Ostad v. Oregon Health Sciences University

• Decision Date: 28 April 2003
• Docket Number: No. 00-36060.,00-36060.
• Citation: 327 F.3d 876
• Parties: David H. OSTAD, Plaintiff-Appellee, v. OREGON HEALTH SCIENCES UNIVERSITY, an Oregon public corporation; Alan Seyfer, individually & in his official capacity as Chief of the Division of Plastic and Reconstructive Surgery, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

327 F.3d 876

David H. OSTAD, Plaintiff-Appellee, v. OREGON HEALTH SCIENCES UNIVERSITY, an Oregon public corporation; Alan Seyfer, individually & in his official capacity as Chief of the Division of Plastic and Reconstructive Surgery, Defendants-Appellants.

No. 00-36060.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 5, 2002.

Filed April 28, 2003.

COPYRIGHT MATERIAL OMITTED

Barbee B. Lyon, Peter H. Koehler, Karin L. Guenther, and Scott G. Seidman, Tonkon Torp LLP, Portland, OR, for the defendants-appellants.

Scott N. Hunt & Richard C. Busse, Busse & Hunt, Portland, OR, for the plaintiff-appellee.

Appeal from the United States District Court for the District of Oregon; Ancer L. Haggerty, District Judge, Presiding. D.C. No. CV-98-01091-ALH.

Before: B. FLETCHER, O'SCANNLAIN, and BERZON, Circuit Judges.

Opinion by Circuit Judge BETTY B. FLETCHER.

Opinion concurring in part, and dissenting in part by Circuit Judge

BETTY B. FLETCHER, Circuit Judge.

Appellants Oregon Health Sciences University (OHSU) and Dr. Alan Seyfer appeal following a jury award of both compensatory and punitive damages in favor of Dr. David Ostad. We affirm.

Ostad, a former OHSU resident who worked under Seyfer, alleged that his termination from the residency program was motivated by Seyfer's retaliation against him for questioning Seyfer's billing practices. Appellants challenge, among other things, the district court's denial of their motion for judgment in their favor as a matter of law. They contend that the trial judge misapprehended the law applicable to mixed-motive First Amendment employment claims. We affirm the district court's determination that entry of judgment as a matter of law would be improper, as well as its formulation of jury instructions. We also affirm the district court's decision to admit certain testimony of Dr. Wheatley, one of Seyfer's colleagues.

I. Factual Background & Procedural History

Ostad began a residency in the Plastic and Reconstructive Surgery Division of Oregon Health Sciences University (OHSU) on July 1, 1996. He had a one-year contract that was renewable for a second year.

Roughly two months into Ostad's rotation with Seyfer, chief of the division, Seyfer wrote Ostad a letter, dated January 16, 1997, criticizing Ostad's performance. The letter relayed complaints about Ostad from several doctors in OHSU's plastic surgery and emergency medicine divisions. Seyfer also detailed Ostad's problematic treatment of several patients, some of whom reportedly asked that Ostad no longer be permitted to treat them, and he described technical deficiencies with Ostad's work that he had observed personally. Seyfer warned that if Ostad's performance did not improve within a month, the resident would find himself on academic probation.

Ostad contends he was ordered to sign the letter and "get out" of the office and that he was not permitted to read the letter or discuss its contents with Seyfer. Seyfer points to Ostad's signature on the letter acknowledging, "I have read this letter carefully and agree to its contents. I will try to achieve the goals that Dr. Seyfer has outlined above."

During the same period, Ostad had raised questions about Dr. Seyfer's billing practices. OHSU could not legally bill Medicare and Medicaid for procedures performed by residents unless a teaching staff physician was present for the critical part of the procedure. Ostad claimed that Seyfer asked to be listed as the attending physician regardless of whether he was present when Ostad performed a procedure. Ostad testified that Seyfer became angry when challenged about the practice.

Two weeks after presenting the first letter, Seyfer gave Ostad a second letter detailing additional disappointment with Ostad's lack of knowledge and skill. Although the original letter had provided for review after a month, Seyfer informed Ostad that he was placing him on probation from the date of the letter, January 30, 1997, through the end of the following month.

Ostad testified at trial that Seyfer delivered the letter with a warning: "This is it.... You don't want to play the game.... Stop meddling in my business.... We need to be paid for what you do." Ostad contends that these statements referred to his complaints about Seyfer's billing practices. Ostad signed the letter, but this time acknowledged its receipt without agreeing to its contents.

On February 24, 1997 — one week prior to the scheduled termination of Ostad's academic probation — Seyfer presented the resident with yet another letter. This time the senior doctor detailed complaints from two other physicians who had observed Ostad while Seyfer was out of town. One physician alleged that Ostad had refused to come promptly to treat a patient with multiple facial fractures. The second recounted another patient's complaints about Ostad's treatment and her request that he not be permitted to participate in her care. Seyfer also noted problems with Ostad's treatment of another patient. Seyfer informed Ostad that he would be removed from the "on-call roster" so he would have time to respond to the accusations in writing by the end of the probationary period.

As requested, Ostad replied with a letter in which he responded to each of the accusations of Seyfer's letter of February 24. Ostad's letter did not mention Seyfer's billing practices.

Seyfer wrote still another letter on March 3, 1997. In it, he described deficiencies with Ostad's treatment of several patients. Ostad again signed to acknowledge receipt. The next day, Seyfer gave Ostad a letter placing him on administrative leave through the end of his one-year residency. Ostad, who refused to sign his name to the letter, testified that, when handing him the letter, Seyfer told him that he had "meddled in [Seyfer's] business too much."

Ostad requested a hearing, as was his right under OHSU regulations. OHSU convened a panel of five doctors — none of them plastic surgery specialists — to consider a formal Notice of Proposed Termination compiled from Seyfer's letters. Because of the panel's lack of familiarity with plastic surgery, Dr. Thornburg, the chair of the panel, confirmed at trial that the group depended heavily on Seyfer for a description of procedures and an assessment of how a junior resident should perform.

The two-day hearing provided many of the elements of due process that would be afforded a party at trial. Ostad was represented by counsel, was permitted discovery, and was allowed to cross-examine witnesses who testified under oath. Ostad was not, however, permitted to subpoena witnesses. He therefore was unable to compel the testimony or participation of two physicians who were Seyfer's colleagues and had supervised Ostad and reviewed him favorably.

Seyfer's testimony took up 217 pages of the hearing's 403-page transcript and included hearsay about other doctors' assessments of Ostad. Ostad, who was answering the charges against him put forth by OHSU, presented no evidence about Seyfer's allegedly improper billing practices. The panel's Opinion and Order made several factual findings and recommended that Ostad be terminated. Consistent with the panel's recommendation, OHSU chief administrative officer Roy Vinyard terminated Ostad's residency.

Ostad filed suit pursuant to 42 U.S.C. § 1983, alleging that Seyfer and OHSU had violated his First Amendment right to freedom of speech. At trial, Ostad was able to present witnesses who complimented his performance as well as witnesses who criticized Seyfer's billing practices — evidence unavailable to the OHSU panel that recommended his termination.

There was ample evidence to suggest that Seyfer was motivated by animus in response to Ostad's protected speech about his billing practices. Ostad testified to 30 to 40 incidents in which he challenged Seyfer about his billing practices. Jurors also heard Ostad's recollection of several explosive statements he alleged Seyfer made in response to Ostad's criticisms.

The jury returned a special verdict against both OHSU and Seyfer. The jury concluded that Ostad proved that the defendants had retaliated against him for exercising his free speech rights. The jury also found that OHSU and Seyfer failed to prove that Ostad "would have been terminated from OHSU's plastic surgery program for other reasons even in the absence of his protected speech activity." The jury recommended an award of $32,000 in past economic damages, $150,000 in non-economic damages, and no future economic damages. The jury determined that Seyfer should pay Ostad an additional $200,000 in punitive damages. Because the district court had ruled previously that the jury's ruling on future economic damages would be advisory only, the court entertained further written argument before issuing an order granting Ostad $90,000 for future economic loss.

Pursuant to Fed.R.Civ.P. 50(b), OHSU and Seyfer moved for judgment as a matter of law or, in the alternative, a new trial pursuant to Fed.R.Civ.P. 59. The district court denied both requests. We have jurisdiction pursuant to 28 U.S.C. § 1291.

II. Discussion

A. Judgment as a Matter of Law

OHSU and Seyfer contend that they were entitled to judgment as a matter of law because Ostad failed to produce sufficient evidence that the exercise of his right to free speech played a role in his termination. The appellants explain that, although Seyfer may have been motivated by animus based on Ostad's speech, he ultimately did not terminate Ostad. That decision was left to the chief administrative officer acting on the recommendation of the Hearing Committee, which had no knowledge of Ostad's complaints about billing practices and, thus, could not have been motivated by unconstitutional reasons to make its termination recommendation. Therefore, appellants argue, neither Seyfer nor OHSU should be liable because the Hearing Committee's unbiased decision cut off the chain of causation between Seyfer's...