Bender v. Suburban Hosp., Inc.

Decision Date30 October 1998
Docket NumberNo. 98-1637,98-1637
Citation159 F.3d 186
Parties78 Fair Empl.Prac.Cas. (BNA) 321, 74 Empl. Prac. Dec. P 45,608 Carol L. BENDER, M.D., Plaintiff-Appellant, v. SUBURBAN HOSPITAL, INCORPORATED, Defendant-Appellee, and Board of Trustees of Suburban Hospital, Incorporated; John W. Barrett; Richard Byrne, M.D.; John Eng, M.D.; Don Fontana, M.D.; Antoni Goral, M.D.; Brian Grissler; Jay Grodin, M.D.; Wendell Holloway; Patricia Kellogg, M.D.; Harris Kenner, M.D.; Lawrence Kline; Sydney Malawer, M.D.; Ira Miller, M.D.; William Minogue, M.D.; Richard Pollen, M.D.; Robert Rothstein, M.D.; John Saia, M.D.; Joel Schulman, M.D.; Robert Snider; Michael Stanton, M.D.; Roger Titus; Alan Wolland, M.D., Defendants.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: Diane Elizabeth Bieri, Howrey & Simon, Washington, D.C., for Appellant. Jonathan Barkasy Sprague, Post & Schell, P.C., Philadelphia, Pennsylvania, for Appellee. ON BRIEF: Margaret M. Swisler, Lisa J. Saks, Laura S. Shores, Howrey & Simon, Washington, D.C., for Appellant. S. Allan Adelman, Godard, West & Adelman, P.C., Rockville, Maryland, for Appellee.

Before NIEMEYER, HAMILTON, and LUTTIG, Circuit Judges.

Affirmed by published opinion. Judge LUTTIG wrote the opinion, in which Judge NIEMEYER and Judge HAMILTON joined.

OPINION

LUTTIG, Circuit Judge:

Dr. Carol Bender appeals the dismissal, for failure to state a claim, of her Title VII discrimination suit against Suburban Hospital for its refusal to renew her staff privileges. We affirm.

I.

According to her complaint, Bender is a doctor of internal medicine and has maintained a private practice in Rockville, Maryland, since 1977. Also in 1977, Bender acquired staff privileges at Suburban Hospital ("Suburban" or "the hospital") in nearby Bethesda, Maryland. At some point, she acquired like privileges, which she still holds, at Shady Grove Adventist Hospital in Gaithersburg.

Staff privileges at a hospital facilitate a physician's practice. Such privileges enable a physician to admit and treat patients, order medication and procedures, receive various services from hospital staff, and use hospital equipment and office space. At Suburban, Bender and other physicians with staff privileges created a coverage group agreement pursuant to which they covered for each other when a member of the group was unavailable. Suburban facilitated the increase in a physician's patient base by offering a physician-referral program and an "on-call" roster for emergency room duty. Staff privileges do entail various duties for a physician, such as ensuring one's licensing and continuing education, paying dues, and serving on committees. Privileges at Suburban extend for two years, after which the Board of Trustees of Suburban may renew them for another two-year term.

Bender's relationship with Suburban began to sour in the fall of 1992. As part of her renewal application, and in light of some alleged behavioral incidents, Suburban required Bender to undergo a psychiatric evaluation, which she did in February 1993. In May 1993, a committee recommended that Suburban condition Bender's reappointment on her submitting to counseling and therapy. This recommendation led both to further hearings at the hospital and to Bender filing complaints with the federal Equal Employment Opportunity Commission ("EEOC") and the Maryland Commission on Human Relations. In February 1996, after further wrangling and failed negotiations, Suburban terminated Bender's staff privileges, prompting a second complaint with the EEOC, alleging retaliation, which resulted in the EEOC issuing a right-to-sue letter in April 1997.

Suburban, pursuant to its legal obligation, duly reported its termination of Bender's privileges to the National Practitioners' Data Bank, a clearinghouse of information on health care providers. Whenever a physician applies for staff membership or privileges with a health care entity, the entity must acquire a report on her from the Data Bank. Likewise, preferred provider organizations ("PPO") may access information regarding a physician who wishes to contract with them. Suburban informed the Data Bank that it had terminated Bender's privileges after nineteen years "because of her long history of disruptive and abusive conduct in the Hospital and her refusal to obtain professional counseling," and because of "unprofessional conduct." It submitted a similar report to the Maryland Board of Physician Quality Assurance.

In April 1997, Bender sued the Hospital, its Board, and various doctors at Suburban. Her 38 page, 129 paragraph complaint alleged violation of numerous Maryland laws, as well as of Title VII of the federal Civil Rights Act of 1964. The Title VII theory involved two claims: first, a "direct" claim that Suburban had discriminated against her in employment by refusing to renew her staff privileges on account of her sex; second, an "indirect" claim that Suburban's actions had harmed her ability to secure employment elsewhere. The district court dismissed both federal claims for failure to state a claim, and dismissed the state claims without prejudice. Bender appeals the dismissal of her second Title VII claim.

II.

Various strategic decisions of both sides to this case have narrowed the issue on appeal to one: whether Bender's complaint for "indirect" discrimination sufficiently alleges that Suburban harmed some employment relationship of Bender with a third party. For the reasons that follow, we hold that it does not.

We need not consider whether Bender's relationship with Suburban suffices for a direct claim against the hospital for discrimination. The district court held that such a claim requires an employment relationship and that a doctor with staff privileges at a hospital is an independent contractor, not an employee. Bender waives any challenge to this holding by not appealing it.

We also need not resolve for the first time in this Circuit whether Title VII allows indirect liability for an employer's interference with an individual's employment with third parties. Every Court of Appeals to consider this issue has followed the lead of the District of Columbia Circuit in allowing such a claim, see, e.g., Sibley Memorial Hospital v. Wilson, 488 F.2d 1338, 1341-42 (D.C.Cir.1973); Christopher v. Stouder Memorial Hosp., 936 F.2d 870, 875 (6th Cir.1991). 1 Suburban does not contest the Sibley line of cases; it argues instead merely that Bender does not fit within that line because she has failed to plead a "third party employment relationship." Appellee's Br. at 5. And we reach the same result by applying Sibley as we would if we were to reject it. Suburban also does not argue that Bender's relationship with the hospital was too tenuous to bring this case within Sibley, which requires that a plaintiff's relationship with the defendant be at least one where the defendant "controlled the plaintiff's employment relationship" with third parties and was the plaintiff's "de facto or indirect employer." See EEOC v. Illinois, 69 F.3d 167, 169 (7th Cir.1995). Thus, we assume, without deciding, that the general rule of Sibley applies here--that an entity who is an "employer" under Title VII may be liable for interfering with someone's employment relationship with a third party, if done for discriminatory reasons, and that Suburban's relationship with Bender sufficed to make such liability possible.

But that does not mean we follow Sibley and like cases as to what satisfies the requirement that plaintiff show an "employment relationship" with a third party. Although Sibley itself repeatedly referred to its interpretation of Title VII as applying to interference with "direct employment relationships between third parties," see, e.g., 488 F.2d at 1342 (emphasis added), the court there, without discussion or explanation, treated a private nurse's relationship with patients at a hospital as satisfying the rule. Faced with this apparent tension between Sibley 's articulated standard and its application of that standard, we follow the standard articulated and require a plaintiff to allege harm to an employer-employee relationship, as defined by the law of agency. We believe that the language of Title VII, along with precedent of the Supreme Court and this Circuit, compels such a rule. Further, any other rule would extend Title VII's reach to any and every relationship that an employer's discrimination might harm in any way, a result we are reluctant to conclude Congress intended.

Title VII provides in relevant part as follows:

It shall be an unlawful employment practice for an employer--

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's ... sex.

42 U.S.C. § 2000e-2(a). Because Bender's claim on appeal does not rest on Suburban's alleged failure or refusal to "hire" her, or its "discharge" of her, but rather on the consequence of such "discharge," her claim must find a home in the third clause if it is to state a claim: she must allege that Suburban discriminated against her "with respect to [her] compensation, terms, conditions, or privileges of employment."

The operative term for purposes here is "employment." That is, the clause presumes the existence of an employer-employee relationship, as defined by longstanding principles of agency law, 2 in contrast to, for example, an independent contracting relationship. See Diggs v. Harris Hospital-Methodist, Inc., 847 F.2d 270, 274 (5th Cir.1988) ("[E]ven if we were to hold that Harris Hospital could violate the provisions of Title VII by interfering with Diggs's relationship with a third party--a question we do not reach--that relationship would have to be an employment relationship under the economic realities/common law contract control test."); Mitchell v. Frank R. Howard...

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