Croghan v. Norton Healthcare, Inc.

613 S.W.3d 37

Steven CROGHAN, Administrator of the Estate of Amy L. Croghan, Appellant

v.NORTON HEALTHCARE, INC.; Vicki Thieneman; Casey Maudlin; and Kimberly Brannon, Appellees

NO. 2018-CA-001351-MR

Court of Appeals of Kentucky.

FEBRUARY 14, 2020; 10:00 A.M. Discretionary Review Denied by Supreme Court December 9, 2020

OPINION

MAZE, JUDGE:

Steve Croghan, as Administrator of the Estate of Amy L. Croghan ("the Estate") appeals from a summary judgment entered by the Jefferson Circuit Court dismissing the Estate's employment-discrimination claims against Norton Healthcare, Inc. and individual defendants (collectively, "Norton"). The trial court found that the Estate's claims brought under the Kentucky Civil Rights Act (KCRA) were time-barred based on a contractual six-month limitation period for bringing claims arising from the employment. While this appeal was pending, the legislature amended KRS ¹ 336.700 to contain language which would bar enforcement of the contractual provision. We conclude that the amendment is applicable to this action. Furthermore, we agree with the Estate that this period is not a sufficient time to conduct a reasonable investigation and to file a KCRA action in good faith. Therefore, we conclude that the provision is not enforceable with respect to the Estate's KCRA claims and the trial court erred by dismissing the complaint as untimely. Hence, we reverse and remand for additional proceedings on the merits of these claims.

The relevant facts of this action are as follows. On December 3, 2008, Amy L. Croghan ("Croghan") applied for a position as a Registered Nurse in the oncology radiation department at Norton Suburban Hospital. At the time she applied, the electronic employment application contained the following language:

I agree that any claim or lawsuit relating to my service with Norton Healthcare, Inc., [sic ] or any of its subsidiaries or related entities must be filed no more thansix [sic ] (6) months after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary. Mysignature [sic ] certifies that I have read and understand the contents of this employmentapplication [sic ], and that I am fully able and competent to complete it and that the statementsI [sic ] made herein are true.

Just below the paragraph was a box with a sentence stating, "By checking this box I acknowledge that all information submitted is true and complete." The paragraph also required Croghan's signature and a date. Croghan checked the box and signed the page, along with several other pages on the application.

Norton hired Croghan and she began her employment at Norton Suburban Hospital on January 12, 2009. She alleges that she was subjected to age discrimination while working there. In late 2012, Croghan transferred to a position at the Norton Northeast Radiation Center. At this facility, Croghan was working under the lead physician, Dr. Kristie Paris. In early 2014, Vicki Thieneman² became the nurse manager for the center and assumed supervisory responsibility over Croghan. Croghan also worked with Casey Maudlin, who served as the chief radiation therapist/manager at the center, and communicated with Kimberly Brannon, who served as an employee relations manager for Norton.

Croghan alleged that Maudlin was hostile to anyone who was older than sixty and overweight, including both her and Dr. Paris. Croghan alleges that Maudlin scheduled her patients at odd hours and required her to perform secretarial tasks and duties not expected of other nurses. Croghan states that she complained about the working conditions to Brannon, but nothing ever came of it and her working conditions became more difficult.

Dr. Paris left the facility in the summer of 2015. On August 3, 2015, Croghan received a fax from a drug store seeking to verify Dr. Paris's prescription refill for magnesium. Croghan provided the verification without seeking authorization from an on-staff physician, as required by Norton's policies. Two days later, Norton suspended Croghan for this conduct. After additional review, Norton terminated Croghan on August 10.

Thereafter, Croghan filed for unemployment benefits, which Norton contested. In October 2015, the Unemployment Insurance Commission determined that Croghan's actions did not constitute misconduct related to employment sufficient to disqualify her from receiving benefits. In addition, Norton reported Croghan's conduct to the Kentucky Board of Nursing and directed her to self-report the incident. However, the Board declined to pursue any disciplinary action.

On April 4, 2016, Croghan filed this action against Norton, Thieneman, Maudlin and Brannon. In relevant part, she asserted claims under the KCRA for age discrimination, disability discrimination, hostile work environment and retaliation.³ Following Croghan's death, the trial court granted leave to substitute Steve Croghan, as Administrator of her Estate, as a party to the action. Thereafter, Norton and the individual defendants moved for summary judgment, arguing that the action was untimely because Croghan failed to file it within six months of her termination as required by the provision in her employment application.

After considering Norton's motion and the Estate's response, the trial court agreed. The court first found that Croghan made a knowing and voluntary waiver of the statutory limitation period when she signed the provision in her employment application. The court further found that six months is a reasonable amount of time to assert the claims at issue in this case. The court also found that the limitation period was not tolled during the time that Norton contested Croghan's claim for unemployment benefits. Based on these findings, the trial court granted Norton's motion for summary judgment and dismissed Croghan's complaint.

Claims brought under the KCRA, KRS 344.010, et seq. , are subject to the five-year limitation period provided for statutory causes of action in KRS 413.120(2). See Kentucky Comm'n on Human Rights v. City of Owensboro , 750 S.W.2d 422, 422 (Ky. 1988). The question in this case is whether an employer may require the employee to waive the statutory limitation period and accept a shorter period. As this is entirely a question of law, our review is de novo and without deference to the trial court's conclusions.

Gosney v. Glenn , 163 S.W.3d 894, 898-99 (Ky. App. 2005).

At the time the summary judgment motion was pending, there was no controlling Kentucky authority directly addressing this issue. Consequently, the trial court cited to Dunn v. Gordon Food Services, Inc. , 780 F. Supp. 2d 570 (W.D. Ky. 2011), which considered whether an employee may waive the KCRA limitation period in favor of a shorter period. In Dunn , the employment application required that any claim arising out of the employment, including KCRA claims, must be brought within one year of the event giving rise to the claim. The Western District of Kentucky concluded that Kentucky law would permit a waiver of a statute of limitations in an employment application even though it is a unilateral condition of employment. Id. at 575-76. The court went on to address whether the waiver was knowing and voluntary and whether the contractual limitation period was reasonable. After finding both under the facts of that case, the federal court concluded that the employee's waiver of the statutory limitation period was reasonable. Id. at 576-77.

The holding of Dunn is consistent with Sixth Circuit precedent upholding the enforceability of similar waivers of statutory limitation periods. In Myers v. Western-Southern Life Ins. Co. , 849 F.2d 259, 261-62 (6th Cir. 1988), the Sixth Circuit addressed an age and disability discrimination claim brought under Michigan law. The employment application, like the one in the current case, required that any claim relating to the employment must be brought within six months after termination of employment. The Sixth Circuit first found that the provision was not void as against public policy. Id. at 261-62. The court next found that the contractual language was clear and the employee's acceptance of the term was knowing and voluntary. Id. at 262. And lastly, the court concluded that a six-month limitation period was not inherently unreasonable. Id. See also Thurman v. DaimlerChrysler, Inc. , 397 F.3d 352 (6th Cir. 2004).

Furthermore, the United States Supreme Court has held that an insurance contract provision may serve to shorten the time for bringing an action to a lesser period than the time that is prescribed by statute, as long as "the shorter period itself [is] a reasonable period." Order of United Commercial Travelers of Am. v. Wolfe , 331 U.S. 586, 608, 67 S. Ct. 1355, 1365, 91 L. Ed. 1687 (1947). Most other jurisdictions also have upheld contractual waivers of the statute of limitations under similar circumstances. See Soltani v. W. & S. Life Ins. Co. , 258 F.3d 1038, 1043-44 (9th Cir. 2001) ; Hunter-Boykin v. George Washington Univ. , 132 F.3d 77, 79 n.1 (D.C. Cir. 1998) ; Taylor v. W. & S. Life Ins. Co. , 966 F.2d 1188, 1206 (7th Cir. 1992) ; and Hays v. Mobil Oil Corp. , 930 F.2d 96, 99-100 (1st Cir. 1991). Indeed, this Court has held that, where there is no statute prohibiting the contractual shortening of a statutory period of limitation, a contractual limitation in an insurance contract is not in conflict with statutes providing for longer periods of limitation. Webb v. Kentucky Farm Bureau Ins. Co. , 577 S.W.2d 17, 18 (Ky. App. 1978).⁴

We are mindful that the provision at issue in this case was part of an adhesion contract and was presented as a condition of employment. Furthermore, the KCRA expresses a strong public policy against employment discrimination. Moreover, Section 14 of the Kentucky Constitution guarantees that "[a]ll courts shall be open, and every person for an injury done him in his lands, goods, person or reputation, shall have...