North Carolina Lawyers Weekly
By Nick Hurston
A district court clearly erred when it assumed that an inference of sex discrimination necessarily followed when an employee proved a prima facie case of disparate treatment and their employer’s explanation wasn’t credible, the 4th U.S. Circuit Court of Appeals has held.
While the district court was entitled to substantial deference, the key evidence showed the employee was fired by a woman and replaced by a woman and there was no suggestion that gender “was even remotely a factor in [the defendant’s] decision,” Fourth Circuit Judge Paul V. Niemeyer pointed out.
“On this record, while we conclude that [the employee] made a persuasive case that firing her was probably an unfair business decision, she nonetheless failed to present evidence sufficient for a factfinder to conclude that it was the product of discrimination based on sex,” Neimeyer wrote. “Accordingly, we reverse.”
Judges Julius N. Richardson and U.S. District Judge Michael S. Nachmanoff of the Eastern District of Virginia, sitting by designation, joined Neimeyer’s decision in Balderson v. Lincare Inc. (VLW 023-2-075).
‘Cloned’ notes
Florida-based Lincare, a supplier of respiratory-therapy products and services, sells an in-home mechanical ventilator that physicians can order for patients. The company’s sales representatives work with physicians, offering guidance on the necessary information for their patients to get coverage for the devices from their insurers or Medicare.
All Lincare employees were required to comply with the company’s Corporate Health Care Law Compliance Program and Code of Conduct. Examples of prohibited conduct included “‘[m]isrepresenting a diagnosis for the patient to justify the services or equipment furnished,’ and ‘[o]ffering or giving valuable property, equipment, services, gifts or other benefits to a person in exchange for the referral of patients to the Company.’”
Chandra Balderson was hired as a sales representative in 2015, becoming a top-10 performer and earning significant commissions. She was responsible for reviewing sales orders, partly to ensure that doctors’ progress notes contained all information necessary to obtain insurance coverage. Her manager, Chad Brady, could review sales orders, but he had no sales responsibility and earned no commissions.
During a 2019 compliance audit, Lincare found signed doctor’s notes in 19 ventilator orders that were nearly identical. They identified different patients but “the body of each note appeared to be ‘cloned’ or a ‘template,’” of why the ventilator was medically necessary, per the opinion.
Lincare’s Chief Compliance Officer Jennifer Pedersen investigated and found that Balderson faxed an unsigned, handwritten template note to a doctor with instructions to use an attached statement to fill in the notes. The statement essentially matched the cloned notes.
The doctor signed the template, added the patient’s identifying information, revised the order form with Balderson’s statement and faxed them back with the patient’s recent office records.
Realizing that diagnostic codes on some orders didn’t match patient records, Pedersen concluded that Balderson violated Lincare’s compliance program by suggesting that doctors sign template progress notes that contradicted their diagnoses.
Termination
Balderson admitted using the template to make it easier for doctors to get coverage; she turned over 17 more signed doctor’s notes, each containing the same generic language.
Pedersen also learned that Brady had provided “coaching” or “leading” information to doctors by sending three examples of statements sufficient to support a ventilator order. Brady also provided free equipment to a patient who lost theirs in a fire.
During a meeting that included Brady, Lincare’s corporate counsel and health care services manager, Pedersen informed Balderson that she was fired for “leading” doctors. Lincare eventually hired a woman to replace Balderson.
Pedersen gave Brady a “final written warning” for his conduct because his violation “did not rise to the magnitude” of Balderson’s as he only provided guidance about what information doctors should include.
Balderson sued Lincare in a West Virginia state court for statutory violations. After the case was removed to federal court, Balderson added a claim under West Virginia’s Human Rights Act for discrimination on the basis of sex.
The district court dismissed all of Balderson’s claims except discrimination which proceeded to a bench trial.
Entitled inference
Pedersen explained at trial why Balderson’s conduct was a serious infraction, saying Medicare cautions that using templates to support reimbursement “can ‘put a physician’s practice at risk’ and can result in ‘contradictory information’ being introduced into a patient’s medical record.”
Balderson testified that she believed Lincare discriminated against her because she and Brady “were doing the same thing.”
The district court said that was enough to establish a prima facie case and that the Lincare’s reason for firing Balderson was “simply not credible.”
Finally, and most critically, the district court found that pretext was demonstrated by Brady’s lighter punishment despite his conduct being “at least comparable” to Balderson’s.
After the district court granted judgment to Balderson and awarded her compensatory and punitive damages, Lincare appealed.
Reversed
The West Virginia Human Rights Act’s prohibition of employment discrimination is governed by the same analytical framework and structures developed under Title VII of the Civil Rights Act, including its burden-shifting framework for analyzing pretext claims, Niemeyer explained.
He noted that the district court failed to follow 2000’s Reeves v. Sanderson Plumbing Products, Inc. ruling from the U.S. Supreme Court.
The Reeves court specifically addressed “whether a plaintiff’s prima facie case of discrimination …, combined with sufficient evidence for a reasonable factfinder to reject the employer’s nondiscriminatory explanation for its decision, is adequate to sustain a finding of liability for intentional discrimination,” Niemeyer said. “The Court’s conclusion was that such a showing may be sufficient but that it is not necessarily so – it depends on the circumstances.”
Rather, the Reeves court said “there will ‘[c]ertainly … be instances where, although the plaintiff has established a prima facie case and set forth sufficient evidence to reject the defendant’s explanation, no rational factfinder could conclude that the action was discriminatory.’”
Niemeyer then looked to the instant case.
“The district court failed to recognize this possibility and to address it in light of the circumstances presented,” he said. “Had it done so, it would have been compelled to conclude that Balderson’s case was one of the type recognized in Reeves, in which a prima facie showing of a similar comparator, combined with reasons to doubt the employer’s explanations, is not sufficient to support a finding on the ‘ultimate’ issue — the employer’s discriminatory intent.”
