Creel v. United States

Case: 07-60703 Document: 00511038817 Page: 1 Date Filed: 03/01/2010

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

March 1, 2010

No. 07-60703 Charles R. Fulbruge III

Clerk

THOMAS L. CREEL,

Plaintiff–Appellee,

v.

UNITED STATES OF AMERICA,

Defendant–Appellant,

v.

LLOYD F. MERCER, M.D.,

Defendant–Appellee.

Appeal from the United States District Court

for the Southern District of Mississippi

Before REAVLEY, BENAVIDES, and OWEN, Circuit Judges.

PRISCILLA R. OWEN, Circuit Judge:

Thomas L. Creel brought a medical malpractice action against Dr. Lloyd

F. Mercer and the United States arising from Creel’s treatment at the G.V.

Montgomery Veterans Affairs Medical Center (VAMC) in Jackson, Mississippi.

The district court dismissed Creel’s claims against Mercer, concluding that

Mercer was an employee of the federal government at the time of the alleged

negligence and, consequently, entitled to immunity under the Federal Tort

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No. 07-60703

Claims Act (FTCA).1 Because we conclude that Mercer was an independent

contractor, we reverse and remand.

I

Creel consulted with Mercer, his orthopedic surgeon, concerning the

surgical replacement of his left knee. After examining Creel, Mercer concluded

that surgery was needed, and Creel agreed to the procedure. Mercer performed

the surgery at VAMC. The morning after the surgery, Mercer was alerted that

Creel’s left leg was losing color and did not have a pulse. Mercer then contacted

Dr. Fred Rushton, a surgeon at the University of Mississippi Medical Center, for

a consultation. After numerous procedures under the care of Rushton, Creel’s

left leg was amputated above the knee.

Creel brought suit against the United States pursuant to the FTCA,

alleging medical malpractice. Creel later amended his complaint to add Mercer,

Rushton, and University Surgery Associates, P.L.L.C. (University Surgery) as

defendants. Rushton and University Surgery were later dismissed from the suit.

At all relevant times, Mercer had contracted with VAMC to provide

“Orthopedic Surgeon Services . . . in accordance with the requirements of the

contract.” The contract required Mercer to provide staff coverage for orthopedic

surgery clinics, to provide attending staff responsibility for in-patient orthopedic

care, and to supervise orthopedic residents. The contract also required Mercer

to perform all services “in accordance with VA policies and procedures and the

regulations of the medical staff by laws of the VA facility . . . [and] under the

direction of the Chief of Staff, and the Chief, Surgical Service.”

1

See 28 U.S.C. § 2679(b)(1) (“The remedy against the United States . . . arising or

resulting from the negligent or wrongful act or omission of any employee of the Government

while acting within the scope of his office or employment is exclusive of any other civil action

or proceeding for money damages by reason of the same subject matter against the employee

whose act or omission gave rise to the claim or against the estate of such employee.”).

2

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The contract required the VA to supply “necessary personnel for the

operation of the services contracted for at the VA.” However, Mercer was to

protect the “personnel furnishing services under this contract” by providing them

with workers’ compensation, professional liability insurance, health

examinations, income tax withholding, and social security payments. The

contract further provided:

It is expressly agreed and understood that this is a

nonpersonal services contract . . . under which the

professional services rendered by the Contractor or its

health care providers are rendered in its capacity as an

independent contractor. The Government may evaluate

the quality of professional and administrative services

provided but retains no control over professional

aspects of the services rendered, including by example,

the Contractor’s or its health-care providers’

professional medical judgment, diagnosis, or specific

medical treatments. The contractor and its health-care

providers shall be liable for their liability-producing

acts or omissions.

The parties to the contract also explicitly agreed that the “contractor, its

employees, agents, and subcontractors shall not be considered VA employees for

any purpose.”

The original contract provided Mercer an estimated payment of $1,104 per

day for the initial portion of his contract and then $22,080 per month for the

fiscal year beginning October 1, 2002. The United States paid him the exact

amount of his invoices, and there were no withholdings from payments. The

contract required Mercer to work from 8:00 a.m. to 4:30 p.m., Monday through

Friday, and only required him to work other hours in an emergency.

The Government moved to dismiss the FTCA claim, arguing that Mercer

was an independent contractor at VAMC, and Mercer moved to dismiss the

claims against him, arguing that he was a federal employee. The district court

granted Mercer’s motion and denied the Government’s, finding that Mercer was

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a federal employee and therefore that Creel’s exclusive remedy was against the

United States pursuant to 28 U.S.C. § 2679(b). The district court later entered

a final judgment of dismissal as to Mercer under Federal Rule of Civil Procedure

54(b). The Government timely appealed.

II

We review de novo a district court’s finding that an individual is an

employee of the Government under the FTCA. 2 “[T]he United States as

sovereign, is immune from suits save as it consents to be sued.” 3 Pursuant to the

FTCA, “Congress has waived sovereign immunity and has granted consent for

the government to be sued for acts committed by any ‘employee of the

Government while acting within the scope of his office or employment.’” 4 The

FTCA, however, does not cover acts committed by independent contractors.5

“The critical factor in determining whether an individual is an employee

of the government or an independent contractor is the power of the federal

government to control the detailed physical performance of the individual.” 6 In

addition to this factor, in Linkous v. United States, we considered a number of

other factors that the Restatement (Second) of Agency § 220 identifies as

relevant.7 These include:

(a) the extent of control which, by the agreement, the

master may exercise over the details of the work;

2

Hebert v. United States, 438 F.3d 483, 486 (5th Cir. 2006); Linkous v. United States,

142 F.3d 271, 275 (5th Cir. 1998).

3

Linkous, 142 F.3d at 275.

4

Id. (quoting 28 U.S.C. § 1346(b)).

5

Id.

6

Id.

7

See id.

4

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(b) whether or not the one employed is engaged in a

distinct occupation or business;

(c) the kind of occupation, with reference to whether, in

the locality, the work is usually done under the

direction of the employer or by a specialist without

supervision;

(d) the skill required in the particular occupation;

(e) whether the employer or the workman supplies the

instrumentalities, tools, and the place of work for the

person doing the work;

(f) the length of time for which the person is employed;

(g) the method of payment, whether by the time or by

the job;

(h) whether or not the work is a part of the regular

business of the employer;

(i) whether or not the parties believe they are creating

the relation of master and servant; and

(j) whether the principal is or is not in business.8

In this case, factors (a) through (d) weigh in favor of finding that Mercer

was an independent contractor. Due to the nature of his work as an orthopedic

surgeon, Mercer was engaged in a distinct occupation requiring a high degree of

skill and performed work normally done by a specialist without supervision.

Under the terms of the contract, the United States retained “no control over

professional aspects” of Mercer’s services. While Mercer was required to follow

several VA rules and procedures and was supervised by the Chief of Staff and

Chief of Surgical Service (Chief), VAMC did not intrude on the daily rendition

of medical services or override Mercer’s medical judgment regarding diagnosis

and treatment. For example, in regard to the incident at issue, Mercer did not

8

R ESTATEMENT (SECOND ) OF AGENCY § 220 (1958).

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discuss the type of surgery he was to perform on Creel with the Chief; the Chief

was not present in the operating room while Mercer was performing the surgery;

and Mercer made the choice of the type of procedure he performed based solely

on his professional opinion.

Conversely, factors (e), (g), (h), and (j) support the conclusion that Mercer

was an employee of the Government. VAMC provided the “instrumentalities,

tools, and the place of work” for Mercer. Mercer was not paid on a fee-for-service

basis. The contract specified an estimated yearly income that was based on

Mercer being present at the VAMC Monday through Friday between 8:00 a.m.

and 4:30 p.m. Mercer’s contract did not provide for vacation, except for national

holidays, and he was paid less during those months in which he took vacation.

Moreover, the Government paid Mercer additional remuneration for any hours

he worked in excess of the Monday through Friday schedule. In addition,

VAMC, the principal here, is in the business of providing a wide range of medical

services, including the orthopedic services provided by Mercer.

On the other hand, factor (f), the length of time for which the individual

was employed, weighs in favor of independent contractor status. Mercer’s

contract was for a relatively short term (a maximum of one and a half years,

including all options to extend its term), and Mercer had worked for only a few

months at the time of Creel’s surgery. In Peacock v. United States, we held that

factor (f) supported independent contractor classification because the contract

term was for a period of year, even though the individual had worked for the

hospital for over five years.9 Given the short duration of Mercer’s tenure at the

time of the incident and the contract duration, we conclude that this factor

supports classifying Mercer as an independent contractor.

9

— F.3d —, 2010 WL 537773, at *3 (5th Cir. 17 Feb. 2010).

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Finally, factor (i), the relative beliefs of the parties, supports independent

contractor status because the parties did not believe that they were creating an

employer–employee relationship. Mercer’s contract explicitly stated that the

“contractor, its employees, agents, and subcontractors shall not be considered VA

employees for any purpose” and that Mercer rendered his professional services

in his “capacity as an independent contractor.” The contract clearly provided

that VAMC retained no control over the professional aspects of Mercer’s work.

Furthermore, Mercer’s contract required him to provide professional liability

insurance for himself and whomever he hired. As we observed in Linkous, “[i]f

[the contractor] believed she was becoming an employee of [the Government],

then there would have been no need for her to indemnify the government for her

negligence.”10 Thus, factor (i) supports independent contractor status.

After considering all of the Restatement factors, we conclude that Mercer

was an independent contractor. The “power of the federal government to control

the detailed physical performance” of Mercer’s services was insufficient to

establish an employer–employee relationship. Therefore, the district court erred

in ruling that Mercer was an employee of the United States. This being the case,

the district court improperly granted Mercer’s motion to dismiss and denied the

Government’s motion to dismiss.

* * *

For the foregoing reasons, we REVERSE the judgment of the district court,

and REMAND with instructions to deny Mercer’s motion to dismiss and grant

the Government’s motion to dismiss.

10

Linkous, 142 F.3d at 277.

7