Laje v. R. E. Thomason General Hospital

• Decision Date: 14 January 1982
• Docket Number: No. 80-2168,80-2168
• Citation: 665 F.2d 724
• Parties: Luis J. LAJE, Plaintiff-Appellee, v. R. E. THOMASON GENERAL HOSPITAL, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 724

665 F.2d 724

Luis J. LAJE, Plaintiff-Appellee, v. R. E. THOMASON GENERAL HOSPITAL, Defendant-Appellant.

No. 80-2168.

United States Court of Appeals Fifth Circuit.

Jan. 14, 1982.

L. W. Anderson, Dallas, Tex., George Rodriguez, Jr., County Atty., El Paso, Tex., for defendant-appellant.

Gibbins & Spivey, Paul E. Knisely, Broadus A. Spivey, Austin, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before INGRAHAM and TATE, Circuit Judges. ^*

INGRAHAM, Circuit Judge:

Appellee Dr. Luis Laje filed this suit under 42 U.S.C. § 1983 ¹ following his discharge from the post of Clinical Director of Psychiatry at R. E. Thomason General Hospital (Appellant). Appellant is a component of the El Paso County Hospital District, in El Paso, Texas. Dr. Laje's complaint alleged that his discharge, and the hospital's failure to process his request for staff privileges, deprived him of substantive and procedural due process. In a prior appeal this court held that the decision of appellant's Board of Managers to deny Dr. Laje's staff privileges was supported by substantial evidence. Laje v. R. E. Thomason General Hospital, 564 F.2d 1159 (5th Cir. 1977), cert. denied 437 U.S. 905, 98 S.Ct. 3091, 57 L.Ed.2d 1134 (1978). This appeal follows a jury award of $20,000 for procedural due process violations surrounding Dr. Laje's discharge, and $32,400.26 for lost salary under his employment contract. The district court, 502 F.Supp. 185, set attorney's fees at $25,649.34. Appellant raises the following issues on appeal: (1) Whether the hospital is entitled to Eleventh Amendment immunity from suit; (2) whether there is sufficient evidence to support the award of $20,000 representing "mental anguish and emotional distress" resulting from procedural due process violations; (3) whether back pay is recoverable in this suit; and (4) whether the award of attorney's fees is excessive. We hold the hospital may not claim Eleventh Amendment immunity, and affirm the judgment below with the exception of the recovery of back pay.

Dr. Laje entered into a two-year employment contract with appellant for the period July 15, 1971-July 14, 1973. During his tenure Dr. Laje and his immediate superior developed differences of opinion regarding treatment methodology and hospital procedures. On August 17, 1972, Dr. Laje was informed by the hospital administrator that he was fired, effective the next day, primarily because of insubordination. Allegations of incompetence were added later. Dr. Laje was permitted to address the Hospital Finance Committee on August 20, the following Sunday. At the close of this meeting the committee informed Dr. Laje that he would be given thirty days to resign or be discharged. After further attempts by Dr. Laje to persuade the board chairman and hospital administrator to reinstate him, Dr. Laje was terminated. This suit was filed in November 1973. The discharge issue and a request for staff privileges were severed, and the former held in abeyance while the staff privileges request was remanded to the hospital's Board of Managers for full hearing. After hearings in April 1974, the Board denied the request and its findings were eventually upheld by this court. Laje v. R. E. Thomason General Hospital, supra.

The discharge issue was then remanded to the Board of Managers for hearing. The Board upheld the decision to discharge Dr. Laje on April 5, 1979. On cross-motions for summary judgment, the district court found the decision to discharge Dr. Laje was supported by substantial evidence and therefore dismissed the substantive due process claims, but further found that Dr. Laje had been denied procedural due process prior to the April 1979 hearing before the Board. Accordingly, the district court ordered a jury trial to determine whether Dr. Laje could recover actual damages and attorney's fees for this deprivation of procedural due process. The jury trial took place on September 3 and 4, 1980, and resulted in the award described above.

I. Eleventh Amendment Immunity

Although appellant's original brief did not contest the application of Section 1983 to this case, at oral argument appellant raised the possibility of Eleventh Amendment immunity in light of this court's en banc decision in Van Ooteghem v. Gray, 654 F.2d 304 (5th Cir. 1981). We permitted both parties to submit supplemental briefs on this issue. Faced with the "sensitive" question whether Texas counties should be considered agencies or departments of the state, the en banc court in Van Ooteghem remanded for an initial determination by the district court. Id. at 306; see also Downing v. Williams, 624 F.2d 612, 626 (5th Cir. 1980), vacated, 645 F.2d 1226 (5th Cir. 1981). The Eleventh Amendment status of the R. E. Thomason General Hospital, however, is readily apparent from the material before us and we see no need to further prolong this litigation. ²

While local government entities may, in some circumstances, be considered an arm of the state, thereby deriving the state's Eleventh Amendment immunity, see Sessions v. Rusk State Hospital, 648 F.2d 1066, 1069 (5th Cir. 1981) (state institution), independent local political subdivisions are not entitled to such immunity even though they may "exercise a 'slice of state power' ". Lake Country Estates, Inc. v. Tahoe Planning Agency, 440 U.S. 391, 400-01, 99 S.Ct. 1171, 1176-77, 59 L.Ed.2d 401 (1979). A federal court must examine the particular entity in question and its powers and characteristics as created by state law to determine whether the suit is in reality a suit against the state itself. Mount Healthy City School Dist. Bd. of Education v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 572, 50 L.Ed.2d 471 (1977); Hander v. San Jacinto Junior College, 519 F.2d 273, 279 (5th Cir. 1975). Courts typically look at the degree of local autonomy and control, and most importantly whether the funds to defray any award would be derived from the state treasury. Moore v. Tangipahoa Parish School Bd., 594 F.2d 489 (5th Cir. 1979); Campbell v. Gadsden County Dist. School Bd., 534 F.2d 650 (5th Cir. 1976).

Applying these principles to R. E. Thomason General Hospital, it appears that the relationship between the hospital and the state is simply too attenuated to support an extension of Eleventh Amendment immunity. The hospital is part of the El Paso County Hospital District, created pursuant to Article 4494n, Tex.Rev.Civ.Stat.Ann. (Vernon 1976). Under Article 4494n, creation of a hospital district begins by local initiative. Art. 4494n, § 1; cf. Goss v. San Jacinto Junior College, 588 F.2d 96, 99 n.5 (5th Cir.), modified on other grounds, 595 F.2d 1119 (5th Cir. 1979). Hospital districts are financed through special local taxes entirely separate from other county or state taxes. Art. 4494n, § 2, and through bonds sold in the name and upon the full faith and credit of the hospital district. Id. § 3. Title to land, buildings and equipment used for medical purposes is vested in hospital districts. Id. § 4. The Board of Hospital Managers appointed by the County Commissioners Court enjoys virtually unlimited autonomy and control over hospital affairs, including, significantly, the power "to sue and be sued and to promulgate rules and regulations for the operation of the hospital," make all hiring decisions and enter into contracts with counties and the state and federal government. Id. § 5. A hospital district may acquire property by eminent domain. Id. § 9. Finally, and most telling in our view, the Texas Constitution provides a hospital district "shall never become a charge against the State of Texas." Const. Art. 9, § 4 (Vernon 1955). It is true, as appellant points out, that the activities of a hospital district are subject to approval of the county commissioners court in several instances. Similar supervision, however, did not prevent the Court from considering that, "(o)n balance," a local Ohio school board was nevertheless not an arm of the state. Mount Healthy, supra, 429 U.S., at 280, 97 S.Ct. at 572. See also Holley v. Lavine, 605 F.2d 638, 642-44 (2d Cir. 1979), cert. denied, 446 U.S. 913, 100 S.Ct. 1843, 64 L.Ed.2d 266 (1980).

We are left with the definite and distinct impression that a hospital district, and a component thereof such as appellant, is an independent legal entity in relation to the State of Texas. Bexar County Hospital Dist. v. Crosby, 320 S.W.2d 247, 249 (Tex.Civ.App.-San Antonio 1958), modified, 160 Tex. 116, 327 S.W.2d 445 (1959).

This appellant is not an arm of the state for Eleventh Amendment purposes, Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974); this finding makes it unnecessary to proceed to a consideration of the effect of the waiver of sovereign immunity in the Texas Tort Claims Act. Tex.Rev.Civ.Stat.Ann.Art. 6252-19 (Vernon 1970). Cf. Savage v. Pennsylvania, 475 F.Supp. 524, 530 (E.D.Pa.1979), aff'd, 620 F.2d 289 (3d Cir. 1980).

II. Damages for Denial of Procedural Due Process

Appellant attacks the jury's award of $20,000 for mental anguish and emotional distress on several grounds, claiming that there was insufficient evidence to support either an award of damages or the amount of damages awarded, and that the district court failed to allow evidence that Dr. Laje's discharge was justified. The crux of appellant's argument is that damages are recoverable only to the extent they flow from a deprivation of procedural due process, excluding any emotional distress resulting from the discharge itself (which was substantively justified). Both parties correctly indicate that Carey v. Piphus, 435 U.S. 247, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978), is controlling on this question.

In Carey the Court held that no injuries are presumed to result from a deprivation of procedural due process; rather, a plaintiff must prove actual compensable injury, possibly including emotional distress, in order to recover more than nominal...