Perry v. VHS San Antonio Partners

Case: 20-50356 Document: 00515774519 Page: 1 Date Filed: 03/10/2021

United States Court of Appeals

for the Fifth Circuit United States Court of Appeals

Fifth Circuit

FILED

March 10, 2021

No. 20-50356 Lyle W. Cayce

Clerk

Doctor Melvin G. Perry, Jr.,

Plaintiff—Appellant,

versus

VHS San Antonio Partners, L.L.C., doing business as North

Central Baptist Hospital,

Defendant—Appellee.

Appeal from the United States District Court

for the Western District of Texas

USDC No. 5:18-CV-404

Before Jolly, Stewart, and Oldham, Circuit Judges.

E. Grady Jolly, Circuit Judge:

The man at the center of this employment-discrimination appeal is

Dr. Melvin G. Perry, Jr., an African-American pediatric intensivist. Dr.

Perry treated children in the pediatric intensive care unit of a hospital owned

by VHS San Antonio Partners, L.L.C. under his professional services

agreement with Pediatric Inpatient Critical Care Services (PICCS), which

itself operated under a separate coverage agreement with VHS. PICCS

eventually terminated its professional services agreement with Dr. Perry at

VHS’s request. In response, Dr. Perry sued claiming race discrimination

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under Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981. The

district court granted summary judgment dismissing his claims against VHS,

dismissing his Title VII claim for lack of an employment relationship with

VHS, and his § 1981 claim for lack of a contractual relationship with VHS.

Dr. Perry appeals to us. We hold that Dr. Perry’s Title VII claim fails for

lack of an employment relationship with VHS under either integrated-

enterprise or joint-employment theories. And we further hold that Dr.

Perry’s § 1981 claim fails because Dr. Perry cannot identify an impaired

contractual right enforceable against VHS. Consequently, we affirm the

district court’s partial final judgment. (Dr. Perry’s § 1981 claim against

PICCS is still pending before the district court.) 1

I

VHS is an entity that owns and operates North Central Baptist

Hospital. North Central Baptist is located in San Antonio, Texas and is the

hub for pediatric care for the Baptist Health System in the area. The pediatric

intensive care unit is at the center of this dispute. In December 2014, North

Central Baptist needed physicians to treat patients in that unit. To fill that

need, VHS contracted with PICCS, a professional association owned by

three physicians: Dr. Thomas Gowan, Dr. Hugo Carvajal, and Dr. Nelson

Pedro Chavez. The parties call this agreement the “coverage agreement,”

and we will do the same.

The purpose of the coverage agreement is to ensure that VHS has

enough pediatric intensivists to treat the children in North Central Baptist’s

pediatric intensive care unit. The agreement achieves that goal by making

1

The district court entered a Federal Rule of Civil Procedure 54(b) partial final

judgment authorizing this interlocutory appeal.

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PICCS the “exclusive provider” of pediatric critical care services for North

Central Baptist’s pediatric intensive care unit.

Five features of the coverage agreement bear mention. First, the

coverage agreement says that PICCS and its physicians “are acting as

independent contractors, and shall not be considered employees or agents

of” VHS. Second, the coverage agreement requires PICCS to pay its

physicians fair market value. Third, the coverage agreement sets baseline

qualifications for PICCS physicians; they must (a) be duly licensed and

qualified to practice medicine in Texas; (b) be a participating physician in

Medicare and in Texas’s Medicaid program; (c) be approved for membership

and/or clinical privileges on the medical staff of North Central Baptist; and

(d) be Board Certified (or Board Eligible) in pediatrics. Fourth, the coverage

agreement grants VHS’s CEO the right to “request removal” of any

PICCS physician “if continued service by such [p]hysician could jeopardize

patient care or safety.” Upon such a request, PICCS agrees to

“immediately remove” the physician “in accordance with [North Central

Baptist’s] Medical Staff Bylaws.” Fifth and finally, the coverage agreement

obliges PICCS to appoint a director of the pediatric intensive care unit,

“subject to the prior approval of” VHS’s CEO.

To meet its obligations under the coverage agreement, PICCS

required more physicians. So it placed an advertisement online, soliciting

applications from pediatric critical care specialists. Dr. Perry responded.

One of PICCS’s owners, Dr. Carvajal, found Dr. Perry’s application

“attractive” and invited Dr. Perry to travel to San Antonio for an interview

in January 2015.

The interview went well. Just two months later, Dr. Perry entered

into a professional services agreement with PICCS. Three features of that

agreement are relevant. First, Dr. Perry agreed to “render professional

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medical services in the specialty of pediatric critical care medicine” at North

Central Baptist. Second, Dr. Perry agreed that “the relationship between

[PICCS] and him is that of an independent contractor.” And third, Dr.

Perry agreed to execute a separate “physician agreement” with VHS.

Dr. Perry signed the physician agreement a few weeks later. Under it,

he agreed that he understood that he was bound by the terms of the coverage

agreement between VHS and PICCS. He also agreed that North Central

Baptist’s “Medical Staff Bylaws shall control my termination of Medical

Staff Membership and/or clinical membership.” The physician agreement

was signed only by Dr. Perry, purportedly “[i]n consideration of [his]

approval by [VHS] to provide services” at North Central Baptist. Because

the physician agreement is the basis for Dr. Perry’s § 1981 claim against

VHS, and the language of that agreement informs the analysis to follow, we

set out the agreement in full:

I, Melvin G. Perry, MD, am a member, associate, partner or

employee of or an independent contractor under contract with

Pediatrics Inpatient Critical Care Services, P.A.

(“Group”). I understand that I am bound by all terms and

conditions of the Agreement for Department coverage dated

December 12, 2014 and effective March 1, 2015 (the

“Agreement”) between VHS San Antonio Partners, LLC

dba North Central Baptist Hospital (“Hospital”) and

Group. In consideration of my approval by Hospital to provide

services at North Central Baptist Hospital (“Hospital”),

pursuant to the Agreement, I knowingly and voluntarily agree

to the following.

I understand, acknowledge and expressly agree that it is in the

best interest of Hospital’s ability to provide quality patient care

in a cost-effective and efficient manner for Hospital to contract

with an entity to be the exclusive provider of the Services for

the Department. I further understand, acknowledge and agree

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that upon expiration or earlier termination of the Agreement,

with or without cause, Hospital shall have the right to grant an

exclusive contract for the provision of Services to any person

or entity.

I understand, acknowledge and agree that the Medical Staff

Bylaws shall control any termination of Medical Staff

Membership and/or clinical privileges. I understand,

acknowledge and agree that unless and until such loss of

membership occurs, I am bound by and subject to all provisions

of the Bylaws, Rules and Regulations of Hospital and/or its

Medical Staff.

Without limiting the foregoing in any way, I understand,

acknowledge and agree that if the Agreement expires and/or

terminates for any reason, and I continue to hold Medical Staff

membership and/or exercise clinical privileges thereafter, this

shall not, in any way, waive or restrain the Hospital from

granting an exclusive contract for the provision of Services to

any person or entity.

I agree that if any one or more of the provisions contained

herein shall be held to be invalid, illegal or unenforceable for

any reason, whether in whole or in part, such invalidity,

illegality or unenforceability shall not affect any other provision

hereof, and this Physician Agreement shall be construed as if

such provision had never been contained herein.

BY MY SIGNATURE BELOW, I ACKNOWLEDGE THAT

I HAVE CAREFULLY READ AND UNDERSTOOD THE

ABOVE PHYSICIAN AGREEMENT, AND I HAVE

CAREFULLY READ AND UNDERSTOOD THE

AGREEMENT REFERRED TO ABOVE AND THAT I

KNOWINGLY AND VOLUNTARILY AGREE TO THEIR

TERMS.

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Dr. Perry’s stint at North Central Baptist was a short one. 2 He worked

there under his professional services agreement with PICCS for just 22

months, from April 2015 to February 2017. During Dr. Perry’s tenure, VHS

did not pay his salary, did not bill for his services, did not pay for his

continuing medical education or his membership in professional

organizations, did not pay his malpractice insurance, did not create his

schedule, and did not keep his personnel records.

In January 2017, North Central Baptist President Bill Waechter and

North Central Baptist Chief Medical Officer Dr. Dana Kellis decided to

terminate Dr. Perry’s professional services agreement. Although the

termination, officially, was without cause, Waechter testified that the

contract was terminated because Dr. Perry had created a hostile work

environment that was “putting . . . patient care in jeopardy.”

This occasion was the first—and is the only—time VHS exercised its

contractual right to request removal of a PICCS physician. PICCS

complied with the request and sent Dr. Perry a letter informing him that “the

Board of Directors of PICCS has directed to terminate” the agreement

“without cause pursuant to Section 15.1” and giving Dr. Perry 90 days notice

of the termination. Dr. Perry chose not to work through the full notice period

and treated patients at North Central Baptist only through February 2017.

II

In response to the termination of his contract, Dr. Perry sued both

PICCS and VHS under Title VII and 42 U.S.C. § 1981. He alleged that

PICCS and VHS discriminated against him on the basis of his race and sex

and subjected him to a hostile work environment. Regarding his

2

The reader is reminded that VHS owns and operates North Central Baptist

Hospital.

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employment, he alleged that (a) both PICCS and VHS were his Title VII

“employer,” (b) PICCS and VHS were joint employers, and (c) PICCS

and VHS constituted a single, integrated enterprise.

At the urging of PICCS and VHS, the district court bifurcated

discovery on the employment-relationship issue from discovery on other

issues. The district court ordered limited discovery “on the threshold issues

of whether [Dr. Perry] was an employee of [PICCS] and whether [VHS]

was a joint employer of [Dr. Perry].” The district court stayed discovery on

the merits of Dr. Perry’s claims, pending its ruling on dispositive motions

regarding those threshold issues.

Dipositive motions followed. VHS sought summary judgment

dismissing all of Dr. Perry’s claims, contending the Title VII claim failed

because Dr. Perry did not have an employment relationship with VHS, and

the § 1981 claim failed because Dr. Perry did not have a contract with VHS.

PICCS also moved for summary judgment, but it sought dismissal of the

Title VII claim only. PICCS first contended that Dr. Perry’s Title VII

claim failed on the ground that PICCS did not meet the Title VII definition

of “employer” because PICCS did not employ at least 15 people. See 42

U.S.C. § 2000e(b). PICCS next contended that the claim failed for the

independent reason that application of the “hybrid economic

realities/common-law control test” showed that Dr. Perry was an

independent contractor, not an employee of PICCS. And PICCS last

contended that VHS and it were not joint employers of Dr. Perry; Dr. Perry

was an independent contractor of both entities.

The district court granted both motions for summary judgment in a

lengthy opinion, analyzing the Title VII claims first and the § 1981 claim

second.

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The Title VII analysis was intricate. Starting with the claims against

PICCS, the district court concluded that PICCS, standing alone, did not

qualify as a Title VII “employer” because it did not employ at least 15

people. So PICCS could not be liable under Title VII unless Dr. Perry could

aggregate PICCS’s and VHS’s employees by showing that PICCS and

VHS constituted a single, integrated enterprise. Consistent with Schweitzer

v. Advanced Telemarketing Corp., 104 F.3d 761, 764 (5th Cir. 1997), the district

court began the aggregation analysis by applying a “hybrid economic

realities/common law control” test to determine whether Dr. Perry was an

employee or independent contractor of PICCS. But application of that test

yielded no answer: The district court found fact disputes bearing on Dr.

Perry’s status as a PICCS employee. Having found fact disputes concerning

Dr. Perry’s employment relationship with PICCS, the district court turned

to VHS, asking whether that entity and PICCS constituted a single,

integrated enterprise, such that both could be liable under Title VII. PICCS

and VHS did not constitute an integrated enterprise, the district court

decided, because Dr. Perry failed “to show the requisite degree of

interrelation in daily employment matters.” That conclusion left just one

basis for imposing Title VII liability—joint employment. Again applying the

“hybrid economic realities/common law control” test, the district court

concluded that VHS did not qualify as a joint employer of Dr. Perry because

VHS lacked meaningful control over Dr. Perry and his work. Given the

district court’s conclusions that (1) VHS was not a joint employer, (2) VHS

and PICCS were not a single, integrated enterprise, and (3) PICCS,

standing alone, did not employ enough people to qualify as a Title VII

“employer,” the district court entered summary judgment dismissing all of

Dr. Perry’s Title VII claims.

The § 1981 analysis proved simpler. Dr. Perry’s § 1981 claim against

VHS failed because, according to the district court, Dr. Perry did not have a

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contractual relationship with VHS. Dr. Perry’s “physician agreement” was

not a contract covered by § 1981, the district court reasoned, because the

physician agreement “d[id] no more than restate the fact that the [Medical

Staff] Bylaws control membership and privileges and their termination” and

thus created “no enforceable contract rights against VHS.” In the light of

its conclusion that Dr. Perry did not have a contract with VHS, the district

court entered summary judgment dismissing Dr. Perry’s § 1981 claim against

VHS.

After the district court’s summary-judgment ruling, one claim

remained—a § 1981 claim against PICCS. Not wanting to delay this appeal,

Dr. Perry moved for entry of a partial final judgment under Federal Rule of

Civil Procedure 54(b), thus allowing entry of an appealable judgment on one

or more claims even when trial-court litigation remains for other claims. The

district court granted the motion, entering a partial final judgment dismissing

all of Dr. Perry’s claims against VHS, from which Dr. Perry takes this timely

appeal.

In short, the only matters before us today are Dr. Perry’s Title VII

and § 1981 claims against VHS. His § 1981 claim against PICCS is still

pending in the district court.

III

We review the grant of summary judgment de novo. West v. City of

Houston, 960 F.3d 736, 740 (5th Cir. 2020) (per curiam). Summary judgment

is appropriate if the movant shows that 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 dispute is genuine if “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). A fact is material if it “might

affect the outcome of the suit.” Id. We view the evidence in the light most

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favorable to the nonmovant and draw all reasonable inferences in that party’s

favor. Adams v. Alcolac, Inc., 974 F.3d 540, 543 (5th Cir. 2020) (per curiam).

Dr. Perry makes three claims. First, he contends that VHS is liable

under an “interference” theory of Title VII liability promulgated in Sibley

Memorial Hospital v. Wilson, 488 F.2d 1338 (D.C. Cir. 1973). Second, he

contends that the district court erred in granting summary judgment

dismissing his Title VII claims for lack of an employment relationship with

VHS. Third, he contends that the district court erred in granting summary

judgment dismissing his § 1981 claim for lack of a contractual relationship

with VHS. We consider his Sibley argument before turning to Title VII and

then to § 1981.

IV

Dr. Perry contends—for the first time on appeal—that VHS is liable

under Sibley’s “interference” theory. 3 We generally do not consider

arguments raised for the first time on appeal. See Stokes v. Emerson Elec. Co.,

217 F.3d 353, 358 n.19 (5th Cir. 2000). But there are exceptions. For

example, we may consider an issue “if the argument on the issue before the

district court was sufficient to permit the district court to rule on it.” In re

Liljeberg Enters., Inc., 304 F.3d 410, 427 n.29 (5th Cir. 2002). That is not the

case here. Because Dr. Perry did not mention Sibley or even suggest the

“interference” theory in the district court, the argument on the issue was not

sufficient to permit the district court to rule on it. So Dr. Perry failed to

3

Under Sibley’s “interference” theory, a plaintiff can bring a Title VII action

against a defendant who is not his “actual” or “direct” employer if that defendant

“control[s] access to” the plaintiff’s employment and “den[ies] such access by reference

to invidious criteria.” 488 F.2d at 1342.

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preserve his Sibley argument, and we decline to consider it. We turn to

consider Dr. Perry’s Title VII claim.

V

The basic premise of a Title VII case is that the plaintiff had an

employment relationship with the defendant. See Muhammad v. Dall. Cnty.

Cmty. Supervision & Corr. Dep’t, 479 F.3d 377, 380 (5th Cir. 2007). Dr. Perry

contends that he had an employment relationship with VHS on the basis of

two alternative theories. First, he contends that VHS and PICCS were

engaged in an integrated enterprise. Second, he contends that VHS was his

joint employer, along with PICCS. We address each argument in turn.

A

Dr. Perry first contends that his evidence is sufficient to show that

VHS and PICCS constituted a single, integrated enterprise. In Title VII

cases, “‘superficially distinct entities may be exposed to liability upon a

finding they represent a single, integrated enterprise: a single employer.’”

Schweitzer, 104 F.3d at 763 (quoting Trevino v. Celanese Corp., 701 F.2d 397,

404 (5th Cir. 1983)). We apply a four-factor test to determine whether two

entities are a single employer for Title VII purposes. Johnson v. Crown

Enters., Inc., 398 F.3d 339, 343 (5th Cir. 2005). The factors are “(1)

interrelation of operations, (2) centralized control of labor relations, (3)

common management, and (4) common ownership or financial control.”

Vance v. Union Planters Corp., 279 F.3d 295, 297 (5th Cir. 2002) (citing

Trevino, 701 F.2d at 403).

The first factor, interrelation of operations, “ultimately focuses on

whether” one entity “excessively influenced or interfered with the business

operations” of the other. Lusk v. Foxmeyer Health Corp., 129 F.3d 773, 778

(5th Cir. 1997). Evidence that one entity is involved in the “daily

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employment decisions” of the other is “central.” Schweitzer, 104 F.3d at

765. The fact that one entity “ultimately benefitted from the activities” of

the other “is irrelevant to whether their operations were interrelated.” Lusk,

129 F.3d at 778. “Attention to detail, not general oversight, is the hallmark

of interrelated operations.” Id. (citing Johnson v. Flowers Indus., Inc., 814

F.2d 978, 982 (4th Cir. 1987)). Evidence suggestive of interrelated

operations includes (1) one entity’s involvement in the other’s daily

decisions relating to production, distribution, marketing, and advertising; (2)

shared employees, services, records, and equipment; (3) commingled bank

accounts, accounts receivable, inventories, and credit lines; (4) one entity’s

maintenance of the other’s books; (5) one entity’s issuance of the other’s

paychecks; and (6) one entity’s preparation and filing of the other’s tax

returns. Id. No such evidence is present here. More broadly, there is no

evidence that VHS “excessively influenced or interfered with the business

operations” of PICCS, which is the “ultimate focus[ ] ” of this factor. Id.

Still, Dr. Perry complains that the district court overlooked evidence that

PICCS physicians are necessary to VHS’s business and that VHS

“coached” Dr. Perry by telling him that he needed to improve his conduct.

But those facts do not reflect the degree of interrelatedness Lusk requires:

They do not show VHS’s “attention to detail” or its “excessive[ ]

influence[ ] ” in PICCS’s business. Id. Consequently, this factor disfavors

a finding that VHS and PICCS constitute a single, integrated enterprise.

The second factor, centralized control of labor relations, “has been

called the most important one.” Johnson, 398 F.3d at 343 (citing Schweitzer,

104 F.3d at 764). We have refined the inquiry into one question: What entity

made the final decisions on employment matters regarding the person

claiming discrimination? Id. (quoting Trevino, 701 F.2d at 404). To satisfy

this factor, Dr. Perry points primarily to two items of evidence. First, he

points to the coverage agreement between PICCS and VHS. That

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agreement, as we have explained, grants VHS’s CEO the right to “request

removal” of PICCS physicians and requires PICCS, in turn, to

“immediately remove” the physician “in accordance with . . . Medical Staff

Bylaws.” Second, he points to an email from North Central Baptist Chief

Medical Officer Dr. Dana Kellis to North Central Baptist President Bill

Waechter. 4 In that email, Dr. Kellis states that he met with PICCS’s owner-

directors, and “we reached the decision to tell Dr. Perry that he is being

terminated without cause . . . .” The coverage agreement’s grant of the

power to request Dr. Perry’s removal, and Dr. Kellis’s reference to “we,”

suggest that both VHS and PICCS made the final decision to terminate Dr.

Perry’s professional services agreement. See Trevino, 701 F.2d at 404.

Although VHS’s power to request removal of a PICCS physician was

exercised on only one occasion, such a power generally favors a finding that

VHS and PICCS constitute an integrated enterprise.

The third factor, common management, disfavors a finding that VHS

and PICCS are a single, integrated enterprise. PICCS’s management

consisted of Dr. Thomas Gowan, Dr. Hugo Carvajal, and Dr. Nelson Pedro

Chavez. The VHS-owned North Central Baptist Hospital was managed by

Bill Waechter. There is no overlap of managerial responsibilities.

The fourth and final factor, common ownership or financial control,

also disfavors a single, integrated enterprise. Dr. Perry has not identified any

commonality of ownership of VHS and PICCS, nor has he presented any

evidence of shared financial control.

In sum, the first, third, and fourth factors indicate that VHS and

PICCS do not constitute an integrated enterprise. But the second and most

4

The reader is once again reminded that VHS owns and operates North Central

Baptist Hospital.

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important factor—centralized control of labor relations—as a general rule

favors a finding that VHS and PICCS constitute an integrated enterprise.

Nevertheless, this conclusion raises the question whether Dr. Perry’s

satisfaction of the second factor, such as it may be, standing alone, creates a

genuine dispute of material fact, precluding summary judgment on the

integrated-enterprise theory. The district court thought not, and we agree.

Although we have not confronted this precise question until today, the

Equal Employment Opportunity Commission has offered some guidance. It

has suggested that no single factor is dispositive of the integrated-enterprise

analysis. See EEOC Compliance Manual, Section 2: Threshold

Issues at III(B)(1)(a)(iii)(a), 2009 WL 2966755. Our cases have pointed us

in a similar direction. In Torres v. Liberto Manufacturing Co., we said that the

plaintiff’s reliance on the second factor, standing alone, was “not

persuasive.” 67 F. App’x 252, 2003 WL 21195924, at *3 (5th Cir. 2003) (per

curiam). And in Lusk, we emphasized the need for evidence of “[s]ome

nexus” to “daily employment decisions.” 129 F.3d at 778 (citing Schweitzer,

104 F.3d at 765). The only evidence offered on that point in this case is that

VHS exercised its contractual right to request that PICCS terminate Dr.

Perry’s professional services agreement. Apparently no such or similar event

had occurred before. This singular involvement of VHS in PICCS’s

personnel retention demonstrates that reasonable jurors could not find that

VHS was “so involved in the daily employment decisions of [PICCS] as to

justify treating the two . . . as a single employer.” Id. at 777 n.3 (citations

omitted). Consequently, the district court did not err in concluding that Dr.

Perry failed to create a genuine dispute of material fact on his integrated-

enterprise theory. We now turn to consider Dr. Perry’s next theory—joint

employment.

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B

Dr. Perry contends that even if he fails on his integrated-enterprise

claim, he has surely offered enough evidence to survive summary judgment

on the ground that VHS was a joint employer. We lay the foundation to his

argument, citing its definition: “The term ‘joint employer’ refers to two or

more employers that are unrelated or that are not sufficiently related to

qualify as an integrated enterprise, but that each exercise sufficient control of

an individual to qualify as [his] employer.” EEOC Compliance

Manual, Section 2: Threshold Issues at III(B)(1)(a)(iii)(b), 2009 WL

2966755.

To determine whether an entity exercises enough control over an

individual to qualify as his employer, we apply a “hybrid economic

realities/common law control test.” Deal v. State Farm Cnty. Mut. Ins. Co. of

Tex., 5 F.3d 117, 118–19 (5th Cir. 1993) (quoting Fields v. Hallsville Indep. Sch.

Dist., 906 F.2d 1017, 1019 (5th Cir. 1990) (per curiam), cert. denied, 498 U.S.

1026 (1991)). The right to control the employee’s conduct is the most

important component of determining a joint employer. Id. at 119 (citing

Fields, 906 F.2d at 1019). When examining the control component, we focus

on the right to hire and fire, the right to supervise, and the right to set the

employee’s work schedule. Id. (citing Fields, 906 F.2d at 1020; Mares v.

Marsh, 777 F.2d 1066, 1068 (5th Cir. 1985)). The economic-realities

component of the “hybrid economic realities/common law control test”

focuses on who paid the employee’s salary, withheld taxes, provided benefits,

and set the terms and conditions of employment. Id. (citing Mares, 777 F.2d

at 1068).

It is helpful that we previously have applied this “hybrid economic

realities/common law control test” in the hospital-physician context. See

Diggs v. Harris Hosp.-Methodist, Inc., 847 F.2d 270 (5th Cir. 1988). We held

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in Diggs that an obstetrician-gynecologist with staff privileges at a hospital

failed to establish that she was an employee of the hospital. 5 Id. at 272. The

hospital supplied the tools, staff, and equipment Diggs needed to treat

patients, and the hospital “impose[d] standards” upon Diggs, as it did upon

all physicians with staff privileges. Id. at 273. The hospital even required

Diggs to have a “sponsor” present during surgical procedures. Id. Yet all of

this involvement was insufficient. Id. We emphasized that the hospital did

not “direct the manner or means” by which Diggs rendered medical care; it

did not pay Diggs for her services; and it did not pay her licensing fees,

professional dues, insurance, taxes, or retirement benefits. Id.

Applying this test here, we first find that the evidence of control is

weak. To be sure, we already have discussed the only fact that reflects

control—VHS’s limited contractual right to “fire” Dr. Perry by requesting

that PICCS terminate his professional services agreement. The other facts

cut against control. First, VHS did not have the right to hire Dr. Perry. The

coverage agreement delegated to PICCS the task of employing or

contracting with physicians other than the Director of PICCS. Second,

VHS did not have the right to set Dr. Perry’s work schedule. PICCS

created and maintained the work schedule for Dr. Perry. Dr. Perry himself

even retained the right to adjust the schedule set by the PICCS Director.

5

Cases from other circuits have reached the same general conclusion: A physician

with hospital privileges is not a hospital employee for purposes of federal antidiscrimination

law. See, e.g., Henry v. Adventist Health Castle Med. Ctr., 970 F.3d 1126, 1133 (9th Cir. 2020)

(bariatric surgeon), petition for certiorari filed, No. 20-869 (Dec. 30, 2020); Wojewski v.

Rapid City Reg’l Hosp., Inc., 450 F.3d 338, 344 (8th Cir. 2006) (cardiothoracic surgeon);

Shah v. Deaconess Hosp., 355 F.3d 496, 500 (6th Cir. 2004) (general surgeon); Vakharia v.

Swedish Covenant Hosp., 190 F.3d 799, 806 (7th Cir. 1999) (anesthesiologist); Cilecek v.

Inova Health Sys. Servs., 115 F.3d 256, 263 (4th Cir. 1997) (emergency physician).

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For example, Dr. Perry refused to work on dates that he had planned to take

a trip to Australia and New Zealand. During some months, Dr. Perry, at his

choosing, worked only one week at North Central Baptist, and he worked the

rest of the month at Kids Time Pediatric locations in Georgia. Dr. Perry’s

power to determine his own work schedule and to offer his professional

services at other locations suggests that he is an independent contractor, not

an employee of VHS. 6 See Henry, 970 F.3d at 1131 (physician’s freedom to

run his own private practice was “inconsistent with employee status”);

Levitin v. Nw. Cmty. Hosp., 923 F.3d 499, 501–02 (7th Cir. 2019) (physician

who could set her own hours and work at other hospitals was independent

contractor—not employee—of hospital); Cilecek, 115 F.3d at 261 (same).

Thirdly, we ask whether VHS had the right to supervise Dr. Perry or

to interfere with his exercise of professional medical judgment in any

meaningful respect. Although Dr. Perry points to evidence that VHS

provided him with the equipment and facilities he needed to treat his

patients, that fact is insufficient to establish control. See Diggs, 847 F.2d at

273. Dr. Perry also points to “coaching” he received from VHS in response

to complaints that he was “rude and condescending.” The fact that an

unidentified VHS employee “coached” Dr. Perry in a generalized way and

“impress[ed] upon” him the “need to improve” his conduct clearly does not

demonstrate VHS’s power to control Dr. Perry’s exercise of professional

medical judgment. See, e.g., Henry, 970 F.3d at 1132 (physician’s obligation

to abide by hospital regulations did not evidence “a right to control the

manner and means of [his] practice”); Cilecek, 115 F.3d at 261–62

6

Yet Dr. Perry insists that VHS set his schedule, complaining that a VHS employee,

Shannon Herrod, scheduled his pediatric sedations “inappropriately.” Herrod’s

“inappropriate” scheduling of pediatric sedations does not show that VHS set Dr. Perry’s

schedule because, as the district court noted, PICCS Director Chavez scheduled Dr. Perry

on a 12-week cycle, subject to Dr. Perry’s stated availability.

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(physician’s obligation to abide by hospital rules and regulations, “which

regulated his work at the hospitals in substantial detail,” did not transform

him into hospital employee). Dr. Perry also contends that VHS could

require him to treat certain patients over his objections, but the argument

finds only limited support in the record. The argument rests on a single

occasion in which “administration” transferred a pregnant, septic teenager

to North Central Baptist Hospital over Dr. Perry’s objection. Dr. Perry

testified that this was an example of VHS “forcing a patient onto [him].” It

is unclear from the record, however, what entity “forced” the patient on

him, or whether the patient was indeed “forced” on him, given that the

patient was transferred to another hospital at the request of a physician who

agreed with Dr. Perry’s assessment. In any event, this one incident does not

establish that VHS had the power to control Dr. Perry’s exercise of

professional medical judgment. In sum, the evidence offered by Dr. Perry

does not support the control component.

We move on now to address the economic-realities component of the

“hybrid economic realities/common law control test.” As earlier noted, the

economic-realities component focuses on “whether the alleged employer

paid the employee’s salary, withheld taxes, provided benefits, and set the

terms and conditions of employment.” Deal, 5 F.3d at 119 (citing Mares, 777

F.2d at 1068). VHS did none of these things. It did not pay Dr. Perry’s

salary, bill for his services, pay for his continuing medical education courses

or his membership dues to various professional organizations, pay for his

malpractice insurance, create his schedule, or keep his personnel records.

Thus, neither component of the “hybrid economic realities/common

law control” test supports an employment relationship between VHS and

Dr. Perry. Like the hospital in Diggs, VHS ultimately lacked the requisite

control; it did not “direct the manner or means by which [Dr. Perry]

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render[ed] medical care.” 847 F.2d at 273. Consequently, we find no error

by the district court in rejecting the joint-employer argument.

This conclusion coheres with Burton v. Freescale Semiconductor, Inc.,

798 F.3d 222 (5th Cir. 2015), on which Dr. Perry relies. There we considered

whether a temporary employee assigned by a staffing company to a

manufacturer had an employment relationship with the manufacturer under

the “hybrid economic realities/common law control test.” Id. at 227–28.

We held that she did. Id. In so holding, we emphasized that the manufacturer

supervised the temporary employee: The manufacturer “completed

performance reviews” of the temporary employee’s work and “delivered”

“[o]n-the-job corrections and admonishment.” Id. Here, such supervision,

which we emphasized in Burton, is absent. To repeat, VHS did not have the

right to supervise Dr. Perry or to interfere with his exercise of professional

medical judgment in any meaningful respect. So we cannot agree that Burton

requires reversal.

In sum, Dr. Perry did not have an employment relationship with VHS

under either an integrated-enterprise or a joint-employment theory. Unable

to show an employment relationship with VHS, Dr. Perry cannot prevail on

his Title VII claim against VHS. We therefore affirm the summary

judgment dismissing the Title VII claims against VHS, and turn to consider

Dr. Perry’s claim under § 1981.

VI

Section 1981 does not supply “a general cause of action for race

discrimination.” Arguello v. Conoco, Inc., 330 F.3d 355, 358 (5th Cir. 2003).

It bars race discrimination in contracting. See 42 U.S.C. § 1981. It does so by

guaranteeing to all persons within the jurisdiction of the United States the

“same right . . . to make and enforce contracts . . . as is enjoyed by white

citizens . . . .” Id. § 1981(a). It defines the phrase “make and enforce

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contracts” to include “the making, performance, modification, and

termination of contracts, and the enjoyment of all benefits, privileges, terms,

and conditions of the contractual relationship.” Id. § 1981(b).

Section 1981 requires a plaintiff to show that (1) he is a member of a

racial minority; (2) the defendant had an intent to discriminate on the basis

of race; and (3) the discrimination concerned one or more of the activities

enumerated in the statute, such as the making and enforcing of a contract.

Bellows v. Amoco Oil Co., 118 F.3d 268, 274 (5th Cir. 1997) (citing Green v.

State Bar of Tex., 27 F.3d 1083, 1086 (5th Cir. 1994)). “Any claim brought

under § 1981 . . . must initially identify an impaired contractual relationship

under which the plaintiff has rights.” Domino’s Pizza, Inc. v. McDonald, 546

U.S. 470, 476 (2006) (cleaned up). A § 1981 claim fails as a matter of law if

the plaintiff lacks “rights under the existing (or proposed) contract that he

wishes ‘to make and enforce.’” Id. at 479–80 (quoting 42 U.S.C. § 1981).

Dr. Perry sued VHS under § 1981 claiming discrimination based on

his race. He has failed, however, to identify in his complaint an “impaired

contractual relationship [with VHS] under which [he] ha[d] rights,” id. at

476, and therefore his complaint failed to state a plausible § 1981 claim. But

VHS did not move to dismiss for failure to state a claim, choosing to move

for summary judgment instead. Dr. Perry opposed that motion on the ground

that his physician agreement created a contractual relationship with VHS.

The district court disagreed, dismissing the § 1981 claim and holding that the

physician agreement did not create a contractual relationship between Dr.

Perry and VHS.

Although we will not specifically disagree with the holding of the

district court, we will affirm the dismissal on a slightly different ground. See

Bluebonnet Hotel Ventures, L.L.C. v. Wells Fargo Bank, N.A., 754 F.3d 272,

276 (5th Cir. 2014) (We “may affirm summary judgment on any ground

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supported by the record, even if it is different from that relied on by the

district court.”) (internal citation and quotation marks omitted). The

physician agreement was signed only by Dr. Perry, who executed the

agreement “[i]n consideration of [his] approval by [VHS] to provide

services” at North Central Baptist Hospital. This language, however, refers

to Dr. Perry meeting privileging credentials, not to any formal approval by

VHS. Under the physician agreement, Dr. Perry agreed that he understood

that he was bound by the terms of the coverage agreement between VHS and

PICCS. He also agreed that North Central Baptist’s “Medical Staff Bylaws

shall control my termination of Medical Staff Membership and/or clinical

membership.” VHS, on the other hand, is not shown to have agreed to

anything. It follows, then, that Dr. Perry failed to identify any right under the

physician agreement that he seeks to “make and enforce” against VHS. So

his § 1981 claim fails.

Our conclusion that Dr. Perry failed to identify an enforceable

contractual right against VHS does not end the discussion. Dr. Perry further

maintains that he can recover against VHS under § 1981 in the absence of a

contractual relationship with VHS. He urges us to hold that VHS has

§ 1981 liability because it “interfered” with his PICCS professional services

agreement by requesting that PICCS terminate that agreement. He

contends that we recognized in Faraca v. Clements, 506 F.2d 956 (5th Cir.

1975), the right of a § 1981 plaintiff to sue a “third party”—that is, a non-

party to the contract at issue—for interference with the plaintiff’s right to

make and enforce a contract. So, for purposes of this case, Dr. Perry argues

that Faraca allows him to bring a § 1981 claim against VHS—a “third party”

to his professional services agreement with PICCS—for interfering with

that agreement.

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But Dr. Perry overreads Faraca. That case arose from the refusal of a

state facility, the Georgia Retardation Center, to hire Dr. Andrew Faraca for

an administrative position because Dr. Faraca, a white male, was married to

an African-American woman. Id. at 958. Although Dr. Faraca was the best-

qualified candidate for the position, the Director of the Center told a hiring

officer not to hire Dr. Faraca because of “concern about the effects of the

racially mixed couple on visitors and possible adverse reactions from state

legislators.” Id. Dr. Faraca was not hired. He responded by suing the

Director for race discrimination under § 1981, claiming that the Director had

interfered with his right to contract with a prospective employer, the State of

Georgia. Id. After a bench trial, the district court held the Director

personally liable to Dr. Faraca under § 1981. Id. at 957. We affirmed. Id.

We did so despite the fact that the Director was, strictly speaking, a third

party: Dr. Faraca did not have a contract with the Director, and the Director

did not have the power to contract or refuse to contract with Dr. Faraca. Id.

Because the Center was a State of Georgia facility, the State was the

employer, and, according to the opinion, only it would have been in a position

to refuse to enter into a contract with Dr. Faraca. Id. at 959.

Since we decided Faraca, however, we have clarified the reason for

the Director’s liability. See Bellows, 118 F.3d at 274. The Director “was only

nominally a third party,” we have explained. Id. Because the Director was

acting on behalf of the State of Georgia when he instructed a subordinate not

to hire Dr. Faraca, the Director and the State “were essentially one and the

same.” Id. Accordingly, we do not read Faraca to recognize, as Dr. Perry

contends, a true third-party-interference theory of § 1981 liability. See id.

Rather, we read Faraca to allow § 1981 liability where the “third party” and

the contracting party are “essentially one and the same.” Id. No evidence

suggests that VHS and PICCS are “essentially one and the same.” It

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follows that Dr. Perry cannot recover against VHS under § 1981 on the

theory initially articulated in Faraca and clarified in Bellows.

VII

We now sum up. In this opinion, we have held that Dr. Perry did not

have an employment relationship with VHS. We have rejected his argument

that an employment relationship arose under either joint-employment or

integrated-enterprise theories. Consequently, the district court did not err

in granting summary judgment dismissing Dr. Perry’s Title VII claims. We

have further held that Dr. Perry has failed to show any contractual right

enforceable against VHS under his “physician agreement” and have thus

concluded that the district court did not err in granting summary judgment

dismissing Dr. Perry’s § 1981 claim. For these reasons, the partial final

judgment of the district court, dismissing all of Dr. Perry’s claims against

VHS, is, in all respects,

AFFIRMED.

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