United States District Court, N.D. New York
RUDOLPH A. BUCKLEY, M.D., Plaintiff,
SLOCUM DICKSON MEDICAL GROUP, PLLC as successor in interest to Slocum Dickson Medical Group, P.C., Defendant
For Plaintiff: ANDREW S. KOWALCZYK, JR., ESQ., JOSEPH S. DEERY, JR., ESQ., OF COUNSEL, KOWALCZYK, DEERY, HILTON & BROADBENT, LLP, Utica, NY.
For Defendant: ELLEN K. EAGEN, ESQ., ANNE B. DOTZLER, ESQ., JUDITH M. SAYLES, ESQ., OF COUNSEL, HISCOCK & BARCLAY, LLP, Syracuse, NY.
MEMORANDUM--DECISION and ORDER
DAVID N. HURD, United States District Judge.
In July 2010 plaintiff Rudolph A. Buckley, M.D. (" plaintiff" or " Buckley" ) filed this action in the Supreme Court, Oneida County, against defendant Slocum--Dickson Medical Group (" Slocum--Dickson" or " defendant" ) asserting a state law breach of contract claim regarding severance benefits (" First Cause of Action" ) and seeking declaratory judgment (" Second Cause of Action" ) and an accounting (" Third Cause of Action" ). On August 2, 2010, defendant answered the complaint and asserted six
state law counterclaims. Then, on August 12, 2010, defendant removed the action to federal court, arguing that the First Cause of Action arises under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § § 1001-1461 (" ERISA" ).
The parties have completed discovery, and plaintiff has filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. Defendant opposes, and plaintiff replied. In its opposition papers, defendant suggests it is entitled to summary judgment on plaintiff's First Cause of Action. However, defendant did not make a formal cross-motion.
Oral argument was heard on May 24, 2012, in Utica, New York. Decision was reserved.
II. FACTUAL BACKGROUND
Unless otherwise noted, the following facts are undisputed. Buckley, a resident of Utica, New York, is an orthopedic physician specializing in spinal surgery. Slocum--Dickson is a New York limited liability company that operates a for-profit medical practice in the Utica area. Plaintiff began working at Slocum--Dickson on August 17, 2000. The parties' employment relationship was governed by two separate contracts--an Employment Agreement effective August 17, 2000, and a Severance Plan dated October 24, 2002.
Pursuant to the Employment Agreement, Buckley " shall observe and follow the highest ethics and standards of the profession, . . . and at no time act in such a way as to impair the confidence of patients or of the public in the profession." Eadline Aff., Ex. A, ECF No. 25-1, ¶ 2 (" Employment Agreement" ). He is also " responsible for providing the highest professional medical care to all patients of [Slocum--Dickson]." Id. ¶ 4. Either party may terminate the Employment Agreement " with or without cause" through written notice provided at least ninety days prior to the effective date of termination. Id. ¶ 12(A)(ii). If Buckley gives such notice but fails to continue to work for the entire notice period, or if he fails to give notice and unilaterally withdraws from employment, he must pay Slocum--Dickson ten thousand dollars ($10,000) in liquidated damages. This sum represents " the amount reasonably anticipated to be lost by the Employer in the event the Employee elects to unilaterally terminate his/her employment." Id.
Upon termination of his employment, Buckley " shall be paid by March 31st (thirty first) of the following year . . . all compensation to which [he] is entitled, prorated to the effective date of termination, as well as any severance pay [he] is entitled to under the [Severance Plan]." Id. ¶ 12(B). The Employment Agreement also contains restrictive covenants under which plaintiff is barred from practicing within twenty-five miles of defendant's main office for three years after the termination of his employment. He is also
prohibited from soliciting former or existing patients or inducing any of defendant's employees to terminate his or her employment for three years.
Under the Severance Plan, an employee with at least seven years of service and whose employment has terminated for reasons other than death, disability, or retirement " shall receive . . . an amount equal to sixty-five percent (65%) of [his] share of the accounts receivable of [defendant], existing as of the date of termination, assigned to [his] department . . . within the preceding two (2) years." Eadline Aff., Ex. B, ECF No. 25-2, ¶ 2(i) (" Severance Plan" ). This severance payment is reduced by the aggregate amount of disability income paid to the employee during the twelve months preceding termination. The severance payment is to be paid in three increments: thirty-five percent (35%) shall be paid one year after termination of employment; thirty-five percent (35%) the second year after termination; and thirty percent (30%) the third year. In the alternative, Slocum-Dickson may elect to pay in monthly installments over the course of three years.
The Severance Plan provides defendant's Board of Managers (" the Board" ) with " exclusive authority and discretion to: (i) Determine whether an individual is eligible for any benefits under the Plan; [and] (ii) Determine the amount of benefits, if any, an individual is entitled to from the Plan." Id. ¶ 16. The Board's determinations and interpretations are to be given deference in all courts " to the maximum allowed by applicable law" and shall " [n]ot be overturned or set aside by any court of law unless found to be arbitrary and capricious, or made in bad faith." Id.
If an employee's claim for severance benefits is wholly or partially denied, Slocum--Dickson must provide written notice of the decision within ninety days. This notice must identify the specific reason(s) for the denial, reference the specific provisions of the contract upon which the denial is based, describe what additional material may be necessary to perfect the claim, and explain the steps to be taken to obtain review of the decision. The Board has " sole responsibility" to review a denied claim. Id. ¶ 15. The Severance Plan repeatedly references ERISA, which governs its provisions.
On June 2, 2009, Buckley provided written notice to Slocum--Dickson that he was terminating his employment effective August 30, 2009. Defendant acknowledged that this satisfied the ninety-day notice provision in the Employment Agreement. The parties traded various correspondence regarding Buckley's departure. Included in this correspondence was Buckley's request for severance benefits to which he was entitled under the Severance Plan. Defendant developed and began to implement a plan for plaintiff's exit from practice at Slocum--Dickson. Plaintiff participated in meetings regarding this exit plan. On July 15, 2009, defendant mailed letters to plaintiff's patients advising that August 28, 2009, would be his final day in the office.
Buckley then determined that it was financially advantageous to him to terminate his employment before August 30, 2009. Consequently, on August 4, 2009, he provided defendant with a letter advising
of his immediate termination. At the same time, he tendered a check for $10,000 as liquidated damages for failure to complete the ninety-day notice period. Slocum--Dickson refused to accept Buckley's August 4 termination date, arguing that the earlier termination date would negatively impact the continuity of patient care. Buckley did not work for defendant after August 4, 2009. Further, on the advice of counsel, plaintiff refused to sign an agreement created by defendant under which he would continue to oversee the ongoing care of his patients until the end of August ...