Frazier v. Board of Trustees of Northwest Mississippi Regional Medical Center

• Citation: 765 F.2d 1278
• Decision Date: 22 July 1985
• Docket Number: No. 83-4679,83-4679
• Parties: 38 Fair Empl.Prac.Cas. 783, 37 Empl. Prac. Dec. P 35,387, 2 Fed.R.Serv.3d 1369, 1 A.D. Cases 791 Dorothy FRAZIER, Plaintiff-Appellant, v. The BOARD OF TRUSTEES OF NORTHWEST MISSISSIPPI REGIONAL MEDICAL CENTER, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1278

765 F.2d 1278

38 Fair Empl.Prac.Cas. 783,

37 Empl. Prac. Dec. P 35,387, 2 Fed.R.Serv.3d 1369,

1 A.D. Cases 791

Dorothy FRAZIER, Plaintiff-Appellant, v. The BOARD OF TRUSTEES OF NORTHWEST MISSISSIPPI REGIONAL MEDICAL CENTER, et al., Defendants-Appellees.

No. 83-4679.

United States Court of Appeals Fifth Circuit.

July 22, 1985.

Kossman & Kossman, Nancy P. Kossman, L. Paul Kossman, Cleveland, Miss., for plaintiff-appellant.

Merkel & Cocke, John H. Cocke, Walter Stephens Cox, Clarksdale, Miss., for Bd. of Trustees of NWMRMC & Clifford L. Johnson, Etc.

Frank C. Kruppenbacher, Paul H. Bowen, Orlando, Fla., for Lifetron Systems, Inc., et al.

Appeal from the United States District Court for the Northern District of Mississippi.

Before GOLDBERG, RUBIN and HILL, Circuit Judges.

GOLDBERG, Circuit Judge:

This appeal confronts us with a paragon of unclarity, a paradigm of mutuality, and a plethora of pittances. The paragon is whether, by virtue of their contractual and operational relations with a county hospital, a private employer and some of its employees acted "under color of state law" within the meaning of 42 U.S.C. Sec. 1983 (1982). The paradigm is whether these same private actors became "recipients" of federal assistance when paid by a federally funded county hospital such that they can be held accountable for their allegedly discriminatory conduct under section 504 of the Rehabilitation Act of 1973, 29 U.S.C. Sec. 794 (1982). The pittances concern a refusal to grant relief pursuant to Fed.R.Civ.P. 60(b)(6), a denial of attorney's fees, and other sundry procedural rulings by the trial court.

I

A

Lifetron, Inc. (formerly Vitraton Systems, Inc.), is a privately-owned and -operated corporation that provides respiratory therapy care to facilities such as Northwest Mississippi Regional Medical Center. Northwest, in turn, is a county hospital organized under Mississippi law and run by a Board of Trustees appointed by the Board of Supervisors of Coahoma County, Mississippi. In December of 1980, Lifetron and Northwest entered into a contract whereby Lifetron was to staff and run the hospital's respiratory therapy department. When the agreement took effect on February 1, 1981, the employees in the hospital's self-run respiratory therapy section (other than individuals with a minimum of ten years' employment at Northwest) became employees of Lifetron. Subject to the rules and policies of the hospital and its medical staff, Lifetron was the final authority over who was promoted or demoted, hired or fired.

In return for its services, Lifetron was to receive every month from Northwest a minimum flat fee supplemented by twenty percent of any gross respiratory-therapy-patient revenues over a certain amount. The agreement stated that Lifetron was an independent contractor and that Northwest was to pay Lifetron for services rendered, rather than as a function of Northwest's having billed or even collected payment from its respiratory therapy patients. The contractual relationship between Lifetron and Northwest was thus bilateral in both execution and effect: Lifetron had an agreement only with Northwest, which itself retained sole dominion over the billing of patients.

In contrast with these mutually exclusive spheres--Lifetron with its relative independence over those in its employ, and Northwest with its unshared authority to bill patients--the day-to-day operations of the hospital and the independent contractor were more entwined. Northwest provided for most or all of Lifetron's utilities as well as for some of the respiratory therapy equipment; Lifetron's office was located in the hospital building; Lifetron's patients were the hospital's patients; and finally, Lifetron's activities were subject not only to its own departmental policy and procedure manual but also to the hospital's policy regarding patient care. A patient in need of respiratory therapy would apparently never know that his care was being furnished by anyone other than the hospital staff.

B

Dorothy Frazier was a respiratory therapist employed by the hospital when Lifetron took over the management of Northwest's respiratory therapy department in February of 1981. Consistent with the arrangement between Northwest and Lifetron, Frazier became an employee of Lifetron, which soon demoted her from supervisor of the eleven-to-seven shift to technician on the seven-to-three shift. She was told by her new supervisor, Wes Cummings, as well as by two subsequent Lifetron supervisors, Bryan Parker and Tony Nolan, that her demotion stemmed from negative comments in her Northwest personnel file.

On January 29, 1982, Frazier filed suit in federal district court for the Northern District of Mississippi against Northwest and Lifetron, as well as against Cummings, Parker, Northwest's personnel manager (Fred Hood), and Northwest's administrator in charge of operations (Clifford Johnson). ¹ The complaint alleged that Northwest and Lifetron had penalized Frazier for having spoken out against deficiencies in the respiratory care at Northwest and for her history of a nervous breakdown sixteen years earlier. In Frazier's view, Northwest and Lifetron, acting through each of the above-named individuals, had conspired to plant adverse documentation in her personnel file with an eye toward her eventual discharge. These activities purportedly deprived Frazier of her constitutional rights under color of state law within the meaning of 42 U.S.C. Sec. 1983 ² by impermissibly burdening (1) Frazier's first amendment right to criticize patient care, (2) her procedural due process right to a hearing on the validity of the reports contained in her personnel file, and (3) her equal protection right not to be discriminated against because of her history of mental instability. The complaint sought damages for back pay and emotional distress, as well as injunctive relief to restore her to her former supervisory position and to afford her the opportunity to contest the reports in her personnel file.

Some three months into the lawsuit, on April 21, 1982, Lifetron fired Frazier for having violated departmental policy by speaking to nursing personnel instead of to her supervisor about perceived flaws in the administration of treatment in the department. Frazier responded with a motion to amend her complaint and for a preliminary injunction reinstating her as Lifetron's employee at the hospital. The court granted the motion on May 28, allowing Frazier to bolster her claims of discrimination with the added fact of her discharge, and to join her then-current supervisor Tony Nolan (a Lifetron employee) as a defendant. ³ The court also granted the requested injunctive relief, reasoning that in light of the then-prevailing law, the relationship between Lifetron and Northwest was sufficient to characterize Frazier's discharge as "state action" for purposes of her section 1983 claim, that there was a substantial likelihood of plaintiff's success on the merits of that claim, and that the equities as between Frazier's prolonged unemployment and Lifetron's patience weighed in favor of granting the requested relief. ⁴

Several months of depositions ensued, but on August 20, 1982, the district court granted a motion for summary judgment in favor of defendants Northwest and its employees, Johnson and Hood. The summary disposition was based on a lack of evidence that Northwest or any of its employees had had anything to do with the decisions to demote or to discharge Frazier: in the district court's view, these actions were attributable solely to Lifetron in its capacity as Frazier's employer. On April 19, 1983, the court entered a final judgment dismissing the claims against the Northwest defendants pursuant to Fed.R.Civ.P. 54(b). Frazier never appealed this order.

Another five months of deposition squabbles passed before the district court, on September 12, 1983, entered an order vacating the preliminary injunction and granting the remaining defendants' motion for summary judgment. The court reasoned that in the interim since it had granted Frazier's request for preliminary injunctive relief, the Supreme Court had handed down Rendell-Baker v. Kohn, 457 U.S. 830, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982), and Blum v. Yaretsky, 457 U.S. 991, 102 S.Ct. 2777, 73 L.Ed.2d 534 (1982) ⁵--cases that altered the concept of state action as it applies to the conduct of private parties. In the district court's view, these cases dictated that Lifetron and its employees could no longer be characterized as having acted under color of state law for purposes of the plaintiff's section 1983 claim. As to Frazier's claim under section 504 of the Rehabilitation Act, the court noted our decision in Brown v. Sibley, 650 F.2d 760 (5th Cir.1981), which held that standing to sue under section 504 exists only where an otherwise qualified plaintiff can show that he was discriminated against by a particular program or activity that is a "recipient" of federal funds within the meaning of the statute. Id. at 770. The district court concluded that while Northwest is a recipient for purposes of a section 504 claim, the "nexus" between the Medicare and Medicaid funds received by Northwest and the payment ultimately channeled to Lifetron "is so attenuated as not to be actionable by a plaintiff having the status of an employee of a private contractor furnishing respiratory services to a county-owned hospital." Accordingly, the court dismissed Frazier's claim under section 504 as well as that under section 1983.

On September 23, 1983, Frazier filed a motion under Rules 59(e), 60(b)(3), and 60(b)(6), asking, among other things, for the court to alter and amend its final judgment of September 12 in favor of Lifetron and its employees, as well as for relief from the court's order of April 19, which had directed the entry of final judgment in favor of Northwest and its employees pursuant to Rule 54(b). The district court denied...