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Vermont High Court Says Physician Had Valid Public Policy Argument In Connection With Termination Of Employment


HLD, v. 32, n. 12 (December 2004)

Vermont 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 office.

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

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