United States District Court, E.D. Kentucky
[Copyrighted Material Omitted]
For Marla Montell, Plaintiff: J. Dale Golden, Justin Peterson, LEAD ATTORNEYS, Drew Byron Meadows, Golden & Walters PLLC, Lexington, KY.
For Diversified Clinical Services, Inc., Austin Day, Defendants: Katharine C. Weber, LEAD ATTORNEY, Jackson Lewis LLP - Cincinnati, Cincinnati, OH; Sarah E. Keates, LEAD ATTORNEY, PRO HAC VICE, Jackson Lewis LLP - Cincinnati, Cincinnati, OH.
Danny C. Reeves, United States District Judge.
MEMORANDUM OPINION AND ORDER
This matter is pending for consideration of Defendants Diversified Clinical Services, Inc.'s (" DCS" ), and Austin Day's Motion for Summary Judgment and Motion for Sanctions. [Record Nos. 36, 43] The defendants contend that there are no genuine issues of material fact and that they are entitled to judgment as a matter of law. [Record No. 36] Additionally, they seek sanctions against Plaintiff Marla Montell and her counsel for filing and maintaining the Complaint which they assert is frivolous. [Record No. 43] For the reasons discussed below, the Court will grant the defendants' motion for summary judgment but deny their motion for sanctions.
This retaliation case arises out of Plaintiff Marla Montell's employment with DCS which began November 30, 2009, and ended May 23, 2011. Montell alleges that she was sexually harassed by her supervisor Austin Day throughout her employment and that, following her report of Day's conduct to the DCS Human Resource (" HR" ) department, she was retaliated against and constructively discharged. The defendants deny these allegations and contend that Montell willfully resigned from her position.
DCS operates comprehensive outpatient wound care treatment centers for numerous hospitals throughout the United States. It contracts with medical facilities,
such as the Frankfort Regional Medical Center (" FRMC" ), to manage the operations of outpatient clinics. DCS provides a variety of treatment options to patients such as hyperbaric oxygen (" HBO" ) therapy. The company derives its income primarily from HBO therapy treatments and from patient visits, also known as " wound care revenue." In 2009, DCS began operating FRMC's wound care center. Montell served as the Program Director for the wound care center at FRMC. A Program Director employed by DCS is located at each of DCS's facilities to manage the facility operations. Each is responsible for managing the day-to-day operations of the center and for the growth of the center by encouraging new patients and doctors to use the facility.
At times relevant to this matter, Day was employed by DCS as an Area Vice President (" AVP" ). During Montell's tenure, Day supervised a geographical area which included Kentucky and all or portions of five other states. Day was responsible for oversight of the Program Director at FRMC and the 13 other medical facilities within his territory. Although Montell reported to and was supervised by Day during her employment with DCS, Day did not have any day-to-day responsibilities at FRMC and was only present at the facility periodically. Day worked primarily from his home in West Virginia and traveled to the different medical facilities he supervised. 
Montell's specific duties as FRMC's Program Director included supervising employees, conducting community education, reporting charges to Medicare, ensuring that reimbursements were handled properly, attending management meetings with hospital representatives, and meeting regularly with the FRMC hospital liaison. [Record No. 29, p. 17]  Each of DCS's Program Directors is required to meet certain profit goals for the wound care center he or she oversees. [Record No. 29, p. 17] These profit goals are set by DCS and are generally based upon the profit points for the same time period from the prior year for that wound care center. [ Id., p. 19] To assist a Program Director in achieving these goals, DCS requires that he or she attend and participate in quarterly meetings, referred to as " DASH meetings." [ Id., pp. 19-20] During these meetings, Program Directors present reports concerning the centers they supervise. More specifically, these reports include goals, attainment levels, and perceived opportunities for improvement of the centers.  [ Id., pp. 20-21] DCS Program Directors attend these meetings, along with other DCS employees, including AVPs, Regional Directors of Clinical Operations, Reimbursement Managers, and other members of the DCS executive management team. [ Id. ; Record No. 28, p. 26]
Day testified that it became clear to him during the Fall of 2010 that Montell and her center at FRMC were not meeting expectations. Revenue generated by the center was declining due to the lack of patients receiving treatment. Other concerns
were raised regarding physician coverage and staffing. [Record No. 28, pp. 25-26] Additionally, Montell failed to meet her performance goals for the beginning of 2010. [Record No. 29, p. 49; Record No. 34-4, pp. 13-14] Montell's performance issues became even more apparent during the October 2010 DASH meeting. According to Day, Montell's presentation during the meeting demonstrated a " [c]omplete lack of understanding of what was driving the business, what was behind it, and the root cause of her issues or problems and how to solve them." [Record No. 28, p. 25] Other DCS employees in attendance, including Program Director Belinda Blair and Day's supervisor, Senior Vice President of Operations (" SVP" ) Michael Tanner, shared Day's sentiment regarding the lack of quality of Montell's presentation as well as her perceived failure to understand certain key concepts of the business. [ See Record No. 30, pp. 8, 10-11; Record No. 33, pp. 24-25.] Montell acknowledged that she did not do a good job with her presentation. [Record No. 29, pp. 22, 34]
On November 9, 2010, Day placed Montell on a Performance Improvement Plan (" PIP" ). This plan identified Montell's deficiencies regarding Medicare and Medicaid reimbursement issues for FRMC and her lack of understanding of the data contained in DCS's operational reports for the facility. Montell ultimately agreed that she needed to demonstrate a better understanding of these issues. [ Id., p. 29] However, despite being placed on a PIP and other occasions of counseling by Day, Montell failed to meet profit goals for the fourth quarter of 2010. Within a month of the first quarter of 2011, Day notified Montell that the financial statistics for the center were again unsatisfactory. [ Id. ; Record No. 34-3, p. 47]
In addition to these financial issues, problems continued regarding properly coding reimbursement charges. By February 28, 2011, these coding issues at FRMC escalated to the point that FRMC's CFO hosted a conference call with the plaintiff and other FRMC and DCS executives to express the hospital's concerns with the continued improper coding of Medicare reimbursement charges. [Record No. 29, p. 30] Montell acknowledged that it was her responsibility to make sure that charges were being properly coded, and responded that she was doing the very best she could do. [ Id., pp. 31-32]
Following FRMC's complaint, on March 7, 2011, Montell received a Documented Counseling and Development Plan, indicating that the issues with improper coding were an ongoing problem that had been addressed previously with the plaintiff.  Day reiterated Montell's responsibilities concerning these issues and the importance of correcting these problems because they are considered contract compliance issues that can lead to DCS losing FRMC as a client. [Record No. 34-3, pp. 57-64 ; Record No. 30, pp. 29-30] Although Montell offered a number of excuses, she ultimately took responsibility for the deficiencies. [Record No. 29, p. 34]
Later in March 2011, Day met with Montell to inform her that it was necessary for her to be in the office during business hours and that she could only conduct out-of-office duties one day per week. Day also informed Montell that she would be required to attend weekly calls with DCS's Reimbursement Manager to review reimbursement issues. [ Id., p. 17-18, 34-35; Record No. 34-3, p. 74] The
following week, Montell was not at the facility, although she had been instructed by FRMC to be on site for a government inspection. This led to FRMC complaining about Montell's failure to be available during the inspection. [Record No. 29, pp. 40, 45-46] After receiving this complaint,  Day contacted Patience McLaughlin, a hospital employee under Montell's supervision, and requested that she monitor and report Montell's arrival time at FRMC wound care center. It appears that Montell had no knowledge of this conversation and was unaware that her arrival time at FRMC was being monitored. [Record No. 37, p. 6]
Around this time, Montell was also preparing for an upcoming DASH meeting. After sending Day a draft presentation, Day responded indicating his disappointment. According to Day, the draft presentation was " at best 50%." He also offered a number of suggestions for improvement. [ Id., pp. 44-45; Record No. 34-4, pp. 1-2] On April 12, 2011, Montell sent an email to fellow DCS Program Director Belinda Blair requesting help on her upcoming DASH presentation. In this e-mail, Montell acknowledged that financial numbers at FRMC were " not good" and stated that she felt like Day was " 'gunning'" for her. [Record No. 34-4, p. 3]
In the beginning of April 2011, DCS executives began discussing Montell's potential termination. [Record No. 34-6, pp. 38-40] And on April 13, 2011, DCS issued Montell a Final Written Warning (" Final Warning" ). [ Id., pp. 4-7; Record No. 29, p. 45] This warning outlined Montell's performance problems and detailed the center's negative growth. [Record No. 34-4, pp. 4-5] The warning specifically stated that DCS expected monthly increases in new patients by 3%, encounters by 5% ( i.e., the number of times patients were treated at the facility for any type of treatment), and HBO treatments by 10%. [ Id. ] This warning explained that further issues would result in discipline up to and including termination. [ Id. ]
On May 3, 2011, Montell was issued an Amended Final Written Warning (" Amended Final Warning" ). [ Id., pp. 8-12] The Amended Final Warning indicated that one of Montell's late arrivals at the FRMC wound care center was included in her original Final Warning in error, but that shortly after being issued the Final Warning, DCS received another complaint from the hospital. In addition to the original information contained in her Final Warning, the Amended Final Warning stated that, for the month of April, Montell failed to meet two of the three monthly increase metrics, as set out in the Final Warning. The Amended Final Warning also indicated that Montell was placed on a thirty-day action plan and that any further complaints or failure to meet targets for new patients, encounters, and HBO treatments would result in termination. [ Id. ]
On May 19, 2011, Day notified Montell that she had failed to attain her performance bonus goals for the first quarter of 2011. [Record No. 29, p. 49] As acknowledged by Montell, her performance for the first quarter of 2011 was worse than her performance in the fourth quarter of 2010. [Record No. 29, p. 49] On the same day, Montell contacted DCS HR Manager Megan Lee and reported inappropriate conduct by Day. Following this report, Lee contacted Day and informed him that she (Lee) was investigating a report of sexual harassment filed by Montell.  [Record No. 32, p. 45]
According to Montell, on Friday, May 20, 2011, Day told her that she should either resign or her employment would be terminated. [Record No. 37, p. 10] Additionally, Montell stated that Day contacted Barb Vanhoose of FRMC and informed her that Montell had resigned. [ Id. ] Feeling threatened, Montell called Lee to again report Day and request a reprimand; however, Lee does not recall this conversation. The next business day (Monday, May 23, 2011), Montell sent an e-mail to Day and Lee indicating that her last day would be Friday, May 27, 2011.
Montell identified the following comments and gesture as the basis for her claim that she was sexually harassed by Day:
(1) Day commented to her that " nothing turns me on more than a woman wearing a dress in heels," when she was wearing a dress and heels;
(2) Day commented to her that " nothing turns me on more than a woman wearing a red dress and heels," when she was wearing a red dress and heels; and
(3) Day commented to her that " when people first meet you, they may think you are an air-head, until they get to know you," while making an hourglass shape with his hands.
[Record No. 29, pp. 35, 37-38; Record No. 34-4, pp. 22-23] Montell testified that Day prefaced his two dress and heels comments by stating " I know you can get me in trouble. Don't call HR on me." [Record No. 29, pp. 37-38]
Although Montell claims that Day commented on her appearance every time he saw her, she acknowledged that, at first, she appreciated these comments and took them as compliments. [ Id., p. 37] And when questioned about what comments she perceived to be inappropriate, Montell only identified the above three comments. [ Id., pp. 37-38; Record No. 29-1, pp. 4, 7] There are no witnesses to these incidents and Montell's report to Lee was the first time she complained about Day's conduct. Montell testified that Day never inappropriately touched her, or attempted to do so, and that he never requested any sexual favors. 
On May 2, 2012, Montell filed this lawsuit against DCS and Day. She asserts claims of general harassment, intentional infliction of emotional distress, retaliation, and negligence. The defendants have moved for summary judgment on all of Montell's claims. On July 31, ...