Jones v. McNeese

• Citation: 746 F.3d 887
• Decision Date: 05 May 2014
• Docket Number: No. 12–2696.,12–2696.
• Parties: Bernard JONES; Alcohol and Drug Counseling Services, LLC; Healing Circle Recovery Community, Inc., Plaintiffs–Appellees v. Rick McNEESE, Dr., Nebraska Department of Correctional Services, Assistant Administrator of Behavioral Health–Substance Abuse, Individually, Defendant–Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

746 F.3d 887

Bernard JONES; Alcohol and Drug Counseling Services, LLC; Healing Circle Recovery Community, Inc., Plaintiffs–Appellees

v.Rick McNEESE, Dr., Nebraska Department of Correctional Services, Assistant Administrator of Behavioral Health–Substance Abuse, Individually, Defendant–Appellant.

No. 12–2696.

United States Court of Appeals, Eighth Circuit.

Submitted: May 16, 2013.

Filed: March 26, 2014.

Rehearing and Rehearing En Banc Denied May 5, 2014.

Ryan C. Gilbride, Assistant Attorney General, argued, Lincoln, NE (Linda Louise Willard, on the brief), for Appellant.

Joy Shiffermiller, argued, Lincoln, NE, for Appellee.

Before SHEPHERD, BEAM, and MELLOY, Circuit Judges.

MELLOY, Circuit Judge.

This 42 U.S.C. §§ 1981 and 1983 lawsuit is before the Court on interlocutory appeal for a second time after we remanded the case for an additional consideration of the defendant's claim to qualified immunity. The district court determined on remand that the defendant is not entitled to qualified immunity on any ground. We reverse.

I. Background

A. Facts

Bernard Jones, who is African American, was employed as a substance-abuse counselor by the Nebraska Department of Correctional Services (NDOC) from 1991 to 2007. While on injury leave from his job at NDOC in 1998 and 1999, Jones completed a practicum at First Step Recovery, Inc. (“First Step”), a privately owned substance-abuse rehabilitation facility that coordinates with the State of Nebraska to provide treatment services to persons on probation and parole. First Step is wholly owned by Dianne McNeese, Dr. Richard McNeese's (“Dr. McNeese”) wife. Dr. McNeese was Assistant Administrator of Behavioral Health–Substance Abuse at NDOC from July 2005 until he resigned in October 2009. During his Assistant Administrator tenure, Dr. McNeese also worked as a consulting psychologist at First Step.

When Jones completed his practicum in 1999, Dr. McNeese offered to hire Jones to work part-time at First Step in addition to working at NDOC. Jones declined Dr. McNeese's offer because he perceived it to be racially motivated. Specifically, Jones testified that Dr. McNeese wanted to hire him at First Step to “work with the minorities, in particular the blacks,” so that Jones could “attract more black clients ... because that's a revenue source that [Dr. McNeese] [wanted] to get.”

In 2000, Dr. McNeese again approached Jones about working part-time for First Step. This time, Dr. McNeese told Jones that he could work for First Step but practice at another substance-abuse treatment facility, Antlers, which had partnered with First Step in bidding on a $14 million federal contract. Jones accepted the offer to work for First Step by way of Antlers because he would have the opportunity to work alongside Ron Namuth, the owner of Antlers and a person whom Jones described as a “great counselor” and perceived as having a “tremendous reputation.”

Between six and nine months after Jones started working at Antlers, Dr. McNeese and Namuth had what Jones characterized as a “falling out.” At that time, Namuth offered to buy out Jones's contract as an independent contractor with First Step if Jones agreed to work for Antlers and cease affiliating with First Step. Jones accepted Namuth's offer, cut all ties with First Step, ¹ and continued working at Antlers until January 2008.

Throughout Jones's part-time employment with First Step and Antlers, Jones continued working full-time at NDOC until he retired in 2007. In 2005 or 2006, Jones approached Dr. McNeese about a concept that Jones was pursuing called “Healing Circle Recovery Community.” ² Jones intended to operate Healing Circle as a treatment center while employed at NDOC, but testified in his deposition that Dr. McNeese told him that he would be fired from NDOC if he did so. Dr. McNeese denies making any such statement, but admits that he and two other NDOC employees—one Caucasian and the other Pakistani—worked at First Step while still employed by NDOC. Jones subsequently approached NDOC Deputy Director Larry Wayne—who at all times occupied a position in NDOC superior to both Jones and Dr. McNeese—to discuss his proposal to perform part-time work outside of NDOC at Healing Circle. Wayne directed Jones to ask the NDOC legal department if there would be any conflict of interest, and the legal department said there would not be. The legal department concluded there was no conflict of interest because Healing Circle, as proposed by Jones, would be a women-only treatment center whereas Jones only worked with men at NDOC.

After retiring from NDOC in 2007, Jones also established Alcohol and Drug Counseling Services, LLC (ADCS), an outpatient treatment center for men only. ADCS and Healing Circle each began accepting clients in 2008, and each received payment for treatment services to parolees and persons on probation through different state-funded voucher systems. Healing Circle received vouchers primarily from the Nebraska Office of Probation, while ADCS received vouchers directly from NDOC.³ ADCS received ninety-nine percent of its funding from the NDOC voucher system, and the NDOC vouchers to ADCS made up more than one-fourth of all distributed NDOC vouchers.

Dr. McNeese oversaw the NDOC voucher system from October 2008 to October 2009. Although the NDOC voucher system draws from a different pool of state funds than the Office of Probation voucher system, NDOC made arrangements for the Office of Probation to administer the NDOC vouchers. Under each respective voucher system, parolees and persons on probation are permitted to choose their own treatment facility, provided that the facility is on a list of NDOC-approved treatment providers. ADCS was on this list until June 30, 2009, when Dr. McNeese suspended ADCS from the list.

On June 29, 2009, Dr. McNeese learned from a supervisor of chemical dependency counselors at the NDOC that, the week before, Jones had visited inmates at a correctional facility in Lincoln, Nebraska to promote ADCS's treatment services. During the visit, Jones distributed forms to the inmates that many of them signed, thereby agreeing to utilize ADCS's outpatient treatment services upon their release. In an email dated June 29 and sent to various NDOC and Office of Probation administrators, Dr. McNeese characterized this practice as “highly inappropriate” and a “very serious violation” that, if true, “calls for immediate action due to [an] ethical breach.” The email read as follows:

Here's the latest information on a practice I see as highly inappropriate. I continue to be concerned that Mr. Jones uses his knowledge of DCS and previous professional relationships to obtain access to the inmate population, misrepresent DCS support of the program, and go so far as to “manipulate” inmates into signing an agreement. I think this practice has the potential of creating an inappropriate power relationship in which he has perceived power over inmates as clients, including the implied power of supporting them with the Parole Board (and presumably the implied opposite of not supporting them).

If [the] report is accurate, I see this as a very serious violation that calls for immediate action due to the ethical breach.... I also see this as something that may need attention from Legal.

On June 30, Dr. McNeese emailed Jones notifying Jones that he was suspending ADCS from the NDOC approved-provider list “pending further investigation.” ⁴ Dr. McNeese testified in his deposition that he suspended ADCS because he believed that Jones violated certain confidentiality provisions of the Health Insurance Portability and Accountability Act (HIPAA). The NDOC legal department later informed Dr. McNeese that Jones's visit to the Lincoln correctional facility was a “non-issue.” After learning that there was no HIPAA violation, however, Dr. McNeese did not reinstate ADCS on the approved-provider list. Dr. McNeese said later that the failure to do so was a “mistake on my part.”

Around the same time that ADCS and Healing Circle were suspended from the approved-provider list, NDOC was soliciting bids from treatment facilities for a contract to become the sole provider of outpatient services for parolees and persons on probation; the contract was worth $200,000. Prior to ADCS's and Healing Circle's suspensions, ADCS and Healing Circle had received more NDOC vouchers than any other group of treatment facilities owned by and/or affiliated with a single participant in the NDOC voucher system; First Step had received the second-most vouchers. Because ADCS—and likely Healing Circle ⁵—were suspended from the approved-provider list, they were also in effect precluded from bidding on and being awarded the sole-provider contract because one criteria was that the bidder be a current voucher recipient.

NDOC issued a letter of intent to award the sole-provider contract to First Step on August 25, 2009. On August 26, NDOC received a notice of grievance from an unsuccessful bidder and subsequently rescinded its letter of intent to contract with First Step. NDOC then issued a second letter of intent to contract with a different treatment facility. On August 31, NDOC sent a third letter that rescinded all previously issued letters of intent and placed the NDOC sole-provider contract on hold.

Shortly after the August 26 grievance was filed, officials placed Dr. McNeese on unpaid administrative leave due to a conflict of interest. Although Dr. McNeese did not participate in evaluating the bid proposals to become NDOC's sole provider of treatment services, he was deemed “instrumental” in developing the criteria and the weighting system used to evaluate the proposals. Further, Dr. McNeese directly supervised the individuals who were responsible for evaluating the proposals, and he provided the written justification for initially awarding the contract to First Step. Dr. McNeese disclosed that his wife owned First Step, but failed to disclose the extent of he and...