Clay v. Holy Cross Hospital

• Decision Date: 14 June 2001
• Docket Number: No. 00-2916,00-2916
• Parties: (7th Cir. 2001) Pamela R. Clay, Plaintiff-Appellant, v. Holy Cross Hospital, Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1000

253 F.3d 1000 (7th Cir. 2001)

Pamela R. Clay, Plaintiff-Appellant, v. Holy Cross Hospital, Defendant-Appellee.

No. 00-2916

In the United States Court of Appeals For the Seventh Circuit

Argued February 16, 2001

Decided June 14, 2001

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 3835--James F. Holderman, Judge.

Before Easterbrook, Manion, and Diane P. Wood, Circuit Judges.

Manion, Circuit Judge.

Dr. Pamela Clay sued her former employer, Holy Cross Hospital, alleging that the Hospital terminated her because of her pregnancy in violation of Title VII. The Hospital moved for summary judgment. The district court granted the motion, concluding that Clay failed to demonstrate that the Hospital's legitimate, non-discriminatory reason for her termination was a pretext for discrimination (the Hospital administration asserted that Clay failed to demonstrate the dedication necessary to grow her practice into a profitable enterprise). Clay appeals.¹ We affirm.

I.

Holy Cross Hospital is located in Chicago, Illinois. In 1992, the Hospital embarked on a plan to create a Neighborhood Affiliate Network ("Network") of primary care physicians who would practice in offices in the community surrounding the Hospital. The Hospital's strategy was to subsidize the network of physicians with guaranteed salaries until their practices matured into profitable enterprises, thus eliminating the need for the Hospital's subsidy. A Practice Management Department managed the daily operations of the Network. Bill Seliga, the Hospital's Vice President of Practice Management, headed the Practice Management Department and reported directly to the Hospital's Chief Executive Officer, Mark Clement.

The Hospital hired its first physician for the Network in 1993. From the beginning of the Network's creation, Clement explained to the Network's physicians that they were expected to "hustle" to build a profitable practice because, at some point, they would be on their own.

In June 1996, the Hospital hired Dr. Pamela Clay to work as a pediatrician at its Ford City Neighborhood Affiliate. Clay signed a written employment contract entitling her to an initial salary of $100,000. The contract allowed either Clay or the Hospital to terminate the employment relationship upon 90 days' notice. The Ford City Affiliate was under the administrative control of Julie Rudolph, a clinical operations manager in the Hospital's Practice Management Department.

Clay became pregnant in late October 1997. (She did not disclose her pregnancy to the Hospital's administration until May 1998.) By early 1998, the Network failed to reach a break-even point and continued to need the Hospital's subsidy. Additionally, the Hospital was having financial difficulties of its own at that time. Clement concluded that the Hospital could no longer afford to subsidize the Network at then-present levels, in part due to reductions in Medicare payments caused by the Balanced Budget Act of 1997. In the first few months of 1998, the Hospital was losing approximately $300,000 per month on the Network.

Due to the Network's poor financial performance, on April 14, 1998, Clement met with Seliga to review the Network's subsidy and the fact that some physicians and their practices were not performing as well as expected. Clement asked Seliga to assess the practice of each physician in the Network to determine which physicians "were going to get the hospital where it needed to be," and which physicians should be "prune[d]" from the Network. Clement asked Seliga to assess each physician's practice, including subjective factors like how hard a physician was working, and whether the physician was participating in the Hospital's marketing efforts in order to build a profitable practice.

After his meeting with Clement, Seliga met with several managers in the Practice Management Department, including Julie Rudolph, and Theresa Gaffney, the Hospital's Marketing Director. At that meeting, Seliga told the practice managers that the Hospital needed to reduce the Network's subsidy, and that it would likely have to lay off some physicians. He solicited the managers' opinions on which physicians to terminate. The practice managers commented on each physician's willingness to participate in practice-building efforts, and on their likelihood to grow their practices. The group created a preliminary list of physicians they perceived to be less likely to grow their practices to profitability. That initial list included Clay and eight other physicians.

Between April 14 and April 20, 1998, Seliga reviewed Clay's numbers concerning her revenues, expenses, participation in community events, hours in the office, marketing activities, procedures provided to patients, and patient volume. Then on April 20, Seliga met again with Gaffney and the practice managers to discuss the list of proposed layoffs. According to Seliga, the group reached a consensus that each physician on the list was unlikely to grow their practice to profitability because they lacked the willingness to participate in marketing activities or to make the other efforts required to see, attract, and service more patients. The issue of pregnancy was never brought up in the decision-making process.

After some additional meetings between Seliga, Clement, and other Hospital administrators, the list of physician layoffs was finalized on May 1, 1998. The reduction-in-force ("RIF") was termed the "Neighborhood Affiliate Reorganization" and was expected to save the Hospital approximately $2 million. As the head of the Practice Management Department, Bill Seliga had the ultimate authority, subject to Mark Clement's review, to decide which physicians would be terminated under the RIF.

Seliga testified that he decided to terminate Clay because he concluded that she would not achieve a financially-self- sufficient practice regardless of the amount of assistance she received from the Hospital. According to Seliga, he based his decision on his own knowledge of Clay's performance and on the advice he received from other Hospital employees, including Julie Rudolph and Theresa Gaffney. Seliga testified that he was advised by Gaffney that Clay was uncooperative with the Hospital's marketing efforts, and that she failed to participate in any of the Hospital's 25 marketing events. Seliga also states that he was told that Clay had low patient accessibility. Patient accessibility means the amount of time that a physician is in her office and her receptivity to walk-in patients. It is undisputed that patient accessibility is "the key" to building a successful practice. According to Seliga, Gaffney and Rudolph told him that Clay was unwilling to see patients outside of her scheduled office time, and that she would turn patients away who were waiting in her office at the end of her schedule. Seliga also testified that Rudolph informed him that Clay was reluctant to take advantage of opportunities to grow her practice by covering for other physicians who were unavailable. And Seliga determined that Clay's practice had low growth and low revenue, and that she had a generally uncooperative attitude. Therefore, Seliga claims that he concluded that Clay failed to demonstrate the entrepreneurial spirit and commitment necessary to grow her practice into a profitable enterprise.

Clement, Rudolph and Gaffney corroborated Seliga's testimony. According to Clement, physicians were selected for termination because "what they might have been looking for in a position may not have been consistent with what we were looking for in a physician." Clement testified further as to the kind of physician that the Hospital was not seeking: "Some physicians, some employees are looking for a j-o-b, an entitlement; I'll do my 40 hours; I'm not going to be responsible for growing the practice; I'm not going to be an owner." Rudolph affirmed that the physicians selected for termination were assessed to be less likely to grow their practices than those who were retained. Rudolph also testified that she commented to Seliga about Clay's reluctance to see patients after hours. And Rudolph noted Clay's inadequate revenue, as her net collections amounted to $22,453 for the six-month period from July 1997 to December 1997, while she received a $50,000 salary for that same period. Furthermore, Gaffney testified that she told Seliga about Clay's unwillingness to participate in the Hospital's marketing efforts.

On May 14, 1998, Seliga met with Clay about her termination. Seliga testified that he first learned of Clay's pregnancy at that meeting. The following day, on May 15, the Hospital formally announced the Reorganization.

After the announcement of her termination, Clay sued the Hospital, alleging that she was terminated because of her pregnancy in violation of Title VII. The Hospital moved for summary judgment, arguing that Clay could not establish a prima facie case of pregnancy discrimination because Seliga, the Hospital's decision-maker, was unaware of Clay's pregnancy when he selected her for termination. The Hospital also argued that Clay could not show that the Hospital's legitimate, non-discriminatory reason for her termination (Seliga's belief that Clay failed to demonstrate the potential to grow her practice to profitability) was a pretext for discrimination.

In her response to the Hospital's motion, Clay argued that she established a prima facie case because Seliga knew about her pregnancy before he selected her for termination. Clay became pregnant in late October 1997, and was pregnant for a full nine months until she delivered her baby on July 16, 1998. According to Clay, she started to become visibly pregnant in February 1998. She testified that it is her "belief" that Seliga knew of her pregnancy because she and Seliga had attended a few Hospital conferences and meetings in February, March, and April of 1998. But...