HLD, v. 32, n. 12 (December 2004)
High Court Says Physician Had Valid Public Policy Argument In Connection With
Termination Of Employment
In 1994, Dr. Leigh LoPresti (plaintiff) entered into an employment
agreement with Rutland Regional Physician Group (defendant), which is a physician
practice group. Plaintiff is a primary care physician and he was expected to
refer patients to specialists in the practice group. Plaintiff eventually determined
that, in his opinion, some of the specialists in the practice group were not
providing quality care to the patients and some specialists were performing
unnecessary procedures. Plaintiff greatly reduced his referrals to some specialists
in the practice, but not to others. In 1998, defendant decided to close the
office where plaintiff worked, moved the other physician in the office to another
location, and terminated plaintiff's contract pursuant to the terms of the contract.
The contract provided plaintiff could be terminated with or without cause. Defendant
said the reason for terminating the contract was because it was closing the
Plaintiff sued defendant for breach of contract based on an implied
covenant of good faith and fair dealing, wrongful discharge in violation of
public policy, and promissory estoppel. During discovery plaintiff found evidence
that he may have been terminated for his referral practices. Plaintiff sought
to amend his complaint to include improper termination based on his referral
practices. Plaintiff argued he was under an ethical duty to protect his patients
from physicians he thought were not providing proper care. Defendant moved for
summary judgment arguing the plain language of the contract provided for termination
without cause and there was no public policy to support plaintiff's ethical
concerns about the referrals. The trial court granted defendant's motion for
summary judgment and held plaintiff's arguments were immaterial because defendant
had the right to terminate the contract without cause.
The Supreme Court of Vermont affirmed the trial court's judgment
on the implied covenant and promissory estoppel claims and reversed and remanded
on the public policy claim. The high court first addressed plaintiff's claim
that his wrongful discharge violated public policy based on his referral practices.
Vermont law has long recognized that an at-will employee can be terminated without
cause unless there is a clear public policy against the reason for the discharge,
said the high court, and thus the trial court erred in holding that a "without
cause" termination provision in an employment contract insulates an employer
from a claim of wrongful discharge based on public policy.
In Payne v. Rozendaal, 520 A.2d 586 (Vt. 1986), the high court concluded that an
employer's contractual right to terminate an employee was not absolute because
public policy concerns must be considered. In this case the public policy concern
is the welfare of the public's health and protection from injury based on plaintiff's
claim that he did not want to refer his patients to physicians he thought were
not providing appropriate care or were subjecting patients to unnecessary procedures.
Plaintiff based his public policy argument on medical ethics and the high court
determined that because the trial court did not consider that argument, and
there was little information on the record about defendant's expectations for
its employees and how it handled referrals, the judgment on that issue had to
be reversed and remanded for further consideration.
The high court then turned to the issue of the implied covenant
of good faith and fair dealing and plaintiff's argument that his termination
violated the covenant because the common purpose of the contract was to provide
the highest quality care to patients and his referral practices should not have
been the basis for his termination. The only way that a covenant of good faith
and fair dealing could be violated would be if the employee were fired in violation
of public policy. Since plaintiff had a public policy claim the claim based
on the covenant was not necessary, said the court.
Plaintiff also argued the covenant was violated because of defendant's
bad faith in firing him. The high court determined defendant did not act in
bad faith because it followed the procedures required by the contract for termination.
The high court said plaintiff did not have a right to permanent employment and
rejected his argument that defendant's stated reason for terminating him was
a pretext for the real reason for this termination, which was his referral practices.
The contract did not require defendant to give a reason for the termination,
and any stated reason is not actionable. The high court also held that promissory
estoppel does not apply in contract disputes.
LoPresti v. Rutland Reg'l Health Servs., No. 2003-222, 2004
WL 2365402 (Vt. Oct. 22, 2004). To read the case, go to http://dol.state.vt.us/gopher_root3/supct/current/2003-222.op