Korty v. Indiana University Health, Inc.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION AT LAFAYETTE

LAURA KORTY, )

)

Plaintiff, )

)

vs. ) CAUSE NO. 4:21-CV-33-PPS

)

INDIANA UNIVERSITY HEALTH, INC., )

)

Defendant. )

OPINION AND ORDER

Plaintiff, Laura Korty, was a Clinical Nurse Quality Coordinator for Indiana

University Health (“IUH”) when she decided to voluntarily resign. During the process

of training her male replacement, Korty discovered he was making $15,000 more than

she had been earning. That realization prompted this lawsuit under the Equal Pay Act

which IUH now seeks summary judgment on. Because the undisputed facts

demonstrate that the pay disparity between Korty and her replacement was due to

factors other than sex, summary judgment must be granted.

Background

At the outset, I note that Korty has filed a motion to strike. [DE 37.] Korty seeks

to exclude from the summary judgment record some hearsay testimony and certain

facts mentioned by IUH that she claims are irrelevant. [DE 37.] Because I have not

relied on any of that evidence in my decision in this case, I will deny that motion as

moot.

IUH is a healthcare system based in Indianapolis, with dozens of facilities

statewide. [Baker Dec., DE 33-1, at 1.]1 IUH Arnett Hospital is located in Lafayette,

Indiana, and is part of IUH’s West Central Region. Id. Max Foxen is Compensation

Manager for IUH. [Foxen Dep., DE 33-2, at 2.] In that role, he helps create guidelines

for IUH Talent Acquisition Consultants to follow when setting compensation offers for

employees. Id. Factors to consider for new hires include pay range, internal equity,

prior relevant work experience, and budget. [Id. at 2, 10.] IUH uses the term “internal

equity” to review the pay of current IUH employees to determine where to slot the new

hire. [Id. at 3.] IUH’s policy permits pay differences between individuals in the same job

code based on relevant work experience, performance, or seniority. Id. According to

Foxen, talent acquisition coordinators should generally avoid new hire rates that are

higher than incumbent pay; however, exceptions may occur, including when a current

IUH employee experiences a demotion. Id. In other words, when a current IUH

employee is hired for a position where his or her current base pay is above the new pay

(i.e. a demotion), talent acquisition coordinators can take that into account, while also

considering relevant experience and internal equity. Id.

Korty started working with IUH as a patient care intern in December 2010 and

then transitioned to a registered nurse role in October 2011. [Korty Dep., DE 33-3, at 7-

8.] In June or July 2012, Korty transferred to a registered nurse role at IUH Arnett

1 There are a lot of different pieces of evidence in the record including deposition

excerpts, declarations, and exhibits produced during discovery. For the sake of

consistency, the citations in this order are to the blue CM/ECF page number at the top

of each page.

2

Hospital, where she stayed until the summer of 2015, when she resigned. [Id. at 8-9.] In

March 2017, Korty returned to IUH Arnett as an outpatient float nurse. [Id. at 10.] In

October 2017, Korty applied for and received the position of specialist medical staff

quality and peer review nurse at IUH Arnett, which later became known as the Clinical

Nurse Quality Coordinator. [Id. at 11.] Korty started reporting to Laura Baker, Director

of Quality, Patient Safety and Infection Prevention of IUH Arnett. [Id. at 19.]

In that final position, Korty screened cases for IUH Arnett’s committees (i.e.,

emergency room, surgery, pediatrics, etc.), to determine if the case needed to go

through the peer review process, as well as assigning the cases to correct committees,

setting up agendas for the meetings, attending the meetings, and taking minutes. [DE

33-3 at 14.] She also coordinated ongoing professional practice evaluations for

credentialed medical staff at IUH Arnett. [Id. at 15.] While Korty was originally only

responsible for the Arnett Hospital, over her tenure, she also took over the same

responsibilities for IU Health’s Frankfort and White Memorial Hospitals too. [Id. at 14,

17-18.] During her employment, Korty was the only quality coordinator in the West

Central Region. [Id. at 16-17; DE 33-1 at 1.] Around February 2021, Korty told Baker

she was resigning, but she agreed to stay to train her replacement. [DE 33-1 at 3.] At the

time of her resignation, Korty was earning $31.53 per hour or $65,583 per year. [DE 33-4

at 10.]

As Baker began the task of finding Korty’s replacement, she “wanted the role to

focus on increasing provider engagement in setting quality metrics and making the peer

3

review process more robust.” [DE 33-1 at 3.] She reviewed applications and

interviewed candidates, and Baker decided she wanted to hire Justin Reagin to fill the

position Korty was vacating. [Id., Baker Dep., DE 33-4, at 7.] Reagin was an internal

candidate; he was already working for IUH as a Clinical Informaticist. [DE 33-1 at 3.]

Reagin was well qualified for the position. He had worked as a nurse, as well as an

Associate Administrator at IUH Frankfort Hospital for over two years, with staff

management and leadership responsibilities. Id. Because Baker found Reagin to be

such a quality candidate, she wanted to offer a salary he would find acceptable. [DE 33-

4 at 12.]

While Reagin was the best candidate for the job, there was a problem. He was

earning substantially more money in his current position. He was therefore told that he

would have to take a pay cut if he wanted the new job. [DE 36-6 at 4.] Nevertheless,

Baker wanted to find a way to offer Reagin a salary that was attractive enough to make

it work. [DE 33-4 at 12.] Lori Fenton was the IUH Talent Acquisition Consultant

assigned to work on making that happen. [DE 33-6 at 2.]

Baker relied upon, and engaged in discussions with her HR partners, to decide

what Reagin’s salary should be. [DE 33-1 at 3.] The initial pay recommendation for

Reagin was prepared by Fenton. [Id. at 4.] In coming up with her recommendation,

Fenton considered market range, internal equity, and Reagin’s knowledge, skills and

abilities. [DE 33-6 at 3.] Fenton told Baker that she reviewed the market range for the

job and was aware that Reagin was in a higher market range in his Clinical Informaticist

4

position than the CNQC role would provide. [DE 33-6 at 3.] Fenton also told Baker that

Reagin was currently making $41.07/hour, or $85,426 annually. Id. Fenton noted

Reagin’s leadership experience, as well as the nine years of clinical experience that he

and Korty both had. [DE 33-6 at 3; DE 33-1 at 4.] Fenton, as well as Nicole Jarrett from

IUH, both indicated that Reagin’s experience acquired in his higher pay grade positions

was considered valuable – in general, higher pay grades indicate experience at a higher

level. [Jarrett Dep., DE 33-5, at 13, 14, 17; DE 33-6 at 3.]

Fenton initially proposed offering Reagin between $32.00/hour or $66,560/year

and $33.00/hour or $68,640/year. [DE 33-6 at 3.] This would have been roughly

equivalent to what IUH paid Korty for that position. [DE 33-4 at 9.] But according to

Fenton, she “knew there was room to offer him more based on his prior pay and

experience under IUH guidelines, [but] [she] provided a conservative initial

recommendation to be conscious of the department’s budget.” [DE 33-6 at 3.] After

Baker reviewed Fenton’s recommendation, she responded in an e-mail back to Fenton

expressing concern at how big a pay cut Reagin was going to have to take: “Ouch . . .

that’s a pay cut for sure . . [Korty’s] been in the quality coordinator role for 3 years, so

[Reagin] has more RN experience and both his Clinical Informaticist and Nursing

Supervisor Experience will be valuable in this role.” [DE 33-1 at 4; 15.] Nonetheless,

Baker initially agreed to offer Reagin $33/hour. Id.

But then Baker apparently had second thoughts about offering $33/hour. She

followed up with Fenton: “Do we look at internal equity across IU Health at all? There

5

are Clinical Nurse-Quality Coordinators at Bloomington and Ball who do similar roles.”

[DE 33-1 at 4, 15.] Fenton then reviewed the pay rates of the ten other coordinators

within the South Central and East Central regions to compare internal equity, and

noted that it “does change things for [Reagin.]” [DE 33-1 at 4-5, DE 33-6 at 4, 9.] She

identified the average pay for that position in those regions as $38.30/hour or $79,664

annually, with the highest at $40.10/hour. [DE 33-6 at 4, 9.]

Based on this additional information, Baker recommended that Fenton offer

$38/hour to Reagin. [DE 33-1 at 5, 13.] Fenton agreed, and that was the amount she

first offered to Reagin. [DE 33-6 at 4.] But Reagin wanted more. He responded by

inquiring if there was “any wiggle room for negotiation at all” in the offered salary. [DE

33-6 at 4, 22.] Fenton responded that “one thing that IU Health really focuses on is

internal equity with other team members in the role; however you do have amazing

experience & the skill-set that Laura [Baker] is seeking for this position so I will

definitely advocate for that and get back with you as soon as possible.” [Id. at 4, 21.]

Baker then agreed to increase the offer to $38.76/hour (or $80,621 annually). [DE

33-1 at 5.] In raising the offer, Baker noted that her budget was “pretty stretched” and

she did not think offering him any higher amount was in line with internal equity. [DE

33-1 at 5, 12.] This time, Reagin accepted the position. [DE 33-1 at 5.] Here is how Baker

articulated the reasons for Reagin’s higher pay rate:

IU Health does market adjustments for clinical nurses on a fairly

routine basis, and nurses who work in other positions aren’t always

included in those adjustments. Because [Reagin] had maintained a

position as a pediatric nurse and as a supervisor, he was given

6

raises as part of the clinical nurse role. So when he applied for the

position, he’s - and now the clinical nurse quality coordinator, he

already had a higher rate . . .

[DE 33-4 at 13; DE 33-1 at 4.]

Discussion

Summary judgment must be granted when “there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). A genuine dispute of material fact exists when “the evidence is such that a

reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). I must take the facts in the light most favorable to

the party opposing the motion. Fulk v. United Transp. Union, 160 F.3d 405, 407 (7th Cir.

1998).

Korty’s only claim is under the Equal Pay Act (EPA) which prohibits wage

discrimination on the basis of sex for equal work in jobs that require equal skill, effort

and responsibility and which are performed under similar working conditions. See 29

U.S.C. § 206(d)(1). To establish a prima facie case under the EPA, Korty must show: “(1)

higher wages were paid to a male employee, (2) for equal work requiring substantially

similar skill, effort and responsibilities, and (3) the work was performed under similar

working conditions.” Merillat v. Metal Spinners, Inc., 470 F.3d 685, 695 (7th Cir. 2006)

(citation omitted).

Everyone seems to agree that Korty is able to meet the prima facie case. The

burden therefore shifts to IUH to prove that a statutory affirmative defense applies.

7

Lauderdale v. Ill. Dep’t of Human Servs., 876 F.3d 904, 907 (7th Cir. 2017). There are four

defenses, any one of which can justify the pay differential. In other words, an

employer is not liable if the pay is made pursuant to “(i) a seniority system; (ii) a merit

system; (iii) a system which measures earnings by quantity or quality of product; or (iv)

a differential based on any other factor other than sex.” 29 U.S.C. § 206(d)(1).

IUH contends that Reagin’s pay differential was based on the fourth affirmative

defense, a factor other than sex. This fourth affirmative defense is admittedly a bit

fuzzy. It has been described as a “broad ‘catch-all’ exception and embraces an almost

limitless number of factors, so long as they do not involve sex.” Fallon v. State of Illinois,

882 F.2d 1206, 1208 (7th Cir. 1989). Ultimately, the Seventh Circuit “does not require

that the factor other than sex be related to the requirements of the particular position in

question, or that it be a business-related reason.” Id. at 1211. Instead, the question to be

asked under the fourth affirmative defense is “whether the factor is discriminatorily

applied or if it causes a discriminatory effect.” Id. Finally, an employer can’t just give

an after the fact explanation for the pay discrepancy; there must be evidence “that the

employer actually relied on that reason.” Lauderdale, 876 F.3d at 908.

Here, the evidence is clear that there were multiple factors other than sex that

legitimize the $15,000 pay difference between Korty and her male successor.

1. Market Range/Prior Salary

The e-mail chain between Baker and Fenton makes it plain that IUH considered

Reagin’s previous salary in determining what he should be offered initially, and in

8

calculating his final offer. Recall that Fenton initially acknowledged that Reagin was

making $85,426/year in his current position, and recommended that IUH offer him

$32/hour or $66,560/year up to $33/hour or $68,640/year based on his experience and

education. [DE 33-1 at 15.] In response, Baker noticed this would cause Reagin to take

quite a hit, stating “ouch . . . that is a pay cut for sure” and asked Fenton if they could at

least initially offer the $33/hour. Id. Fenton then responded that she could look at the

internal equity to see if they had room to offer more to Reagin. [Id. at 14.]

For Baker to have focused in on Reagin’s prior salary was entirely reasonable.

Indeed, the Seventh Circuit “has repeatedly held that a difference in pay based on the

difference in what employees were previously paid is a legitimate ‘factor other than

sex.’” Lauderdale, 876 F.3d at 908. The Court acknowledges that “[b]asing pay on prior

wages could be discriminatory if sex discrimination led to the lower prior wages.” Id.

But Korty has not made that showing at all — nowhere has she shown that Reagin’s

previous salary was inflated based upon his sex.

IUH has established that its own guidelines provide when a current IUH

employee experiences a demotion (like Reagin did here), the talent acquisition

coordinators can actually approve a new pay rate at the maximum of the new pay grid.

[Foxen Dec., DE 33-2 at 3.] Recall that Reagin held the Clinical Informaticist role prior

to applying for Korty’s job, and he made approximately $20,000 more per year at that

job than IUH was paying Korty for doing hers. It was altogether reasonable for IUH to

consider Reagin’s previous pay in determining how much to offer him for the new

9

position. Indeed, a slew of courts have arrived at the same conclusion. See, e.g., Hubers v.

Gannett Co., Inc., No. 16 C 10041, 2019 WL 1112259, at *4-5 (N.D. Ill. Mar. 11, 2019)

(granting summary judgment where undisputed evidence showed that male’s base

salary was higher than a female’s not because of sex, but because of his prior salary);

Purcell v. Indiana Univ-South Bend and Its Chancellor, No. 3:13 CV 386, 2017 WL 447236, at

*4-5 (N.D. Ind. Feb. 2, 2017) (granting summary judgment where female lecturer in

music was paid less than male lecturers, where the court found the men had a higher

salary due to their higher market value – they had received higher salaries before and

the university determined their salaries were necessary to attract a new resident quartet

to lecture and perform); Cooper-Schut v. Visteon Auto. Sys., No. IP-01-0899-C-B/G, 2003

WL 1702261, at *13 (S.D. Ind. Mar. 31, 2003) (grating summary judgment on Equal Pay

Act claim finding company based its decision to pay a male more than a female for

legitimate reasons other than sex, including his prior salary and experience).

Korty candidly admits that the current state of the law in this circuit allows

consideration of prior salary as a valid reason “other than sex” to explain a pay

disparity. [DE 35 at 8.] However, she advocates that the Seventh Circuit should join

other circuits that refuse to consider prior salary as a factor other than sex because it

simply perpetuates a pay disparity between the sexes.2 While there may be some merit

2 See, e.g., Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995) (holding prior salary is

not a separate justification for pay differential); Rizo v. Yovino, 887 F.3d 453 (9th Cir.

2018) (en banc), vacated on unrelated grounds sub. nom Yovino v. Rizo, 139 S.Ct. 706

(2019) (holding “prior salary alone or in combination with other factors cannot justify a

wage differential” because, otherwise, employers could “capitalize on the persistence of

10

to that position, I am bound to follow the precedent of this circuit. As I have said

before, “[i]n a hierarchical system of courts, binding precedent is just that, district court

judges are not free to disregard the law as clearly espoused by the Seventh Circuit, until

it is either overruled by that court or the Supreme Court.”Szany v. Garcia, No. 2:17-cv-

74-PPS-JPK, 2020 WL 2767356, at *15 (7th Cir. 2020); see also Reiser v. Residential Funding

Corp., 380 F.3d 1027, 1029 (7th Cir. 2004) (district judges must follow the decisions of the

Seventh Circuit, even if they disagree with the decision).

To the extent Korty looks to the Supreme Court case in Corning Glass Works v.

Brennan, 417 U.S. 188, 209-10 (1974), to try to sway this court that prior salary should

not be considered, that case concluded that “the company’s continued discrimination in

base wages between night and days workers, though phrased in terms of a neutral

factor other than sex, nevertheless operated to perpetuate the effects of the company’s

prior illegal practice of paying women less than men for equal work.” Here, IUH has

provided undisputed evidence that Reagin’s prior salary was set for a different role

(when he was a Clinical Informaticist), and Korty has provided no evidence at all that

previous salary was already artificially inflated due to sex; therefore, the broader

arguments set forth in Brennan just don’t apply in this case.

While Korty contends Reagin’s prior pay rate is only a pretextual reason for

over-paying Reagin because he is male [DE 35 at 13], this is pure speculation. There is

no evidence to support such a theory. Korty believes it is telling that Reagin wrote in

the wage gap and perpetuate that gap ad infinitum”).

11

an e-mail at the beginning of the application period that “It’s never been all about the

money.” [DE 35 at 12-13, DE 36-3 at 4]. But of course that doesn’t mean it wasn’t partly

about the money. Indeed, that’s the reason Reagin negotiated for more compensation.

Yet, somehow, Korty remains adamant that Reagin did not in fact “negotiate for a

higher salary.” [DE 35 at 13]. That position is deeply perplexing in light of Reagin’s e-

mail to Fenton after he received his first offer asking, in reference to compensation, if

“there is any wiggle room for negotiation at all?” [DE 33-6 at 22.] Of course he was

negotiating salary terms. And Fenton was doing the dance too when she responded by

promising to “let [him] know on the salary piece as soon as possible.” [Id. at 21.]

I don’t see anything improper (much less discriminatory based upon sex), in

IUH’s desire to hire Reagin and, during that process, minimize the pay cut that he

would be taking by moving into Korty’s role. After all, Reagin was their top candidate

and they wanted to do their level best to seal his commitment. As the Seventh Circuit

has aptly recognized, “[m]aintenance of an employee’s compensation in a transfer

between positions is not in our view unusual and avoids the serious problem of

‘unmerited’ pay reductions.” Covington v. Southern Illinois Univ., 816 F.2d 317, 323 (7th

Cir. 1987). And Korty cannot contest that IUH specifically considered the market range,

and Reagin’s prior salary, in setting his pay for the new position. It is right there in the

e-mails. As such, IUH has provided a factor other than sex that justifies the wage

differential.

2. Internal Equity

12

There is yet another reason unrelated to sex that explains the pay differential in

this case, and that is internal equity. Fenton and Baker considered (in a documented e-

mail) the pay rates of ten other clinical nurse quality coordinators within the South

Central and East Central Regions. [DE 33-1 at 14.] Korty points out that these regions

include some hospitals that are geographically far from IU Arnett, but she does not

argue that these jobs are not comparable. [DE 35 at 17.] Anyway, all of the comparators

in the same nurse quality coordinator jobs were female, and most were paid more than

Korty. [DE 33-6 at 4, 18.] Fenton identified the average pay in those regions was

$38.30/hour or $79,664 annually, with the highest at $40.10/hour. Id. Therefore,

Fenton told Baker there was room to offer Reagin more, but IUH could not exceed

$40.10/hour. [DE 33-6 at 4.] Fenton then approved Baker’s request to initially offer

Reagin $38.00/hour. Id. In response, when Reagin asked if there was any wiggle room

in the offered salary, Fenton told him “one thing that IU Health really focuses on is

internal equity with other team members in the role; however you do have amazing

experience & the skill-set that Laura [Baker] is seeking for this position so I will

definitely advocate for that and get back with you as soon as possible.” Id. (emphasis

added). Baker agreed to increase the offer to $38.76 per hour (or $80,621 annually),

which still was in line with the average pay of clinical nurse quality coordinators (and

below the highest earner in that position who was a female in a comparable region), but

in doing so she noted that offering any more would not be in line with “internal

equity.” [DE 33-1 at 5.]

13

There is no doubt at all that internal equity was considered in determining

Reagin’s salary, and it is a sex-neutral basis for coming up with his salary. In response,

Korty claims “[i]f internal equity were a bona fide factor other than sex, IU Health

would have applied it equally to Korty.” [DE 35 at 15.] But Korty was hired at a

different point in time, and with different work experience than Reagin. We don’t

know anything about IUH’s budget when Korty was hired in 2017, or whether she tried

to negotiate a higher salary (like Reagin did), or if she accepted what she was initially

offered.

Additionally, it is really a stretch for Korty to argue that “[i]f Reagin’s pay was

attributable to internal equity, surely internal equity would dictate that Korty’s pay also

be increased for the month that they overlapped.” [DE 35 at 16.] At that point in time,

Korty had already voluntarily turned in her resignation, and just stayed on an

additional month to train Reagin. It seems a bit fanciful to expect IUH to gratuitously

pay an employee who has voluntarily resigned more money during the one month

transition. Such a notion is not ground in reality, nor is it required by the EPA. The

section cited by Korty, 29 C.F.R. § 1620.25, dealing with the equalization of rates only

applies “when a prohibited sex-based wage differential has been proved” and in this

case, Korty has not shown that IUH used a sex-based wage differential.

3. Knowledge, Skills and Experience

Finally, Reagin’s knowledge, previous experience, and skills also are another

factor unrelated to sex that justify his salary. IUH’s compensation guidelines allow for

14

pay differences when based on relevant work experience, performance or seniority. [DE

33-2 at 3.] Baker thought Reagin’s experience as a current RN, Clinical Informaticist,

and Nursing Supervisor would help him increase provider engagement in setting

quality metrics and improving the peer review process. [DE 33-4 at 12; DE 33-1 at 3.]

Although Korty and Reagin both had nine years of clinical experience, Baker thought

Reagin would be a great fit due to his knowledge and experience and Fenton

recognized his experience as valuable. [DE 33-6 at 3; DE 33-1 at 3.] This clearly

provides another factor other than sex that justifies Reagin’s pay rate.

According to Korty’s subjective belief, Reagin’s qualifications were not superior

to hers. [DE 35 at 19.] But they also were not direct comparators - it was not like Korty

and Reagin applied for the same job position at the same time. She was leaving and he

was picked as her replacement. What Korty cannot dispute is that IUH considered

Reagin’s qualifications in hiring him – Fenton and Baker discussed it in their March 5,

2021 e-mail chain. [DE 33-1 at 15.]

Finally, as a last ditch effort, Korty claims that even if Reagin’s qualifications

were superior to hers, “that superiority is to be disregarded when the superiority is in

excess of the skill, experience, training, education, and/or ability required of the

position,” citing 29 C.F.R. § 1620.15(a). [DE 35 at 19.] However, section 1620.15 defines

“jobs requiring equal skill in performance” for the purpose of establishing whether the

EPA would even apply in the first place – not for purposes of evaluating the “factor

other than sex” defense. The Seventh Circuit has explained that a “factor other than

15

sex” to support a particular pay decision “need not be ‘related to the requirements of

the particular position in question,’ nor must it even be business-related.” Dey v. Colt

Constr. & Dev. Co., 28 F.3d 1446, 1462 (7th Cir. 1994) (quoting Fallon v. State of Ill., 882

F.2d 1206, 121 (7th Cir. 1989) (noting “[e]mployers may prefer and reward experience,

believing it makes a more valuable employee, for whatever reason”)). As such,

Reagin’s experience, background, and skill set was a proper consideration for IUH to

examine in determining his salary. And this is another sex-neutral reason that accounts

for his salary discrepancy.

***

To summarize, IUH has articulated at least three factors other than sex that

buttress their decision to offer Reagin what amounted to about $15,000 more than Korty

was earning in the same position. Korty has not identified anything pretextual about

these reasons. In fact, they are all well documented and seem to be legitimate business

reasons that were evaluated and discussed (in writing) prior to offering Reagin his final

salary. Therefore, Korty’s claims fail.

Conclusion

For the aforementioned reasons, Plaintiff’s Motion to Strike [DE 37] is DENIED

as MOOT. Defendant Indiana University Health, Inc.’s Motion for Summary Judgment

[DE 31] is GRANTED, and the case is DISMISSED WITH PREJUDICE.

ENTERED: December 21, 2022.

s/ Philip P. Simon

PHILIP P. SIMON, JUDGE

UNITED STATES DISTRICT COURT