Swann et al v. Fresenius Medical Care Holdings, Inc. et al
Memorandum Opinion and Order granting defendants' Motion to dismiss (Related Doc # 7 ). Judge Lesley Wells(C,KA)
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
-----------------------------------------------------SAMUEL SWANN, et al.,
SERVICES, INC. d/b/a FRESENIUS
MEDICAL CARE, et al.,
CASE NO. 1:14-CV-00843
MEMORANDUM OPINION AND
ORDER GRANTING THE
DEFENDANTS’ MOTION TO DISMISS
-----------------------------------------------------UNITED STATES DISTRICT JUDGE LESLEY WELLS
Before the Court is a motion to dismiss filed by the defendants Fresenius
Management Services Inc. (“Fresenius”), Laura Conaway, and Michelle Wiest. The
plaintiffs Samuel and Suzan Swann have responded in opposition, and the def endants
replied. For the reasons that follow, the motion will be granted.
The following factual allegations, drawn from the plaintiffs’ Amended Complaint,
are accepted as true for the purpose of deciding the defendants’ motion. Beginning in
2007, the plaintiff Mr. Swann was employed by Renal Advantage, Inc. (“Renal
Advantage”), a provider of dialysis services. (Amended Complaint ¶20). In February
2009, Mr. Swann and Renal Advantage entered into a Confidentiality, Noncompete,
and Severance Agreement. (Amended Complaint ¶21). As part of the Severance
Agreement, Renal Advantage promised to pay Mr. Swann his base salary for twelve
months after termination, if he was terminated “without cause.” (Amended Complaint
¶22). In 2011, Mr. Swann and Renal Advantage entered into a Retention Bonus Award
Agreement, which provided that certain bonuses would be paid to Mr. Swann at
specified times. (Amended Complaint ¶23).
Between 2011 and 2012, Renal Advantage was acquired by another renal
dialysis company, Liberty Dialysis Holdings, Inc., which was acquired by Fresenius
Management Services, Inc., the defendant in the present case. (Amended Complaint
¶24). In the spring of 2012, Plaintiff Swann interviewed with Fresenius’ management
team, and he was offered a position in Fresenius’ Cleveland office as Regional Vice
President Eastern Ohio. (Amended Complaint ¶25). Mr. Swann accepted the offer and
began work for Fresenius in Cleveland, under the supervision of defendants Laura
Conaway and Michelle Wiest. (Amended Complaint ¶26). In June 2012, Fresenius
agreed to comply with the payment obligations detailed in the Severance Agreement
and the Bonus Agreement described above. (Amended Complaint ¶27). In 2013, Mr.
Swann was given a raise and paid a bonus pursuant to the Bonus Ag reement.
(Amended Complaint ¶¶29, 30).
On or about September 25, 2013, Fresenius, by and through its management
team, including Ms. Wiest, announced a new admission policy. According to the
plaintiffs, the policy gave preferential admission and scheduling treatment to
commercially-insured patients over patients who were insured by the government, in
light of low-reimbursement rates from government and private payers. It is alleged that
Fresenius employees, such as Mr. Swann, were instructed to accommodate new
commercially insured patients even if it meant bumping a current patient’s scheduled
shift. (Amended Complaint ¶31). On or about September 27, 2013, Mr. Swann was
allegedly directed by Fresenius’ management to discharge two patients solely because
the patients’ private insurance company had decreased its reimbursement rate to 135%
of the Medicare reimbursement rate for dialysis services. (Amended Complaint
¶32).According to the plaintiffs, the patients were compliant with their regimen and were
in no way “disruptive” or “abusive.” (Amended Complaint ¶34).
Mr. Swann disagreed with the new policy. In a series of conversations and
emails with management, Mr. Swann expressed his disagreement with the policy and
the directive to involuntarily discharge the two patients described above. He also
communicated in writing to management, through his team’s licensed social worker,
that the proposed involuntary discharge violated the applicable Medicare regulations
governing dialysis centers as well as the Ohio Renal Network’s policies (Amended
Complaint ¶33). Fresenius’ Medical Director and others also allegedly questioned the
legitimacy of involuntarily discharging the patients based solely on a reduction in
reimbursement rate from health insurance carrier. (Amended Complaint ¶34)
Notwithstanding the concerns raised by Mr. Swann and others, Fresenius
retained the new admission policy. (Amended Complaint ¶35). On or about October 21,
2013, Mr. Swann again explained to management his concern that the new admission
policy and the decision to involuntarily discharge the patients were “unethical,” and
“morally wrong,” and that the company was exposed to “compliance risks with CMS and
the Renal Network.” The plaintiff informed Fresenius that he found it “impossible to
align and fully support this initiative” and, had no alternative but to provide six-week
notice of his termination. (Amended Complaint ¶36).
On October 25, 2013, in response to Mr. Swann’s written notice, Ms. Conaway
allegedly informed Mr. Swann that the new admission policy complied with the law. Ms.
Conaway also allegedly defended the decision to involuntarily discharge the patients,
because in Fresenius’ view, a “material reduction” in payment constitutes
“non-payment” under the applicable laws and regulations. (Amended Complaint ¶37).
On October 23, 2013, Ms. Conaway met with Mr. Swann and advised him that
his resignation was accepted effective immediately. She further advised Mr. Swann that
his pay and health insurance benefits would be terminated that day. According to Mr.
Swann, the sole reason given for his termination was the October 21, 2013 notice.
(Amended Complaint ¶38). On information and belief, Mr Swann claims that Ms. Wiest
would have participated in all decisions regarding his employment status.(Amended
On approximately October 25, 2013, Ms. Conaway called Mr. Swann at his home
and advised him that, contrary to what was said on October 23, 2013, he would be paid
through November 29, 2013 in lieu of notice and that a “package” would be forwarded
to him shortly. (Amended Complaint ¶40). On or about October 29, 2013, the plaintif f
was informed in writing by Ms. Conaway that his employment with Fresenius had
terminated effective October 26, 2013 but that the company would pay him through
November 29, 2013. The “package” did not offer to pay Mr. Swann any severance. The
defendants allegedly requested that Mr. Swann sign a document binding him to various
obligations to Fresenius with no consideration. Mr. Swann did not sign the proposed
agreement. (Amended Complaint ¶41).
Mr. Swann filed this lawsuit April 18, 2014. In his first amended complaint, he
alleges that he was constructively discharged when he was subjected to the intolerable
work conditions created when Fresenius adopted the new admission policy. He
maintains (1) that the defendants violated Ohio’s Whistleblower Statute, R.C.§ 4113.52
when he was discharged after having complained about the alleged illegal/unethical
nature of Fresenius’ new admissions policy; (2) that he was wrongfully discharged in
violation of Ohio public policy; (3) that Fresenius breached its contractual obligation to
pay him his severance pay; and (4) that he relied, to his detriment, on promises
contained in Fresenius’ Code of Business Conduct. Mr. Swann’s spouse, Suzan
Swann, alleges that she lost the companionship, services, and affection of her
husband, as a result of the defendants’ actions.
The defendants now move to dismiss the Amended Complaint on the ground
that it fails to state a claim upon which relief can be granted.
II. Law and Argument
The plaintiff’s complaint must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 12(b)(6) motion
tests the sufficiency of the complaint. To survive a motion to dismiss, “a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing
Twombly, 550 U.S. at 556).
A. The Plaintiff’s Ohio Whistleblower Claim
First, the Court considers whether the plaintiff has pled sufficient facts to support
his claim under the Ohio Whistleblower Statute, R.C. 4113.52 (B). In order to establish
a violation of the Ohio Whistleblower Statute, “a plaintiff must first make a prima facie
case by showing that (1) he or she engaged in activity which would bring him or her
under the protection of the statute, (2) [he or she] was subject to an adverse
employment action and (3) [that] there was a causal link between the protected activity
and the adverse employment action.” Wood v. Dorcas, 142 Ohio App.3d 783, 757
N.E.2d 17, 23 (2001).
In this instance, the defendants maintain that Mr. Swann’s Whistleblower claim
fails as a matter of law because he voluntarily resigned. As such, the defendants argue,
he was not subject to an adverse employment action. While Mr. Swann admits that he
submitted a letter of resignation, he maintains that his resignation was involuntary, as it
came in response to intolerable work conditions and thus, amounted to a constructive
A plaintiff “may establish an adverse employment action by demonstrating that
she [or he] was constructively discharged.” Logan v. Denny’s, Inc., 259 F.3d 558, 568
(6th Cir. 2001). An employee is constructively discharged when an employer’s actions
make working conditions so intolerable that a reasonable person under the
circumstances would feel compelled to resign. Kocsis v. Multi-Care Mgmt., 97 F.3d 876,
887 (6th Cir. 1996). Ohio courts generally apply an objective test to evaluate whether
an employee was constructively discharged, evaluating “whether the cumulative effect
of the employer’s actions would make a reasonable person believe that termination was
imminent.” Mauzy v. Kelly Servs., Inc., 75 Ohio St.3d 578, 589, 664 N.E.2d 1272
(1996). Courts consider a wide range of factors, such as “reductions in sales territory,
poor performance evaluations, criticism in front of coemployees, inquiries about
retirement intentions, and expressions of a preference for employees outside the
protected group.” Id.
In Handford v. Buy Rite Office Products, Inc., 3 N.E.3d 1245, 1253 (Ohio Ct.
App. 2013), an Ohio court of appeals concluded that a plaintiff whose employer failed to
take action in response to the plaintiff’s complaints that the employer was allegedly
engaged in illegal activity was not constructively discharged. Specifically, the employee
reported to her employer that it was double billing clients for credit card purchases, and
she informed the employer that some employees were smoking marijuana on company
premises. Id. at 1252. In response, the employer informed the plaintiff that it did not
intend to address the alleged unlawful activities. Id. The employee thereafter claimed
that working conditions had become intolerable, and she quit. Id. The court rejected the
employee’s claim that she was constructively discharged, reasoning as follows:
we conclude that Buy Rite’s actions in this case would not make a reasonable
person believe that Handford’s termination was imminent. The only action
allegedly taken by Handford’s employer was that [the supervisor] told Handford
that she did not intend to pursue Handf ord’s allegations. Handford resigned
within hours of this interaction. Handford was not threatened. She was not
criticized or harassed. None of her supervisors insinuated that her position at
Buy Rite was in jeopardy. Rather, Handford did not approve of the manner in
which [the supervisor] intended to deal with the allegations, and so she “elected
to resign.” As a matter of law, [the supervisor’s] response to Handford’s
complaint does not create an actionable claim for constructive discharge.
Id. at 1253.
In this instance, the plaintiff contends that working conditions became intolerable
to a reasonable person because the def endants instituted an admissions policy, which
he believed was unethical or illegal, and despite his complaints about the policy,
Fresenius “made no effort to abate either the new admission policy nor the efforts to
involuntarily discharge the patients.”(Amended Complaint, ¶35). The plaintiff claims
that the defendants instead “chastised” and “retaliated” against him (although he
provides no specific details with respect to the defendants’ alleged retaliatory actions).
Because the plaintiff found it “impossible to align and fully support this initiative” he felt
that he “had no alternative but to provide six-week notice of his termination.” (Amended
Complaint, ¶ 36) The defendants accepted Mr. Swann’s resignation and his
employment was terminated.
In the Court’s view, the plaintiff’s Amended Complaint fails to describe working
conditions so intolerable that a reasonable person would feel compelled to resign. First,
the allegation that management chastised him after he complained about the new
policy is insufficient by itself to support a claim of constructive discharge. See Peters v.
Lincoln Electric Co., 285 F3d 456, 479 (6th Cir. 2002) (“[H]urt f eelings are not enough
to create a case of constructive discharge.”). While the plaintiff’s opposition brief
asserts he was given “the choice to either continue his employment by engaging in acts
he believed violated the law and showed a reckless disregard for patient safety or lose
his job,” (Doc. 12, p. 14, emphasis in original), there is no such allegation in his
Amended Complaint nor does he allege any facts that would support it.
It is not evident, based on the Amended Complaint, that in response to Mr.
Swann’s concerns about the new policy, that management threatened to fire him,
demote him, reduce his job responsibilities or pay, transfer or reassign him, harass him
in a manner calculated to encourage him to resign, or take away any benefit to which
he was entitled, if he did not carry out the policy. See R.C. 4113.52(B). Except for being
“chastised” by management, which cannot by itself form the basis of a constructive
discharge claim, there are no allegations that management took any action at all. The
only alleged action in response to Mr. Swann’s complaints was a non-action, in that
Fresenius refused to retract its new admission/discharge policy as the plaintiff
demanded. As described in Buy Rite, supra, an employer’s refusal to take action in
response to an employee’s claims that the employer is engaged in illegal activity does
not necessarily create intolerable working conditions. While there may be a
circumstance in which such a refusal might make work conditions intolerable, Mr.
Swann has not persuaded the Court that this is the case.
Mr. Swann has failed to allege facts that support a plausible claim that he was
constructively discharged. Therefore, without an allegation that he was subject to an
adverse employment action, his claim under the Ohio Whistleblower Act fails on its
B. Wrongful discharge in violation Ohio public policy
To maintain a cause of action for wrongful discharge in violation of public policy,
the plaintiff must establish: (1) a clear public policy manifested in the Ohio or United
States Constitutions, a statute or administrative regulation, or the common law (the
“clarity element”); (2) that the dismissal of employees under similar circumstances
would jeopardize the public policy (the “jeopardy element”); (3) that the discharge was
motivated by conduct related to the public policy (the “causation element”), and (4) that
the employer lacked a legitimate overriding business justification for the plaintiff's
discharge (the “overriding justification element”). See Collins v. Rizkana, 73 Ohio St.3d
65, 70 652 N.E.2d 653, 658 (1995).
In this instance, Mr. Swann fails to state a plausible wrongful discharge claim
because he resigned from his position, and, as described in the section above, he fails
to set forth facts to support the claim that he was constructively discharged.
C. Breach of Contract
Mr. Swann alleges that Fresenius breached the Severance Agreement when it
failed to pay him a year’s severance pay. The Severance Agreement provides, in
In the event the Company terminates Employee without cause at any time, the
Company agrees that…the Company shall pay to Employee Employee’s base
salary…for an additional twelve (12) months…If Employee is terminated by the
Company for any reason other than without cause or Employee terminates his
employment with the Company for any reason then Employee shall not be
entitled to the benefits described in this Section 5.
(Compl. ¶ 21, Ex. A). Because the plaintiff voluntarily resigned from his position and
fails to allege facts in support of his claim that he was constructively discharged, his
claim that Fresenius breached the Severance Agreement is not plausible.
D. Promissory Estoppel
Mr. Swann alleges that the defendants are liable to him on a theory of
promissory estoppel. The Ohio Supreme Court has recognized the doctrine of
promissory estoppel, stating that
[a] promise which the promisor should reasonably expect to induce action or
forbearance on the part of the promisee or a third person and which does induce
such action or forbearance is binding if injustice can be avoided only by
enforcement of the promise.
McCroskey v. State, 8 Ohio St. 3d 29, 30, 456 N.E.2d 1204, 1205 (1983) (q uoting
Restatement of the Law, Contracts 2d (1973), Section 90). Thus, to state a claim for
promissory estoppel, a plaintiff must allege “a clear and unambiguous promise and
reliance by the party to whom the promise is made. The reliance must be reasonable
and foreseeable, and the party relying on the promise must have been injured by the
reliance.” Dailey v. Craigmyle & Son Farms, L.L.C., 177 Ohio App. 3d 439, 446, 894
N.E.2d 1301, 1307 (1996) (citing Doe v. Adkins, 110 Ohio App.3d 427, 437, 674 N.E.2d
In this instance, the plaintiff contends the relevant promise is contained in
Fresenius’ Code of Business Conduct. There, the plaintiff claims, Fresenius promised
“that an employee would not be retaliated against for reporting criminal violations . . . .”
(Amended Complaint ¶81). The alleged retaliation in this instance is the plaintiff’s
alleged termination. As above, this claim falls flat because the plaintiff states no facts
establishing that the defendants terminated his employment. Further, as the defendants
point out, “[g]enerally, employee handbooks do not constitute an em ployment contract.”
Stembridge v. Summit Acad. Mgmt., 2006-Ohio-4076, ¶27 (Ohio Ct. App. Aug. 9, 2006)
(citing Rudy v. Loral Defense Sys., 85 Ohio App.3d 148, 152, 619 N.E.2d 449 (1993)).
Thus, without alleging the existence of a clear and unambiguous promise, the plaintiff
has failed to state a plausible promissory estoppel claim.
E. Loss of Consortium
With the dismissal of all of Mr. Swann’s claims, Ms. Swann’s derivative claim for
loss of consortium is also dismissed.
For the reasons stated above, the defendants’ motion to dismiss is granted.
IT IS SO ORDERED.
/s/ Lesley Wells
UNITED STATES DISTRICT JUDGE
Date: 4 August 2015
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