Hagen v. Siouxland Obstetrics & Gynecology, PC

• Decision Date: 20 August 2015
• Docket Number: Nos. 14–2580,14–2648.,s. 14–2580
• Citation: 799 F.3d 922
• Parties: Edward P. HAGEN, Do, Plaintiff–Appellee/Cross–Appellant v. SIOUXLAND OBSTETRICS AND GYNECOLOGY, PC, et al., Defendants–Appellants/Cross–Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

799 F.3d 922

Edward P. HAGEN, Do, Plaintiff–Appellee/Cross–Appellant

v.SIOUXLAND OBSTETRICS AND GYNECOLOGY, PC, et al., Defendants–Appellants/Cross–Appellees.

Nos. 14–2580

14–2648.

United States Court of Appeals, Eighth Circuit.

Submitted: April 13, 2015.

Filed: Aug. 20, 2015.

Rehearing and Rehearing En Banc Denied Sept. 25, 2015.

Jeff William Wright, argued, Joel D. Vos, on the brief, Sioux City, IA for Defendants–Appellants/Cross–Appellees.

Jay Elliott Denne, argued, Stanley E. Munger, on the brief, Sioux City, IA, for Plaintiff–Appellee/Cross–Appellant.

Before RILEY, Chief Judge, LOKEN and SHEPHERD, Circuit Judges.

Opinion

LOKEN, Circuit Judge.

Siouxland Obstetrics & Gynecology, P.C. (“Siouxland”), of Sioux City, Iowa, terminated Edward Hagen, its President and an equity owner, invoking the for-cause termination provision in Hagen's January 1, 1993, Employment Agreement. Hagen filed this diversity action against Siouxland and three co-owners and partners in its Ob/Gyn practice, Drs. Paul J. Eastman, Tauhni T. Hunt, and Angela J. Aldrich (collectively, “Siouxland”). Hagen's complaint alleged, inter alia, breach of contract and wrongful retaliatory discharge in violation of Iowa public policy. After an eight-day trial, a jury upheld the public policy tort claim, awarding Hagen $1,051,814 in compensatory damages. The district court denied Siouxland's motion for judgment as a matter of law or a new trial and Hagen's motion for additur. Siouxland appealed; Hagen cross-appealed. Reviewing issues of Iowa law de novo, we conclude that Hagen failed to prove he was an at-will employee who may assert a tort claim for wrongful discharge in violation of Iowa public policy and therefore reverse.

I. Background Facts

We view the facts relevant to the controlling issue of law in the light most favorable to the jury's verdict. At the time in question, Siouxland was a professional corporation conducting the group practice of four obstetrician/gynecologists and was one of two “women's clinics” in Sioux City. It was located across the street from St. Luke's Hospital. Siouxland was established in the early 1960s by Hagen's father, also an Ob/Gyn doctor. Hagen received an Iowa license to practice medicine and joined his father's practice in 1992.

Hagen's Employment Agreement was executed by his father on behalf of Siouxland as Employer. The Agreement guaranteed Hagen an initial monthly salary, subject to adjustment; a discretionary bonus “to make the total compensation ... equal to the reasonable value of his services”; deferred compensation in the event of death or disability and continuation of his salary during the first six months of disability; office space and staff “adequate for the performance of his duties”; and four weeks of paid vacation per year. Hagen agreed “to devote substantially all of his time and attention” to Siouxland's practice of medicine and not to engage in the practice of medicine other than as Siouxland's employee. Article I provided that the Agreement was for automatically renewable one-year terms “subject, however, to prior termination.” Article XI, the lengthy Termination section, provided that the Agreement would terminate upon Hagen's death, permanent disability, or loss of license to practice medicine in Iowa; by mutual agreement of the parties; at the option of either party upon ninety-days written notice of cancellation; or by Siouxland—

in the event of embezzlement or other theft; willful contravention of professional ethics; substantial and willful violation of any other terms or conditions of this Employment Agreement, all subject to determination by the Board of Directors of the CORPORATION.

Hagen helped his father recruit defendants Hunt, Aldrich, and Eastman to the Siouxland practice group later in the 1990s. When Hagen's father retired in the early 2000s, Hagen became President of Siouxland. The four physicians were on-call for the group the same number of nights, weekends, and holidays. All four had privileges at St. Luke's hospital. Hagen testified that Hunt and Aldrich, both females, attracted more patients than Eastman and Hagen, causing “some friction in the office.”

Turning to the events at issue, Dr. Hagen testified that, shortly before his on-call shift began at 5:00 on November 5, 2009, Dr. Eastman called to advise that his patient, Maria Maeda, was thirty-four weeks pregnant, previously had a liver transplant, and now had sepsis, an infection that can endanger an unborn baby. Maeda was admitted to St. Luke's early that afternoon with premature contractions. Eastman had not seen her. He thought Maeda's medical doctors were transferring her to a hospital in Omaha, but had learned she was still at St. Luke's because the Omaha hospital considered her too sick to travel. Hagen then called or was paged by St. Luke's and was told by the labor and delivery unit that the baby's heart rate was 130 and they were trying to transfer Maeda to intensive care.

When Dr. Hagen arrived at the hospital, he was told by the ultrasound technician and confirmed that the baby was no longer alive. Hagen asked one of the delivery room nurses how long the baby had been dead. She did not know. Hagen testified he then said to two nurses, “How the fuck can this happen at St. Luke's that they watch a baby die on the monitor, suffocate, and do nothing?” He then told the nurses, “You killed this baby. You watched this baby die on the monitor. I mean, you guys did nothing.” Hagen then called Eastman and told him, “You didn't come see her, and this baby is dead, and now I've gotta do a C-section on a mother and deliver a dead body.” Hagen then informed Maria's husband of the baby's death.

The next day, Hagen told the head of St. Luke's medical staff and its chief financial officer that he was “reporting” himself for yelling and swearing at the nurses, the nurses for “not treat[ing] this patient well,” and Eastman for not coming to see Maeda. Hagen returned to the Siouxland office where he consulted several attorneys about the incident. One said Hagen may have a duty to report what he believed was Eastman's malpractice to the Iowa state medical board. Hagen informed Eastman he had been advised to report him to the medical board and told his other partners he was inclined to report Eastman.

On Monday, November 9, the head of St. Luke's medical staff called and informed Hagen he was being suspended for ten days for yelling at the nurses and cursing in the intensive care unit. He received the suspension notice on Tuesday and told his partners, “I'm going to tell the patient, you know, to sue this hospital.... You know, we're going to take St. Luke's down. I can't take St. Luke's down. There's nothing for me to sue the hospital for. But the patient can, so I'm going to tell the patient to call a lawyer and investigate this.” On Wednesday night, Hagen called Maeda at the hospital and told her: “Maria, you were mistreated. This is malpractice. The nurses missed the boat. Dr. Eastman missed the boat, and I think you should get an attorney.” On Thursday, November 12, Hagen told his Siouxland partners about the phone call and left for a long weekend at his cabin in Wisconsin.

After Hagen left, Aldrich told her partners she was leaving Siouxland because of Hagen's behavior. Hunt and Eastman said they would leave, too. After consulting Siouxland's attorney, the three physicians agreed to terminate Hagen for cause instead of leaving the group. Hagen attended a meeting of the Siouxland principals on Monday, November 16, and was fired “for willful contravention of professional ethics and substantial and willful violation of other terms or conditions of his employment agreement.”

At trial, Hunt testified to a history of workplace conflict involving Hagen that increased as Hagen gained seniority:

[I]t turned into more of a bully type of atmosphere. [Hagen] became a little more dominant, and it was—it seemed a little bit more abusive at times too because really you just wanted to avoid him. He made the rules. He would change the rules. You didn't know when the rules changed. And you really just wanted to stay away from him.

Eastman described Hagen's outbursts at hospitals, including throwing a vacuum against a wall during a C-section, leading to blood splattering over the wall, and breaking instruments during surgery. Aldrich explained she voted to terminate Hagen because “I could not work with him anymore with the way that he is, him yelling, disruptive, patients telling me they don't like him, please stick around, Dr. Aldrich, for the weekend. I don't want Dr. Hagen to deliver me.... I just could not work with him anymore.” Aldrich also worried that Hagen's suspension would hurt Siouxland's reputation. On cross-examination, Hagen admitted he yelled at nurses, once broke hospital equipment, and had used the nickname “All Bitch” to describe Aldrich. Hunt testified that Hagen was fired because the other doctors did not “feel comfortable having one partner that's so abusive and so erratic.”

Siouxland's attorney testified that, in his opinion, Hagen's conduct provided four reasons justifying immediate termination: (1) harming the practice's relationship with St. Luke's hospital by threatening to sue it; (2) conducting another medical practice without the consent of the other Siouxland directors, contrary to the terms of employment; (3) disruptive behavior; (4) inability to cover calls at the hospital due to the suspension. He also believed that Hagen's disruptive behavior causing his suspension at St. Luke's could constitute breach of an ethical duty.

II. Procedural History

Hagen's twelve-count Complaint included claims for breach of contract and retaliatory discharge in violation of public policy. After the district court denied Siouxland summary judgment on the contract claim, Hagen's Trial Brief advised the court that breach of contract was one of nine claims that “are not being pursued by Plaintiff.” Only the public policy tort claim is at issue on...