Roger Wortham, M.D. v. Acadia Healthcare, LLC

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

14-718

ROGER WORTHAM, M.D.

VERSUS

ACADIA HEALTHCARE, LLC, ET AL.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. C-20135893
HONORABLE HERMAN C. CLAUSE, DISTRICT JUDGE

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ELIZABETH A. PICKETT
JUDGE

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Court composed of Sylvia R. Cooks, John D. Saunders, Elizabeth A. Pickett, John
E. Conery, and D. Kent Savoie, Judges.

AFFIRMED IN PART, REVERSED IN PART, AND RENDERED.

Cooks, J., concurs and assigns reasons.

Conery, J., concurs in part and dissents in part and assigns reasons.

Timothy W. Basden
Alan K. Breaud
Breaud & Meyers
600 Jeferson St., Suite 1101
Lafayette, LA 70502
(337) 266-2200
COUNSEL FOR PLAINTIF-APPELLANT:
Roger Wortham, M.D.

Matthew Brown
Michelle K. Buford
Sullivan Stolier Knight LC
1042 Camellia Blvd., Suite 2
Lafayette, LA 70508
(337) 233-6210
COUNSEL FOR DEFENDANT-APPELLANT:
Acadia Healthcare, LLC

PICKETT, Judge.

Both Dr. Roger Wortham and his former employer, Acadia Healthcare,

L.L.C., appeal the judgment of the trial court, which awarded Dr. Wortham

amounts due under the terms of an employment contract and attorney fees, but not

penalty wages.

STATEMENT OF THE CASE

Dr. Wortham accepted a job with Acadia Healthcare in October 2010. He

signed a one-year contract with an effective date of January 15, 2011. As part of

the contract, Dr. Wortham assigned to the hospital the right to bill for his services

in exchange for an annual salary of $180,000.00, an additional fee for certain

consultations, reimbursement for certain expenses (including for licenses, dues,

and continuing education), and a “bonus” of “50% of collections over costs.”

After the one-year term of the original contract expired, Dr. Wortham continued

working for Acadia Healthcare without executing a new contract. Dr. Wortham

tendered his resignation on January 24, 2013, effective on March 24, 2013.

Prior to leaving, Dr. Wortham requested information about the amount he

had billed and the costs associated with his practice for the purpose of determining

his bonus. He also submitted reimbursement for two continuing education

conferences from July 2011 and July 2012, his 2012 and 2013 dues for state and

national medical associations, and his 2011 and 2012 Board of Pharmacies license.

He received no reply. When he continued to receive no reply, he hired an attorney

to make inquiries.

Dr. Wortham filed a petition in district court on November 19, 2013, seeking

bonus payments for 2012 and the partial 2013 year, the reimbursements that he

submitted in January 2013, and penalty wages, and attorney fees in accordance

with La.R.S. 23:632. Acadia Healthcare maintained that the contract expired in

January 2012 and Dr. Wortham was not entitled to bonus payments thereafter. It

also disputed the reimbursement of expenses. Immediately before trial on January

13, 2014, Acadia Healthcare submitted the billing and expense information

requested by Dr. Wortham. After a trial, the trial court awarded $21,729.93 in

earned bonuses for 2012 and 2013, $7,021.76 in expense reimbursements,

$11,409.50 in attorney fees, and $804.25 in litigation expenses. The trial court did

not award penalty wages as sought by Dr. Wortham. Both Dr. Wortham and

Acadia Healthcare have appealed.

ASSIGNMENTS OF ERROR

On appeal, Acadia Healthcare asserts one broad assignment of error:

The trial court erred as a matter of law by enlarging the scope
of the Employment Agreement when its language was clear and
unambiguous, and, based on that erroneous ruling, by awarding [the
p]laintiff bonuses, reimbursement for certain business and medical
expenses, and attorney fees pursuant to the Louisiana Wage Payment
Act, La.R.S. 23:23:631 et seq.

In his appeal, Dr. Wortham asserts one assignment of error: that the trial

court erred in denying his claim for penalty wages under La.R.S. 23:632. He also

asks for attorney fees for work done in this appeal.

DISCUSSION

The Employment Agreement

Acadia Healthcare argues that the Employment Agreement is clear and

unambiguous. It expired on January 14, 2012, and Dr. Wortham became an at-will

employee on that date. It argues that the only compensation they owe him is the

$180,000.00 base salary, which was timely paid upon his resignation. Acadia

Healthcare claims the trial court erred as a matter of law in interpreting the

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contract, and we should review the trial court’s ruling de novo. We agree that the

contract clearly expired on January 14, 2012. The question faced by the trial court

was a determination of the terms of Dr. Wortham’s continued employment with

Acadia Healthcare.

In order to recover under La.R.S. 23:632, Dr. Wortham has the burden of

proving that “(1) wages were due and owing; (2) demand for payment was made

where the employee was customarily paid; and (3) the employer did not pay upon

demand.” Becht v. Morgan Bldg. & Spas, Inc., 02-2047, p. 4 (La. 4/23/03), 843

So.2d 1109, 1112. In order to show that wages were due, Dr. Wortham must prove

the terms of the contract. This is a factual determination subject to the manifest

error standard of review. Id.

Acadia Healthcare argues that when the Employment Agreement expired,

Dr. Wortham became an at-will employee only entitled to the base salary of

$180,000.00. Its chief executive officer, Joe Rodriguez, testified that those

sections of the Employment Agreement regarding base salary, assignment of

billing, and Dr. Wortham’s duties did not change when the contract terminated.

Only Dr. Wortham’s entitlement to an annual bonus, which amounted to a

commission for the services he billed, changed when the contract expired. Mr.

Rodriguez admitted that he and Dr. Wortham never had any discussion about the

terms of his continued employment when the Employment Agreement expired.

Dr. Wortham testified that he understood the terms of the Employment Agreement

to continue because there was never any discussion about changing those terms.

One colloquy during Mr. Rodriguez’s testimony gives credit to Dr.

Wortham’s argument. Mr. Rodriguez explained that after the first year, Dr.

Wortham was assigned more consultations at a higher rate. When asked if the

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payments for those consultations were deducted as expenses when calculating Dr.

Wortham’s annual bonus, Mr. Rodriguez originally said they did not, but then

deferred to the hospital’s chief financial officer, Larry Maxwell. Mr. Maxwell

confirmed that those amounts were charged as expenses when calculating the

bonus. But there was no need to calculate a bonus if Dr. Wortham was not entitled

to the bonus. This is consistent with Acadia Healthcare’s position throughout the

litigation that only those terms of the contract which benefitted it continued in

force, while any terms that inured to the benefit of Dr. Wortham expired on

January 14, 2012. We find the trial court did not err in finding that all the terms of

the Employment Agreement continued after January 14, 2012.

The Annual Bonus

Since we find that the trial court correctly found the terms of the

Employment Agreement remained in effect, we must now consider whether the

other arguments advanced by the hospital for failing to pay Dr. Wortham have any

merit. The provision regarding the annual bonus stated:

In addition, Practitioner will be eligible for 50% of collections over
costs as outlined in the attached exhibit. (In order to assist
Practitioner in maximizing collections, a biller will be assigned to
assist with all claims issues.)

The attached exhibit was a worksheet which calculated the bonus using

hypothetical figures. Dr. Wortham does not dispute that in the first year he worked

at Acadia Healthcare, his costs exceeded his collections, and he was not entitled to

a bonus. Acadia Healthcare argues that the calculation of expenses is cumulative,

not annual, and because the costs so far exceeded the collections for the first year,

Dr. Wortham is not entitled to a bonus in the second year or the partial third year.

To that end, Mr. Rodriguez testified that the annual bonus has always been

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cumulative, based on a “running tally.” Conversely, Dr. Wortham argues that the

collections and costs used to calculate of the bonus are reset each year. He points

to the worksheet attached as an exhibit to the Employment Agreement. The annual

costs on this sheet include salary of $180,000.00, benefits, taxes, a collection and

processing fee, and a liability insurance fee. There is no line item for carried-over

expenses from the previous year. The trial court made a factual determination that

the calculation of costs was not cumulative year over year. There is sufficient

evidence to support his finding that Dr. Wortham was entitled to a bonus for 2012

and 2013, and we will not disturb it.

Finally, Acadia Healthcare argues in its reply brief that the annual bonus is

not considered wages because it is payable at the end of the year, and therefore Dr.

Wortham cannot collect the bonus pursuant to La.R.S. 23:631 and 632, which

state, in pertinent part:

§ 631. Discharge or resignation of employees; payment within three
days after termination of employment

A. (1)(a) Upon the discharge of any laborer or other employee of any
kind whatever, it shall be the duty of the person employing such
laborer or other employee to pay the amount then due under the
terms of employment, whether the employment is by the hour, day,
week, or month, on or before the next regular payday or no later
than fifteen days following the date of discharge, whichever occurs
first.

(b) Upon the resignation of any laborer or other employee of any
kind whatever, it shall be the duty of the person employing such
laborer or other employee to pay the amount then due under the
terms of employment, whether the employment is by the hour, day,
week, or month, on or before the next regular payday for the pay
cycle during which the employee was working at the time of
separation or no later than fifteen days following the date of
resignation, whichever occurs first.

(2) Payment shall be made at the place and in the manner which
has been customary during the employment, except that payment
may be made via United States mail to the laborer or other

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employee, provided postage has been prepaid and the envelope
properly addressed with the employee’s or laborer’s current
address as shown in the employer's records. In the event payment
is made by mail the employer shall be deemed to have made such
payment when it is mailed. The timeliness of the mailing may be
shown by an official United States postmark or other official
documentation from the United States Postal Service.

....

B. In the event of a dispute as to the amount due under this Section,
the employer shall pay the undisputed portion of the amount due as
provided for in Subsection A of this Section. The employee shall
have the right to file an action to enforce such a wage claim and
proceed pursuant to Code of Civil Procedure Article 2592.

§ 632. Liability of employer for failure to pay; attorney fees

Any employer who fails or refuses to comply with the
provisions of R.S. 23:631 shall be liable to the employee either for
ninety days wages at the employee's daily rate of pay, or else for full
wages from the time the employee’s demand for payment is made
until the employer shall pay or tender the amount of unpaid wages due
to such employee, whichever is the lesser amount of penalty wages.
Reasonable attorney fees shall be allowed the laborer or employee by
the court which shall be taxed as costs to be paid by the employer, in
the event a well-founded suit for any unpaid wages whatsoever be
filed by the laborer or employee after three days shall have elapsed
from time of making the first demand following discharge or
resignation.

In support of this argument, Acadia Healthcare cites Dore v. WHC Lease Service,

Inc., 528 So.2d 235 (La.App. 3 Cir. 1988). In Dore, the court determined that the

bonus the plaintiff claimed could only be determined by reviewing audited

financial statements, therefore they could not be calculated before the end of the

fiscal year. In this case, the provisions of the Employment Agreement, which we

have determined apply in this case, specifically state that the “compensation and

vested rights to fringe benefits” should be prorated. Similarly, in Ward v. Tenneco

Oil Co., 564 So.2d 814 (La.App. 3 Cir. 1990), we held that La.R.S. 23:631 does

not apply to a value incentive plan that required an employee to remain with the

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company until the sale of the company. In this case, we agree with the trial court’s

finding that the bonus payments were analogous to commissions that were

calculable at the date of the termination, and thus payable as wages. See Brown v.

Navarre Chevrolet, Inc., 610 So.2d 165 (La.App. 3 Cir. 1992).

Reimbursement for Licenses and Continuing Education

At oral argument before this panel, counsel for Acadia Healthcare indicated

that the expenses for licenses and continuing education had been paid, and was no

longer an issue to be resolved by this court. We deem this issue abandoned, and

affirm the award of $7,021.76 in expense reimbursements.

Penalties and Attorney Fees

The trial court awarded $11,409.50 for attorney fees, but did not award

penalty wages. The trial court’s findings of fact as to whether an employee is due

penalty wages and attorney fees is a finding of fact subject to the manifest error

standard of review. Red Ball Oxygen, Inc. v. Swilley, 11-787 (La.App. 3 Cir.

12/7/11), 82 So.3d 360. “In order to recover penalty wages and attorney’s fees

under La.R.S. 23:632, the claimant must show that (1) wages were due and owing;

(2) demand for payment was made where the employee was customarily paid; and

(3) the employer did not pay upon demand.” Becht v. Morgan Bldg. & Spas, Inc.,

02-2047, p. 3 (La.4/23/03), 843 So.2d 1109, 1112, cert. denied, 540 U.S. 878, 124

S.Ct. 289, 157 L.Ed.2d 142 (2003).

Dr. Wortham argues that the trial court should have awarded penalty wages

as well as attorney fees pursuant to La.R.S. 23:632. Acadia Healthcare claims that

since the amounts claimed by Dr. Wortham are not due under the contract, attorney

fees should not have been awarded. As we have rejected Acadia Healthcare’s

arguments on the validity of the contract, we reject their argument that attorney

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fees are not due. We find the trial court did not commit manifest error in its

finding that the Dr. Wortham was entitled to attorney fees.

The jurisprudence has developed a rule whereby an award for penalty wages

pursuant to La.R.S. 23:632 will not be awarded if the employer proves an equitable

defense. Beard v. Summit Institute of Pulmonary Medicine and Rehabilitation,

Inc., 97-1784 (La. 3/4/98), 707 So.2d 1233. Furthermore, this court stated in

Newsom v. Global Data Systems, Inc., 12-412, p. 6 (La.App. 3 Cir. 12/12/12), 107

So.3d 781, 787, writ denied, 13-429 (La. 4/5/13), 110 So.3d 595:

This statute is penal in nature and, therefore, must be strictly
construed in favor of the one receiving benefits under that chapter of
the law. Fontenot v. Reddell Vidrine Water Dist., 02-439
(La.1/14/03), 836 So.2d 14. Equitable defenses are available, and
penalty wages are not to be absolutely imposed. Pace v. Parker
Drilling Co. and Subsidiaries, 382 So.2d 988 (La.App. 1 Cir.), writ
denied, 383 So.2d 1016 (La.1980). Generally, when there is a good
faith question of whether the employer actually owes past due wages,
resistance to payment will not trigger penalty wages. However, when
the employer is arbitrary, sets out procedural pitfalls for the employee,
or is negligent in failing to pay past due wages, penalty wages will be
assessed. Id.

We find the trial court committed manifest error in finding that penalty

wages were not due. Acadia Healthcare refused to respond to repeated request by

Dr. Wortham and his counsel to provide information about the payments he

claimed. It provided no defense or an attempt at a good faith argument until Dr.

Wortham filed suit. Considering the evidence, we find that the defenses it has

offered up for the refusal to pay the bonus payments have not been made in good

faith. We award penalty wages in the amount of $61,363.67 ($180,000.00 divided

by twelve months divided by twenty-two working days in a month times ninety).

Finally, we award attorney fees to Dr. Wortham for the work done on this

appeal. We award $7,500.00 in attorney fees.

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CONCLUSION

The judgment of the trial court awarding Dr. Wortham $21,724.93 for

annual bonus payments is affirmed. The award for reimbursement of expenses is

affirmed. The judgment of the trial court awarding attorney fees of $11,409.50 and

litigation expenses in the amount of $804.25 is affirmed. The trial court’s

judgment denying Dr. Wortham’s claim for penalty wages is reversed, and we

award penalty wages in the amount of $61,363.67. Finally, we award Dr.

Wortham $7,500.00 for attorney fees in pursuit of this appeal. Costs of this appeal

are assessed to Acadia Healthcare, LLC.

AFFIRMED IN PART, REVERSED INPART, AND RENDERED.

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STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

14-718

ROGER WORTHAM, M.D.

VERSUS

ACADIA HEALTHCARE, LLC, ET AL.

COOKS, J., concurring.

Additionally, I note Acadia Healthcare continued to do nothing until the

morning of trial when it handed over, for the first time, the record sought by Dr.

Wortham. Throughout trial, and now on appeal, it has vigorously fought to avoid

the clear wording of the contract at issue and the application of the jurisprudence

sealing its fate here today.

NUMBER 14-718 CA

COURT OF APPEAL, THIRD CIRCUIT

STATE OF LOUISIANA

ROGER WORTHAM, M.D.

V.

ACADIA HEALTHCARE, LLC, ET AL.

CONERY, J., concurs in part and dissents in part

The majority’s opinion adequately sets forth the procedural history, facts,

and law applicable to this case. The manifest error rule applies and there is a

reasonable factual basis in the record to affirm the trial court’s award of annual

bonus payments as back wages, that portion of the expenses of CME and licenses

renewed in 2011, attorney fees, litigation expenses, and costs. I concur with that

portion of the majority’s opinion.

I disagree with the majority’s decision to reverse the trial court and award

penalty wages pursuant to La. R.S. 23:632. The trial judge made specific factual

findings as to the reason he denied penalties.

However, because there are some litigation questions, some
interpretation questions in figuring what was owed, and who owes
what, whether - - it’s a continuing - - the defendants had a basis to
question, to raise questions, and it’s legitimate questions, about what
number should be used, should be used, should the number result, for
instance, on the CME, of no reimbursement, or is it a twenty thousand
dollar ($20,000) figure, as I found, or is it some other number? So
there are legitimate issues that needed to be litigated[.]

I believe that there is a reasonable basis in the record to support the trial court’s

ruling under the manifest error standard, and I would affirm his ruling to deny

penalties.

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