Toole v. Lakeshore Ear, Nose & Throat Ctr.
| Docket Number | 21-11850 |
| Decision Date | 02 June 2023 |
| Parties | AMANDA TOOLE, Plaintiff, v. LAKESHORE EAR, NOSE, AND THROAT CENTER, P.C., Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Plaintiff Amanda Toole is an African American woman and acclaimed head and neck surgeon. She worked for Defendant Lakeshore Ear, Nose, and Throat Center, P.C. (LENT) from 2001 through 2020. Dr. Toole brings this lawsuit asserting she was paid less than her Caucasian male physician counterparts based on her race and gender. She asserts sex discrimination under Title VII, 42 U.S.C. § 2000e-2 (Title VII)(Count I), violation of the Equal Pay Act, 29 U.S.C. § 206(d)(EPA)(Count II), race discrimination under 42 U.S.C. § 1981(Count III), as well as sex and race discrimination under Michigan's Elliott-Larsen Civil Rights Act, MICH. COMP. LAWS § 37.2202 (ELCRA)(Count IV).
Now before the Court is the Plaintiff's Motion for Partial Summary Judgment and the Defendant's Motion for Summary Judgment. Also, before the Court are two Motions to Seal, filed by Defendant. These matters are fully briefed and a hearing was held on May 30, 2023. The parties have also jointly moved to strike Plaintiff's exhibit. This motion will be granted. For the reasons that follow, the Court grants Plaintiff's Motion for Partial Summary Judgment, denies Defendant's Motion for Summary Judgment and grants Defendant's Motions to Seal.
LENT is a metropolitan-Detroit otolaryngology center and provides ear, nose, and throat medical care. LENT has surgical specialties with respect to skin, head, neck, sinus, and facial plastic surgery. Dr. Toole is a board-certified otolaryngologist and head and neck surgeon. LENT has seventeen physicians and thirteen of them, including the Plaintiff, were owners/shareholders during the relevant time period.
Each shareholder purchased and owned the same equity interest in LENT- 480 shares, except for its founder, Dr. Megler, who owned 600 shares. On October 1, 2004, Plaintiff became a LENT shareholder when she purchased 480 shares of LENT for $110,000.00. Each shareholder served on LENT's board of directors and has a right to vote his or her shares. Plaintiff and the other board members voted to amend LENT's bylaws to create a two-person Executive Committee to manage LENT's business affairs and determine shareholder compensation. The Executive Committee was comprised of LENT's President, Dr. Megler, and LENT's Vice President elected to 2-year terms.
At certain times during her employment at LENT, Plaintiff signed debt instruments for LENT, although she did not always consent to doing so. Plaintiff's written consent was required for LENT to sell, lease or exchange all or substantially all of its assets, merge or consolidate with another business or entity, or dissolve, or liquidate its business.
All shareholders entered into an Employment Agreement with LENT. By signing the Employment Agreement, Dr. Toole agreed that her duties will be performed “to the reasonable satisfaction of the Company” and that she could not be employed in any other business activity without the prior written consent of the Company. ECF No. 55, PageID.1317. Dr. Toole also agreed that treatment and diagnosis of patients will be “in compliance with all applicable State and Federal laws, professional medical standards and all rules and regulations promulgated by the Company.” Id., PageID.1318. Dr. Toole also agreed that “the Company may at any time relieve the Employee from treating any patient of the Company.” Id.
Dr. Toole “expressly understood that the Company shall have the sole and absolute authority to determine which employee of the Company shall perform professional services for any particular patient of the Company.” Id. The Agreement entitled Dr. Toole and the other shareholders to health insurance, medical malpractice insurance, reimbursement for medical education, and vacation benefits up to five weeks per year. Id.
While Plaintiff had the option to terminate her employment with the Company, she could so with 180 days written notice. Id., PageID.1320. If Dr. Toole chose to end the employment relationship, “the Company, in its sole and absolute discretion, shall have the option to pay the compensation due Employee during the applicable notice period and require that during the applicable notice period Employee discontinue providing services for the Company, or otherwise modify Employee's work schedule.” Id. The Employment Agreement permitted Plaintiff's termination only for “cause” and “notice of such termination.”
Dr. Toole also agreed to be bound by a restrictive covenant, which upon her separation from LENT, precluded her from applying for or maintaining medical staff privileges at any hospital located within a 15-mile radius of any of the Company's offices.” Id., PageID.1321. Moreover, Dr. Toole agreed to disclose and assign to the Company all right, title and interest in and to all ideas, inventions, and improvements made or conceived by the Employee with respect to the practice of medicine while employed by the Company, together with all patents or copyrights therefor, and to execute all documents requested by the Company in connection therewith.” Id., PageID.1322.
LENT asserts that Dr. Toole was not supervised by anyone, and she could set her own schedule and determine which surgeries to perform. However, LENT's President testified that he “kept very close observation of the quality of [Dr. Toole's] work” and LENT's Vice President admitted that LENT “constantly” evaluated the doctors.
In 2011, LENT entered into a Professional Services Agreement (PSA) in which it promised its doctors would work exclusively for the St. John/Ascension hospital system. LENT had two primary streams of revenue: (1) the PSA with Ascension Hospital under which the Hospital paid LENT to treat its patients and (b) services LENT provided directly to its own patients at its offices, which included cosmetic surgeries and hearing related services. The PSA guaranteed that LENT would be paid, without consideration of whether Ascension collected full reimbursement from insurance and patients for LENT's services.
The Hospital paid LENT for medical services it performed based on a dollar amount per service known as the “Conversion Factor.” The Hospital and LENT negotiated the amount of the Conversion Factor annually. The Hospital billed health insurance carriers, Medicare/Medicaid and patients. The Hospital paid LENT by multiplying the Conversion Factor by the standard valuation Medicare assigns to medical services covered by Medicare-known as Relative Value Units (RVU). However, Medicare does not assign RVUs to procedures it does not cover such as cosmetic procedures, like facelifts and nose jobs. These procedures resulted in payments to LENT and counted towards the budget. LENT directly billed its patients for services that did not have RVUs.
According to Defendant, shareholders' compensation was based on each shareholder's percent of total Payments (collections) to the Hospital and LENT from insurance, Medicare/Medicaid and patients. LENT argues the Executive Committee determined shareholder compensation almost exclusively using an objective mathematical calculation - each shareholder's percentage of total fiscal year Payments to the Hospital and LENT from insurance companies, Medicare/Medicaid and patients multiplied by LENT's profits. LENT's profits are the total revenue minus expenses and operating reserves. Each shareholder's fiscal year payments were divided by all payments to the Hospital and Lent to determine each shareholder's percent of total payments. Each shareholder's percent of all payments was multiplied by LENT's profits to determine share of profits.
LENT further asserts that after determining each shareholder's percent of all payments, the Executive Committee then made minor increases or decreases (between 1% and 5%) to each shareholder's pay to ensure each shareholder was fairly compensated. Adjustments were made for shareholders who saw a higher number of pediatric or Medicaid patients with lower reimbursement rates.
Plaintiff counters that LENT relied on the shareholder's RVUs to determine salary. According to Dr. Toole, LENT minutely documented every RVU, constantly reported on them, and tied physician pay to them in many oral and written statements. For instance, on November 4, 2015, the shareholder-physicians were informed by LENT that ECF 70, PageID.3169.
Dr Toole maintains she billed more than every single one of her colleagues between 2017 and 2020, meaning she had the highest RVUs then her white male physician-shareholder counterparts. She testified that she “was the highest earner every year” and “brought in the most money” to LENT. See ECF No.68, PageID.3024. In support of her contention, Dr. Toole relies on Dr. Megler's admissions during his deposition that Dr. Toole had the most RVUs, and that “her activities brought in the most income from Ascension. Plaintiff also relies on Charts 5-11, which are attached to her Response brief. Dr. Toole argues these charts show that in 2017, Dr. Toole was LENT's #1 biller, and she tallied 43% more RVUs than the men averaged. For instance, charts 14, 16 and 18 examine “collections/paym...
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