Heng v. Rotech Medical Corp.

• Decision Date: 02 November 2004
• Docket Number: No. 20040082.,20040082.
• Citation: Heng v. Rotech Medical Corp., 2004 ND 204, 688 N.W.2d 389 (N.D. 2004)
• Parties: Debora HENG, Plaintiff and Appellant v. ROTECH MEDICAL CORPORATION and PSI Healthcare, Inc., d/b/a Arrow-health Medical Supply, Defendants and Appellees.
• Court: North Dakota Supreme Court

688 N.W.2d 389

2004 ND 204

Debora HENG, Plaintiff and Appellant v. ROTECH MEDICAL CORPORATION and PSI Healthcare, Inc., d/b/a Arrow-health Medical Supply, Defendants and Appellees.

No. 20040082.

Supreme Court of North Dakota.

November 2, 2004.

Patricia R. Monson (argued) and Kirsti Broeder Hourigan (appeared), Nilles, Ilvedson, Stroup, Plambeck & Selbo, Ltd., Fargo, ND, for plaintiff and appellant.

Adele Hedley Page, Page Law Firm, L.L.C., Fargo, ND, for defendants and appellees. KAPSNER, Justice.

[¶ 1] Debora Heng appealed from a summary judgment dismissing her retaliatory discharge and breach of contract claims against Rotech Medical Corporation and PSI Healthcare, Inc., doing business as Arrowhealth Medical Supply (hereafter collectively "Arrowhealth"), and ordering her to pay Arrowhealth's attorney's fees. We affirm in part and reverse in part, concluding the trial court correctly dismissed Heng's breach of contract claim but erred in dismissing her retaliatory discharge claim.

I

[¶ 2] Arrowhealth provides respiratory therapy and medical equipment to patients in their homes. On August 10, 2001, Heng was hired to manage Arrowhealth's Fargo office.

[¶ 3] Arrowhealth allowed its service technicians, who were not licensed healthcare specialists or respiratory therapists, to assemble oxygen delivery systems and instruct patients in their use. Arrowhealth's job description for service technicians specifically provided service technicians were to deliver and set up equipment in customers' homes and educate customers in proper use and care of the respiratory equipment. In November 2001 Heng hired a new service technician, who informed Heng that he believed Arrowhealth's practice violated North Dakota law. Heng reported this information to Arrowhealth's Regional Manager, Adam Blumenshein, who assured her that Arrowhealth's practices were in accordance with all applicable laws and regulations.

[¶ 4] On December 19, 2001, Heng met in Duluth with Blumenshein and Arrowhealth's Corporate Compliance Coordinator, Julie Johnson. Heng again expressed concern over the legality of Arrowhealth's practices, and they obtained a copy of the relevant regulation, 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.

Blumenshein told Heng he interpreted the regulation as allowing Arrowhealth's practices. At the Duluth meeting, Blumenshein also discussed with Heng personality conflicts and other personnel problems in the Fargo office.

[¶ 5] After returning to Fargo from the meeting, Heng anonymously contacted the North Dakota Respiratory Care Board. She was specifically told that the regulation prohibited service technicians from assembling oxygen delivery systems and instructing patients on their use. Heng read Arrowhealth's service technician job description to the Board representative, and he advised her that allowing service technicians to perform those functions would be illegal.

[¶ 6] Heng then contacted Johnson, who told her to stop having the service technicians do set ups and patient instruction for the time being. Heng claims Johnson also told her not to tell anyone else about the issue, and Johnson would contact Blumenshein for further clarification. Heng subsequently called Blumenshein, who was vacationing out of state, to further discuss the issue.

[¶ 7] On January 3, 2002, Blumenshein and Johnson met with Heng in the Fargo office. Heng claims she sought further guidance on the regulation but was given none. They also discussed ongoing personnel problems in the Fargo office, and Heng was advised that the situation would have to improve for the Fargo office to be successful. On January 18, 2002, Blumenshein fired Heng.

[¶ 8] Heng brought this action alleging retaliatory discharge, breach of contract, and intentional infliction of emotional distress. The trial court granted Arrowhealth's motions for summary judgment dismissal of Heng's retaliatory discharge and breach of contract claims, and Heng voluntarily dismissed her intentional infliction of emotional distress claim. Arrowhealth moved for an award of attorney's fees under N.D.C.C. § 34-01-20(3) as the prevailing party on the retaliatory discharge claim, and the court ordered Heng to pay $57,707.00 to Arrowhealth for its defense of the retaliatory discharge claim. Judgment was entered and Heng appealed.

II

[¶ 9] Summary judgment under N.D.R.Civ.P. 56 is a procedural device for promptly and expeditiously disposing of an action without a trial if either party is entitled to judgment as a matter of law and no dispute exists as to either the material facts or the reasonable inferences to be drawn from undisputed facts, or if resolving the factual disputes will not alter the result. Investors Real Estate Trust Props., Inc. v. Terra Pacific Midwest, Inc., 2004 ND 167, ¶ 5, 686 N.W.2d 140; Groleau v. Bjornson Oil Co., 2004 ND 55, ¶ 5, 676 N.W.2d 763. Whether summary judgment was properly granted is a question of law that we review de novo. Investors Real Estate Trust, at ¶ 5; Muhammed v. Welch, 2004 ND 46, ¶ 8, 675 N.W.2d 402. The party seeking summary judgment has the burden of showing that there is no genuine issue of material fact and that, under applicable principles of substantive law, the party is entitled to judgment as a matter of law. Groleau, at ¶ 5.

[¶ 10] In considering a motion for summary judgment, the court must view the evidence in the light most favorable to the party opposing the motion, and that party must be given the benefit of all favorable inferences which can reasonably be drawn from the evidence. Groleau, 2004 ND 55, ¶ 5, 676 N.W.2d 763; Muhammed, 2004 ND 46, ¶ 8, 674 N.W.2d 402. Even undisputed facts do not justify summary judgment if reasonable differences of opinion exist as to the inferences to be drawn from those facts. Groleau, at ¶ 5; Muhammed, at ¶ 8. If, however, reasonable persons could reach only one conclusion from the facts, issues of fact may become issues of law. Groleau, at ¶ 6; Muhammed, at ¶ 8. Summary judgment is appropriate against a party who fails to establish the existence of a genuine issue of material fact on an essential element of a claim on which she will bear the burden of proof at trial. Investors Real Estate Trust, 2004 ND 167, ¶ 5, 686 N.W.2d 140.

III

[¶ 11] Heng contends the trial court erred in dismissing her breach of contract claim against Arrowhealth. Arrowhealth's employee policy manual provided for a progressive discipline procedure and prohibited retaliation against an employee for reporting suspected violations of healthcare regulations. Heng argues that the manual created an employment contract, and that Arrowhealth breached that contract by failing to follow the progressive discipline policy and by firing her for reporting suspected violations.

[¶ 12] Employment for an indefinite term is governed by N.D.C.C. § 34-03-01:

Termination of employment at will — Notice required. An employment having no specified term may be terminated at the will of either party on notice to the other, except when otherwise provided by this title.

[¶ 13] We outlined the application of this statute in the context of employee policy manuals in Dahlberg v. Lutheran Soc. Servs. of North Dakota, 2001 ND 73, ¶¶ 13-14, 625 N.W.2d 241 (citations omitted):

Under N.D.C.C. § 34-03-01, employment without a definite term is presumed to be at will, and an at-will employee may be terminated with or without cause. By contract, however, the parties may modify the at-will presumption and define their contractual rights regarding termination. An employer may contractually modify the at-will presumption with an employee handbook or personnel policy manual.

The construction of an employment contract to determine its legal effect is a question of law, and on appeal, we will independently examine and construe the contract to determine if the trial court erred in its interpretation. We construe employment contracts, including handbooks and policies, as a whole to determine the parties' intent. An explicit and conspicuous disclaimer in an employee personnel policy manual, stating no contract rights exist or the policies are not intended to create contractual rights, demonstrates the employer's intent that the manual is only a guide for the employee.

When provisions in the employee policy manual expressly state that it does not create a contract, the employee is put on clear notice that the manual preserves the presumption of employment at will. Olson v. Souris River Telecomms. Coop., Inc., 1997 ND 10, ¶ 16, 558 N.W.2d 333.

[¶ 14] Arrowhealth's employee policy manual and other employment documentation explicitly and conspicuously disclaim any contract rights and repeatedly declare that employment is at will. The "Introductory Statement" to the policy manual provides in part:

Nothing in this handbook is intended to create nor should be construed as an employment contract. As always, employees can decide to end their employment with Rotech at any time; and, likewise, the Company can end such employment at any time for any reason that the Company, in its sole discretion, may deem appropriate.

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