Court Opinion

ID: 9350058
Source: CourtListenerOpinion
Date Created: 2022-12-23 15:03:22.97148+00
Date Added: 2024-06-11T16:49:11.807522
License: Public Domain

RENDERED: DECEMBER 22, 2022; 10:00 A.M.
                  NOT TO BE PUBLISHED

           Commonwealth of Kentucky
                  Court of Appeals

                     NO. 2022-CA-0096-MR

SABRINA HOBBS                                        APPELLANT

            APPEAL FROM FLOYD CIRCUIT COURT
v.     HONORABLE JOHN DAVID PRESTON, SPECIAL JUDGE
                  ACTION NO. 19-CI-00508

HIGHLANDS HOSPITAL
CORPORATION; CONSOLIDATED
HEALTH SYSTEMS, INC.;
APPALACHIAN REGIONAL
HEALTHCARE, INC.; ARH TUG
VALLEY HEALTH SERVICES, INC.,
D/B/A HIGHLANDS ARH REGIONAL
MEDICAL CENTER; ROBERT
NATHAN ROYALTY, MD; AND
HIGHLANDS ARH REGIONAL MEDICAL
CENTER ORTHOPEDIC SURGERY                            APPELLEES

                          OPINION
                         AFFIRMING

                        ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; CALDWELL AND MAZE, JUDGES.
MAZE, JUDGE: Sabrina Hobbs has appealed from the Floyd Circuit Court’s

orders awarding summary judgment in favor of Highlands Hospital Corporation

and Consolidated Health Systems, Inc. (collectively Highlands); Appalachian

Regional Healthcare, Inc. and ARH TUG Valley Health Services, Inc. d/b/a

Highlands ARH Regional Medical Center (collectively ARH); and Dr. Robert

Royalty, MD. Following a thorough examination of the record, we affirm.

            In 2017 Hobbs was hired by Highlands as a Revenue Cycle Manager,

responsible for the oversight of numerous clinics, including Dr. Royalty’s

orthopedic surgery practice. Almost immediately she discovered what she

perceived to be problems in that practice involving the conversion of patient

records to electronic format and the proper documentation and reporting of patient

visits. She also expressed concerns about excessive patient volume. She reported

these issues to Vice President of Physician Services Todd Hightower and CEO

Harold C. “Bud” Warman. Highlands took corrective action. Hobbs suffered no

adverse consequences for making these reports. In fact, she was promoted to

Interim Vice President of Physician Services, a position that became permanent.

Her salary doubled. She received raises and bonuses and her employment

continued until July 31, 2019.

            In late 2018 or early 2019, Dr. Royalty learned that Hobbs had

discussed his compensation with other staff members, and that she had told them

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he did not care about his staff or his patients, only money. Dr. Royalty lodged a

complaint with CEO Warman. The three of them met to discuss the matter. Dr.

Royalty specifically said that he did not want her fired. He merely wanted her to

cease having a day-to-day presence in his practice. Another individual was then

appointed to oversee the practice.

             In 2019, ARH purchased Highlands with a final closing date of

August 1, 2019. It inserted a transition team into the Highlands operations to

conduct “due diligence.” Hobbs assisted the team during that period, and she was

extended a conditional offer of employment. However, upon observation, the

members of the ARH transition team agreed that problems with the revenue cycle

for the clinics for which she had oversight as well as unprofessional conduct with

other executive level employees and overly familiar conduct with subordinates

made her a poor fit for ARH. Therefore, on July 31, 2019, prior to the finalization

of the purchase, the employment offer was rescinded.

             On August 7, 2019, Hobbs filed suit, setting forth a claim pursuant to

KRS 216B.165(3) for discrimination/retaliation against her based upon her

complaints regarding issues of patient health. Initially, only Highlands was named

as a defendant. Thereafter, on August 14, 2019, an amended complaint was filed

adding ARH and Dr. Royalty. Count 1 reiterated her claim against Highlands.

Count 2 alleged that ARH worked with Highlands to retaliate against her in

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violation of KRS 216B.165(3). Finally, Count 3 set forth claims against Dr.

Royalty for slander and interference with Hobbs’ employment contract.

             Following a period of extensive discovery Highlands filed its motion

for summary judgment on June 2, 2021, arguing that since it had taken no adverse

employment action against Hobbs, it could not be found to have retaliated against

her pursuant to KRS 216B.165(3). On June 7, 2021, Dr. Royalty also filed a

motion for summary judgment in which he argued that his only statement

regarding Hobbs was made to CEO Warman. As such it was made within the

employment context and therefore privileged and not subject to her claim of

slander. He further contended that since Hobbs had no employment contract with

ARH, he could not have interfered with it. Finally, on June 8, 2021, ARH filed its

motion for summary judgment arguing that there is no cause of action for a

retaliatory failure to hire in this Commonwealth, that KRS 216B.165 does not

apply to a pre-employment relationship and that Hobbs is unable to show the

requisite elements of retaliation. By order entered September 14, 2021, the trial

court granted all three motions and this appeal followed.

Standard of Review:

             Our review of an order granting summary judgment is de novo.

Keaton v. G.C. Williams Funeral Home, Inc., 436 S.W.3d 538, 542 (Ky. App.

2013). We conduct a thorough and searching examination of the record to

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determine whether, when viewed as a whole, it shows that there is no genuine issue

of material fact such that the movant was entitled to summary judgment. Stilger v.

Flint, 391 S.W.3d 751, 753 (Ky. 2013). We do so without deference to the

judgment of the trial court. Jamgotchian v. Kentucky Horse Racing Commission,

488 S.W.3d 594, 601 (Ky. 2016).

Analysis:

   I.    Highlands’ Motion for Summary Judgment:

            KRS 216B.165 states that:

            (1) Any agent or employee of a health care facility or
            service licensed under this chapter who knows or has
            reasonable cause to believe that the quality of care of a
            patient, patient safety, or the health care facility’s or
            service’s safety is in jeopardy shall make an oral or
            written report of the problem to the health care facility or
            service, and may make it to any appropriate private,
            public, state or federal agency.

            ...

            (3) No health care facility or service licensed under this
            chapter shall by policy, contract, procedure, or other
            formal or informal means subject to reprisal, or directly
            or indirectly use, or threaten to use, any authority or
            influence, in any manner whatsoever, which tends to
            discourage, restrain, suppress, dissuade, deter, prevent,
            interfere with, coerce, or discriminate against any agent
            or employee who in good faith reports, discloses,
            divulges, or otherwise brings to the attention of the health
            care facility or service the circumstances or facts to form
            the basis of a report under subsections (1) or (2) of this
            section. No health care facility or service shall require

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             any agent or employee to give notice prior to making a
             report, disclosure, or divulgence under subsections (1) or
             (2) of this section.

             To set forth a prima facie case of retaliation, a plaintiff must show that

she engaged in a “protected activity,” that her employer was aware that she took

such action, and that she suffered “adverse employment action” as a result.

MacGlashan v. ABS Lincs KY, Inc., 84 F.Supp.3d 595, 599 (W.D. Ky. 2015)

(quoting Colorama, Inc. v. Johnson, 295 S.W.3d 148,152 (Ky. App. 2009)). In

considering the evidence in the light most favorable to the non-moving party, as

required by Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky.

1991), Hobbs’ initial report regarding the failure of Dr. Royalty’s clinic to properly

document patient care could be deemed to be a protected activity for purposes of

retaliation analysis.

             However, Hobbs is unable to demonstrate that she suffered any

“adverse employment action” imposed by Highlands. There was no evidence that

she was ever disciplined by Highlands. Indeed, by her own testimony, Hobbs

continued to receive promotions, salary increases, and bonuses throughout her

employment at Highlands. The record is replete with evidence of her rapid rise

within the organization and there was ample evidence to support the trial court’s

conclusion that there are no genuine issues of material fact as to her claim of

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retaliation. Highlands did not terminate her employment. It merely ceased to

exist.

   II.   ARH’s Motion for Summary Judgment:

            The trial court found that while Hobbs may have made reports

   regarding patient safety to CEO Warman and Vice President Hightower of

   Highlands, she made no such reports to ARH and was not an employee of ARH

   at the time the reports were allegedly made. The court interpreted Hobbs’ claim

   as one based upon a “retaliatory failure to hire.” Baker v. Campbell County

   Board of Education, 180 S.W.3d 479, 484 (Ky. App. 2005). As such, no cause

   of action has been recognized as a matter of Kentucky’s public policy.

            Hobbs argued that she was, in fact, an employee of ARH by virtue of

   a letter dated June 17, 2019, offering her future employment with the company.

   However, that letter contained six different conditions that must be fulfilled

   before the contract would become effective. Most significant was the provision

   that it was “contingent” on the closing and finalizing of the acquisition of

   Highlands by ARH. It specifically stated that “Your start date will be effective

   the date of final consummation.” That event did not occur until August 1, 2019.

   The offer to Hobbs was rescinded on July 31, 2019, based upon a joint

   determination by Trena Hall, Roy Milwee, and Sonya Bergman of ARH that,

   upon observation, she had performed poorly and conducted herself in an

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   unprofessional manner. Although the trial court made no specific findings in

   this regard, there was clearly enough evidence of record for the court to

   conclude that, because she had never become an employee of ARH, her only

   potential claim could be for a retaliatory failure to hire. Therefore, as a matter

   of Kentucky law, she had no cause of action against ARH.

   III.   Dr. Royalty’s Motion for Summary Judgment:

             The trial court concluded that there were no genuine issues of material

fact as to Hobbs’ claim that Dr. Royalty slandered her since there was insufficient

evidence other than rumors and speculation that he made any statement about her

other than his report to CEO Warman regarding her breach of confidentiality. This

statement, the court found as a matter of law, was protected by qualified privilege.

             Slander is a subset of the broader tort of defamation. Disabled

American Veterans, Dep’t of Kentucky, Inc. v. Crabb, 182 S.W.3d 541, 547 (Ky.

App. 2005). “The essential elements of defamation are: ‘(a) a false and

defamatory statement concerning another; (b) an unprivileged publication to a third

party; (c) fault amounting at least to negligence on the part of the publisher; and (d)

either actionability of the statement irrespective of special harm or the existence of

special harm caused by the publication.’ RESTATEMENT (SECOND) OF TORTS § 558

(1977).” Harstad v. Whiteman, 338 S.W.3d 804, 810 (Ky. App. 2011). The Court

therein noted that, where the statement concerns “unfitness to perform a job” there

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need be no showing of malice, unless there is a claim of privilege. After the matter

of privilege has been raised, the burden then shifts to the plaintiff to show that

either it does not apply or that it was abused. Under such circumstances, a

showing of actual malice is required. Id. at 810.

             “Abuse of the qualified privilege may be shown in several ways, some

indicating ill will or maliciousness more directly than others. These include: (1)

the publisher’s knowledge or reckless disregard as to the falsity of the defamatory

matter; (2) the publication of the defamatory matter for some improper purpose;

(3) excessive publication; or (4) the publication of defamatory matter not

reasonably believed to be necessary to accomplish the purpose for which the

occasion is privileged.” Toler v. Süd-Chemie, Inc., 458 S.W.3d 276, 284 (Ky.

2014) (internal quotation marks omitted) (quoting RESTATEMENT (SECOND) OF

TORTS § 596 cmt. A (1977)). The Court stated that “[t]o defeat a summary

judgment or directed verdict motion, a party must, in essence, present the same

amount of proof required if there was no privilege.” Id. at 285.

             CEO Warman testified that Dr. Royalty complained to him that Hobbs

had violated a trust and that he no longer trusted her to be involved with his

practice, but that he did not want her to be fired. Dr. Royalty indicated to him that

he was personally hurt that she was talking about his salary to other doctors and

staff members. Karen Sellers, CEO Warman’s assistant, testified that she took Dr.

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Royalty’s initial complaint and made notes. She also confirmed that Dr. Royalty

was concerned about the disclosure of his salary and the statements that Hobbs had

allegedly made regarding his lack of care for patients and staff.

                Dr. Royalty testified that he informed CEO Warman that she told his

staff about his salary and said that he didn’t care about his staff or his patients, only

money. He stated that Beth Boyd told him about Hobbs’s statements, but that Matt

Blanton, Stephanie Ramey, LaShay Reed,1 and others knew about them. Beth

Boyd’s affidavit confirmed this testimony.

                Hobbs cited Sellers’ notes in support of her argument that Dr. Royalty

used his influence to force the hospital to terminate her employment. Although

those notes certainly demonstrate Dr. Royalty’s anger regarding Hobbs’ disclosure

of his salary and her comments about his feelings towards his staff and his patients,

they do not indicate that he ever attempted to force either Highlands or ARH to

terminate her employment. “The party opposing summary judgment cannot rely

on their own claims or arguments without significant evidence in order to prevent a

summary judgment.” Wymer v. J.H. Properties, Inc., 50 S.W.3d 195, 199 (Ky.

2001) (citing Harker v. Federal Land Bank of Louisville, 679 S.W.2d 226 (Ky.

1984)).

1
    Boyd, Blanton, Ramey, and Reed were all employees of Dr. Royalty’s clinic.

                                              -10-
               The trial court also found that there are no genuine issues of material

fact as to Hobbs’ claim of interference with her contractual relationship with ARH.

As set forth elsewhere herein, Hobbs clearly had no such relationship. Therefore,

she would be unable to establish the remaining elements of the tort as set forth in

Snow Pallet, Inc. v. Monticello Bank Company, 367 S.W.3d 1 (Ky. App. 2012).

               Even had there been evidence of contract formation, there was ample

evidence to demonstrate that either Dr. Royalty had no knowledge of the contract

or had no intent to cause a breach of the contract. His testimony was that he never

informed anyone at ARH about his complaints regarding Hobbs. Trena Hall of the

ARH transition team testified that she never talked to Dr. Royalty about Hobbs and

does not know if anyone else did. Matt Blanton’s affidavit also confirmed that he

never heard Dr. Royalty issue any “ultimatum” to ARH regarding Hobbs’

termination.

               Because we find no genuine issue of material fact regarding the

claims set forth in Hobbs’ amended complaint, the summary judgments of the

Floyd Circuit Court are affirmed.

               ALL CONCUR.

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BRIEFS FOR APPELLANT:      BRIEF FOR APPELLEES:

Earl M. McGuire            Laura L. Mays
Prestonsburg, Kentucky     Gregory A. Jackson
                           Lexington, Kentucky

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