# Mohammed Fawwaz Shoukfeh, M.D., P.A., D/B/A Texas Cardiac Center v. James G. Grattan and Texas Workforce Commission > Court of Criminal Appeals of Texas · June 1, 2015 URL: https://www.frixlaw.com/law-library/cases/4048542 ## Case - **Court:** Court of Criminal Appeals of Texas - **Decided:** June 1, 2015 - **Precedential status:** Published - **Opinion:** Opinion - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4048542 ## Opinion text ACCEPTED 07-15-00113-CV SEVENTH COURT OF APPEALS AMARILLO, TEXAS 6/1/2015 8:01:39 PM Vivian Long, Clerk _________________________________ FILED IN In The 7th COURT OF APPEALS AMARILLO, TEXAS 6/1/2015 8:01:39 PM Seventh District Court of Appeals VIVIAN LONG CLERK No. 07-15-00113-CV MOHAMMED FAWWAZ SHOUKFEH, M.D., P.A., D/B/A TEXAS CARDIAC CENTER, APPELLANT v. JAMES G. GRATTAN AND TEXAS WORKFORCE COMMISSION, APPELLEES _________________________________ APPELLANT’S BRIEF ON THE MERITS _________________________________ CRAIG, TERRILL, HALE & GRANTHAM, LLP H. GRADY TERRILL ELIZABETH G. HILL Texas Bar No. 24083179 9816 Slide Rd, Suite 201 Lubbock, Texas 79424 806/744-3232 Facsimile 806/744-2211 ehill@cthglawfirm.com ORAL ARGUMENT REQUESTED ISSUES PRESENTED I. Did the Texas Workforce Commission fail to enforce the plain language of Grattan’s agreement when it failed to conclude that the agreement was ambiguous in order to consider evidence outside the written agreement between the parties? II. Was the Texas Workforce Commission’s decision arbitrary, unreasonable and without regard to the law when it imposed duties on Texas Cardiac Center in violation of the Texas Labor Code and voided another employee’s compensation agreement? i IDENTITIES OF PARTIES AND COUNSEL Pursuant to Texas Rule of Appellate Procedure 38.1(a), Appellants certify that the following is a complete list of the parties, the attorneys, and any other person who has any interest in the outcome of this lawsuit: Plaintiff/Appellant: Mohammed Fawwaz Shoukfeh, M.D. P.A., d/b/a Texas Cardiac Center Attorneys for Plaintiff/Appellant: H. Grady Terrill Elizabeth G. Hill Craig, Terrill, Hale & Grantham, LLP 9816 Slide Road, Suite 201 Lubbock, Texas 79424 Defendant/Appellee: James G. Grattan Attorneys for Defendant/Appellee: John H. Simpson Splaw Simpson Pitts P.O. Box 1376 Lubbock, TX 79408-1376 Defendant/Appellee: Texas Workforce Commission Attorneys for Defendant/Appellee: Peter Laurie Office of the Attorney General P.O. Box 12548 Austin, TX 78711-2548 ii TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL..............................................................i TABLE OF CONTENTS ......................................................................................... iii INDEX OF AUTHORITIES ...................................................................................... v ISSUES PRESENTED .............................................................................................. ii I. Did the Texas Workforce Commission misconstrue the contract’s plain language when it accepted Grattan’s argument that certain expenses should not be deducted, even though the plain language of the contract provided for the deductions? ............................................................................................. ii II. Was the Texas Workforce Commission’s determination arbitrary and unreasonable when it imposed duties on Texas Cardiac Center that are in violation of the Texas Labor Code and voided another employee’s compensation agreement? .................................................................................. ii STATEMENT OF THE CASE .................................................................................... 1 STATEMENT REGARDING ORAL ARGUMENT .................................................. 1 STATEMENT OF FACTS .......................................................................................... 2 SUMMARY OF THE ARGUMENT........................................................................... 4 ARGUMENT ............................................................................................................... 8 I. This Court should find that the Texas Workforce Commission misconstrued the contractual agreement between the parties because it accepted Grattan’s analysis of an unambiguous provision. ............................................ 8 A. The agreement is unambiguous and therefore, the TWC—as well as the district court—erred in considering parol evidence.................... 10 iii B. The Texas Workforce Commission, as well as the district court, failed to determine that the contract was ambiguous and therefore, committed an error of law. .................................................... 17 II. This Court should find that the Texas Workforce Commission’s determination was arbitrary and unreasonable because it imposed unwritten and illegal duties on Texas Cardiac Center. .................................. 20 A. The Texas Workforce Commission imposed duties on Texas Cardiac Center that are in direct violation of the Texas Labor Code. ....................21 B. The Texas Workforce Commission reached its conclusion by looking to the title of the employee rather than the nature of the employee’s compensation agreement .......................................................23 PRAYER ..................................................................................................................25 APPENDICES.......................................................................................................... 28 iv INDEX OF AUTHORITIES Cases Ayres Welding Co. v. Conoco, Inc., 243 S.W.3d 177 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) ............................ 8,9 Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738 (Tex. 1998)................................................................................................. 9, 14 Calpine Producer Servs., L.P. v. Wiser Oil Co., 169 S.W.3d 783 (Tex. App.—Dallas 2005, no pet.) ................................................................. 17 Cities of Abilene v. Pub. Util. Comm’n of Tex., 146 S.W.3d 742 (Tex. App.—Austin 2004, no pet.) .................................................... 14, 17 City of El Paso v. Pub. Util. Comm’n of Tex., 344 S.W.3d 609 (Tex. App.—Austin 2011, no pet.) ...................................................... 8, 12 Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) ............................................................................................... 8 Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587 (Tex. 1996) ......................................................................................... 9, 15 Evergreen Nat’l Indem. Co. v. Tan It All, Inc., 111 S.W.3d 669 (Tex. App.—Austin 2003, no pet.) ............................................................ 8 City of Houston v. Morris, 23 S.W.3d 505 (Tex. App.—Houston [1st Dist.] 2000, no pet.) .............................................. 7 Heritage on San Gabriel Homeowners Ass’n v. Tex. Comm’n on Envtl. Quality, 393 S.W.3d 417 (Tex. App.—Austin 2012, pet. denied).......................... 11,20 Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517(Tex. 1995)..................................................................... 17, 18 Starr Co. v. Starr Indus. Servs., Inc., 584 S.W.2d 352 (Tex. App.—Austin 1979, writ ref’d n.r.e.) ................................................... 20 v State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430 (Tex. 1995)..................................................................................................... 14 Statutes Texas Labor Code § 61.018 ............................................................................ passim vi STATEMENT OF THE CASE This case arises pursuant to a wage claim filed by Appellee, James Grattan, with the Appellee, Texas Workforce Commission (TWC) (Claim No. 13- 055631-0). See CR 340-53. The initial determination order was issued by TWC on August 14, 2013, wherein Appellant, Texas Cardiac Center, was ordered to pay Grattan wages of $38,435.89; both parties appealed. See CR 348. After an appeal, the Wage Claim Appeal Tribunal issued an order on October 7, 2013 wherein Texas Cardiac was ordered to pay Grattan the wages of $5,817.32; both parties appealed. See CR 340-47. Finally, TWC issued Findings and Decisions of Commission Upon Review of Claim for Wages on February 06, 2014, wherein Texas Cardiac was ordered to pay Claimant the wages of $125,988.91. See CR 351-53. Pursuant to Tex. Labor Code § 61.062, the administrative remedies were exhausted and Texas Cardiac petitioned for a trial de novo from the 99th District Court in Lubbock County pursuant to § 61.062 (e) on February 28, 2014. See CR 6- 10. All parties filed cross motions for summary judgment. The Court issued its final judgment on March 2, 2015, granting the motions for summary judgment of the Appellees and denying the motion for summary judgment of the Appellant. See CR 426. Texas Cardiac timely filed this appeal of the trial court’s ruling on March 31, 2015. See CR 428-29. 1 STATEMENT REGARDING ORAL ARGUMENT Oral argument would be beneficial to the Court in this case because the issues presented concern complex legal analysis of both the standard of review, as well as the interplay between contract law and statutory mandates. STATEMENT OF FACTS James Grattan was a physician with Texas Cardiac Center (“Texas Cardiac”) from June 19, 2006 through April 30, 2013. See CR 262-64; 273. At the onset of Grattan’s agreement to become a physician with Texas Cardiac, Grattan entered into a Physician Employment Agreement providing for the written authorization to deduct expenses for shared overhead of Texas Cardiac. See CR 262-64. The Agreement specifies a formula in Section 1(E) that outlines how earnings will be calculated. See CR 263. Grattan was paid the net results of his gross receipts less his pro rata share with other physicians of Texas Cardiac who had also contractually agreed in writing to the deductions. See CR 260-61. This “eat what you kill” concept is highly common in physician groups and the deductions are authorized pursuant to Texas Labor Code § 61.018. See CR 260-61. In 2012, one of the four physicians that were subject to the deductions resigned, leaving only three physicians to share in the overhead expenses. See CR 260-61. Texas Cardiac hired a new employee, Dr. Qaddour, a new physician who 2 was not yet licensed in Texas and did not have staff privileges at the local hospitals. See Ex. CR 260-61. Qaddour’s employment with Texas Cardiac resembled that of a nurse or office staff member who was not yet income producing and would gradually increase his duties and salary until he became an expense-sharing physician after two years of employment. See CR 189-96. Qaddour did not provide written authorization for the deductions to allow Texas Cardiac to deduct the overhead expenses pursuant to the Texas Labor Code. See CR 191. Although notice was given to Grattan regarding the meeting to discuss these issues, Grattan did not attend or express his opinion regarding the offer to Qaddour; therefore, the Board of Texas Cardiac approved the hire of Qaddour as an employee that would allow a stair-step transition period while he was obtaining licenses and privileges to practice. See CR 260-61; 189-96. Throughout his employment, Grattan received detailed calculations of his pay—calculated pursuant to the above formula. See CR 260-61. The portion of time in dispute between the parties includes the pay for the months of September 2012 through April of 2013. See CR 260-61. In January of 2013, Grattan provided notice of his intent to depart his employment with Texas Cardiac. See CR 273. During that time, Grattan continued to receive compensation pursuant to the agreement between the parties. See CR 260-61. Following his final departure in April of 2013, Texas Cardiac sent Grattan his final paycheck in the 3 amount of $32,014.66 (amounts calculated from September 2012 until April 2013), the amount calculated pursuant to the above formula minus required deductions, such as income tax and social security. See CR 265-73. Grattan filed this wage claim in complaint that Texas Cardiac had not deducted the overhead expenses from Qaddour, even though neither Qaddour’s agreement nor the Texas Labor Code authorized such deductions. See Parts I and II; Tex. Lab. Code § 61.018. Grattan argued that because Texas Cardiac had required all practicing physicians to contribute to the overhead deductions in the past, that Texas Cardiac was always required to do so, even though not contractually or statutorily authorized to against Qaddour. Nonetheless, the final TWC committee agreed with Grattan and determined that Texas Cardiac Center must divide the overhead expenses between four physicians, including Qaddour, even though Texas Cardiac had no contractual or statutory authorization to do so. See CR 351-53. SUMMARY OF THE ARGUMENT The entire crux of the dispute between the parties focuses on what deductions were authorized by Grattan as his pro rata share as dictated in his agreement with Texas Cardiac. The question is: Who should be subject to the “pro rata” share of the deduction of overhead expenses? Grattan urged—and the Texas Workforce Commission (TWC) accepted—the argument that because 4 Qaddour was a “practicing physician,” Qaddour should consequently, be subject to the pro rata deduction requirements because this was the past “compensation practice” of Texas Cardiac. Yet, neither the agreement between Grattan and Texas Cardiac nor the agreement between Qaddour and Texas Cardiac provided for such a presumption. Most importantly, the Texas Labor Code prohibits an employer, such as Texas Cardiac, from deducting expenses without written authorization, or some other legal authorization, such as a court order. Yet, the TWC required just that: ordering that Texas Cardiac must divide the overhead expenses with a new physician who had not provided written authorization as required by the Texas Labor Code. Further, without determining that Grattan’s agreement was ambiguous, the TWC looked outside the agreement to reach its conclusion in violation of traditional principles of contract law. Further, the TWC failed to consider Qaddour’s contractual arrangement, as well as the character of his employment with Texas Cardiac, more akin to that of a nurse or staff member, especially in the first six months. This determination violated the Texas Labor Code, as well as general principles of contract law. In fact, the only division authorized contractually, or statutorily by the Texas Labor Code, was a division between the physicians who had contractually agreed in writing to the deduction of overhead expenses. This was the only 5 conclusion that the TWC could have come to that would be consistent with the law. Rather than determining that a new employee who never provided written authorization for the deductions should be forced to share in the overhead expenses, the TWC should have looked to the plain language of both agreements, as well as the requirements under the Texas Labor Code, which dictate written authorization prior to such deductions. Because the TWC’s decision was arbitrary, unreasonable, and without regard to the law, this Court should reverse the district court’s ruling affirming the TWC’s decision and remand for further proceedings. STANDARD OF REVIEW The various standards of review potentially applicable to this case warrant considerable discussion. As a preliminary matter, this Court is aware that it reviews de novo whether a district court applied the correct legal standard and granted summary judgment affirming an agency decision. See Heritage on San Gabriel Homeowners Ass’n v. Tex. Comm’n on Envtl. Quality, 393 S.W.3d 417, 423 (Tex. App.—Austin 2012, pet. denied). Further, while courts provide certain deference to administrative agency decisions, courts still review the agency’s legal conclusions for errors of law, while reviewing its factual findings for support by substantial evidence. See id. (“In other words, we must remand for arbitrariness if we conclude that the agency has not ‘genuinely engaged in reasoned decision-making.’”). While 6 courts should provide considerable deference to an agency’s decisions involving factual determinations, there is no presumption of validity to be afforded an agency’s interpretation of a contract. See City of El Paso v. Pub. Util. Comm’n of Tex., 344 S.W.3d 609, 619 (Tex. App.—Austin 2011, no pet.) (“[A]n administrative interpretation of the contract is not entitled to a presumption of validity.”) (emphasis added). Likewise, in contrast to the interpretation of a statute or rule—in which courts give deference to an agency’s interpretation due to its rulemaking authority and expertise concerning its policies—interpretation of private parties’ agreements are not given such statutory-like deference. See id. Further, courts must remand for arbitrariness if it concludes that the agency has not “genuinely engaged in reasoned decision-making.” See id. Courts should review not only whether there was substantial evidence to support the decision, but also whether the correct legal standard was applied to reach that decision. City of Houston v. Morris, 23 S.W.3d 505, 508 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (stating that if the TWC acted “without regard to the law or the facts,” the denial was “unreasonable, arbitrary, or capricious” and subject to reversal). 7 ARGUMENT I. This Court should find that the Texas Workforce Commission misconstrued the contractual agreement between the parties because it accepted Grattan’s interpretation of an unambiguous provision and ignored a valid contractual agreement with Qaddour. When interpreting contractual language, courts should seek to give full effect to the plain language of the contract as the best expression of the intent of the parties. See Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983) (“In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument.”). When a contract can be given a definite interpretation, then the contract is not ambiguous and will be interpreted as a matter of law. See id.; see also City of El Paso, 344 S.W.3d at 619 (“If a contract is unambiguous—i.e., it can be given a definite or certain legal meaning—an administrative interpretation of the contract is not entitled to a presumption of validity.”). Simply claiming that a provision could be interpreted differently does not amount to an ambiguity. See Evergreen Nat’l Indem. Co. v. Tan It All, Inc., 111 S.W.3d 669, 676 (Tex. App.—Austin 2003, no pet.); Ayres Welding Co. v. Conoco, Inc., 243 S.W.3d 177, 182 (Tex. App.— Houston [14th Dist.] 2007, pet. denied) (“Ambiguity in a contract does not exist merely because the parties assert forceful and diametrically opposing interpretations, but only if the contract language is susceptible to two or more reasonable interpretations.”) (emphasis in original). Even when a contract 8 could include more specific language, this alone does not create an ambiguity when the court can ascertain the reasonable interpretation of the language. See Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 591 (Tex. 1996) (“The failure to include more express language of the parties’ intent does not create an ambiguity when only one reasonable interpretation exists.”). If a party’s urged interpretation would require the court to ignore the plain language of the contract, the interpretation is unreasonable and must be rejected. See Ayres Welding Co., 243 S.W.3d at 182. Further, courts should strive to maintain consistency throughout a written agreement and not construe any single portion in a manner that would conflict with general rules of contract construction and would result in an absurd and nonsensical result. See Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 740-41 (Tex. 1998) (“We must read all parts of the contract together, striving to give meaning to every sentence, clause, and word to avoid rendering any portion inoperative.”) citing State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995). To that end, courts should strive to give full effect to the parties’ chosen language. See Balandran, 972 S.W.2d at 741 (“Our primary goal, therefore, is to give effect to the written expression of the parties’ intent.”). 9 A. The agreement is unambiguous and therefore, the TWC—as well as the district court—erred in considering parol evidence. Here, Grattan’s employment agreement provides for the deduction of expenses pursuant to a clearly enunciated formula. See CR 206-08. Grattan’s urged interpretation, which the TWC adopted, ignores the plain language of the agreement entered between the parties. The pertinent portion of Grattan’s agreement provides: E. The following terms shall apply beginning June 19, 2006. Physician will be responsible for his own malpractice and health insurance, life/disability insurance expenses, communication (i.e., cell phone, pager, etc.) expenses, and other non-cardiac related expenses as well as a pro rata share of the overhead expenses incurred by Association (including, without limitation, overhead incurred by Association during periods in which Physician may be ill and therefore, absent from Association); and (ii) Physician will receive Physician’s Net Receipts collected by Association less Physician’s pro rata share of the overhead expenses. “Physician’s Net Receipts” means the net amount collected by Association for services personally performed by Physician, less contractual and other adjustments, and shall exclude all Designated Health Services Revenues. “Designated Health Services Revenues” are defined as the net collections of Association for the professional and technical components of the following ancillary tests: echocardiograms, Doppler tests, chest x-rays and any other ancillary services that are deemed to be designated health services under the Stark Law (Social Security Act §1877 and as published at Fed. 70 Reg. 70116 (Nov. 21, 2005) and as amended thereafter). The revenues from designated Health Services Revenues will be distributed to shareholders in accordance with a formula based on revenues from the previous year. See CR 262-64 (emphasis added). Essentially, the agreement dictated a formula to determine Grattan’s pay: 10 Physician’s Net Receipts plus Designated Health Services Revenues minus Contractually Agreed Deduction of Overhead Expenses Although the practice had typically employed four physicians, during times of transition, three physicians divided the overhead expenses. See 260-61. In 2012, one of the physicians left the practice, leaving only three physicians, including Grattan and Shoukfah, to share in the expenses of the practice. See CR. In January 2013, Texas Cardiac hired a new employee, Dr. Qaddour, an unlicensed doctor that was in the process of both obtaining a license to practice medicine in Texas and obtaining privileges at area hospitals. See CR 189-96. Qaddour was unable to begin practice in earnest until his license and privileges were granted. See CR 189-96. Qaddour’s employment agreement specifically referenced a lower salary and limited responsibilities during the time he was not yet granted privileges at the area hospitals, including and up to two years after his initial employment. See CR 189-96. As a result, Qaddour was hired as an employee, with a different agreement with Texas Cardiac than Grattan, and treated similar to a nurse or office staff member until he began generating income. See CR 189-96; 340-47. Yet, Grattan urged that because Qaddour was technically a “physician” (even if he was not licensed to yet practice in Texas) that Qaddour should also 11 share in the division of expenses from the first day he began working for Texas Cardiac. See CR 351-53. Texas Cardiac, however, contracted with Qaddour under a different arrangement because without privileges and, consequently, practice income, Qaddour was not yet able to generate income to cover the pro rata division of overhead expenses. See CR 189-96 (agreement with Qaddour contemplating his eventual completion of privileges). No written authorization to deduct expenses was obtained from Qaddour, as required under the Texas Labor Code § 60.018. See CR 189-96. The TWC adopted this position even though nothing within Grattan’s agreement set forth a mandated requirement that any employee who was also a physician must share in the pro rata expenses. See CR 262-64. The consequence of the TWC interpretation would literally mean that While true that courts should provide considerable deference to an agency’s decisions involving factual determinations, there is no presumption of validity to be afforded an agency’s interpretation of a contract. See City of El Paso, 344 S.W.3d at 619 (“[A]n administrative interpretation of the contract is not entitled to a presumption of validity.”). Further, in contrast to the interpretation of a statue or rule—in which courts give deference to an agency’s interpretation due to its rulemaking authority and expertise concerning its policies, interpretation of private parties’ agreements are not given such statutory-like deference. See id. 12 Nothing within Grattan’s employment contract provided for a guaranteed number of physicians and even past conduct between the parties revealed that often times, only three physicians shared in the pro rata division. See CR 260- 61. And, considering the different hiring and compensation agreement with Qaddour, no reasonable interpretation of Grattan’s contract could support his insisted division in violation of the agreement with Qaddour, and consequently, in violation of the Texas Labor Code. See Part II; Tex. Lab. Code § 61.018. In fact, looking to the plain language of the contract, Grattan was required, himself, to “practice medicine in Association’s office(s), as well as in area hospitals required by Association.” See CR 206. In contrast, Qaddour’s contract contemplated a substantially lower salary until Qaddour obtained his privileges. See CR 189-96. Further, Grattan was required to “maintain medical staff membership and appropriate clinical privileges in good standing at the Lubbock Heart Hospital, Covenant Health System, and such other area hospitals as required by Association.” See CR 206. In return, Grattan received a percentage of the “Designated Health Service Revenue” pursuant to his contract— something Qaddour would not receive at all for his first two years. See CR 206. Even so, prior to determining that a provision or portion of a contract is unambiguous, the court (or in this case, agency) must first seek to determine whether the contract can be interpreted pursuant to the plain language. See 13 Balandran, 972 S.W.2d at 740-41 (“We must read all parts of the contract together, striving to give meaning to every sentence, clause, and word to avoid rendering any portion inoperative.”) citing State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995). Prior to considering parol evidence, the agency should first determine that the contract is ambiguous. See Cities of Abilene v. Pub. Util. Comm’n of Tex., 146 S.W.3d 742, 750 (Tex. App.—Austin 2004, no pet.). Yet, the TWC accepted Grattan’s unilateral assertion that Qaddour should be treated as a fully practicing physician from the moment he began working at Texas Cardiac (without a written agreement to deduct expenses as required under the Texas Labor Code). In looking to the contract’s plain language, including the requirements placed on Grattan, the TWC should have reached a plain language interpretation that determined that Qaddour was not yet on the same level as Grattan (and the other practicing physicians) and had not agreed to the authorized deduction of expenses during the time of his transition of the first two years. In fact, in contrast to Grattan’s agreement with Texas Cardiac, Qaddour did not receive a percentage of the “Designated Health Service Revenue” which would certainly aid a fully practicing physician in covering the shared overhead expenses. See CR 262-64. To be sure, simply because the agreement does not further provide specific references to a transition time for unlicensed physicians, this alone does 14 not create an ambiguity that would allow the Court—or TWC—to look outside the parties’ agreement. See Columbia Gas Transmission Corp., 940 S.W.2d at 591 (“The failure to include more express language of the parties’ intent does not create an ambiguity when only one reasonable interpretation exists.”). Here, Qaddour was not a practicing, fully licensed physician and under an analysis of the plain language of Grattan’s agreement, Qaddour was not on the same playing field as Grattan. Yet, the final TWC committee (two of the three committee members) arbitrarily accepted Grattan’s urged and unreasonable interpretation—which finds no basis or support within the agreement’s plain language and is in direct violation of the requirements of the Texas Labor Code. See Ayres Welding Co., 243 S.W.3d at 182 (finding that an interpretation is unreasonable when it ignores the plain language of the agreement between the parties); see also Texas Labor Code § 61.018 & Part II. Essentially, Grattan urged and the TWC’s final committee adopted this position that looks outside— and conflicts—with the plain language of the contract which provides that Grattan would receive additional and better compensation than Qaddour. Even considering Grattan’s complaint that his income was substantially less the final months of his employment is explained by the decrease in his revenue. See CR 265-73 (averaging approximately $97,000 in gross revenue for the months of September – December 2012 as compared to approximately $79,000 in gross 15 revenue for the months of January – April 2013). See CR 265-73. And, Grattan’s claim that overhead expenses increased dramatically during the final months of his employment are unfounded as well. See CR 265-73 (averaging total overhead expenses of approximately $185,000 for the months of September – December 2012 as compared to approximately $190,000 for the months of January – April 2013). The practical effect of this interpretation is highlighted by the apparent effect on Qaddour this interpretation would create. Essentially, Qaddour, without a license or privileges to practice and without providing written authorization, would be expected to incur and payout the shared expenses of the physician group, even though he initially had little to no revenue because he was not yet licensed or privileged to practice. This interpretation violates both contractual principles, as well as the Texas Labor Code’s requirement that employees provide written authorization before deductions. See Tex. Lab. Code § 61.018. And, because he was not receiving certain revenue and limited to 45 percent of his collections, Qaddour’s salary compensation was significantly less advantageous than Grattan. Compare CR 262-64 with CR 189-96. Consequently, the TWC decision reflects a fundamental error of law because it failed to construe the agreement by its plain terms or consistent with other provisions within the same agreement. But, importantly, it is impossible to 16 even determine how the TWC reached its decision, which considered parol evidence, because it failed to determine that the contract’s language was ambiguous. B. The Texas Workforce Commission, as well as the district court, failed to determine that the contract was ambiguous and therefore, committed an error of law. Before reaching the conclusion that outside evidence should be considered to construe the parties’ agreement, a court, or agency, must first find that the contract itself is ambiguous. See Cities of Abilene, 146 S.W.3d at 750. The ultimate concern in construing a contract is to ascertain the true intent of the parties. See Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). Courts should examine an unambiguous contract as a whole, harmonizing all provisions and looking only to the written contract. See Calpine Producer Servs., L.P. v. Wiser Oil Co., 169 S.W.3d 783, 787 (Tex. App.—Dallas 2005, no pet.) (describing this approach as the “Four Corners Rule”). When the contract reveals itself as ambiguous, however, the court may consider the parties’ interpretations of the contract and examine extraneous evidence to determine the true meaning of the instrument. See Nat’l Union Fire Ins. Co., 907 S.W.2d at 520. The determination of whether a contract is ambiguous is a question of law. See id. And in making that determination, a court may construe the contract in light of the surrounding circumstances at the time the contract was drafted. See Balandran, 972 17 S.W.2d at 741. If when viewed through the lens of those circumstances, the contract’s meaning appears uncertain or doubtful, then the language is necessarily susceptible to more than one meaning. See id. An ambiguity may be patent—evident on the face of the contract—or latent—only ambiguous when applied to the subject matter with which it deals by reason of some collateral matter. See Nat’l Union Fire Ins. Co., 907 S.W.2d at 520 n.4 (“For example, if a contract called for goods to be delivered to ‘the green house on Pecan Street,’ and there were in fact two green houses on the street, it would be latently ambiguous.”). The court may consider parol evidence only when the ambiguity at issue is latent. Id. Once the court reaches the determination that a contract’s language proves ambiguous, the court may look to parol evidence to decipher the parties’ intent. Id. Here, however, there is nothing within the record to show that the TWC actually engaged in any analysis to reach the conclusion that the contract was ambiguous. In fact, the contrast between the extent of the opinions issued by the prior agency decision maker, Sue Dennis, highlights the lack of analysis and consequently, arbitrary results. See CR 15 (actually analyzing the language of Grattan’s agreement). This is further buttressed by the starkly different results that the prior two agency decision makers reached. See CR 11-20. The final TWC committee simply stated the following: “According to the compensation 18 practice and agreement between the parties, the expenses of the business were divided between all practicing doctors.” See CR 24. Yet, this interpretation is not actually supported by either the agreement or the actual facts. But, nonetheless, the TWC must have first reached the conclusion that the agreement was ambiguous to even consider parol evidence. But here, the TWC engaged in apparently no analysis that the agreement was ambiguous and would allow the consideration of parol evidence. The TWC’s opinion simply states that the “Commission does not agree with the Wage Claim Tribunal’s conclusion that the employer had the right to change the pay agreement between the parties.” See CR 24. Then, the TWC goes on to claim that “[a]ccording to the compensation practice and agreement between the parties, the expenses of the business were divided between all the practicing doctors.” See CR 24. Yet, nothing within Grattan’s agreement states this presumption and Grattan’s agreement does not include the term, “all practicing doctors,” as those that would be sharing in the pro rata expenses. See CR 262- 64. The TWC clearly considered parol evidence without identifying any provision within the agreement as ambiguous. See CR 351-53. Consequently, the TWC committed errors of law when it heavily considered evidence outside the four corners of the agreement in construing the parties’ contractual commitments without first determining that the agreement was ambiguous. 19 Therefore, this Court should reverse the District Court’s decision affirming the TWC’s determination. II. This Court should find that the Texas Workforce Commission’s determination was arbitrary and unreasonable because it imposed unwritten and illegal duties on Texas Cardiac Center. Even when courts have found that substantial evidence supports an agency’s decision, courts must still reverse and remand when the decision is unreasonable or reached without a reasoned basis under the law. See Starr Co. v. Starr Indus. Servs., Inc., 584 S.W.2d 352, 355 (Tex. App.—Austin 1979, writ ref’d n.r.e.) citing Lewis v. Metropolitan Savings & Loan Ass’n, 550 S.W.2d 11, 16 (Tex. 1966) (“There the Court made it clear that an order may be supported by substantial evidence and yet be invalid for arbitrariness.”); Heritage on San Gabriel Homeowners Ass’n, 393 S.W.3d at 423 (“In other words, we must remand for arbitrariness if we conclude that the agency has not ‘genuinely engaged in reasoned decision-making.’”). The unreasonable nature of the TWC’s determination is best characterized by practically observing its effect: that Texas Cardiac must deduct overhead expenses to Qaddour—without a written agreement to do so as required under the Texas Labor Code—and could never employ a physician without charging the overhead expenses to that physician. Nothing within Grattan’s agreement required Texas Cardiac to only employ physicians that would contribute to the overhead expenses and nothing required Texas Cardiac 20 to include “all practicing physicians” within the calculations of the formula. See CR 262-64. In fact, as further discussed below, the TWC decision is in direct violation of the Texas Labor Code. Further, the TWC’s decision virtually voided another employee’s agreement who was not party to the wage claim and presumed that the fourth doctor must share in the expenses, even though he was not contractually obligated to do so—a violation of Texas law. Because the TWC engaged in abrupt and arbitrary decision making—without regard to the legal analysis as to whether the contract was ambiguous and without regard to the other employee’s nature of compensation and employment, this Court should reverse because the TWC acted unreasonably, arbitrarily, and without regard to the law. A. The Texas Workforce Commission imposed duties on Texas Cardiac Center that are in direct violation of the Texas Labor Code. As specifically addressed in the Texas Payday Law, an employer may only withhold or divert employee’s wages under certain exceptions, including written authorization from the employee. See Tex. Lab. Code 61.018. Yet, instead of determining that the pro rata share would be shared between those physicians that had agreed contractually to the overhead deductions—pursuant to the Payday Law—that “all practicing physicians” should share. See CR 351- 53. In fact, there is no evidence within the TWC record that the final committee even considered the fact that the Payday Law would apply equally to Qaddour 21 and requires deductions only if contractually agreed to, or otherwise authorized by law. See CR 351-53. In contrast, the TWC made the determination, essentially, that Qaddour should also share in the expenses because “this is how it had always been done.” See CR 351-53. Yet, this very presumption is in direct violation of Texas law itself—by the agency charged with its enforcement. See Tex. Lab. Code 61.018. The Texas Payday Law provides: An employer may not withhold or divert any part of an employee’s wages unless the employer: (1) is ordered to do so by a court of competent jurisdiction; (2) is authorized to do so by state or federal law; or (3) has written authorization from the employee to deduct part of the wages for a lawful purpose. See Tex. Lab. Code § 61.018 (emphasis added). Texas Cardiac obtained written authorization from Grattan in the original employment agreement, pursuant to the third exception under the Labor Code. See CR 262-64. Any other physician who would be required to share in the pro rata arrangement must also agree in writing for the deduction pursuant to Texas law. But, incredibly, the final TWC committee did not even contemplate this critically important legal requirement placed on Texas Cardiac through its order—that Texas Cardiac would violate the Texas Labor Code as to Qaddour if it followed the TWC’s order. In fact, the only way that Texas Cardiac could have required Qaddour to share in the overhead expenses was to enter a contractual agreement with 22 Qaddour in writing to that effect. But, somehow, the TWC committee expected Texas Cardiac to impose the pro rata share on “all practicing physicians” regardless of the statutory requirement of a written agreement, because that was the “compensation practice” in the physician’s group. Although the TWC actually cited the correct statute, it failed to consider that this statute would apply to Qaddour as well. See CR 351-53. This unexplained and arbitrary determination is in direct violation of the Texas Labor Code and consequently arbitrary, unreasonable and essentially, illegal. Further, there was absolutely nothing within Grattan’s agreement that required Texas Cardiac to only employ a physician if the physician agreed to share in the overhead expenses. The reasoning that “it had always been done this way” simply does not muster any reasonableness to essentially disregard both the written agreement between the parties and the Texas statutory requirement that any employer obtain written consent prior to withholding deductions from wages. As a result, the TWC decision is in direct violation of the Texas Labor Code because it imposes an obligation on Texas Cardiac to withhold deduction from an employee who had not agreed to do so in writing. B. The Texas Workforce Commission reached its conclusion by looking to the title of the employee rather than the nature of the employee’s employment agreement. In support of its formula of compensation of Qaddour, Texas Cardiac 23 provided the TWC with a copy of Qaddour’s agreement. See CR 189-196. Qaddour agreed to considerably less compensation over the course of the first two years of practice with Texas Cardiac than Grattan or the other Texas Cardiac physicians. See CR 191 (providing that Qaddour would only receive 45 percent of his collections with an advanced salary to be deducted “against Physician’s collections”). Qaddour’s compensation was starkly contrasted from Grattan, who received 100 percent of his net collections. See CR 189-96. Both of the lower agency decisions considered it unreasonable to force Texas Cardiac to saddle Qaddour with the division of expenses—in violation of Qaddour’s employment agreement—when his engagement with Texas Cardiac was most similar to that of a nurse or office staff member. See CR 15 (“Dr. Shoukfeh introduced Dr. Qaddour as a new employee, but not an associate. . . Dr. Qaddour was hired as a salaried employee, and was not held responsible for any portion of the overhead of the practice. . .”). A comparison could best be illustrated by considering a law firm that included partners only—each compensated in an “eat what you kill” arrangement. The TWC’s decision would arbitrarily prevent that law firm from ever hiring an associate right out of law school—without a license to practice or without holding any admissions to nearby courts. Because otherwise, the new associate (in the process of obtaining a law license) must share in the overhead 24 expenses in a similar manner as the rest of the attorneys (simply because that associate was technically an “attorney” once licensed). Such an interpretation is nothing short of an arbitrary and capricious decision, arbitrarily overruling the contractual arrangement between Texas Cardiac and Qaddour. Simply finding concern because Grattan’s salary decreased does not give rise to agency authority to rewrite both his and Qaddour’s compensation agreements, in violation of the Texas Labor Code. Further, Grattan failed to attend the called meeting to discuss the hiring of Qaddour. See CR 340-47. Grattan had full opportunity to participate and at least become aware of the compensation arrangement with Qaddour. Yet, later Grattan complained that he was unaware of the difference in Qaddour’s compensation. The TWC simply declared that “the fourth doctor was not included when splitting business expenses” and therefore Grattan “was underpaid.” See CR 353. The TWC determined that because Qaddour was technically a “physician,” he should also share in the expenses. See CR 351-53. On the contrary, the TWC did not hold the authority to re-write and ignore valid contractual agreements, as well as the Texas Labor Code, between Grattan and the Texas Cardiac, as well as Qaddour and Texas Cardiac. Consequently, the TWC decision was entirely unreasonable, arbitrary and capricious and carried out without regard to the law and the agreements between the parties. As a 25 result, this Court should reverse the District Court’s ruling that affirmed the TWC’s decision. PRAYER The TWC issued findings and conclusions wherein Texas Cardiac was ordered to pay Grattan in a division of deductions that would violate both the Texas Labor Code, as well as traditional principles of contract law. The order required Texas Cardiac to deduct expenses to each of the practicing physicians, even though one of the practicing physicians, Qaddour, had not provided written authorization to do so as required under the Texas Labor Code § 61.018. Further, the TWC looked outside the written agreement between the parties without first determining that the agreement was ambiguous. Therefore, this Court should find that the TWC decision is arbitrary, unreasonable and without regard to the law. This Court should reverse the judgment of the district court and remand for further proceedings consistent with its decision. Respectfully submitted, /s/ Elizabeth G. Hill ELIZABETH G. HILL State Bar No. 24083179 CRAIG, TERRILL, HALE & GRANTHAM, LLP 9816 Slide Rd., Suite 201 Lubbock, TX 79424 806/744-3232 806/744-2211 Facsimile ehill@cthglawfirm.com 26 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing was sent to the following counsel of record pursuant to the Tex. R. Civ. P. on this the 1st day of June, 2015: John Simpson Splaw Simpson Pitts P.O. Box 1376 Lubbock, TX 79408-1376 Peter Laurie Financial and Tax Litigation Division Office of the Attorney General P.O. Box 12548 Austin, TX 78711-2548 /s/ Elizabeth G. Hill CERTIFICATE OF COMPLIANCE I certify that the word count in this Brief is 5,721. /s/ Elizabeth G. Hill 27 APPENDICES APPENDIX 1 – FINAL ORDER OF THE DISTRICT COURT ................................... TAB 1 APPENDIX 2 – ORDERS OF THE TEXAS WORKFORCE COMMISSION ................. TAB 2 APPENDIX 3 – GRATTAN AGREEMENT ............................................................ TAB 3 APPENDIX 4 – QADDOUR AGREEMENT ........................................................... TAB 4 APPENDIX 5 – WILLS AFFIDAVIT .................................................................... TAB 5 APPENDIX 6 – REVENUE CALCULATIONS........................................................ TAB 6 APPENDIX 7 – TEXAS LABOR CODE § 61.018 ................................................. TAB 7 28 TAB 1 Filed 3/2/2015 11:30:00 AM Barbara Sucsy District Clerk Lubbock County, Texas TB No. 2014-510,479 MOHAMMED FAWWAZ SHOUKFEH, § IN THE 99th DISTRICT COURT MD PA, d/b/a TEXAS CARDIAC § CENTER § Plaintiff, § § v. § OF § JAMES G. GRATTAN § TEXAS WORKFORCE COMMISSION § Defendants § LUBBOCK COUNTY, TEXAS FINAL ruDGMENT After considering the Motions for Summary Judgment of James G. Grattan and the Texas Workforce Commission, the pleadings, any response, the affidavits, and other evidence on file, the Court GRANTS the Motions for Summary Judgment of James G. Grattan and the Texas Workforce Commission. The Motion for Summary Judgment of Plaintiff is DENIED. The Court fmds that there is substantial evidence to support the Texas Workforce Commission's PAYDAY LAW (wage claim) decision and that judgment should be entered as to that decision. It is therefore, ORDERED, ADruDGED AND DECREED that the Texas Workforce Commission PAYDAY LAW benefits decision pursuant to Chapter 61, Texas Labor Code in favor of James G. Grattan is affirmed. 426 This order ia final and II_PPC8lable 8l1d clispOflea af all parties I!Dd all claima. All attorntya' fee• I!Dd costa of court incum:d in 1hia cause shall be borne by the party incurriDg same. All other relief not exJUeuly granted herein ia denied. SIGNEDonlhia 2nd dayofMud1,201S Filial ]11dgmmd Pagel 427 TAB 2 ( rage 9 or 85 - This p rin t head e r can be cha nged u d n g the printHe a der H'l'ML tag - see the v.l.e.,o NS ll'niL Jftl'n\la:J. to.: turther .l.nl'o>;mation) FILE COPY DETERMINATION CODES: C0-45 El41 TExAS WORKFORCE COMMISSION PREliMINARY WAGE DETERMINATION ORDER labor Law August 14, 2013 PAGE 1 OF 1 PAGES CLAIMANT EMPLOYER MOHAMMED FAWWAZ SHOUKFEH, M. D.• P.A. DBA TEXAS CARDIAC CENTER 3710 21S'T 51 LUBBOCK TX ,7941~~ 1220 Wg Cfm 1:13 055b31~U Det 8 :000476197 MOHAMMED FAWWAZ SHOUKFEH. M.D •• P.A. DBA TEXAS CARDIAC CENTER An lnvestlgatlo~ having been completed, the following order Is entered pursuant to Chapter 61 of the Texas Labor Code: FINDINGS AND CONCLUSIONS The claimant Is entl tied _ to - $38,435.89 for unpaid ~wa=.og;o.;;e:;;:;s'-:---~-- Based on the employer's policy/agreement and/or the claimant 1 s performance records, the claimant is entitled. to the deter mined amount. It has been determined that the employer violated· the provisions of the Texas Payday Law when the claimant's earned wages were not paid Jn accordance with the Jaw. If it is determined that an employer has acted in bad faith, the Commission may assess an administrative penalty for failure to pay wages as required by Jaw . In this case no penalty is assessed. ORDER The employer, MOHAMMED FAWWAZ SHOUKFEH, M.D., P.A. ~~~~~--------------~n-~~~~--~--------~~--~~--~~~--~~--~· is ORDERED to pay $38,435.89 for t he use and benefit of the claimant, JAMES G GRATTAN • and shall remit the gross or net amount di sbursement payable to the Texas Workforce Commi ss ion. In addition, being found in violation of Chapter 61 of the Texas Labor Code, the employer is assessed an admin is trative penalty in the amount of so .oo' which is t o be remitted to the Texas Workforce Commission. Ass igned Inves ti gator : SMITH Pursuant to the Texas Tax Code, section 171.255, if the corporate privileges of a corporation or other taxable entity subject to the franchise tax are forfeited by the Texas Comptroller, each officer or director of the taxable entity is liable for any debt of the entity during the period of forfeiture. M (SEE REVERSE SIDE fOR ADDITIONAL INFORMATION) LL-25A (0310) 335 (Page 10 of 85 - This print header CAn be enanged using tne printHeader HTML tag - see cne vtewoNE WrML ~nual for further informat~on) APPEALS You have the right to appeal this determination order. Your appeal must be in writing. It must be flied no later than 21 days from the date this determination order was mallei! in order to preserve administrative appeal rights. It you fax your appeal TWC must receive it no later than 21 days from the date the determination was mailed. lWC will use the date we receive the fax to determine whether your appeal is timely. If you file your appeal ·by talC, you should retain your fax confirmation as proof of transmission. If neither party files a timely appeal, this determination order becomes the FINAL ORDER of the Commission. Appeals should be mailed or faxed to: Special Hearings Or You may appeal by Texas Workforce Commission TWC's online appeal form 101 East 15th Street Go to www.texaswo:rk.force.org Austin, Texas_ 78778-0001 Fax#: 512-463-9318 ADMINISTRATIVE LIEN Sac:. 61.081 of the Labor Code pJovides that "A final order of the Commission against an employer Indebted to the state for penalties or wages, unless timely appealed to a court, Is a lien on all property belonging fo the employer. The lien tor an unpaid debt attaches at the time the order of the Commission becomes final." PAYMENTS An employer who requests a hearing to contest fuis determination should not send payment Should your appeal decision affirm that wages are due, follow the payment instructions provided with the appeal decision. An employer who does not request a hearing to contest the determination order shall pay the amount ordered to the Commission not later than the 21st day after the date of mailing of the order. An employer shall malce a net payment amount (balance after valid ·deductions that are authorized by state or federal law, and by court orders; such as but not limited to federal income tax witholding, social security, and child support) payable to the Texas Workforce Commission. Payment to the Commission constitutes payment to the employee for all purposes. To ensure proper processing please return the enclosed remittance slip, and deduction documentation with payment. You may contact the Commission for clarification on valid deductions. PENALTY If the Commission detennines that an employer acted in bad faith in not paying wages as required by this chapter, tho Commission, in addition to ordering the payment of wages, may assess an administrative pen~~lty against the employer. If the Commission determines that an employee acted in bad faith in bringing a wage claim, the Commission may assess an administrat\ve penalty against the employee. BOND The Commission may require an employer to deposit a bond if the employer is convicted of two violations of this chapter or a final order of the Commission against an employer for nonpayment of wages remains unsatisfied after the l Oth day after the date on which the time to appeal from that final order has expired and an appeal Is not pendfng. Please provide the labor Law Section written notificarlon of anv change in your address. Tcxns Workforce Commission Labor Law Section 101 East 15th Street Austin, Texas 78778-00()1 1-800 832-WAGE (9243) - - Fax#: 512-936-3364 ll-25A- BK (0613) TWC000098 Gqr-~ -~ --r· At"•J. lt.~e!:l'S·HS. 336 !Page 11 o! 85 • Thiu print header can lle changed using the printHeader lftHI. tag • 11ee t he viewom: lftHI. manual for further lntonuUon) STATE OF TEXAS TEXAS WORkFORCE COMMISSION . Labor Law Dept. FILE COPY . ' . . 101 East 15th Street Austin, Texas 78778-0001 H. GRADY TERRill. • ~ . . . . . . FIRST BANK CENTER 9816 SLIDE RD. SUITE 201 LUBBOCK TX 79424 DETERMINATION NBR: 000476197 WAGE CLAIM NBR: 13 055831 ~ 0 ll250 (0 194) TWC 000099 1 .J PtMES.- G R e-":, TTAN : ~~~rb§'" l 337 (Page 3 of 70 - This print header can be changed using th~ printHeader HTML tag - see t he viewONE HTML manual f or further information) TEXAS WORKFORCE COMMISSION WAGE CLAIM APPEAL TRIBUNAL 101 East 15th Street Austin, Texas 787?8 October?. 2013 Date Mailed TEXAS PAYDAY LAW DECISION CLAIMANT EMPLOYER JAMES G GRATTAN MOHAMMED FAWWAZ SHOUKFEH MD PA DBA TEXAS CARDIAC CENTER 3110 21ST ST . LUBBOCK TX 79410-1220 NOTICE: . The attached decision will become fmal fourteen (14) calendar days after the date mailed shown abqve, unless within that time a party to the appeal files a written request for reopening or a written appeal to the Commission.• Please see the attached copy of appeal rights for further information regarding reopenings or appeals to the Commission. APPEAL NO.: 13-055631-0 WAGE CLAIM DATE: May 16,2013 · · BUSINESS ENTITY: Texas Professional Association APPEAL FD.,ED BY: Employer DATEAPPBALFILED: August27, 2013 APPEAL FILED BY: Claimant DATE APPEAL FILED: August 28, 2013 DATE OF HEARING: October 1, 2013 PLACE OF HEARING: Telephone APPEARANCES: Hearing, October 1, 2013; Telephone For Claimant: James G. Grattan Observer: John Simpson, Attorney For Employer: Grady Terrlll, Attorney Shirley Willis, CPA Exhibits: 6 CC: H GRADY TERRILL FIRST BANK CENTER 9816 SLIDE RD STE 201 LUBBOCK TX 79424 *Note: Ifthe last date for filing a motion for reopening or an appeal falls on a Texas state or federal holiday, the time for filing the request is extended to the next working day. · TWC 000021 JAMES GRATTAN:00013 339 (Page 4 ot 10 - This print header ean be ehanged using the printHeader HTHL tag - see the viewONE HTHL manual for further information) TEXAS WORIQ'ORCE COMMISSION ' '( W~GE CLAIM APPEAL TRIBUNAL 101 East 15th Street Austin, Texas 78778 October 7. 2013 Date Mailed TEXAS PAYDAY LAW DECISION EMPLQYER CLAIMANT MOHAMMED GAWWAZ SHOUKFEH MD PA DBA TEXAS CARDIAC CENTER 3710 21ST ST LUBBOCK TX 79410-1220 NOTICE: The attached decision will become fmal fourteen (14) calendar days after the date mailed shown above, unless within that time a party to the appeal files a written request for reopening or a written appeal to the Commission,* Please see the attached copy of appeal rights for further information regarding reopenings or appeals to the Commission. APPEAL NO.: 13-055631-0 WAGE CLAIM DATE: May 16, 2013 BUSINESS ENTITY: Texas Professional Association APPEAL FILED BY: Employer DATBAPPBALFILED: August27, 2013 APPEAL FILED BY: Claimant DATE APPEAL FILED: August28, 2013 DATE OF HEARING: October 1,2013 PLACE OF HEARING: Telephone APPEARANCES: Hearing, October I, 2013; Telephone For Claimant: James G. Grattan Observer: John Simpson, Attorney For Employer: Grady Terrill, Attorney Shirley Willis, CPA Exhibits: 6 CC: H GRJU)Y TERRILL Fffi.ST BANK CENTER 9816 SLIDE RD STE 201 LUBBOCK IX 79424 +Note: Ifthe lost date for filing a motion for reopening or an appealfalls on.a Texas state or federal holiday_ the time for filing the request is exten:Jed to the next working day. TWC 000022 .7 ~~ME~~; GP{·,, 1 T ,'-\1·; . fn{~l?~ :s period. Each physician held responsible for overhead costs had a hiring agreement requiring them to participate in covering the overhead .expenses. In the past when leniency was offered to Dr. Wischmeyer regarding the requirement to provide llis share of the overhead expenses, all other doctors agreed to the action. When Dr. Qaddour was hired he was not required to pay any portion of the overhead expenses, as a salaried employee. The claimant was not consulted before this decision was made or advised of the decision before his termination. Each month the claimant was to be issued an accounting sheet tabulating llis earnings from medical services and tests ordered. The accounting also itemized the overhead costs of the association. A total overhead cost was TWC 000024 J f.>::~·~t::·s GRr-··d-Tf\N: 0~10~?2 342 ( ~age 1 of 10 - This print header ean be changed using the printaeader HTHL tag- see the viewONE HlML ~nual f or further "ipfo~ tion ) TEXAS WORKFORCE COMMISSION APPEAL NO. 13-055631-0 .iJ . P.AGENO. 4 calculated and his pro rata sbare was calculated. The claimant's personal expenses would then be itemized and deducted. The claimant's pre-tax wage amount would be printed in bold. The claimant did not receive his revenue sheets for September to April until after his separation. In September and October the gross expenses were divided by three (Dr. Shoukfeh, Dr. Overlie and the claimant). After Dr. Qaddour was hired, the employer continued to divide the overhead expenses by three participants in the practice. The claimant asserted that this forced him to pay more than his pro rata share of the expenses. . . In each but the April revenue sheet for the cla1mant, the expense of a personal employee, from $4,700 to as great as $4,953.84 was deducted from the claimant's earnings. Thi.s was his share of the cost of o~e nurse who assist~ him and tlie other doctors. .When be-resigned, the nurse did also,- moving with the_clainiant to a new ·.· practice. The employer attributed-the funds issued to the nurse aS accrued.and unus~d bene'fit time, $12, 334.84; '· to the claimant 'alone. Further evidence was ""not provided ·to detemillie ·the true cost of" the benefit to the departing nurse. It is noted that the. list of overhead ·expenses. include medical support staff (approximately. $40,000 to $45,000 per month), ~d for employee benefits• ... I . . The claim.ant also protested being charged overhead expenses·for a rese_;utlt-,operatron that h~ had no part of. The claimat1t asserted that th~ receiptS, from the.research conducted were not deposited into the as~c~ati6n. The employer asseited ·that ·if the claimant's patients had particip'~tel;l in th:e re$.eaicb active~ revenue from ~e research would have been posted to the claimant's acrount The re.Seatch entity was maila~ by the association. The claimant had not protested-the expenses for the research component of the association duri.M. his emplo~ent · Accordlng-to the tabu 1ations • oftheem oyer. .. :Month Revenue Total. Overhead· Pr~Qtata . ·p~rson_iil ·Pay~bl~ : .. E~ttenses . sti-ar~i£+ 3> Expenses Earuines September 2012 $WS,040.98 $22~.905.14 $1~;30l.9l . $13~114.71 .$l$~0!U;36 October 2012 $ 97.651.81 $J 83,295~63 $61,09.8.54 . $ 8.531.15 $28;022.12 November2012 . . $ 91,324.96 $170;224.18 .$56 741.39 . st~.345,4o ~1;23SJ7 December 20 l-2 $ 95 691.40 $162,670.45 $S4i22~.48 $~2~08.83 * $l$559.09 .. January2013 . $ 65 972.96 $1~5,661.17 $S~:220.:3p .+ $r5,8J).44 $Jlj S6S.OJ Jan. recalculated ' $ 6,5,972.9_6 $229;505.06 ~ $76~01.68 . . ·':· . · $2?,~98.69 ** -$~0,0~7A1 . . F~brt.iary2013 . $ 87,289.79 $162.SS7.38 $54195.19 .. $24,108.66· $ . g,38S.34 .. ·. Ml!Iyee of tb:e entity. Therefore the Texas Payday Law would not apply to a controversy concerning a partrler against the parbiership. When the. claia)ant w2S hired as :~,n ~~~i~te; tl1ere:~~- ~~' poten~ial th~t \VO~Jd becomfi' a partner in the fu~r~: Howev~r, he was not enijtle4 to .a s~~:of the profits-, altJj9'\igh h~ was reql,lj~d to ~ontribute to the expenses of tJte ·business, The claimant ha.d nQ authorityt~ inal_'Cru side for instrucllons TEXAS WORKFORCE COMMISSION Austin, Texas FINDfNGS AND DECISIONS OF COMMISSION UPON REVffiW OF CLAIM FOR WAGES FEB 0 6 2014 Dat~Mailed i=ILE COPY c I.. Claim Number: A 13-055631-0 I M A ~ty~umber; N T E MOHAMMEDFA~AZSHOUKFEHMDPA M DBA TEXAS CARDIAC CENTER Prior Decision Date: p 3710 21ST ST . October 1, 20 13 L LUBBOCK TX 79410-1220 0 y E R Appeal Filed:b::y:==E=m=pl::o~;y:=er:/:C::l:aim=:an:::t:::====================== CASE WSTORY: By a determination order issued August l4, 2013, pursuant to the Texas Payday Law, Labor Code, Chapter 61, section 61.052, the business, MOHAMMED FAWWAZ SHOUKFEH MD PA DBA TEXAS CARDIAC CENTER, was ordered to pay to the Texas Workforce Commission for the benefit of the claimant, JAMES G GRAITAN, the amount of $38,435.89. Both parties appealed. By a Wage Claim Appeal Tribunal decision issued October 7, 2013, the employer was ordered to pay to the Texas Workforce Commission for the benefit of the claimant $5,817.32. Both parties appealed. · FINDINGS OF FACT: The claimant was employed by the business, a Professional Association, as a Cardiologist, from June 19, 2006 through April 30, 2013. Throughout his employment, the claimant was paid based on a formula that took his net revenue from his own patients (revenue minus expenses) and subtracted his pro rata share of the expenses of the business. This arrangement was memorialized in a written agreement between the parties. For the entirety of his employment, the pro rata share was determined by dividing the expenses by the number of practicjng physicians in. the AssociatioJL Initially, the claimant was not paid anything for his work from September 2012 through April 2013. In May 2013, the emp.loyer calculated what the claimant was owed, aividing ·the business' expenses by three doctors, and paid the claimant $32,014.68. From Nqvember 2012 through April 2013, there were four doctors practicing in the business~ The employer did not divide the expenses between the four doctors because the fourth was newly licensed in Texas. Th~ employer paid the fourth doctor a salary and counted the salary ln the expenses shared between the other three doctors. The claimant did not have a say in whether or not the fourth doctor was hired. . TWC 000003 J ~i\ i,1f.:.S Gf";f. (~ Tl' 1·\ i'..\ : 0!2'Hc1V> :l. 351 TEXAS WORKFORCE COMMISSION .. COMMISSION APPEALS . 101 .EAST 15TH ST AUSTIN TX 78778-0001 Appeal Rights from _Commission Appeals A copy of the decision of the Texas Workforce Commission is either printed on the reverse side of this form or attached. The date of mailing of the decision is set out at the top of the decision. All mailing dates are shown as month, day, and year. You have two methods of appeal available: (1) filing a motion for rehearing with the Commission, or .(2) filing a petition for Judicial review In a court of competent jurisdiction. Section 61 .0614 of the Texas Labor Code provides that this decision wiU become final fo~rteen (14) days-after the date the order Is mailed unless before that date, the appeal Is reopened by Commission order or a party .to the appeal flies a written motio~ for rehearing. A MOTION FOR REHEARING MUST BE FILED IN WRITING. YOU MAY FILE BY MAILING IT DIRECTLY TO THIS OFFICE AT THE ADDRESS SHOWN ABOVE, OR BY FAX AT FAX NUMBER (512) 475-2044. IF YOU FAX YOUR MOTION FOR REHEARING TWC MUST RECEIVE IT NO LATER THAN 14 DAYS FROM THE DATE THE DECISION WAS MAILED. TWC WILL USE THE DATE WE RECEIVE THE FAX TO DETERMINE WHETHER YOUR APPEAL IS TlMELY. IF YOU FILE YOUR APPEAL BY FAX, YOU SHOULD RETAIN YOUR FAX CONFIRMATION AS PROOF OF TRANSMISSIO~: . THE COMMISSION WILL GRANT YOUR MOTION ONLY·IF IT: (1) DESCRIBES SPECIFIC NEW EVIDENCE THAT IS NOT IN THE RECORD, (2) STATES A TRUE, COMPELLING REASON WHY THE EVIDENCE WAS NOT PRESENTED AT THE EARLIER HEARING, 8!iQ (3} EXPLAINS SPECIFICALLY HOW THE NEW EVIDENCE WILL CHANGE THE OUTCOME OF THE CASE. The Commission will grant y_ our motion only if you have shown substantial reasons for granting it, Please include the claimant's social security number and appeal number in your motion. Section 61.062 of the Texas Labor Code provides that a party who has exhausted the party's administrative remedies, other than a motion for rehearing, may brin~ a suit to appeal the decision of the Commission. The suit must be filed not later than the 30 day after the date the decision of the Commission Is mailed. PIH{1006) 352 (!!age b or 40 - ·rtus pn.nt neaaer car. • cnangea uu.ng tne pr 1nt11eaacr tntu. tag - see cne . ·JVI> SP.r;i~.r.~ri~~.. •. .... ~ l i • • 1.1• '·- ··• '••' • • C • I t·• 'WI I 262 ~ SII'fi9JH PITTS . Frot:CJHH' .• 1 80~ 744 2211 ~12012113 10:33 1029 P.007/019 •. •• ~~ ~ tct.....,. .I . . . . . . . . . . . . . . . . . . . . . , . . . . .-~ • ., ........ ~ .... --IW""""'*' lid 4JIIN ulll 'IJIId Jllltr ...... .., 'tiiGI 1111111 1fat . . Df • 1111111:!111 . ., . . . . . . --.ae+W ... ............ ~ ~ -~ -~ ft!~. A••±b ,_...,.... tl) ~ ...... ,. Oe.........,....,..... ~..,.... M filr OXIII1r,.. ~ ....-. 01 1I'J ca. • tlltll m a ,.,.n S'CI'II'r* ....... .m • et ,.,.,_ ClaM 111111111. 11111/or ....... Jry tllo Vadlod.Hn?lrltfnn 1111: c:4.r-... P~Gfilllotwl& ·~at n._ ~.,_.10 a A.,.. 'l1lllrilma.Autafldsla ..... ..,....JCCGIP4 0. tt..Apama WJfl .. rormt•t4a qrtb 1Jl:GilP'.4yJWaa"l de.~~&. Ja ea eweat. ell PhJ 'c'zll'!J dilldl, n,dDJM all noeM taw. of a,.w... ....,.., .. _.....-.....Jill 1111' - ftl•ldoa ...- GW~t to Aalaala•LM\ Ill & pcio4af*-00111111111:11~- ......... Uidl b . . . . . 4f~'o,..,...... ~ p.,...a ...... 10M ot Rulfl:illl.. ~6:oaarA ..................~_,. .to ~ ~as-facld~())'dlaldls L JtPtGr*ta gr.. a -~ew ~ ot~.Jie.UII \t..W lilt IO!lolllll a»NA ~ llrtl"eeIIII'.Dl'la rt•Uua cn,_edas"""""".._ II ~ ¥:-'•'••bda.WI>:IOIIIIIJDODiWibJioa_.,~ 1. ta 11» .,_, of~'·l~ Jl'DMI!G d!ablltq o: 4czdll. Z111t adUIII ra q atcllr:....,., ea:l'Drfrlan.,.JD...._af.AIIoddo& ,.._Js 2013-01-26 1DJ08 17192 263 fEP as 211113 18: 19 Fro11t1 81!16 1"6\5 SJBB 1 808 744 2211 OI/2012D13. 10:34 102e P.00811Ut itBcmvm: JUN 20 2DJ3 r .4'Dnn .. · - 264 TAB 4 (Page 27 o! BS - This print header can be changed using the print.Header HTML tag - see the viewoNE H'l'ML manual for t"urther information) 03:07:22 p.m. 07-30..2013 4 I 1 806 7441211 f;rom:C'f.H&G 806 744 2211 07/30/2013 14:59 1212 P.004/014 'll'EXASCARID>IACCENTER PHYSICIAN EMPLOYMENT AGREEMENT Mohammad Fawwaz Sboukfeh, M.D., P.A. A Texas P1r0fessional Assoclatiom and J)r• .Ahmad Qaddour Date: November 19, 2012 ncBIVBD JUL 3 0 2013 LAB0RLAW4 TWC 000114 JAMES GRATTAN.00112 186 (Page 28 ot 85 - Th.:L9 print head.er can be changed using the pr.intHealler HTHL tag - see the vi ewONE HTHL manual for furt.her information) 03:1>7:12p.tn.OJ-30-201l ~ I 180& 7442211 F.: rom: CT>H&G 80~ 744 2211 07/30/2013 15:00 #212 P.OOS/014 TABLE OF CONJENTS AltTICLE l. EJIIIPLOYMBNT ..................._............................................................................................................... l Section l .1 General Tenns ........................................................................................................." ............... l Section 1.2 Fees Generated ......................................................................................................................... 2 Section 1.3 Managed Care Agreement$ ,............................................................ ~....................................... 2 Section !.4 Patients and Records of the Association..........................................................w ....................... 2 · Section 1.5 Accounts~ lnspection......................................,_.......................................~ ............................. 2 Section 1.6 Division; Su'bdivisions.............................................................................................................. 2 ARTICLE II. DUTIES .......................:......................................................................- ............................................... 2 Section 2.1 Professional Duties................................................................................................................... 2 Section 2.2 Representations/Covenants.......................................................... "''''"""'"'"'"""'''''"'"' ""''"' 3 Section 23 Evaluation ofPhyslcian............................................................................................................ 3 AR.TfCLB UI. COMPENSATION ANI:> BENEFITS .............................................................................................." 4 Section 3.1 Compensation.............................................................................:............................................. 4 Section 3..2 B.mplo"YIUent Tax.es ...............................~.,. ......................,.................................................. :·······'·f'··· 4 Section 3.3 Vacation, Professio.nal Meetings, and Leave Tinte .......---···..................................................4 Section 3.4 Professional Liability Insurnnce ............................................................................................... 4 Section 3.S Otber insurance .............................................................. _ ....................................................... 4 AR.TICLE N. TERM AND TERMINATION ......................... w . . . . . . . . . . . . .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 4 Section 4.1 Tenn ......,.................................................................................................................................. 4 Section 4.2 Tennlnation For Cause ............................................................................................................. 5 Section 4.3 Termination Without Cause...................................................................................................... 6 Section 4.4 Effect ofTenni.narlon .......................................................................................................:....... 6 ARTICLE V. ASSIONNJSNT OF RIGHT TO .BILL ..................................................................................,.............. 6 ARTICLE VI. CONFlDENTIALITY OF INFORMATION .....~.............................................................................. 6 Section 6.1 Confidentiallnfonnntion .......................................................................................................... 6 Section 6.2 Departure...........................................................................~..................................................... 6 · Spensation generated by Physician's expert testimony. or sums earned by Physician while on vacation and working at a teaching hospitaL The Association, at its sole discretion. shall establish tM fees to be charged for cardiology services. It is specifically understood and agreed that Physician shall have no right o.t claim to any pOJtion of Professional FCC3, eisional ethics, the professional practice of the Association; (d) attending, to the extent required by policies of the Association and the applicable canons of professional ethics, the admin.isfrnlive duties of the professional practice ofthe Association; (e) performing all acts reasonably necessary to maintain and improve Physician's professional skills; 2 TWC 0001 18 JAMES 190 GRATTAN:~0116 (Page 32 of 85 - 'l'hls print header can be chang ed u sing t he printHeader HTML t ag - see t he viewONE ~ manual for f urther !~ormation) 03:01:22 p.m. 01- 10-2013 1 806 7442211 ' I ~rom·: cr.H&G ' 1 80~ 744 2211 07/30/2013 15:02 #212 P.009/0t4 ARTICLE m. COMPENSATION AND BENEFITS Se Association's patients, business, sales, financial condition or products, or any Jlllltter or thing ascertained by Physician through Physician's affiliation with the Association, tbe use or disclosure of which matter or thing mig,bt reasonably be construed to be contrary to the best interests of the Association (collectively, the "Confidential Information"}. This restriction shall not apply to medical expertise gained during the term of this Agreement or if Physician can establish that such information (i) has become generally available to and known by the public (other than as a result of an unpermitted disclosure directly or indir«tly by Physician or Physician's affiliates, advisors, or representatives), (ii) has become available to Physician on a non-confidential basis from a source other than the Association or its affiliates, advisors, or rep~tatives, provided that such sourco is not and was not bound by a confidentiality agreement with or other obligation of secrecy ofthe Association of which Physician has knowledge, or (iii) has already been or is hereafter independently acquired or developed by Physician without violating any confidentiality agreement with or other obligation ofsecrecy to the Associntion. Section 6.2 Deuarture. Should Physician leave the employment of the· Association, Physician will neither take nor retain, without prior written authorization from the Association, any Confidential InfoiDllltion. Physician further agrees to destroy any copies of computer discs in his possession and delete or otherwise destroy an~CEIV'ED Confidential lnfonnation contained in his personal computer. Without limiting o!her possible remedies to the Association for lhe bre110h of this covenant, Physician agrees that injunctive or other equitable reJief shall be available to JUL 3 0 2013 6 . T4~RLAW YAMES GRATTAN 00j19 193 (Page 35 of 85 - This print header can be changed using the printHea der HTML tag • see the viewONE HTML manual. for further information) o3:o1:22 p.m. o1-l0-2on I 12 I 1 806 744 2211 F.r Onl'~CTH&G 1 aoa' 144 2211 07/30/2013 15:05 #212 P.012/014 enforce this covenant, such relief to bo without the necessity of posting a bond, cash, or othrnvise. Physician further agrees that if any restriction contained in this parograph is held by any court to be unenforceable or unrea:;onnble1 a lesser restriction shaJI b:l enforced in its place fll¥lremaiD!ng restrictions contained herein shall be enforced independently of each other. SecHon 6.3 lExccptfons. (a) Physician shall not be prohi'bited from releasing any Confidentiallnforroation to Physician's legal counsel or financial advisors, provided that Physici!ln places such advisors Wlder legul o~llgation not to disclose the Confidentiallnfonnation. · (b) It shall not be a breach of Physician's covenants under this Al.tlcte Vl if a disclosure is rnade pursuant to a court order, a valid administrative agency subpoena, or a lawful request for information by an administrative agency. Physician shall give the Association prompt notice of any such court order, subpoena. or request fur information. . ARTICLE VU. NONCOMPETITJON Section 7.1 Covenant Not to Compete. Physician recognizes that the Association's decision to enter into this Agreement is induced primarily because of the covenants and assurances made by Physician in this Agreement, that Physician's covenant not to compete is necessary to ensure the continuation of the business of the Association Md the reputation ofthe Association. as well as to protect tho Association from unfair business competition, including but not limited to, the improper use of Confidential Information, and that hrevocable hann and damage wiU be done to tho Association if Physician competes with the Association. It is tllo intent of the Association to provide Physician to a large and broad based practice which Association bas developed for many years. Thetefore, dwing the tenn l!Dd for a period of 2 yeaiS ibllowing temlination of this • Agreement. Physician shall not. without the prior written consent of the Association, directly or indirectly, either indlviduo.lly or as a partner, joint ventures, employee, agent, officer, director, shareholder or member of any person or entity, (i) provide cardiology services .in Lubbock County Texas; or soliciting or providing cardiology services to any patient that was a patient of Association at any time during the tenns of this Agreement during the tenn or any renewal tenn bereof, or (ii) soUelt for employment. or employ or engoge an.y individual who is employed by the Association or any affiliate of the Association, including, but not limited to, employees of any management services organization or other entity, ~e majority of the equity interests of which is owned by the shareholders of the Association. Upon qlressly authorizes the Association to charge as a direct expense to Physician any and all reosonablo costs, charges, and e"pensea in the aggregate, including, but not limited to, any accounting or lesaJ expenses or other advisory fees incurred by the Association in connection wiU1 its own representation or involvement in any nllltter arising from any and all acts of Physician occwriog from any activity or action (passive or active) that is unrelated to provfding cardiology services for or on behalf of the Association. Physician acknowledges and agrees should such costs or expenses be incurred during Physiclan.'s employment. or be pending at a tirne when an act or event occurs under the preceding sentence, for any reason, Physician expressly allows, agrees, and consents to the Association's withholding and offsetting any reasonable and necessary costs or expenses reafu:ed, paid. or anticipated (or as may be reasonably anticipated) from any paymonts due or owing to Physician onder any provi.9ion of this Agreement . The costs and expenses referred to herein are those directly or indirectly chargeable and payable by the Association that are not covered by insurance or other reimbursement that may be available or payable to the Association. The acts, conduct, or omissions contemplated by this Article apply to all matters, activities. actions, or resulting matters other than thoso associated with providing cardiology services for or on behalf of the Association, and as such shall apply to WlY action or conduct tbat may result in an economic detriment to the Assoc.iation. Association acknowledges and agrees that it shall indemnlly, hold hannless, and reliUburse and/or expressly authorizes the Physician to charge as a direct expense to Association any and all reasonabl~ costs, charges, and expenses. including, but not limited to, any accounting or legal expenses or otber advisoty fees incurred by the Physician in connection with his own representation or involvement in any matter arising from nny and all acts of Physician occurring from any activity or action (passive or active) that is related to providing cardiology sennces for or on b~:half of the Asso.4 Enforuabilltx. Should any provision of this Agreement be held invalid, unenforceable, or unconstitutional by any governmental body or court of competent jurlsdlctjon, such holding shall not dimini$h 1he validity or enforceability of any other provision hereof. The parties further request and desire that the court refonn such provision that js deemed invalid in order to marco it enforceabl