Proctor Hospital fired one of its employees for “insubordination.” But the employee claims the real reason is because her husband was undergoing expensive cancer treatment and the hospital didn’t want to cover the costs anymore. So she sued the hospital. Judge Joe Billy McDade found in favor of Proctor (summary judgment), but the Seventh Circuit Court of Appeals reversed that ruling and remanded the case to the district court.

You can read the whole ruling here. An edited version appears below. Usually legal texts are quite boring, but I actually found this one to be rather engaging, which is why I’m quoting extensively from it instead of summarizing.

In September 2001, Proctor, a hospital in Peoria, Illinois, hired Dewitt to work as a nurse on an “as-needed” basis. Proctor apparently liked how Dewitt did her job because the following month she was promoted to the permanent position of second-shift clinical manager. In that role, Dewitt supervised nurses and other Proctor staff members.

Three years into the job, Dewitt switched to the first-shift clinical manager slot. In the summer of 2005, she switched to a part-time schedule, sharing the responsibilities of second-shift clinical manager with a coworker.

Dewitt, it appears (for we must assume the facts to be as she presents them at this stage of the proceedings), was a valuable employee. In her last evaluation, her supervisor, Mary Jane Davis, described her as an “outstanding clinical manager [who] consistently goes the extra mile.” But things were not quite as rosy as they appeared.

Dewitt and her husband, Anthony, were covered under Proctor’s health insurance plan. Throughout Dewitt’s tenure at Proctor, Anthony suffered from prostate cancer and received expensive medical care. His covered medical expenses were paid by Proctor, which was partially selfinsured. It paid for members’ covered medical costs up to $250,000 per year. Anything above this “stop-loss” figure was covered by a policy issued by the Standard Security Life Insurance Company of New York.

Dewitt was able to maintain health insurance coverage for herself and Anthony even during her short part-time stint, since Proctor credited Dewitt with “hospital approved absence” (unpaid time), allowing her to reach the minimum number of hours necessary to qualify for benefits.

Since Proctor was self-insured, it took a keen interest in the medical claims submitted by its employees. Each quarter, in fact, Progressive Benefits Services, the administrator of Proctor’s medical plan, prepared a “stop-loss report” for Linda K. Buck, Proctor’s vice-president of human resources. The report identified all employees whose recent medical claims exceeded $25,000.

The stop-loss reports highlighted Dewitt’s expenses. Although Dewitt was not listed on reports for 2001 and 2002 (indicating that her family’s medical expenses, particularly those of her husband, were less than $25,000), during the next three years Anthony underwent costly medical procedures. In 2003, the Dewitts’ medical claims for Anthony were $71,684. In 2004, the figure jumped to $177,826. In the first eight months of 2005, the expenses were $67,281.50.

In September 2004, Davis confronted Dewitt about Anthony’s high medical claims. Specifically, she asked what treatment Anthony was receiving, and Dewitt responded that he was undergoing chemotherapy and radiation. Davis asked Dewitt if she had considered hospice care for her husband; Dewitt responded that Anthony’s doctor considered less expensive hospice care placement to be premature. Davis explained that a committee was reviewing Anthony’s medical expenses, which she described as unusually high.

In February 2005, Davis again pulled Dewitt aside to ask about Anthony’s treatment. Dewitt informed her that Anthony’s situation had not changed.

In May 2005, Davis organized a meeting for Proctor’s clinical managers. She informed the employees that Proctor faced financial troubles, which, according to Davis, required a “creative” effort to cut costs.

Proctor fired Dewitt on August 3, 2005, and designated her as “ineligible to be rehired in the future.” Proctor provided no explanation for its “ineligible for rehire” decision. Dewitt’s medical benefits with Proctor continued through the end of August. After that, Dewitt paid for COBRA coverage (which she was able to get for a maximum of 18 months) for herself and her husband. But 18 months, as it turned out, wasn’t necessary as Anthony, a year and a week after Dewitt was fired, gave up his fight with cancer. He died on August 9, 2006.

[…]

The uncontroverted evidence suggests that Proctor, which faced financial trouble, was very concerned about cutting costs. Because Proctor’s unusually high “stop-loss” coverage didn’t kick in until claims exceeded $250,000, it personally felt the heavy bite of Dewitt’s expenses. Proctor wasn’t discreet about its concerns: in the May 2005 meeting, Davis informed Proctor’s clinical managers that the hospital would have to be “creative” in cutting costs.

That the powers-that-be at Proctor were interested specifically in the high cost of Anthony’s medical treatment is obvious. Davis, Dewitt’s supervisor (and the person who ultimately fired her), pulled Dewitt aside twice in five months to inquire about Anthony’s condition. These conversations indicate that Davis was very interested in limiting Anthony’s claims. During their first chat, Davis informed Dewitt that a Proctor committee was reviewing Anthony’s unusually high medical expenses. She also asked Dewitt whether Anthony’s doctor had considered hospice placement—a far cheaper “alternative” to the costly chemotherapy and radiation Anthony was
receiving.

Finally, the timing of Dewitt’s termination suggests that the financial albatross of Anthony’s continued cancer treatment was an important factor in Proctor’s decision. Dewitt was fired in August 2005—five months after her last chat with Davis and three months after Proctor warned
employees about impending “creative” cost-cutting measures. One could reasonably infer that Dewitt was terminated after Proctor conducted its latest periodic analysis of medical claim “outliers” and, this time around, decided that its “wait and see” strategy with the Dewitts
was costing the hospital tens of thousands of dollars every year. A reasonable juror could conclude that Proctor, which faced a financial struggle of indeterminate length, was concerned that Anthony—a multi-year cancer veteran—might linger on indefinitely….