Lasky v. Ohio State Univ.

[Cite as Lasky v. Ohio State Univ., 2011-Ohio-4838.]
Court of Claims of Ohio
The Ohio Judicial Center
65 South Front Street, Third Floor
Columbus, OH 43215
614.387.9800 or 1.800.824.8263
www.cco.state.oh.us
LARRY C. LASKY, M.D.
Plaintiff
v.
THE OHIO STATE UNIVERSITY, et al.
Defendants
Case No. 2007-07647
Judge Alan C. Travis
DECISION
{¶1} Plaintiff filed this action alleging breach of an employment agreement.
The issues of liability and damages were bifurcated and the case proceeded to trial on
the issue of liability. The parties filed post-trial briefs in lieu of closing arguments.
{¶2} As an initial matter, plaintiff filed his complaint on September 20, 2007,
and an amended complaint on October 16, 2007. Defendants argue that some of
plaintiff’s claims are barred by the statute of limitations. The court agrees.
{¶3} R.C. 2743.16(A) provides that “civil actions against the state permitted by
sections 2743.01 to 2743.20 of the Revised Code shall be commenced no later than
two years after the date of accrual of the cause of action or within any shorter period
that is applicable to similar suits between private parties.” Inasmuch as plaintiff filed his
original complaint on September 20, 2007, any claims accruing prior to September 20,
2005, are barred by the statute of limitations.
Case No. 2007-07647 -2- ENTRY
EMPLOYMENT AGREEMENT
{¶4} On November 1, 1993, plaintiff, Larry Lasky, M.D., began employment as
both a tenured-associate professor of pathology and a physician faculty member.
Pursuant to the employment agreement, dated August 24, 1993, Dr. Lasky was
expected to perform a full range of duties including service, teaching, and research. As
a part of Dr. Lasky’s service duties, he was appointed Director of the Division of
Transfusion Medicine of The Ohio State University (OSU) Hospitals. Dr. Lasky was
“expected to supervise all aspects of the service including quality assurance,
accreditation, patient services, and relationships with the Red Cross.” (Plaintiff’s Exhibit
2.) In addition, Dr. Lasky was required to obtain both an appointment to the attending
staff of the University Hospitals and an Ohio medical license. (Plaintiff’s Exhibit 2.)
{¶5} OSU was required to pay Dr. Lasky a base salary of $60,000 per year
beginning November 1, 1993. Pursuant to the agreement with OSU, Dr. Lasky
executed a separate contract with University Pathology Services, Inc. (UPS) that
required him to assign his professional fees to the corporation and become both a
shareholder and an employee of the corporation. Plaintiff’s offer of employment with
OSU also contained a copy of the departmental Patterns of Administration.
{¶6} On July 7, 1999, Dr. Daniel Sedmak, Chair of the Pathology Department,
and Dr. Lasky entered into a revised OSU employment agreement. The agreement
authored by Dr. Sedmak provides the following:
{¶7} “You will step down from clinical service and focus on your research. Your
new salary will be 60% of your total current salary with the understanding that you will
seek funding from current and future sources for 100% coverage of the new salary
level. The fringe benefits will be proportionally adjusted.
Case No. 2007-07647 -3- ENTRY
{¶8} “You will serve as a consultant for Transfusion Medicine and will not be
expected to have regular clinical service responsibilities. You may occasionally be
available to cover absences of faculty in Transfusion Medicine, at an hourly rate, to be
paid in addition to 60% salary, at $75/hour for time spent on-service and for time spent
when called in on call, the latter at the appropriate percentage of this rate as determined
by the rate currently charged in our logging records for call time when not called in. You
will determine your availability for clinical work on this basis, should you be asked to
perform it.
{¶9} “You may hold the title of Director of Academic Transfusion until a new
permanent Director of Transfusion Medicine is named. A search for a new permanent
Director of Transfusion Medicine will occur after a new Director of Clinical Pathology is
appointed (planned to occur within 12 to 24 months). You are welcome to apply for this
position.
{¶10} “At a fixed time before the end of this one year clinical leave
(approximately 3 months), you will let the department know if you wish to continue with
this part time arrangement, or to return to your previous duties. Those duties, along
with benefits, will be as written in the 1993 offer letter with the following exceptions: 1)
your salary will be based on your current full time salary, with appropriate cost of living
and other increases, 2) you will negotiate your clinical responsibilities with the Chair and
the director of clinical pathology, with the final decision to be made by the Chair.
{¶11} “You will focus on your stem cell and cord blood research, having time to
write both manuscripts and new grant proposals. You will have a one-time grant from
the department for $20,000 for your research.” (Plaintiff’s Exhibit 1.)
{¶12} Plaintiff argues that on October 1, 2005, OSU unilaterally reduced his
salary in breach of his employment agreement and that he never entered into a contract
where his salary would fluctuate based upon the amounts of his research grants.
Case No. 2007-07647 -4- ENTRY
Defendants argue that the reduction in salary complies with the parties’ 1999
agreement.
{¶13} In order to recover for breach of contract, plaintiff must prove the
existence of a contract, performance by the plaintiff, breach by the defendant, and
damages or loss as a result of the breach. Samadder v. DMF of Ohio, Inc., 154 Ohio
App.3d 770, 2003-Ohio-5340; Doner v. Snapp (1994), 98 Ohio App.3d 597, 600.
{¶14} It is not disputed that the parties entered into a contractual relationship;
however, the parties dispute Dr. Lasky’s appropriate compensation under the
agreement.
{¶15} A court is not required to go beyond the plain language of an agreement to
determine the parties’ rights and obligations if a contract is clear and unambiguous.
Cuthbert v. Trucklease Corp., Franklin App. No. 03AP-662, 2004-Ohio-4417, ¶21. If no
ambiguity appears on the face of the instrument, parol evidence cannot be considered
in an effort to demonstrate such an ambiguity. Shifrin v. Forest City Enterprises, Inc., 64
Ohio St.3d 635, 1992-Ohio-28.
{¶16} The construction of a written contract is a matter of law. Alexander v.
Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, paragraph one of the syllabus.
“Common words appearing in a written instrument will be given their ordinary meaning
unless manifest absurdity results, or unless some other meaning is clearly evidenced
from the face or overall contents of the instrument.” Id. at paragraph two of the
syllabus. The cardinal purpose of judicial examination of any written instrument is to
ascertain and give effect to the intent of the parties. Aultman Hosp. Assn. v. Community
Mut. Ins. Co. (1989), 46 Ohio St.3d 51. “The intent of the parties to a contract is
presumed to reside in the language they chose to employ in the agreement.” Kelly v.
Med. Life Ins. Co. (1987), 31 Ohio St.3d 130, paragraph one of the syllabus. The
parties do not dispute that the 1999 agreement is unambiguous. Instead, the parties
Case No. 2007-07647 -5- ENTRY
disagree whether the 1999 agreement was subsequently modified by agreement of the
parties.
{¶17} Dr. Lasky testified that the purpose of the 1999 agreement was to allow
him more time to focus on his cord blood research while stepping away from clinical
service. Dr. Lasky explained that he approached Dr. Sedmak about focusing on his
research and obtaining external grants to cover the costs of research. Dr. Lasky stated
that he (Dr. Lasky) suggested a 40% reduction in his base salary and offered to work
towards obtaining funding. Dr. Lasky testified that he planned on extending his
laboratory base and transitioning some of his research into clinical work by establishing
a blood bank.
{¶18} Dr. Lasky testified that in August 1999, one month after signing the 1999
agreement, he spoke with Dr. Sedmak and Harry Pukay-Martin, Chief Administrative
Officer and Financial Manager of the Department of Pathology, several times about
receiving extra compensation for his research. Dr. Lasky stated that the cord blood
project was expanding and that he needed to be compensated for his work. He
explained that the blood banking program was beginning to encompass clinical service,
although he admitted that he primarily dealt with hospitals other than OSU.
{¶19} Dr. Lasky testified that he returned to clinical work immediately after the
1999 agreement; however, he admitted that the only clinical work that he subsequently
performed involved his cord blood research, which he had been performing prior to the
1999 agreement. Dr. Lasky explained that what he called clinical work involved the
cord blood bank, which is a part of transfusion medicine. He explained that he
established the operation, the procedures to be used regarding how to screen and test
donors, and that he also reviewed the results and determined whether the cord blood
was acceptable for transfusion.
{¶20} Dr. Lasky testified that the Red Cross had a business relationship with
OSU and that OSU billed the Red Cross for his salary and benefits. Dr. Lasky
Case No. 2007-07647 -6- ENTRY
explained that StemCyte replaced the Red Cross in the operation for a time but that
StemCyte no longer funds the blood bank.
{¶21} Dr. Sedmak testified that Dr. Lasky did not return to him, within one year
of the 1999 agreement, and request to return to his prior duties. Dr. Sedmak explained
that he had received numerous complaints from individuals in the blood bank and other
faculty members regarding Dr. Lasky’s contentious behavior and inability to administer
in a collegial fashion and that, as a result, he paid close attention to Dr. Lasky and his
duties. Pukay-Martin denied having any conversation with Dr. Lasky regarding
returning to his previous duties.
{¶22} Dr. Lasky’s salary report states that in 1999, a new letter of agreement
adjusted his salary to 60% of its then current value. (Plaintiff’s Exhibit 7.) In 2000,
“ARC contract funding” allowed his salary to be adjusted to 80% of its value prior to the
1999 agreement. Id. In 2001, Dr. Lasky’s salary was adjusted to 100% with “80% ARC
and 20% Lasky research funds.” Id. The guarantee listed in Dr. Lasky’s salary report
remained the same in each of these periods with the exception of several .5% raises.
On October 1, 2002, Dr. Lasky’s salary was “increased to 1.0 FTE with new grants.” In
2005, Dr. Lasky’s salary was “reduced to .6 FTE; no grants supporting salary.” Id.{¶23} Regarding the 1999 agreement, Dr. Sedmak testified that Dr. Lasky was
to be paid 60% of his then total current salary, which served as a base salary. Dr.
Sedmak explained that Dr. Lasky was then encouraged to fund his salary with grants,
but that he would not be paid less than 60% of his total current salary. Dr. Sedmak
explained that if Dr. Lasky was able to cover more than 60% of his salary with grants,
then the additional grants would allow him to earn more than 60% of his salary. Dr.
Lasky denies that he entered into an agreement whereby his salary could fluctuate
based upon the amount of grant funding he had received.
Case No. 2007-07647 -7- ENTRY
{¶24} Pukay-Martin explained that there were times when Dr. Lasky was able to
obtain funding to support his base of 60% plus an additional amount but that Dr. Lasky
had not been able to support his salary above 60% at any point beyond 2005.
{¶25} Dr. Sedmak explained that prior to 1999, Dr. Lasky was an active clinical
pathologist involved with patient diagnosis and care but that he has not participated in
clinical practice since that time. Dr. Sedmak testified that cord blood banking is
investigational rather than clinical inasmuch as blood banking is a manufacturing
process involving tissue procurement and banking; that at no point after the execution of
the 1999 agreement did Dr. Lasky either return to clinical duties or regain his former title
as Director of Academic Transfusion.
{¶26} Dr. Lasky testified that in 2005, OSU reduced his salary to 0.6 full-time
equivalent (FTE) at the same time that his research funding was in an overdraft
situation. Dr. Lasky explained that his research grant had ended; however, OSU
continued to draw his salary from the grant-supported funding account causing an
overdraft. Dr. Lasky explained that OSU used money from his faculty rotary account
and sold a piece of his research equipment to cover the overdraft.1
{¶27} Dr. Barsky testified in his deposition that he became chair of the pathology
department in 2005 and became acquainted with Dr. Lasky within the first few months.2
Dr. Barsky explained that when he began as chair, Pukay-Martin informed him that Dr.
Lasky’s research grants were in serious overdraft. Pukay-Martin testified that the grants
are supported by an outside source, and a deficit occurs when the researcher spends
more money than the grant has paid. Dr. Barsky explained that at the University of
California at Los Angeles, where he had previously worked, the research foundation
both administered the grants and monitored research spending so that overdrafts would
1
Dr. Sanford Barsky, Chair of the Department of Pathology, stated that a rotary fund is an account given
to all faculty members as a start-up discretionary fund that they can use for their professional
development.
Case No. 2007-07647 -8- ENTRY
not occur. Dr. Barsky testified that at OSU the department controls the flow of research
money. Dr. Barsky explained that the principal investigator is in charge of being
financially responsible and that the situation caused him to review Dr. Lasky’s salary,
overdraft, and employment agreements.
{¶28} On September 16, 2005, Dr. Barsky sent Dr. Lasky a letter regarding the
overdraft situation. Dr. Barsky outlined a plan to reduce the $123,884.75 overdraft and
informed Dr. Lasky that “[t]his financial re-allocation will allow you to continue your
operation without your salary being affected for the next 2 months.” Dr. Barsky also
advised him that his salary would be reduced to 60%. (Plaintiff’s Exhibit 12.) Pukay-
Martin explained that once Dr. Lasky satisfied the deficit, there were no ongoing funds
available in his research account and that his salary was subsequently reduced to 60%
pursuant to the 1999 agreement. Dr. Barsky testified that he then met with Dr. Lasky on
September 22, 2005, to discuss the reduction in salary. Dr. Barsky then sent a follow-
up letter on September 27, 2005, memorializing the reduction. “The Office of Human
Resources has approved the 2005-2006 salary adjustments. Your annual salary
effective October 1, 2005, is $102,153.60 at 0.6 FTE.” (Plaintiff’s Exhibit 3.)
{¶29} Dr. Barsky explained that in making the salary determination he had
reviewed both the 1993 and 1999 employment agreements. Dr. Barsky stated that the
1999 agreement set Dr. Lasky’s salary at 0.6 FTE. Dr. Barsky explained that 0.6 FTE
was how OSU expresses salaries rather than full-time or part-time status. Dr. Barsky
stated that he also looked at Dr. Lasky’s duties and responsibilities. Dr. Barsky testified
that Dr. Lasky was a researcher and an associate professor but that he had no clinical
service duties, which meant that he did not derive clinical income. Dr. Barsky testified
that based on the 1999 agreement, Dr. Lasky’s salary should be 60 percent of his total
2
Dr. Barsky’s deposition was admitted as Plaintiff’s Exhibit 25.
Case No. 2007-07647 -9- ENTRY
current salary. Dr. Barsky further asserted that Dr. Lasky did not have the grant support
to sustain his salary.
{¶30} Based upon the testimony of Dr. Sedmak and Pukay-Martin, the court
concludes that Dr. Lasky was entitled to receive “60% of [his] total current salary” under
the 1999 agreement. Additionally, the 1999 agreement required Dr. Lasky to “step
down” from his clinical duties and to focus on his cord blood research. Dr. Lasky has
failed to persuade the court that he “return[ed] to his previous duties” and that his
research became clinical shortly after signing the 1999 agreement. The court is
persuaded by the testimony of Pukay-Martin that Dr. Lasky was to receive pay above
60% only when his research funding exceeded his base salary. The court is also
convinced that the parties did not subsequently modify the 1999 agreement.
PATTERNS OF ADMINISTRATION
{¶31} Dr. Lasky testified that defendants have not provided him with his
appropriate benefits pursuant to the pathology department’s Patterns of Administration
(POA). Dr. Sedmak explained that the POA are rules of administration developed by
the department chair and approved by the faculty. According to the POA, faculty
members could receive two bonuses based upon research: “Research Grants” and
“Coverage of Faculty Salary” (CFS).
{¶32} The POA in effect from January 7, 2002 through June 6, 2007, under the
heading CFS states: “At the end of the fiscal year, a faculty member who obtained from
research grants 10% or more of his/her total salary* will be given a bonus * * * The
faculty member may choose to have the equivalent funds placed in his/her research
rotary rather than taking a salary bonus. * Total salary includes income from all sources,
which may be all from COM&PH or the combination of both COM&PH and UPS. Grant
supported salary is distributed according to the release time policy of the department.”
Case No. 2007-07647 - 10 - ENTRY
(Plaintiff’s Exhibit 6.) Additionally, the bonus policy was “contingent upon sufficient
available funds in the department.” The POA was revised effective June 6, 2007,
eliminating the CFS bonus program.
{¶33} Dr. Lasky asserted that he was paid the CFS bonus in 2001, but that he
has not received any since that time even though he contacted Pukay-Martin to request
the bonus. Plaintiff, however, provided no evidence demonstrating that OSU had
“sufficient available funds” to provide him with a bonus. Moreover, as noted above,
Pukay-Martin testified that Dr. Lasky has not been able to support his salary above 60%
at any point beyond 2005 and that in 2005, his research funding was in a serious
overdraft situation. Dr. Lasky’s OSU salary report indicates that he had “no grants
supporting his salary” in 2005 and that his salary did not change in 2006. (Plaintiff’s
Exhibit 7.) In short, plaintiff failed to persuade the court that he had been denied his
appropriate CFS bonus.
{¶34} For the foregoing reasons, the court concludes that plaintiff has failed to
prove his claim by the preponderance of the evidence. Judgment shall be entered for
defendants.
Case No. 2007-07647 - 11 - ENTRY
Court of Claims of Ohio
The Ohio Judicial Center
65 South Front Street, Third Floor
Columbus, OH 43215
614.387.9800 or 1.800.824.8263
www.cco.state.oh.us
LARRY C. LASKY, M.D.
Plaintiff
v.
THE OHIO STATE UNIVERSITY, et al.
Defendants
Case No. 2007-07647
Judge Alan C. Travis
JUDGMENT ENTRY
{¶35} This case was tried to the court on the issue of liability. The court has
considered the evidence and, for the reasons set forth in the decision filed concurrently
herewith, judgment is rendered in favor of defendants. Court costs are assessed
against plaintiffs. The clerk shall serve upon all parties notice of this judgment and its
date of entry upon the journal.
_____________________________________
ALAN C. TRAVIS
Judge
Case No. 2007-07647 - 12 - ENTRY
cc:
Edward R. Forman Emily M. Simmons
John S. Marshall Randall W. Knutti
Steven D. Dransfield Assistant Attorneys General
111 West Rich Street, Suite 430 150 East Gay Street, 18th Floor
Columbus, Ohio 43215-5296 Columbus, Ohio 43215-3130
Louis A. Jacobs
66871 Rayo Del Sol
Desert Hot Springs, California 92240-1871
GWP/dms
Filed August 1, 2011
To S.C. reporter September 22, 2011