Iowa
Code section 17.A.2(9). The Defendants failed to act in accord with
their own bylaws, rules and regulations with respect to Dr. Sood’s
clinical privileges. The termination of clinical privileges and the
failure to follow the bylaws in doing so, bears “a discernible
relationship to the statutory mandate of the agency as evidenced by
express or implied statutory authorization.” Papadakis v. lowa
State University of Science and Technology, 574 N.W. 2d 258(Iowa 1997).
When hired, Dr. Sood was advised of the bylaws, rules and
regulations of the University of Iowa Hospitals and Clinics. He was
required to follow the procedures therein.
The Court concludes that Dr. Sood must first challenge the
failure to act by the University through administrative procedures.
Sood appeals.6
II. Scope and Standard of Review.
We review the district court’s summary judgment ruling for errors at law.
Osmic v. Nationwide Agribusiness Ins. Co., 814 N.W.2d 853, 858 (Iowa 2014).
The district court properly grants summary judgment when the moving party
demonstrates there is no genuine issue of material fact and that he or she is
entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3). “‘We can
resolve a matter on summary judgment if the record reveals a conflict concerning
6
Sood appealed “all adverse rulings and orders” “with respect to the Breach of contract
claim against Defendant University of Iowa and the Board of Regents for the State of
Iowa.” Trial against Dr. Graham on Sood’s claim of violation of due process proceeded
to trial and ended with a judgment for Sood. The appeal from that judgment was filed on
December 6, 2013. On January 21, 2014, the supreme court denied the University’s
motion to consolidate the two appeals.
8
only the legal consequences of undisputed facts.’” Osmic, 814 N.W.2d at 858
(citation omitted).
III. Discussion.
There is no dispute that the University of Iowa and the Board of Regents
fall within the definition of an administrative agency. See Iowa Code § 17A.2(1)
(“‘Agency’ means each board, commission, department, officer or other
administrative office or unit of the state.”); Press-Citizen, Co. v. Univ. of Iowa,
817 N.W.2d 480, 489 n.8 (Iowa 2012) (noting the University of Iowa is an agency
within the meaning of section 17A.2). Consequently, if an aggrieved party has an
administrative remedy, that party is required to pursue that remedy before
resorting to the courts. See Iowa Code § 17A.19(1).
Sood concedes that if his breach-of-contract count involves covered
“agency action” under chapter 17A, then he must first exhaust his administrative
remedies prior to bringing suit. See Hornby, 559 N.W.2d at 24 (“Iowa Code
section 17A.19(1) requires a party to ‘exhaust[ ] all adequate administrative
remedies’ prior to bringing an action in court to challenge ‘agency action.’”).
Iowa Code section 17A.2(2) defines “agency action” as including
the whole or a part of an agency rule or other statement of law or
policy, order, decision, license, proceeding, investigation, sanction,
relief, or the equivalent or a denial thereof, or a failure to act, or any
other exercise of agency discretion or failure to do so, or the
performance of any agency duty or the failure to do so.
This “broad” definition encompasses matters “within the statutory mandate
of the agency . . . and [which] are peculiarly within its discretion and area of
expertise.” Genetzky v. Iowa State Univ., 480 N.W.2d 858, 861 (Iowa 1992)
9
(finding decision whether to grant tenure and the criteria used to guide that
decision constituted agency action).
However, matters that bear “scant relation to the agency’s statutory
mandate or supposed area of expertise” may lie outside that definition. For
instance, in Jew v. University of Iowa, 398 N.W.2d 861, 864 (Iowa 1987), the
court concluded a sexual harassment claim filed by a university professor against
the university and board of regents was not exclusively restricted to
administrative agency review because the action alleged to be contrary to law
had very little connection with university’s mandate or its supposed area of
expertise, and therefore was not agency action.
The Board of Regents is statutorily required to govern the UIHC. Iowa
Code § 262.7(7). The Board is also required to employ professors, instructors,
officers, and employees and fix their compensation. Id. § 262.9(2). The Board is
also obligated to make rules for the government of the institutions under its
control. Id. § 262.9(3).
A. Agency action. Sood contends this action is governed by Hornby,
which he argues held that a claim for failure to pay wages was not barred for
failure to exhaust administrative remedies because it does not involve matters
normally within the regent’s expertise.
Sood mischaracterizes the holding in Hornby. The supreme court ruled in
Hornby that a claim for failure to pay long-term disability benefits did not require
exhaustion of administrative remedies because there was no administrative
program for long-term disability benefits, nor any administrative rules to process
10
complaints that such benefits had been wrongly denied.7 559 N.W.2d at 25.
Because there was no review procedure provided by rule, the claimant could not
be faulted for failing to follow such a procedure. Id. (“Joyce should not be faulted
for failing to exhaust a review procedure that was not provided by rule.”).
Unlike Hornby (where the claim involved a failure to pay benefits for which
there were no administrative procedures), numerous administrative processes,
procedures, and rules exist to address the matters about which Sood complains.
For example, the Board of Regents has adopted extensive rules governing
personnel administration. See 681 Iowa Admin. Code ch 3. Also pertinent are
the grievance procedures provided in the University’s operations manual.
Section III-29.6 of the operations manual states, “The procedures described in
this section constitute the exclusive remedy within the University for a faculty
member who wishes to challenge the legitimacy of some University
administrative action or non-action,” including a “violation of a written promise to
the faculty member by an authorized administrator of the University.” Sood does
not explain how his claim that the University breached it written promise to pay
him $100,000 does not fall within this rule. And finally, as Sood himself states,
“The [UIHC] Bylaws describe all aspects of clinical privileges . . . [and] lay out the
process by which clinical privileges can be reduced, suspended or terminated.”
Sood argues, however, there are no administrative remedies for his claims
concerning clinical privileges because the UIHC’s bylaws, rules, and regulations
7
It is true the court found that long-term disability payments were “wages” for purposes
of Iowa Code chapter 91, the Iowa Wage Payment Collection Law.” See Hornby, 559
N.W.2d at 25. But Sood’s suggestion that the Hornby case stands for the proposition
that wage claims are exempt from administrative exhaustion requirements reads the
decision too broadly.
11
specifically exempt any action concerning clinical privileges from the section III-
29.6 of the operations manual. Even if we accept that the exemption stated in
the bylaws eliminates the grievance procedure with respect to matters relative to
clinical privileges, this exemption only eliminates the operations manual
grievance procedure. That procedure is replaced by sections four through six of
the UIHC’s bylaws, rules, and regulations, which govern the grant, modification,
and termination of clinical privileges. Those rules, processes, and procedures
include the right to a hearing and the right to appeal to the Hospital Advisory
Committee. The failure to follow such procedures would constitute a violation of
a university obligation, which presumably would be subject to grievance
procedures.
In Papadakis, an Iowa State University faculty member appealed from a
district court’s ruling that his contract dispute with the university must be resolved
through the administrative and judicial review procedures of Iowa Code chapter
17A. 574 N.W.2d at 258. Papadakis was employed as a research scientist
whose terms of employment were embodied in a written letter of appointment.
See id. The director of Papadakis’s unit sent him a letter terminating his rolling
tenure appointment effective on a date certain, and stopped paying his salary on
that date. Id. Papadakis sought a declaratory judgment that his employment
extended beyond the date asserted by the university by virtue of a later letter. Id.
at 259. The district court dismissed the contract claims, concluding the claims
involved agency action. Id.On appeal, the supreme court noted:
12
State agencies must necessarily contract with members of
the public to obtain needed goods and services. We have
recognized that the state is legally responsible for its contractual
obligations in an action to enforce such agreements. See Kersten
Co. v. Dep’t of Soc. Servs., 207 N.W.2d 117, 122 (Iowa 1973). We
do not believe that it was the intent of the legislature in enacting
chapter 17A to relegate all contractual claims against the state to
an administrative determination. [(citing Hornby)]
Papadakis, 574 N.W.2d at 260.
The Papadakis court concluded that in order for an action or inaction by
an agency to be reviewable only under the procedures of chapter 17A, “the
action or inaction in question must bear a discernible relationship to the statutory
mandate of the agency as evidenced by express or implied statutory
authorization.” Id. On appeal, our supreme court found that a university’s
termination of a faculty member’s salary and benefits constituted “agency action”
within the meaning of section 17A.2(2). Id.The University’s professional and scientific personnel are under the
jurisdiction of the board of regents. Iowa Admin. Code r. 681-3.2. Iowa Code
section 8A.412(5) specifically exempts such “professional and scientific
personnel” from the merit system applicable to other state employees. See
Papadakis, 574 N.W.2d at 260 (discussing predecessor statute, Iowa Code
§ 19A.3(5)). As observed in Papadakis, “Iowa Administrative Code rule 681–
3.129(1) allows individual institutions such as [the University of Iowa] to establish
their own grievance and appeal policies.” 574 N.W.2d at 260. The board has
adopted personnel rules that specify in detail how appointments of professional
and scientific personnel shall be made, how such employment shall be
terminated, and establish a grievance and appeal procedure under which
13
affected employees can challenge agency action that is adverse to them. See
681 Iowa Admin. Code chs. 3, 12; Papadakis, 574 N.W.2d at 260.
UIHC’s policies and procedures are found in its bylaws, rules, and
regulations. Qualifications of potential staff membership are enumerated therein.
How a staff member obtains and retains clinical privileges is governed by the
bylaws, rules, and regulations. Procedures concerning clinical privileges,
“corrective action,” and appellate review are included. We, like the district court,
conclude the type of controversy involved in the present case has been relegated
to an administrative process, which Sood must pursue before resorting to the
courts. See Papadakis, 574 N.W.2d at 260 (concluding the personnel issues
involved were “made the subject of a prescribed administrative procedure
undertaken in conformance with express statutory authorization”).
Sood’s attempts to distinguish his claims from those in Papadakis are
unavailing. The alleged breaches of the written contract all stem from the
University’s opinion of Sood’s job performance.8 The University believed Sood’s
job performance was unsatisfactory, and the University revoked Sood’s clinical
privileges on this basis. That it did so in a manner allegedly contrary to its own
procedures does not change the essential character of Sood’s claim.
The University contends Sood’s compensation was premised upon Sood
retaining full clinical privileges, and when he was without full clinical privileges,
the University reduced Sood’s compensation. Although the University later
8
Dr. Graham’s affidavit in support of the motion for summary judgment provides: “In mid
October, 2008 we assigned Dr. Sood to be the staffing physician in the UI nuclear
medicine clinic. By the end of the week it was absolutely clear that he was not capable
of performing at the necessary level to be able to go on and I asked him to stop as an
attending physician.”
14
reinstated Sood’s clinical privileges, his employment record reflects a gap in time
when he lacked clinical privileges. According to Sood, this gap in his record has
affected his ability to obtain subsequent employment.
If the University failed to follow the proper procedures in taking any of
these actions, Sood was afforded a remedy pursuant to the administrative
procedures of the bylaws or operations manual.
Sood attempts to divert attention from the fact that his job performance is
at the center of this controversy by arguing alleged errors by the University in
isolation. He contends for example, that there is no remedy to the reporting gap
of his privileges. His attempt is to no avail. Any alleged breach of the contact
must be measured by all of the facts. If Sood had administratively challenged the
University’s revocation of his clinical privileges, and if successful in that
challenge, we know of no reason why his work history would reflect a gap in his
privileges or the full salary not paid.
Sood’s breach-of-contract claims, including the failure to follow procedures
provided by the rules, “bear a discernible relationship” to the statutory mandates
of the board of regents of and the University of Iowa and its subunits as
evidenced by express and implied statutory authorization.9
9
As noted earlier in this opinion, Iowa Administrative Code rule 681-3.2 establishes that
the University’s professional and scientific personnel are under the jurisdiction of the
board of regents, the board has adopted personnel rules that specify in detail how
appointments of professional and scientific personnel shall be made, how such
employment shall be terminated, and establish a grievance and appeal procedure under
which affected employees can challenge agency action that is adverse to them. See
681 Iowa Admin. Code chs. 3. (personnel administration), 6 (University of Iowa
hospitals), & 12 (University of Iowa organization and general rules, including
organization and administration; see also Iowa Admin. Code r. 681-12.100 (grievance
procedure).
15
The University’s actions, even if improper, were guided by its perception of
Sood’s job performance. There is no genuine issue of a material fact in this
regard. The partial motion for summary judgment does not require us to
determine the propriety of the University’s actions. There is also no genuine
issue of material fact Sood was required to exhaust administrative remedies
before instituting his petition on the contract claim and that he failed to do so.
B. Adequate administrative remedy. Sood next argues that if we conclude
this case involves agency action subject to administrative remedies, we should
find there are no additional administrative remedies available to him or that his
administrative efforts would be futile. See Iowa Coal Min. Co., Inc. v. Monroe
Cnty., 555 N.W.2d 418, 431 (Iowa 1996) (“When the [administrative] remedy is
inadequate or its pursuit would be futile, exhaustion is not required.”). However,
his argument relies upon matters not in this record10 and we refuse to address it.
Cf. Matter of Estate of Kelly, 558 N.W.2d 719, 722 n. 3 (Iowa App.1996) (refusing
to consider affidavits that were created after the fact and were not part of the
record).
We affirm the partial summary judgment for the University on Sood’s
breach-of-contract count for failure to exhaust available administrative remedies.
AFFIRMED.
10
His argument is grounded upon testimony provided at the trial against Dr. Graham,
which is not part of the summary judgment record. Carr v. Bankers Trust Co., 546
N.W.2d 901, 903 (Iowa 1996) (“The record on summary judgment includes the
pleadings, depositions, affidavits, and exhibits.”).