Anatomy of a lawsuit

Most dentists have policies to protect them against lawsuits from patients, but how about lawsuits brought by an employee?

Most dentists have policies to protect them against lawsuits from patients, but how about lawsuits brought by an employee?

John Y. Kwan, DDS, and

Laura Stevens, JD

Nine out of 10 dentists can expect to be sued by a patient or an employee sometime during their career. That`s the statistic I`ve heard from several sources, both legal and dental.

The large majority have coverage when a patient seeks a claim against us, but few policies cover actions that an employee can take against us as an employer. In sharing these events, I hope I can prevent at least one experience like mine ... or at the very least shed some light on the details of my education into the world of employment law. This is a course no one signs up for, but for which all pay a high tuition.

In September 1997, as my day was ending, I was informed that a man in the waiting room wanted to speak to me. He handed me a summons notifying me of an action being filed against me and my former partner for what can be euphemistically referred to as a "wrongful termination lawsuit."

The plaintiff was a former clinical assistant who worked primarily with me. I was being named as a defendant in three areas - pregnancy termination, slander, and sexual harassment. I realized at that moment that I had just become a statistic on the majority side of the equation.

I knew this lawsuit was a real possibility, because I had received a notice from the California Department of Fair Employment & Housing that the employee had filed charges, accusing me and my partner of discrimination. However, the first warnings had come still earlier, when I`d heard from two of my other assistants that the employee was unhappy with an understanding we had reached The agreement we had reached was that instead of firing her for poor performance, she could stay on until her maternity leave began, and then she wouldn`t return to the job after her baby was born.

A problem employee

For three years, our office struggled with this employee who had problems on and off the job. During her first year, she was placed on probation for insubordinate behavior to our practice director, although she had performed well as an assistant. During her second year, she was placed on probation for attitude problems related to her clinical assisting, but then she clearly turned around for the better. Throughout this time, she had many personal distractions involving her parents, her sibling, a divorce, and her child - in addition to other events that clearly affected her work performance.

In the second half of her third year, she was placed on probation again for poor performance and attitude problems. During this time, we were notified that she was pregnant. Through all of these events, we made every attempt to be fair and understanding. But it was time to consult an employment attorney when the process server handed me a summons.

Partnership dissolved

Meanwhile, I also was in a practice partnership that wasn`t working out. After trying unsuccessfully to resolve the problems with a practice consultant, we decided to end the partnership in accordance with our partnership agreement.

Our problem assistant would be leaving on pregnancy leave just weeks before the partnership ended. After many discussions about her attitude and performance - discussions in which she admitted she really didn`t like working for us - she verbally agreed not to return at the end of the leave period, and she informed the staff of her decision. But, when we tried to confirm her intention in writing, she refused ... and then denied making the agreement, saying she intended to return. That is when she also said to other staff members that she would sue us if things did not go her way. In retrospect, we could have confirmed her decision not to return by letter, even if only unilaterally without her signature.

As these events were occurring, I was advised by my regular business attorney to clarify the probationary status in writing. After the partnership ended, a letter of termination was prepared, stating that due to the practice change and financial considerations, a third clinical assistant was not needed. Since two remaining assistants had more seniority, her employment would be terminated. Her pregnancy was not a reason, nor were her history of poor performance, attitude problems, or probations listed (although there was sufficient reason to terminate on the basis of performance).

A few weeks before her pregnancy leave was due to end and within a month of my new sole proprietorship, I received a letter of plaintiff`s intent to return. I then sent the letter of termination and hoped to close the book on this unfortunate series of events. Little did I know that it would be close to three years and many chapters later before the case was closed.

Taking a hard look

It`s hard to describe the anxiety produced by reading claims of pregnancy discrimination, slander, and sexual harassment filed against you. I can`t even speak to the feeling my wife went through, especially with the harassment claims. When your integrity is challenged, it is easy to become angry. When you are a fair and reasonable person, you begin to question your own integrity. Was there any merit to any of these claims? Events like these force you to take a real hard look at yourself. Fortunately, after much introspection, prayer, and support from family, friends, and staff, I was able to trust my integrity, feel confident in my position and live with the reality facing me.

I hired an attorney specializing in employment law. She had been involved with defendants and plaintiffs, so I felt that she could understand both sides. My former partner hired his own attorney. Through his attorney`s machinations, we both found protection from our property insurance carrier. In any case, all insurance companies should be notified. However, in this case, there was a slander charge. The plaintiff claimed that I spoke to a prospective employer and prevented her from getting a job. Property insurance affords you protection against claims of slander. So, I was covered ... at least while there was a slander claim in the case. This was a blessing and rare opportunity to have help paying for my defense. (I now have Employment Practices Liability coverage through my professional liability carrier.)

During this time, I was informed that my former partner had filed a cross complaint against me, charging me with liability for all partnership responsibilities since he had sold me the practice. Another log on the fire, but a relatively small one.

First things first

The first order of business in a lawsuit is the discovery process. The plaintiff, through interrogatories and requests for documents, gathers information, and the defendant does the same. All this involves more time and more aggravation. Neither side makes it easy for the other side to garner information; however, both sides make every attempt to be "cooperative." The plaintiff makes a settlement demand. In my case, this demand was in the hundreds of thousands of dollars. Our counteroffer was in the hundreds of dollars.

How long can you expect litigation that goes to trial to drag out? In California, two years - and you are on the "fast track." Throughout this time, the attorneys periodically are going to court for "status conferences." This is for the purpose of informing the court of the progress of a case still in discovery and getting ready for a trial. Meanwhile, depositions are being scheduled, rescheduled, and rescheduled again. Each time, I have to go to court is more time taken away from the normal "day off."

My deposition was finally finished after four separate meetings over a 10-month span. During this time, my attorney had to leave my defense for a position in another area of law. Fortunately, she picked her best adversary as her replacement, and my new counsel came equipped with a new associate. (I can find bright spots in this whole dark mess.)

After more than a year, the courts suggested mediation. It was going to be over! This was another scheduling nightmare involving three sets of attorneys, two doctors, the plaintiff, and a mutually-agreed-upon mediator. But, where was the property insurance carrier? The insurance company refused to attend because it was their position that they would not pay for any settlement. They only would pay for my defense costs and fees associated with a trial. I was surprised they would rather spend more money to be right than pay less money to have the whole matter over sooner.

What if all the costs and fees of a trial were mine (and the estimated costs paid by the property insurance carrier were over $80,000)? Would I do the same? In retrospect, no. It`s not worth it. Settlement is not necessarily an issue of right or wrong. It`s the cost of getting on with your life. I struggled deeply with the issue of being right vs. being free (have you heard the phrase, "Freedom is not Free"?). Attorneys, who see this all the time, can help you separate your perceptions from the actual realities.

Based on the lack of any evidence to support her claims, mediation brought the plaintiff`s demand down to thousands of dollars. But, the figure still was so high, we only could agree if we could convince the insurance company its involvement would save it tens of thousands of dollars in continuing costs. No go!. The property insurance company chose to continue the trial, paying for the costs of my two attorneys and a lot of other costs. It wasn`t over ...

Meanwhile, trial dates were set and reset. After mediation failed, the court suggested a court settlement conference: mediation with a

sitting judge whose availability is less than the attorney or retired judge whose practice is mediation - such as the last mediator we had. The "fast track"... But it was going to be over!?

Weeks later, the court settlement conference brings us closer, but no settlement. It still wasn`t over!

We had a trial date - 26 months from that day in September 1997 when I first learned I was being sued. We were supposed to go to trial just before Thanksgiving, but if we couldn`t start on the assigned date, it would be in December. My lawyer told me to plan a week off. He wasn`t sure how many days or which days I would be needed in court, but he did say many days. This is not a welcome proposition for a specialty practice trying to accommodate referrals and patients during one of the busiest months of the year. I was really concerned about being unavailable to many of my patients. Was this part of the plan?

Summary adjudication

Our side had been preparing a motion for summary adjudication. This asks a judge to summarily dismiss one or all of the claims prior to a trial, based on the principle that, even if everything the plaintiff said is true, she still doesn`t have any valid claim.

Our case was strong for dismissal of all claims, but what if the claim of slander was dismissed and another claim remained?

The property insurance carrier was involved because of the slander claim only, so I would be left responsible for all costs and fees associated with litigating any remaining claims. The strategy was to seek dismissal of the pregnancy termination and sexual harassment claims, leaving the slander claim for a separate summary adjudication or trial. When my attorneys queried the insurance carrier about the propriety of this strategy, they were advised to do what was best for the client. I was the client; the insurance company was the bill-payer.

My attorneys prepped for trial. The plaintiff was scheduled for examination by a psychiatrist and a psychologist. The summary adjudication was scheduled about a month prior to trial. The plaintiff had hired a private investigator to interview former employees, trying to find something meaningful at the last minute. Both sides continued to try to antagonize and intimidate each other, although I was impressed with my attorneys and their professionalism.

One down; two to go

When the case finally was fully heard and decided, the judge did summarily dismiss the sexual-harassment claim. But the pregnancy-termination claim remained, along with the slander claim, which my attorneys had not asked the judge to dismiss. It still wasn`t over.

The slander charge claimed I had given the plaintiff a bad reference to another dentist. We had a sworn affidavit from the dentist refuting this allegation: I had said positive things about her (which, looking back, were true, but perhaps incomplete).

We had ample evidence refuting her claim of pregnancy termination. We had a trial date, but more depositions were needed. We had to request, wait to receive, then review full written psychiatric and psychological reports. We had the prospects of a week or more in court (probably in December) with the property insurance carrier paying all the bills.

So, I had a big decision to make: settle with my own money, or go to court.

What is the cost of time out of work? What is the cost of rescheduling or canceling patients? What is the price of the stress placed on family, staff, and me? These are questions which never would have to be fully answered by deciding to settle. On the other hand, deciding to settle puts a price on all these aspects of the cost of the case.

During each of the settlement meetings, I made it clear to my attorneys what I was willing to spend. That amount changed as time went on, the true costs became clearer, and as the plaintiff`s demand came down into the realm of the possible.

After the summary adjudication, we knew what the plaintiff`s attorney could convince the plaintiff to accept. I instructed my attorney to make a new offer, which was still lower than the latest demand. I also told her (my attorney) to tell them that she would try to convince me to settle on their minimum.

It worked! It was over! We settled for an amount that was a small fraction of the original settlement demand ... an amount that gave the plaintiff only a fraction yet again of her original demands in the high six figures. Assuming her attorney worked on a contingency, we figured he recouped none of his fees and maybe none of his costs.

It was over. It was bittersweet. No one wins. The cost of fairness is extremely expensive. Time and emotional costs together have no dollar comparison.

A look back

Looking back, what would I have done differently? I would have terminated the employee much sooner, but not without consulting my employment attorney first! I was well trained in the Air Force to document everything and I did ... and continue to do so. My attorney told me I had done a good job with this, providing a lot of crucial evidence that should have won the case in a trial and had helped convince them to accept a small settlement.

I also was trained that the goal of disciplinary measures is rehabilitation. I let that and my caring nature get in the way of firing someone as soon as I should have. You always can put a positive spin on any event. If my experience helps anyone else - in any way - I won`t say it was worth it ... but isn`t helping others what we`re all about anyway?

A final footnote

One of my employment attorneys later told me she would have given me different advice: The dissolving partnership should have terminated all staff members, and each of the sole proprietors should then have hired only the staff each wanted.

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