Oliver Stanbery Orthopedics,llc v. Commonwealth of Kentucky, Kentucky Unemployment Insurance Commission

RENDERED: DECEMBER 17, 2021; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2021-CA-0125-MR
OLIVER STANBERY
ORTHOPEDICS, LLC APPELLANT
APPEAL FROM FAYETTE CIRCUIT COURT
v. HONORABLE ERNESTO M. SCORSONE, JUDGE
ACTION NO. 19-CI-02804
COMMONWEALTH OF KENTUCKY,
KENTUCKY UNEMPLOYMENT
INSURANCE COMMISSION AND
TRICIA TELLES APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CLAYTON, CHIEF JUDGE; DIXON AND JONES, JUDGES.
JONES, JUDGE: Oliver Stanbery Orthopedics, LLC (OSO) appeals from the
Fayette Circuit Court’s opinion affirming a decision by the Kentucky
Unemployment Insurance Commission (the Commission) to award the appellee,
Tricia Telles, unemployment benefits following her termination from OSO.
Having reviewed the record and being otherwise sufficiently advised, we affirm
the circuit court.
I. BACKGROUND
Prior to her termination, Telles was a sales representative for OSO,
which is owned by Matt Oliver and Jason Stanbery. In that role, Telles was
required to be in operating rooms to help ensure the orthopedic products she sold
were being used correctly. In May 2018, Telles was in the operating room during a
surgery at St. Joseph Hospital (the Hospital) when she allegedly violated the
Hospital’s policies by retrieving and opening an expired bone graft during the
surgery.
Telles informed OSO of the allegations, denied them, and asked to
have OSO’s counsel intervene on her behalf. Telles also suggested to OSO that
she could meet with a Hospital board member, who she considered a friend, to
discuss the matter and to disclose information which she believed would result in
the removal of the Hospital’s CEO.1 Telles also discussed with OSO the
possibility that she might privately retain an attorney to contact the Hospital. Mr.
Oliver instructed Telles that she should neither discuss her situation or the CEO
1
It appears as if the information Telles threatened to disclose about the Hospital’s CEO was
unrelated to the allegations regarding the bone graft.
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with the board member nor retain a private attorney to contact the Hospital on her
behalf.
It is undisputed that Telles did not wholly comply with Mr. Oliver’s
instructions. Telles obtained counsel, who sent the Hospital a letter requesting a
meeting so that the matter could be resolved short of litigation. Telles also met
with the Hospital board member. However, Telles testified that she did not discuss
the specifics of the allegations against her at that meeting or divulge any
information about the Hospital’s CEO.
In June 2018, the Hospital decided to suspend Telles’s access to its
facilities for one year. Both Mr. Stanbery and Mr. Oliver testified that the Hospital
was Telles’s main account, and her not being able to be onsite there greatly
reduced the amount of work she was able to perform. OSO terminated Telles in
July 2018, approximately a month after her suspension from the Hospital.
According to Telles, OSO did not give her any reason to support her termination.
In January 2019, Telles sought unemployment benefits. OSO
opposed Telles’s request, arguing that she had been terminated for misconduct
making her ineligible to receive unemployment benefits. See KRS2 341.370(1)(b).
As such, Telles’s claim was initially denied. Telles appealed the denial; after a
two-part evidentiary hearing at which Telles, Mr. Oliver, and Mr. Stanbery each
2
Kentucky Revised Statutes.
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testified, the referee upheld the denial of benefits. Telles appealed the referee’s
decision to the Commission. The Commission ultimately concluded that Telles
was eligible to receive unemployment benefits. First, the Commission found that
while Telles had met the board member, OSO had failed to prove that she
discussed any prohibited subjects during the meeting. Second, the Commission
found that while Telles had disobeyed the instruction for her not to obtain counsel
to contact the Hospital, the instruction was not reasonable because it prevented
Telles from “availing herself of the right to seek legal redress.” (Record (R.) at
850.) Since KRS 341.370(6) defines misconduct, in part, as the failure to follow
“reasonable instructions,” the Commission reasoned that Telles did not commit
misconduct with respect to this instruction.
OSO appealed the Commission’s decision to the Fayette Circuit
Court, which issued a decision affirming the Commission. This appeal followed.
II. STANDARD OF REVIEW
“In an appeal of an administrative action by an agency, the circuit
courts are to provide review, not reinterpretation.” Jones v. Cabinet for Human
Resources, Div. for Licensure and Regulations, 710 S.W.2d 862, 866 (Ky. App.
1986). While the courts review pure issues of law de novo, they must afford the
agency’s factual findings considerable deference. The level of deference is
dependent on who bore the burden of proof before the agency.
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When the decision of the fact-finder is in favor of the
party with the burden of proof or persuasion, the issue on
appeal is whether the agency’s decision is supported by
substantial evidence, which is defined as evidence of
substance and consequence when taken alone or in light
of all the evidence that is sufficient to induce conviction
in the minds of reasonable people. Where the fact-
finder’s decision is to deny relief to the party with the
burden of proof or persuasion, the issue on appeal is
whether the evidence in the party’s favor is so
compelling that no reasonable person could have failed to
be persuaded by it.
Kentucky Retirement Systems v. Brown, 336 S.W.3d 8, 14-15 (Ky. 2011) (quoting
McManus v. Kentucky Retirement Systems, 124 S.W.3d 454, 458 (Ky. App. 2003)).
In turn, “CR 52.01 requires that, in appeals of administrative agency decisions,
appellate courts review the determinations of the circuit courts for clear error.”
Fayette County Bd. of Educ. v. M.R.D., 158 S.W.3d 195, 201 (Ky. 2005).
III. ANALYSIS
As framed by the parties, the central issue in this case is whether
Telles should be disqualified from receiving benefits due to her misconduct,
specifically, her alleged refusal “to obey [OSO’s] reasonable instructions.” KRS
341.370(6). There are two specific instructions at issue: (1) the instruction
regarding Telles’s meeting with the board member; and (2) the instruction for
Telles not to retain counsel to contact the Hospital on her behalf.
“[OSO] bears the burden of proof in establishing that [Telles] should
be disqualified from receiving benefits because of misconduct.” Alford v.
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Kentucky Unemployment Insurance Commission, 568 S.W.3d 367, 370 (Ky. App.
2018). Thus, with respect to the Commission’s factual determinations, the circuit
court’s task was to determine whether the evidence in OSO’s favor was so
compelling that no reasonable person could have failed to be persuaded by it.
Brown, 336 S.W.3d at 14-15.
With respect to the first instruction issued by OSO, the Commission
determined that the instruction was directed at what Telles was not to discuss with
the board member, i.e., her particular situation and any unfavorable information
about the Hospital’s CEO. This finding was based on the testimony of Mr. Oliver
and Mr. Stanbery. The Commission next found that while Telles did meet with the
board member, she did not run afoul of OSO’s instructions because she did not
discuss her situation or relay negative information about the CEO. (R. at 849.)
This finding was based on Telles’s testimony. OSO did not present any evidence
to contradict Telles’s account of her meeting with the board member. Thus, we
cannot conclude that the circuit court committed clear error when it affirmed the
Commission as to the first instruction.
The second instruction involves a more nuanced review. It is
undisputed that Telles retained counsel who sent a letter to the Hospital against the
instructions of OSO. The question is whether OSO’s instruction was reasonable.
There is no explicit statutory definition of reasonable. We have previously held
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that a “reasonable instruction” is one that is within the employee’s “ability to
perform” and will “not result in any undue hardship.” City of Lancaster v.
Trumbo, 660 S.W.2d 954, 956 (Ky. App. 1983). Additionally, “[i]t is not the
practice of a particular employer and employee that determines misconduct. We
are to examine the facts of each case in light of the reasonable employment
relationship.” Douthitt v. Kentucky Unemployment Ins. Comm’n, 676 S.W.2d 472,
475 (Ky. App. 1984).
While OSO may have had some valid concerns about one of its
employees threatening legal action against the Hospital, those concerns must be
considered in light of the facts of the case at hand. Telles believed that she had
done nothing wrong in the operating room, and the Hospital was actively
investigating the incident and determining whether to sanction her for the alleged
violation. Being sanctioned by the Hospital could affect not only Telles’s
employment with OSO but her future employability within her chosen line of
work. While it was certainly reasonable for OSO to make an internal business
decision not to have its own counsel intervene on Telles’s behalf, we cannot agree
with OSO that it was reasonable to instruct Telles that she was not to personally
consult with a private attorney or have a private attorney contact the Hospital on
her behalf, especially where the Hospital was actively investigating allegations of
wrongdoing by Telles. Thus, we agree with the Commission and the circuit court
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that OSO’s instruction unreasonably infringed on Telles’s right to protect her
legitimate and significant personal interests with the assistance of the counsel of
her choosing.3 Accordingly, we find no error with respect to the Commission’s
conclusion that the instruction was unreasonable, and we agree with the circuit
court’s decision to affirm.
Very briefly, we now turn to OSO’s argument that the Commission
erred by not making a finding with respect to whether Telles violated the
Hospital’s policy by retrieving and opening the bone graft, and that the circuit
court erred by failing to recognize the significance of this omission. According to
OSO, it was incumbent on the Commission to reach a determination on whether
Telles violated the Hospital’s policies because if Telles did commit the alleged
breaches of Hospital policy then the instruction that Mr. Oliver gave her not to
have counsel contact the Hospital must have been reasonable. Of course, this
ignores the fact the Hospital’s investigation was ongoing when the instruction was
3
In its appellate brief, OSO argues that the Commission’s reasoning in this regard is tantamount
to a conclusion that OSO violated Telles’s constitutional rights exposing it to liability for
wrongful discharge. OSO explains that it should have been able to terminate Telles in this
situation “without fear of being liable for a wrongful or retaliatory discharge claim.” OSO’s
argument misunderstands the relationship between an unemployment benefits claim and a claim
against the employer for wrongful discharge. The question before the Commission and the
circuit court was limited to whether Telles was entitled to receive unemployment benefits, not
whether her discharge was “wrongful.” In this limited setting, OSO’s reasons (or lack thereof)
for the termination are relevant only for determining whether Telles is entitled to benefits. Hicks
v. Floyd County Bd. of Educ., 99 F. App’x 603, 605 (6th Cir. 2004) (citing Berrier v. Bizer, 57
S.W.3d 271, 281 (Ky. 2001)) (“Indeed, turning an unemployment hearing into a forum for
thorough exploration of such issues [wrongful discharge] would defeat the purpose of providing
fast, cheap resolution of unemployment claims.”).
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issued. Additionally, Mr. Oliver unequivocally testified that he would have
terminated Telles regardless of whether she actually breached the Hospital’s policy
for the simple fact that she disregarded his instructions. In this limited setting, the
inquiry is centered on the reasonableness of the instructions at the time they were
given and nothing more. (R. at 32-36.) Accordingly, we agree with the circuit
court that whether Telles actually breached the Hospital’s policy was irrelevant.
Finally, OSO argues that Telles’s mere threat to disclose damning
information to the board member which she believed would lead to the dismissal of
the Hospital’s CEO was misconduct sufficient to deny her benefits in and of itself.
While Telles’s alleged threat was occasionally mentioned by Mr. Oliver and Mr.
Stanbery during their testimony, OSO has not cited us to where in the
administrative record it argued to the Commission that this was a valid basis for
Telles’s termination. Accordingly, we deem this argument to have been waived
for lack of preservation.4 O’Dea v. Clark, 883 S.W.2d 888, 892 (Ky. App. 1994).
4
CR 76.12(4)(c)(v) requires an appellant’s brief to contain “a statement with reference to the
record showing whether the issue was properly preserved for review and, if so, in what manner.”
OSO’s briefs contain no such preservation statements as to any of its plethora of issues.
We have leniently elected to not penalize OSO for failing to provide a preservation statement for
the other issues because Telles and the Commission do not actively dispute preservation of those
issues. However, Telles asserts on page six of her brief that OSO’s argument that the threat to
get the Hospital CEO fired was sufficient standing alone to deny benefits to Telles is “an entirely
new reason that was never before the Commission.” We likewise failed to see where that issue
was raised before the Commission. In any event, however, it is not our duty to sift through the
administrative record to determine if/where/how OSO raised this issue. That burden fell upon
OSO, not this Court.
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In any event, it seems highly doubtful that Telles’s mere act of discussing this
possible scenario with her supervisor in private rises to the level of actionable
misconduct.
IV. CONCLUSION
For the foregoing reasons, we affirm the Fayette Circuit Court’s
decision affirming the decision of the Kentucky Unemployment Insurance
Commission.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE
COMMONWEALTH OF
John E. Hanley KENTUCKY, KENTUCKY
Hayden A. Holbrook UNEMPLOYMENT INSURANCE
Louisville, Kentucky COMMISSION:
Joshua R. Hurley
Maria Russell
Frankfort, Kentucky
BRIEF FOR APPELLEE TRICIA
TELLES:
Thomas D. Bullock
Rachele T. Yohe
Lexington, Kentucky
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