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Alexander v. Avera St. Luke's Hospital

United States Court of Appeals, Eighth Circuit

September 30, 2014

Larry Alexander, M.D., Plaintiff-Appellant
Avera St. Luke's Hospital, Defendant-Appellee

Submitted: June 12, 2014.

Page 757

Appeal from United States District Court for the District of South Dakota - Aberdeen.

For Larry Alexander, M.D., Plaintiff - Appellant: Pamela Bollweg, Shannon Rae Falon, Steven M. Johnson, Ronald A. Parsons Jr., Johnson & Heidepriem, Sioux Falls, SD.

For Avera St. Luke's Hospital, Defendant - Appellee: Reed Alan Rasmussen, Siegel & Barnett, Aberdeen, SD.

Before LOKEN, BRIGHT, and GRUENDER, Circuit Judges.


Page 758

LOKEN, Circuit Judge.

Pathologist Larry Alexander suffered a heart attack in March 2008, underwent a heart transplant in May 2009, and was hospitalized for bipolar disorder in October 2010. In August 2011, Avera St. Luke's, a non-profit corporation operating St. Luke's Hospital in Aberdeen, South Dakota, terminated its December 2008 Pathology

Page 759

Services Agreement with Dr. Alexander, invoking the provision that either party may terminate the Agreement with or without cause on ninety days prior written notice. Alexander brought this action against Avera, alleging violations of the Americans with Disabilities Act (ADA), 42 U.S.C. § 12102 et seq., the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq., the Family and Medical Leave Act (FMLA), 29 U.S.C. § 2617 et seq. and the South Dakota Human Relations Act (SDHRA), S.D. Codified Laws § 20-13-1 et seq . The district court[1] granted Avera's motion for summary judgment, concluding that each of these statutory claims failed because undisputed material facts demonstrated that Alexander was an independent contractor rather than an Avera employee. Alexander appeals. Reviewing the grant of summary judgment on this issue de novo, see Lerohl v. Friends of Minn. Sinfonia, 322 F.3d 486, 488 (8th Cir.), cert. denied, 540 U.S. 983, 124 S.Ct. 469, 157 L.Ed.2d 374 (2003), we affirm.

I. Background

Dr. Alexander's relationship with Avera began in January 1991, when he entered into a Contract for Professional Services with another pathologist, Dr. Roy Burt, who had entered into an exclusive agreement to provide Avera " all of Hospital's necessary pathological services and provide the medical direction and supervision of the Department of Pathology." The Contract with Burt expressly provided that Alexander " shall apply for and become a member of" the Hospital's medical staff; that the services Alexander would provide under the Contract are those of " a professional physician working as an independent contractor," not as an employee of Burt; that Burt would have no authority to control the manner in which Alexander performed his pathology services; that Alexander, not Burt, would pay all applicable federal and state taxes and withholdings, including social security taxes; and that Alexander would secure and maintain professional liability insurance in prescribed amounts.

In 1994, at Burt's suggestion, Alexander took over Burt's duties as director of pathology at the hospital and entered into a new contract with Avera, entitled " Agreement for Pathology Services." Alexander and Avera entered into substantially identical contracts in 1998, 2002, and 2008. Like the 1991 contract with Burt, the contracts between Alexander and Avera all explicitly stated that Alexander would work as an independent contractor and not as an employee. Each contract specified that Avera would have no authority to control or direct performance of Dr. Alexander's services. The contracts provided that Avera would neither pay nor withhold taxes and that Alexander was solely responsible for paying taxes, obtaining malpractice insurance, and paying for his professional licenses. The contracts gave Alexander the right to hire assistants and substitute pathologists at his own expense; Alexander took advantage of this provision by hiring his wife as an assistant at a substantial salary in the years 2008-2010.

Alexander's duties remained relatively uniform throughout his time at Avera. All the contracts required him to provide pathology services at the hospital in accordance with Avera's bylaws, rules, and regulations, which apply to all members of the hospital's medical staff. Beginning in

Page 760

1994, the contracts obligated Alexander as Medical Director of the hospital's Department of Clinical and Anatomical Pathology to help meet its teaching requirements, and to confine the " majority" of his professional services to the hospital. The 1994, 1998, and 2002 contracts required Alexander to contract separately with Burt " for the provision and rendition of [Burt's pathology] services," specified Alexander's annual compensation, and stated the parties' understanding that one-half of that amount " shall be paid by Alexander to Burt for services rendered under this Agreement." The 2008 contract omitted these provisions and significantly reduced Alexander's annual compensation. The 2008 contract further provided:

In the event [Alexander] is unable to provide necessary services to St. Luke's for a period beyond thirty-five (35) days during a calendar year due to illness, vacation, continuing medical education or any other reason whatsoever, [Alexander] shall be responsible for arranging and compensating a qualified and competent substitute pathologist and provide professional services to and on behalf of St. Luke's under the terms of this Agreement. . . . For purposes of vacation, ...

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