Heng v. Rotech Medical Corp.

Decision Date02 August 2006
Docket NumberNo. 20050311.,20050311.
Citation2006 ND 176,720 N.W.2d 54
PartiesDebora HENG, Plaintiff and Appellee v. ROTECH MEDICAL CORPORATION and PSI Healthcare, Inc., d/b/a Arrowhealth Medical Supply, Defendants and Appellants.
CourtNorth Dakota Supreme Court

Kirsti Broeder Hourigan (argued) and Patricia R. Monson (on brief), Nilles, Ilvedson, Stroup, Plambeck & Selbo, Ltd., Fargo, N.D., for plaintiff and appellee.

Matthew D. Greenley (argued) and Adele Hedley Page (appeared), Page Law Firm, LLC, Fargo, N.D., for defendants and appellants.


[¶ 1] Rotech Medical Corporation and PSI Healthcare, Inc., doing business as Arrowhealth Medical Supply (collectively "Arrowhealth"), appealed from a judgment awarding Debora Heng $35,195 in damages for her retaliatory discharge claim against the companies and $220,762.92 for her attorney fees, costs, and disbursements. We affirm the award of damages and attorney fees, but we reverse the award of costs insofar as it includes mediation and electronic legal research fees.


[¶ 2] Arrowhealth is a medical equipment company that provides on-site setup of home oxygen concentrators and portable liquid oxygen units in North Dakota and other states. Arrowhealth allowed its service technicians, who were not licensed healthcare specialists or respiratory therapists, to set up home oxygen concentrators for its North Dakota patients, after which a respiratory therapist followed up to perform a patient assessment. On August 10, 2001, Heng was hired to manage Arrowhealth's Fargo office. Adam Blumenshein was the regional manager and Heng's immediate supervisor during her employment.

[¶ 3] In November 2001, Arrowhealth hired Michael Jacobson as a service technician. During his interview, Jacobson asked Heng whether it was legal to have service technicians assemble oxygen systems and instruct patients on their use, because his previous employer had prohibited him from performing those duties as a service technician. Heng told Jacobson that she believed it was legal, and afterwards asked Blumenshein, who told her Arrowhealth's use of service technicians in this manner complied with North Dakota regulations. Jacobson and another employee continued to question the legality of the practice, and on December 19, 2001, Heng met in Duluth, Minnesota, with Blumenshein and Julie Johnson, who was a regional director of clinical and marketing for Arrowhealth. Heng brought the subject up at the meeting, and after reading the regulation, Blumenshein and Johnson both said Arrowhealth was in compliance.

[¶ 4] After the meeting, Heng was still concerned that Arrowhealth was violating the law and sought further clarification. On December 21, 2001, Heng called the North Dakota Respiratory Care Board and talked to Board Chairman David Muggerud. Heng read the job description for service technicians to Muggerud, and he told her Arrowhealth's practice of having service technicians assemble oxygen systems and instruct customers in their use violated N.D. Admin. Code § 105-03-01-02, which provides:

Home medical equipment and delivery. North Dakota Century Code chapter 43-42 prohibits the setup and instruction of medical devices related to the practice of respiratory care, gases, and equipment by a nonlicensed health care professional. The delivery and maintenance of medical devices related to the practice of respiratory care, gases, and equipment by a nonlicensed health care professional for the expressed purpose of self-care by a patient or gratuitous care by a friend or family member in the home or extended care facility is permitted.

This maintenance or delivery by the nonlicensed person does not include performing patient assessment, having direct patient contact or patient care relating to home respiratory care, or representing oneself as a certified or registered respiratory care practitioner.

Heng immediately relayed Muggerud's opinion to Johnson, the regional director of clinical and marketing, who told Heng that she should stop having service technicians assemble oxygen delivery systems or instruct customers for the time being, and that she would contact regional manager Blumenshein about the issue. Heng ordered the Fargo office employees to discontinue the practice for North Dakota customers.

[¶ 5] On December 26, 2001, Heng telephoned Blumenshein while he was on vacation for clarification on how to handle company compliance with the regulation on a long-term basis. Blumenshein told Heng to violate the regulation if necessary and have drivers perform the setups. He expressed displeasure with the regulation and its effect on the company's contract with the Veterans Administration, which comprised almost 70 percent of Arrowhealth's business in Fargo. Blumenshein was confident that the company's legal counsel could eventually work out any problems.

[¶ 6] On January 3, 2002, Blumenshein and Johnson met with Heng and other members of the staff at Arrowhealth's Fargo office. They discussed how the Fargo office was going to ensure compliance with the regulation. Blumenshein also informed Heng she needed to be more friendly with the marketing person at the Fargo office for the office to succeed. On January 18, 2002, Blumenshein went to the Fargo office and terminated Heng's employment. According to Blumenshein, he terminated Heng because she created a hostile work environment and alienated referral sources.

[¶ 7] Heng sued Arrowhealth in July 2002, alleging breach of contract, retaliatory termination in violation of N.D.C.C. § 34-01-20, and intentional infliction of emotional distress. The district court granted Arrowhealth summary judgment dismissal of Heng's retaliatory termination and breach of contract claims, and Heng voluntarily dismissed her claim for intentional infliction of emotional distress. In Heng v. Rotech Med. Corp., 2004 ND 204, ¶¶ 1, 37, 38, 688 N.W.2d 389 ("Heng I"), we affirmed the summary judgment dismissal of the breach of contract claim, but concluded there were disputed issues of material fact on the retaliatory discharge claim that precluded summary judgment. We reversed the judgment insofar as it dismissed the retaliatory discharge claim and awarded Arrowhealth attorney fees based on that claim, and remanded for further proceedings. Id. at ¶ 39. Following a bench trial on remand, the district court ruled in favor of Heng on her retaliatory discharge claim, awarded her $35,195 in damages, and ordered Arrowhealth to pay Heng $220,762.92 for her attorney fees, costs, and disbursements.


[¶ 8] Arrowhealth argues the modified burden-shifting test based on McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and adopted by this Court in Schweigert v. Provident Life Ins. Co., 503 N.W.2d 225, 229 (N.D.1993), for purposes of analyzing claims under the North Dakota Human Rights Act, N.D.C.C. ch. 14-02.4, should not be applied to retaliatory discharge claims brought under N.D.C.C. § 34-01-20. According to Arrowhealth, the modified McDonnell Douglas test, applied in conjunction with N.D.R.Ev. 301, "usurps the ultimate question of retaliation from the district court."

[¶ 9] We do not address issues raised for the first time on appeal. See, e.g., Edwardson v. Lauer, 2004 ND 218, ¶ 9, 689 N.W.2d 407. As we said in Chapman v. Chapman, 2004 ND 22, ¶ 7, 673 N.W.2d 920 (internal quotations and citations omitted):

One of the touchstones for an effective appeal on any proper issue is that the matter was appropriately raised in the trial court so it could intelligently rule on it. The purpose of an appeal is to review the actions of the trial court, not to grant the appellant an opportunity to develop and expound upon new strategies or theories.

[¶ 10] In Heng I, 2004 ND 204, ¶ 36 n. 1, 688 N.W.2d 389, we noted "[t]he parties apparently agreed, and therefore we will assume for purposes of reviewing the summary judgment, that the McDonnell Douglas rule applies to a retaliatory discharge claim under N.D.C.C. § 34-01-20." In its trial memorandum on remand, Arrowhealth stated that "[a] claim under N.D.C.C. § 34-01-20 is analyzed under the McDonnell Douglas burden-shifting framework," citing to Dahlberg v. Lutheran Soc. Servs., 2001 ND 73, ¶ 31, 625 N.W.2d 241. In Dahlberg, at ¶ 31 n. 3, this Court noted that the district court in that case analyzed the plaintiff's retaliation claim under the McDonnell Douglas burden-shifting framework, and because the issue had not been raised, we refused to "decide the applicability of Schweigert to a claim for retaliation under N.D.C.C. § 34-01-20." Several paragraphs later in its trial memorandum, Arrowhealth asserted, "At all times, Plaintiff bears the burden of showing that her termination was motivated by retaliation for protective conduct," again citing to Dahlberg, at ¶ 31. Arrowhealth did not contend in the district court that the modified McDonnell Douglas burden-shifting framework does not apply to retaliatory discharge claims under N.D.C.C. § 34-01-20. Although Arrowhealth asserts that its vague allegations in its trial memorandum are sufficient to raise the issue for review, the district court obviously did not view these allegations as challenging the applicability of the modified burden-shifting analysis to retaliatory discharge claims, because it did not address the issue. Because Arrowheath failed to raise this issue in the district court, we do not address it.


[¶ 11] Arrowhealth challenges several of the district court's findings and conclusions.

[¶ 12] North Dakota's "whistle-blower" statute, N.D.C.C. § 34-01-20(1)(a), authorizes an employee to bring a civil action for retaliatory termination if the employer discharges the employee because the employee "in good faith, reports a violation or suspected violation of federal, state, or local law, ordinance, regulation, or rule to an employer, a governmental body, or a law enforcement official." To...

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