Dabertin v. Hcr Manor Care, Inc.

• Court: U.S. District Court — Northern District of Illinois
• Writing for the Court: Levin
• Citation: Dabertin v. Hcr Manor Care, Inc., 177 F.Supp.2d 829 (N.D. Ill. 2001)
• Decision Date: 20 December 2001
• Docket Number: No. 99 C 1702.,99 C 1702.
• Parties: Judy DABERTIN, Plaintiff, v. HCR MANOR CARE, INC., Manor Care, Inc. Severance Plan for Selected Employees, Manor Care, Inc., Manor Care, Inc. Severance Plan for Selected Employees Committee, and Manor Care Inc. Severance Plan for Selected Employees Plan Administrator, Defendants.

177 F.Supp.2d 829

Judy DABERTIN, Plaintiff, v. HCR MANOR CARE, INC., Manor Care, Inc. Severance Plan for Selected Employees, Manor Care, Inc., Manor Care, Inc. Severance Plan for Selected Employees Committee, and Manor Care Inc. Severance Plan for Selected Employees Plan Administrator, Defendants.

No. 99 C 1702.

United States District Court, N.D. Illinois, Eastern Division.

December 20, 2001.

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Martin K. Denis, Kathryn I. Connors, Barlow Kobata & Denis, Chicago, IL, Douglas M. Werman, Law Office of Douglas M. Werman, Chicago, IL, for plaintiff.

Douglas Avrin Freedman, Janet Malloy Link, Scott H. Gingold, Latham & Watkins, Chicago, IL, for defendants.

MEMORANDUM OPINION AND ORDER

LEVIN, United States Magistrate Judge.

Before the court are the parties cross-motions for summary judgment in the cause.

BACKGROUND FACTS

Defendants Manor Care, Inc. and Health Care and Retirement Corporation ("HCR") Manor Care, Inc. (collectively "Manor Care") operate skilled nursing facilities. See generally, Defs.' 56.1(a)(3) St. In 1998, in preparing for a merger with HCR, Manor Care adopted the Severance Plan for Selected Employees (the "Plan"). Id. ¶ 7. Manor Care selected thirty-nine employees comprised of officers and senior management to participate in the Plan. Id. ¶ 8. The thirty-nine employees were among Manor Care's most highly compensated employees. Id. Plaintiff Judy Dabertin, who was a Vice-President/General Manager of Manor Care, was one of the selected employees. Id.

The Plan provided severance benefits which included a lump-sum payout of benefits, a bonus, insurance coverage, and out-placement services for Manor Care's thirty-nine selected employees. Defs.' 56.1(a)(3) St. ¶ 9. Article III of the Plan provides that employees were eligible for benefits as follows:

A Participant shall be entitled to severance benefits under this Plan if and only if his employment with the Company ... terminates under either of the following circumstances:

(A) a termination by the Company ... other than for Cause, or

(B) a termination by the Participant for Good Reason.

Id. ¶ 10. Article 1.8 of the Plan states that "Good Reason" includes:

(i) a significant reduction in the scope of a Participant's authority, position, title, functions, duties or responsibilities ..., (iii) any reduction in a Participant's base salary, (iv) a significant change in the Company's annual bonus program adversely affecting the Participant, or (v) a significant reduction in the other employee benefits provided to a Participant ...

Id. ¶ 11.

In accordance with the Plan's provisions, a Committee was appointed by Manor Care's Board of Directors. Defs.' 56.1(a)(3) St. ¶ 12. The Committee had discretion to "interpret the provisions of the Plan and ... determine all questions arising in the administration thereof, including without limitation the reconciliation of any inconsistent provisions, the resolution of any ambiguities, the correction of defects, and the supplying of omissions." Id. The Plan further provided that "[i]n the event that a claim for a benefit under the Plan has been denied, the decision shall be subject to review by the Committee upon written request of the claimant ..." Id. ¶ 13. Therefore, "[t]he decision of the Committee upon review shall be final and binding on all persons." Id.

In September, 1998, Manor Care merged with HCR and became a wholly owned subsidiary of HCR. Id. ¶ 29.

Mr. M. Keith Weikel, who had been selected to serve as the Chief Operating Officer of the new entity, asked Plaintiff to continue serving in her role as Vice-President/General Manager. Defs.' 56.1(a)(3) St. ¶ 21. Mr. Weikel told Plaintiff that if she accepted the position she would continue to receive the same salary and she would be assigned to the Western Division of Manor Care. Id. ¶¶ 22, 23. Mr. Weikel informed Plaintiff that she did not need to relocate to the West Coast, but that he wanted her to "be in the facilities between four and five days a week." Id. ¶ 24. Plaintiff accepted Mr. Weikel's job offer to serve as Vice-President/General Manager of the new entity. Id. ¶ 28. In addition, the Board of Directors elected Plaintiff as an officer of both HCR Manor Care and Manor Care. Id. ¶ 30.

Prior to the merger, Vice-Presidents/General Managers generally visited each facility under his or her care once a year and relied on regional directors to take care of routine tasks; such as, quality of care issues, regulatory compliance, staffing issues, and customer satisfaction. Defs.' 56.1(a)(3) St. ¶ 32. Mr. Weikel and Mr. Paul A. Ormond, Manor Care's President, however, believed that Manor Care's top managers could not rely on subordinates to manage the facilities assigned to them. Id. at ¶ 33. Instead, they required that top management be personally involved in the day-to-day operations of the facilities. After the merger, Vice-Presidents/General Managers could no longer delegate work to the regional directors and were required to work in the facilities four to five days a week. Id. ¶¶ 33, 34. The Vice-Presidents/General Managers, however, retained the duties, authority, responsibilities, and functions that they had prior to the merger. Id. ¶ 34.

Plaintiff was assigned to the Central and Western Divisions before the merger. Defs.' 56.1(a)(3) St. ¶ 36. However, because the facilities in the Western Division were geographically dispersed, and there was a vast distance between the facilities in the Central and Western Divisions, Mr. Weikel assigned Plaintiff only the Western Division after the merger so that she could handle her intensified job assignment. Id. The Western Division had a smaller number of facilities, beds, direct reports, and construction projects, and less budgeted revenue and operating profit than the combined Western and Central Divisions. Id. ¶ 37. Plaintiff, however, retained the same scope of duties, responsibilities, functions, and authority in her smaller business unit. Id.

In addition, due to the deteriorating performance of the Western Division's facilities, Manor Care decided to work on improving the performance of its existing facilities and stopped construction development of facilities in the Western Division. Defs.' 56.1(a)(3) St. ¶ 38. Plaintiff, however, continued to be assigned all of the same duties, responsibilities, functions and authority for construction development, even though she spent less time working in that area after the merger. Id. Instead, Mr. Weikel required that Plaintiff focus more time on her duties and responsibilities as they related to the profitability and performance of existing facilities. Id. Plaintiff, thus, retained the same duties, responsibilities, functions and authority that she had prior to the merger. Id.

On October 21, 1998, approximately two months after the merger, Plaintiff resigned from her position at Manor Care. Defs.' 56.1(a)(3) St. ¶ 39. Plaintiff told Mr. Weikel that she was resigning because she was "unhappy with her assignment" and "needing to spend all week, every week 2,000 miles away from home." Id. ¶ 40.

After Plaintiff resigned, she submitted a claim for benefits to Mr. Weikel. Defs.' 56.1(a)(3) St. ¶ 41. The basis of her claim was that, in accordance with the Plan provisions, she had "Good Reason" to resign from her position because inter alia the number of facilities, beds, direct reports, and construction projects assigned to her had decreased. Id.

Mr. Weikel denied Plaintiff's claim for benefits. Defs.' 56.1(a)(3) St. ¶ 43. Mr. Weikel sent Plaintiff a letter dated November 16, 1998 in which he explained that "a reduction in the size of the business unit you were assigned to manage [does not] alone constitute[] a reduction in the scope of your authority, functions, duties or responsibilities." Id. He also stated in the letter that "[i]n fact, you continue[d] to have the full range of authority, duties, responsibilities and functions with respect to the facilities in your division as you did prior to the merger." Id.

On November 18, 1998, Plaintiff appealed Mr. Weikel's decision to the Committee. Defs.' 56.1(a)(3) St. ¶ 45. Mr. Weikel recused himself from the review of her claim and the Committee granted Plaintiff an opportunity to make a written submission explaining the basis of her claim. Id. ¶¶ 46, 48. On January 12, 1999, Plaintiff's attorney submitted a twenty-two page single-spaced letter (position paper) explaining her claim. Id. ¶ 49.

On January 14, 1999, Mr. Ormond and three other Committee members met to determine if Plaintiff was entitled to receive benefits under the Plan. Defs.' 56.1(a)(3) St. ¶ 51. The Committee considered her twenty-two page submission, Plaintiff's letter to Mr. Weikel seeking benefits under the Plan, and Mr. Weikel's letter denying her claim. Id. ¶ 50. Mr. R. Jeffrey Bixler also attended the meeting as legal counsel and acted as secretary during the meeting. Defs.' 56.1(a)(3) St. ¶ 54. Mr. Ormond asked Mr. Bixler to prepare a draft of the issues that were discussed by the Committee. Id. ¶ 56.

The Committee accepted the factual allegations in Plaintiff's position paper as true. Defs.' 56.1(a)(3) St. ¶ 65. The Committee, however, decided that even if Plaintiff had correctly stated the facts, she did not have "Good Reason" to resign from her position. Id. Thus, the Committee rejected Plaintiff's allegations that there was a significant reduction in the scope of her authority, position, title, functions, duties, or responsibilities after the merger. Id. ¶ 66. Moreover, the Committee rejected Plaintiff's claim that there was a significant change in Manor Care's bonus program that adversely affected her and that she suffered a significant reduction in employee benefits because she did not receive a stock option grant. Id. ¶¶ 69, 74.

On January 18, 1999, the Committee...