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Hernandez v. Avera Queen of Peace Hospital

Supreme Court of South Dakota

September 28, 2016

DR. SONIA HERNANDEZ, D.O., Plaintiff and Appellant,
AVERA QUEEN OF PEACE HOSPITAL (AQOP) and DR. JOE KRALL, Optometrist, in his official capacity and personally, Defendants and Appellees.



          DR. SONIA HERNANDEZ, D.O. Grand Prairie, Texas Pro se plaintiff and appellant.

          LISA HANSEN MARSO MATTHEW D. MURPHY of Boyce Law Firm, LLP Sioux Falls, South Dakota Attorneys for defendants and appellees AQOP, Chris Lippert, R.N., Dr. Ray Birkenkamp and Dr. Jennifer Tegethoff.

          WILLIAM C. GARRY of Cadwell, Sanford, Deibert & Garry, LLP Sioux Falls, South Dakota Attorneys for defendant and appellee Dr. Joe Krall.

          WILBUR, Justice

         [¶1.] After a hospital terminated its employee doctor, the doctor brought suit against the hospital and against multiple persons associated with the hospital. The circuit court dismissed a number of the doctor's causes of action, leaving for a jury to determine whether the hospital breached the employment contract and whether one party defamed the doctor. During the jury trial, the court entered a judgment as a matter of law dismissing the defamation action. The jury returned a verdict in favor of the hospital on the breach of contract claim. The doctor appeals, asserting the circuit court erred when it dismissed many of her claims against the hospital and the additional parties and when it dismissed her defamation claim during trial. We affirm.


         [¶2.] Avera Queen of Peace Hospital (Avera) of Mitchell, South Dakota began employment negotiations with Dr. Sonia Hernandez in 2011 while Dr. Hernandez finished her ophthalmology residency in New York. According to Dr. Hernandez, Avera wanted her to replace the practice of a retiring local ophthalmologist with a hospital-owned ophthalmology practice. She claimed that Avera offered incentives to entice her to move to South Dakota, such as providing her an office, support staff, and loan forgiveness. On February 11, 2011, the parties finalized the terms of their agreement, and Avera and Dr. Hernandez executed an employment contract.

         [¶3.] In August 2011, Dr. Hernandez arrived in Mitchell, South Dakota and commenced her employment. She also purchased a home. Avera had leased space from the Krall Eye Clinic in Mitchell for Dr. Hernandez to use as an office. According to Dr. Hernandez, when she arrived in August, the office was unprepared and Avera failed to provide sufficient staff or equipment. She alleged that Avera's failure to honor its contractual agreement delayed her ability to see patients until October 2011.

         [¶4.] Between October and November 2011, Dr. Hernandez performed six surgeries. Dr. Hernandez experienced complications during her first three surgeries. According to Dr. Hernandez, the complications occurred because the staff was not properly trained and the equipment was not in working order. After these first three surgeries, Avera assigned a proctor to work with Dr. Hernandez. Avera did so due to its concerns about Dr. Hernandez's complication rate and other issues. Dr. Jeffery Stevens proctored the next three surgeries performed by Dr. Hernandez. Afterwards, Dr. Stevens met with Avera's operating room director, Chris Lippert. Dr. Stevens informed Lippert that he had concerns about the way Dr. Hernandez operated because of her surgical techniques and the way she used the equipment. Dr. Stevens also issued a report. In the report, he recommended that Dr. Hernandez be monitored closely for at least three months if she were to continue to perform surgical procedures at Avera.

         [¶5.] On November 22, 2011, Dr. Hernandez became, as she described, "gravely ill." Dr. Hernandez was hospitalized and informed Avera that she could not return to work until December 7, 2011. She took a leave of absence, which was indicated on Avera's "Personnel Action Form" as a "Medical Leave of Absence." While Dr. Hernandez was on medical leave, Avera orally informed her that it would be terminating her immediately based on Section 8a of the employment contract. On January 18, 2012, Avera issued a letter giving Dr. Hernandez official notice that "Avera Queen of Peace is immediately terminating your employment." Avera informed Dr. Hernandez that "three (3) of your six (6) surgical cases resulted in patient complications and two (2) of those were considered significant. Avera Queen of Peace considers that patient health or safety is in imminent and serious danger from your actions." On the same day, Avera issued Dr. Hernandez a second letter informing her that it would be "summarily suspending [her] surgical privileges at Avera" due to her inability to "perform surgical procedures without such supervision and monitoring" and that "there is substantial likelihood of injury or damage to patients at Avera[.]"

         [¶6.] After terminating Dr. Hernandez, Avera continued its peer review investigation of her cases and of its decision to suspend her privileges. Avera ceased its peer review because, according to Avera, Dr. Hernandez let her South Dakota medical license lapse. Under Avera's bylaws and its fair hearing plan, a physician must be licensed in South Dakota to have privileges at Avera. In Avera's view, because Dr. Hernandez let her medical license lapse, Avera did not need to review its decision to suspend Dr. Hernandez's privileges. Also, according to Avera, under the Health Care Quality Improvement Act (HCQIA) 42 U.S.C. § 11101 et seq., Avera was required to report Dr. Hernandez's licensure forfeiture and privileges suspension to the National Practitioners Data Bank (NPDB). Therefore, Avera filed a report with the NPDB indicating that Dr. Hernandez let her medical license lapse and no longer had privileges at Avera.

         [¶7.] In May 2012, Dr. Hernandez brought suit against Avera for (1) negligent misrepresentation, (2) fraud, constructive fraud, and fraud in the inducement, (3) breach of contract, (4) declaratory action, and (5) punitive damages. She asserted that she relied upon Avera's representations to her detriment. She claimed that Avera induced her to accept long-term employment when it was aware that such position was experimental in nature and that Avera suppressed facts about the true nature of the commitment. She alleged that as a result of Avera's breach of the implied covenant of good faith and fair dealing, she suffered damage. Dr. Hernandez asked the circuit court to declare that Avera be barred from seeking repayment of its loans to Dr. Hernandez.

         [¶8.] Dr. Hernandez amended her complaint, adding Tom Clark, Chris Lippert, Dr. Ray Birkenkamp, Dr. Joe Krall, Dr. Jennifer Tegethoff, and Katena Products as parties. Dr. Hernandez added claims for discrimination, slander/libel, retaliation, gross negligence, and negligence per se. She alleged that Avera and Clark (the CEO of Avera) discriminated against her when they terminated her while she was on medical leave, when they violated the Americans with Disabilities Act (ADA), and when they terminated her based on her age, race, and sex in violation of Title VII of the Civil Rights Act of 1964. Dr. Hernandez asserted that Lippert and Dr. Krall "committed Slander or Libel" against her while she was employed at Avera, and Drs. Birkenkamp and Krall committed slander/libel after she returned from medical leave, and Lippert and Drs. Tegethoff and Birkenkamp committed slander/libel against her after Avera terminated her employment. Dr. Hernandez further claimed that because she refused to sign a severance agreement, Avera and Clark retaliated against her, wrongfully terminated her, suspended her hospital privileges, and reported "a bias report" to the NPDB. According to Dr. Hernandez, Avera engaged in gross negligence or negligence per se because it breached "its duty to perform the necessary inspections on surgical instruments acquired from Katena Products, " because it did not have sufficient back up surgical instruments, and because its surgical instruments fell below the Joint Commission on Accreditation of Healthcare Organizations and Quality Care standards.

         [¶9.] Each defendant filed an answer, and Avera asserted a counterclaim for payment due on its loan to Dr. Hernandez. The defendants also moved to dismiss Dr. Hernandez's amended complaint for failure to state a claim upon which relief could be granted. The circuit court held a hearing on August 27, 2013. Dr. Hernandez appeared pro se. On September 13, 2013, the court issued an order granting Katena Products' motion to dismiss with prejudice. The court granted Avera's motion to dismiss with prejudice on the claims of gross negligence/negligence per se, slander/libel, and retaliation. The court granted Clark's motion to dismiss with prejudice. The court granted Dr. Krall's, Lippert's, Dr. Birkenkamp's, and Dr. ...

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