Mohammed Fawwaz Shoukfeh, M.D., P.A., D/B/A Texas Cardiac Center v. James G. Grattan and Texas Workforce Commission

• Court: Court of Criminal Appeals of Texas
• Decided: June 1, 2015
• Docket: 07-15-00113-CV
• Status: Published

Opinion

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.

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)

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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

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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

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

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.

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TEXAS WORKFORCE COMMISSION APPEALNO. 13-055631-0 ~ '( PAGENO. 2

CASE IDSTORY: By a detennination order issued August l4, 2013, pursuant to the Texas Payday Law, Labor Code, Chapter 61, section 61.052, the employer, 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 GRATTAN, the amount of$38,435.89. Both the employer and claimant appealed.

FINDINGS OF FACT: The claimant filed a wage claim with the Texas Workforce Commission on May 16, 2013, alleging that the employer failed to pay the claimant as prescribed by the Texas Payday Law. Specifically, the claimant asserted that he was not paid all wages earned from September 1, 20121o April 30, 2013. Wages were payable 60 to 90 days fol_loy.'ing the close o_fthe month i~ which they were_eamed,

The claimant worked as an associate physician (cardiologist), from June 19, 2006 to April 30, 2013, for the employer, MOHAMMED FAWWAZ SHOUKFEH MD PA, a Texas professional association, doing business under the name TEXAS CARDIAC CENTER. The claimant earned wages based on formula dependent on his patient load. Wages and expenses were calculated for each month, They were to be paid at the end of the second month following the month in_ which service was provided. (September earnings would be paid at the end of November), When he was paid, the standard federal deductions were taken from his earnings. The employer would also deduct incidental personal expenses as covered by the association. The claimant did not protest these deductions.

When the claimant was hired ~n June 2006, he and Dr. Fawwaz executed an Agreement Proposal. The agreement was not amended during the cl~mant's association whh the practice. The claimant was identified as an employee/partner. A partnership agreement was not formulated. In January 2013, due to the lack of a partnership agreement and other reasons, the claimant resigned, giving 90 days' notice.

The claimant did not contribute personal funds outside of his stated earnings from the practice to pay overhead or operational costs of the offices and practice. The claimant did not contribute real or personal property to the business. The claimant did not have the right to review the financial records of any other doctors within the practice. The claimant never purchased a single share in the Professional Association, but at some point was designated a 1% owner. A documentary·record of the ownership interest was not provided to the claimant or to the Commission. The claimant had did not have a significant interest to effect the operation of the association. He had no right to control or direct the expenditures. He had no authority to hir~ and f~te staff members .. -

The claimant did not share in the profits of the association. Amounts received were based on the receipts his services generated. However the claimant did share in the expenses of the practice. How the employer calculated his percentage of the expenses is the basis of his wage claim. At his separation, the claimant and other associates did not enter into the dissolution of a partnership.

In March 2013, the employer calculated the claimant's earnings for September 2012. This was the first tabulation of the claimant's earnings since September 2012 when August earnings were paid. Since the claimant had given his 90 day notice, the employer calculated all overhead expenses from September 2012 . through February 2013, and deducted one third of the expenses from the claimant's one month of receipts. In doing so, the earnings were zeroed out. No check was issued to the claimant for September 20 I 2. The claimant was not provided with an earnings statement showing his gross earnings for September, minus federal deductions and minus $8,616.47 as his overhead portion, leaving th~ claimant with net zero. The claimant had no lmowledge that his wages earned for September 2012 had been accounted for when he filed his claim.

On September 1, 2012, one of the physicians, Dr. Wischmeyer, left the practice. A meeting was called by Dr. Shoukfeh to discuss the situation. The claimant was unable to attend. In the meeting, Dr. Shoukfeh announced his intention to hire a doctor. The claimant had previously advised Dr. Shoukfeh, that since there had been no discussion or decision regarding his request to consider partnership, this was not the time to bring in another physician.

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TEXAS WORKFORCE COMM1SSION APPEAL NO- 13-055631-0 -~ " PAGENO. 3

· In the .week following the meeting, Dr. Shoukfeh introduced Dr. Qaddour as a new employee, ·but not an. associate. The new physician was hired in November 2012. Dr. Shoukfeh did not inform the claimant of how the hiring of a non-US resident, who was not at that time credentialed by the two hospitals served by the physicians of Ute ~ociation, would effect the claimant's earnings. The claimants hiring agreement was not altered. The claimant was not presented with a written agreement that would explain any special privileges provided to Dr. Qaddour. Each doctor that became affiliated with the professional association, signed a distinct work agreement, individualized to him. Dr. Qaddour was hired as a salaried employee, and was not held responsible for any portion of the overhead of the practice, as the claimant and the other two physicians in the association. It is noted that after his hire, the line item in the overhead expenses identified as medical support salary was not increased commensurate with Dr. Qaddour' s salary.

The new employee was credentialed to treat patients in the Lubbock Heart Hospital in January 2013, and may not have been credentialed at Covenant Medical Center until sometime later. Dr. Qaddour was not required to bear the burden of a share of the overhead costs while the claimant·was employed and he was establishing himself in Lubbock medical community.

According to the Agreement Proposal executed June 19, 2006, and not altered or replaced· by alternate work agreement, the section pertaining to compensation states:

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 insured by the Association.

This section also explained that the claimant's earnings would be paid in accordance with the following formula:

Physician's Net Receipts collected by Association (paid for services personaJiy rendered)

+ Designated Health Services Revenue collected by Associ!ltion (paid for professional and technical tests)

- Pro Rata share of overhead expenses

= monthly earnings paid

The formula did not mention the non-cardiac expenses, which were defmed in the first sentence of the paragraph. These expenses were deducted from the claimant's net earnings after overhead had been taken. The claimant signed the Agreement Proposal, indicating his agreement to all terms and conditions.

The claimant provided evidence to show that employer had historically divided the overhead expenses evenly between all physicians active in the practice within a mcmth>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

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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!I<;h.2013 $ ·72,767.50 $115;9&,5.)$ ~ $5~;69,5.06 . -~3;324,73- · -:$92~;29· .-: .. Aptil201"3. $ 9404S.OS $197:.035'.92 $65~67$,64 $30;513.81 + ·$4;H1AO:

* OecembeJ". figure includes ~p.31 aspeti on·al"expense ·dlscqvtfted aftei; -ujbuJatlon or not atlilblitiible: to·· anotner cate~ory. January ~gures include a $590.51 as a person_al_expe_n~e - di~CC?Ve~ed after t~bulailon o·r,not : ' attributable to'another category. The wliges 8efore·taX.es w~ ~ot'ticalcul~te(i"with:the $590.57 deduWons when-· the sheet was adjusted, but is considered a~ove. * The credit for an isotope reimbutserrtentwas removed. + Includes total rosts of paid benefits to departing nurse. Tabulating the payable earnings using ihe recalculated .figures for January; the claimant would have been due $37,831.98. Note is taken that the inv~stigator did not consider the extr~·- expenses that were attributed to the claimant and handwritten on the revenue sheets, lfthe initial calcuJa~iol). for January i~ used, the claimant would .. be entitled to $95,424.40.

On May 20, a final disbursement was issued to the claimant in the amount of $32,014.66. This was net wages. Proof of the federal deductions taken was not provided. The earnings statement associated with the payment

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TEXAS WORKFORCE COMMISSION APPEAL NO. 13-055631-0 PAGENO. S

cbeok, No. 6069, does not itemize the deductions taken. The employer asserted $at the $6,421.23 difference between the ordered amount of$38,435.89 and the face value of the check, constitutes the federal deductions.

CONCLUSIONS: The claimant is entitled to $5,817.32 in gross wpaid wages from this employer under the Texas Payday Law.

JURISDICTION --PARTNERSHIP . Section 61.001(3) of the Texas Payday Law states, in part, that employee means an individual who is employed by an employer for compensation.

Section 2;03 ofthe Texas. Revised Partnership Act provides, in part, that factors indicating that persons have created a partnership irtoltJde their

(1) receipt or right to receive·a share of profits _from the business, (2) expression of an .intent to be parf!lers in the business, (3}participlfti9n or right to'particip~t~ in the eontrofofthe business, (4) sharing·or a~irig to share to~~~- oftbebusincs"s or Jiability for claims by third parties against the busincrss, and (5) conttibuting 6t agreejhg to contri~lite money or propertY to the business;

A partnership is a distinct legal entity. A pitrtner is a co-ow.ner ar'ld nQt an emplt>yee 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_<~c. de~isio~ for the aJ~sociation. The ult4nate authority rested · ·in the JJ)ajoricy· owner. As ~hown by the hirfug pf,Dr. Qadd~~_r,.the ~lair:nant's reservations were not consicfeted. The claunimt"had no )mo)VJ~~ge t:JJat he-w,M ~onsider.ed a·l% 9wner, until a~er th<:! fact. . The claimant did n!)t share in the'Iosses of the as~pciation: The' ciaiinant did ·not contnoute re.al or personal PJOperty, including cash, with ·the except\on of partial.. paymefit ,of the overhead. Therefore1 "although an eventual · partnership was anticipated, this relationship_was not formecl As pr9ven by his separation, there was no termination of the Professional Association and wrapping up of a partnership.

The claimant was hired· as an associate employee. Therefore his wage claim is covered by the Texas Payday Law. . ·REGULAR: WAGES . Section 61.001(7)(A). ofth~ Texas ;payday Law state~ that'wages means compeilsati!)n ow~d by an employ~r for '' labor or serviees rendered by .an employee, - . whether . comput~d . ori a time; task, piece, eomm1ssion, ~ . or other basis.

The claimant was to be paid· for his services as a cardioJ(igist, and the tests that" be ordered.. Howev.er, the. •' . and ilie re've.pue ~~ g~n~i';lted \'(~:; ~:ubj~d tp;hls~co;ri"trib~itiol}, to ~~ o.verl)eaii .deduction ofh'is personal ~xpenses; . .. . . The employer calculated·his earnings for ea~ ~onth's seJVices. - ·

The controve~y in this claim is whelher-lhe overheap ~hould h~ve. been divided equally between three . . physicians as was done b"y tlie employ6(, or by four physicians nfter the hiring of Dr. Qadd"our. While the claimant remained employed, Dr. Q

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TEXAS WORKFORCE COMMISSION APPEAL NO. 13-055631-0 PAGENO, 6

claimant's overhead deduction for November -April. The calculations presented by the employer, including the corrected January revenue sheet will be found to be accurate and authoritative.

Therefore when the claimant filed his wage claim, he was due $37,831.98 in earned and unpaid wages.

Month Revenue Expense · Personal Payable Share(+3) Expenses Earnlnes September 2012 $105 040.98 $76 301.91 $13 714.71 $15 024.36 October 2012 $ 97,651.81 $61 098.54 $8531.15 $28,02:2.12 November 2012 $ 91,324.96 $56 741.39 $13,345.40 $21,238.17 December 2012 Januazy2013 $ 95 691.40 $ 65;972.96 $542~3.48 $76,501.68 $22 908.83 $29 498.69 * $1.8,559.09 -$40.027.41 February 20 13 $ 87,289.79 $54,195.79 $24,708.66 ' $ 8 385.34 March 2013 $ 72,767.50 $58 665.06 $23,324.73 -$9222.29 April2013 $ 92,045.05 $65 678.64 $30,513.81 -$4,147.40 To tar $37831.98

* December figure includes .$13.31 as personal expense discovered after tabulation or not attributable to another category. January figure includes $590.57 as a personal expense discovered after tabulation or not attributable to another category.

Folfowing the filing of his claim the claimant was issued a check in the net amount of $32,014.66. The claimant negotiated the check after the determination order was issued. The employer failed to produce evidence to prove that this is the amount payable to the claimant after federal deductions. Therefore the determination·will be modified to order the employer to pay $5,817.32 ($37,831.98- $32,014.66).

If the employer provides proof of payment of the gross wages earned of at least $37,831.9"8, minus federal deductions of no more than $5,817 .32, the amount due and payable to the claimant will be satisfied. ·

REQUIRMENT TO PROVIDE EARNINGS STATEMENTS Texas Labor Cpde 62.003 states: EARNINGS STATEMENT. (a) At the end of each pay period, an employer shall give each employee a written earnings statement covering the pay period. (b) An earnings statement must be signed by the employer or the employer's agent and must show: (1) the name of the employee; (2) the rate of pay; (3) the total amount of pay earned by the employee during tbe.pay period; (4) any deduction made from the employee's pay and the purpose of the deduction; (5) the amount of pay after all deductions are made; and · (6) the total number of: (A) hours worked by the employee if the employee's pay is computed by the hour; or (B) units produced by the employee during the pay period if the employee's pay is · computed on a piece rate (c) An earnings statement may be in any form detemlined by the employer. The information required by Subsection (b) may be stated on a check voucher or bank draft given to an employee for the employee's wages. (d) In this section, "pay period" means the period that an employee works for which salary or wages are regularly paid under the employee's employment agreement.

Commission Rule 815.106 (40 TAC 815.106) reads, in part, as follows:

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TEXAS WORKFORCE COMWSSION APPEAL NO. 13-055631-0 f PAGENO. 7

(a) Each employing unit shall keep true and accurate employment and payroll records. that shall include the name and correct address of the employing unit, and the name and address of each branch or·divjsion or establishment operated, owned, or maintained by the employjng unit at different locations in Texas, and the following infonnation for each and every individual perfonning services for it:

(I) the individual's name, address, and social security number; . (2) the dates on which the Individual perfonned services for the employing unit and the state or states in which the services were performed; (3) the amount of wages paid to the individual for each separate payroll peri~d, date of payment. ofthe wages, and amounts or remuneration paid to the individual for each separate payroll period other than "wages," as defined in the Act; and (4) whet.{ler, during any payroll period the individual worked less than full time, and ·i fso, the hours and dates worked.

The employer failed to provide an earnings statement to the cJaimant at the time of the accounting of September wages was performed and with the fmal wages issued to the claimant. The employer is therefore in violation of the Texas Labor Code.

AUTHORIZED DEDUCTIONS Section 61.018 of the Texas Payday Law states that 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.

Commission Rule 821.28 (40 T.A.C. § 821.28) states, in part:

(a) The Commission provides the following guidance in determining whether an employer is entitled to withhold or divert wages under court order, by Jaw or with written autl10rization under Sectiqn _61.018 of the Act: (1) A court is presumed to be a court of competent jurisdiction with respect to issuing court orders: The burden shall be on the party opposing a court.order to challenge the court's authority by appealing to the issuing court or court of appropriate revi~w as the Commission will preswne full faith and credit applies to court orders. (2) State or federal law includes statutes and codes enacted by Congress or the TeXAS Legislature, roles promulgated by a Texas or federal agency, and regulations promulgated by a Texas or federal agency. (3) A lawful purpose is one that is authorized, sanctioned, or not forbidden, by law;

(b) Written authorization for deductions shall be specific as to the lawful purpose for which the employee has accepted the responsibility or liability. Written authorizations shall be; ( 1) sufficient to give the employee a rea~onable expectation of the amount to be withheld from pay; and (2).a clear indication that the deduction is to be withheld from wages.

(c) lf an employer uses a handbook, policy manual or other similar document instead of a separate writing, the employee's signed acknowledgment of receipt of company policies can be authorization to withhold wages if the acknowledgment meets the requirements of subsection (b) of this section and specifically informs the employee of the deduction. The signed acknowledgment of receipt shall also include language that states that the employee agrees to abide by or be bound to the authoriza,tion for deduction.

(d) The employer shall ensure that properly withheld wages are applied toward their authorized purpose. Properly withheld wages not applied towar~ their authorized purpose wlll be considered unlawful deductions.

(e) The employer shall obtain written authorization as required under the Act to deduct credit card service charges from an employee's tips.

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TEXAS WORKFORCE COMMISSION APPEAL NO. 13-055631-0 PAGENO. 8

The standard federal -deductions were taken from earnings according to federal law. The employer is not In violation of the Texas Payday Law for taking these deductions. However the employer must produce a record of the federal deductions taken from his final earning to satisfy the amou_nt ordered through this.decision.

Through his written hiring agreement, the claimant agreed to have a share of the overhead expenses deducted from the revenue he produced. In addition, he authorized deductions for personal expenses from.his earnings. Therefore the employer is not in violation of the Texas Payday Law for deducting the amounts accounted for on his revenue sheets.

Insufficient evidence was provided to detennine if any other doctor had been charged for the expense of her employment, during her full tenure.' Insufficient evidence haS been provided to reduce the $12, 334.84 deduction for the nurse's receipt of earned wages and earned and unused vacation time from tho claimant's fmal month•s earnings. Based on the revenue history, the claimant was responsible for at least $4,700 of this amount as payment of wages for work perfonned by the nurse in April. Therefore the Commission bas not factual basi.s to find the amount deducted was in error.

The claimant protested the inclusion of research expenses in the overhead costs charged to the associate doctors. The claimant failed to protest these charges during his employment or before this hearing date. · Therefore they will be accepted as the part 'of the itemized list of overhead expenses, and will not be excluded from the calculation of the claimant's earnings.

DECISION: In accordance with the Texas Payday Law, Labor Code, Chapter 61, section 61.059, the detennination order issued August 14, 2013, is modified.

The employer, MOHAMMED FAWWAZ SHOUKFEH MD PA, DBA TEXAS CARDIAC CENTER, is hereby ordered to pay to the order of the Texas Workforce Commission for the use and benefit of the claimant, JAMES G GRATTAN, wages in the amount of $5,817.32, in accordance with tho attached instructions for payment.

S. Dennis Hearing Officer

sd3

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TEXAS WORKFORCE COMMISSION APPEAL NO. 13-055631-0 PAGENO. 9

***IMPORTANT**"' INSTRUCTIONS TO EMPLOYER FOR PAYMENT TO THE COMMISSION ***IMPORTANT***

WHO MUST PAX:

MOHAMMED FAWWAZ SHOUKPEH MD PA DBA TEXAS CARDIAC CENTER

Pursuant to the Texas Tax Code, § 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 forfeited entity is liable for nny debt of the entity during the period offorfeiture.

AMOUNTOFPAXMENT: $5,817.32 (less deductions, if applicable, for federal income tax withholding and Social Security to the extent authorized by federal law.)

WHEN PAYMENT DUE BY EMPLOYER TO THE COMMISSION:

November 20. 2013

MAKE CHECKPAXA.BLE TO: Texas Workforce Commission

Please note the claimant's name and Social Security number on the face of the check.

MAIL CHECK TO: Texas Workforce Commission Labor Law Payment Division P.O. Box 684483 Austin, Texas 78768-4483

QUESTIONS ABOUT PAYMENT: If you have questions concerning payment of the amounts assessed you may contact the Labor Law Department at:

1(800) 832-9243 or (512) 475-2670

PAYMENT TO EMPL OYEE; The Commission will pay the claimant wages coUected and, if applicable, any interest earned on those wages.

TWC 000030

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Texas Workforce Commission Appealing Texas Payday Law Decisions Ifyou disagree with the Payday Law decision, two methods of appeal are available:

1. Request a Reopening oro Heoring. Ifyou did not participate in your hearing and have good cause Cor your nonappearance, you may request a reopening ofyour hearing within 14 days pursuant to Commission Rule 16 (40 TAC §815.16(5)). This request must explain why you were not able to appear. You may be granted a reopening ifyour request establishes good cause for your failure to participate. To request a reopenjng of your hearing. mail your request to Special Hearings Department, Texas Workforce Commission, 101 E. 151h Street, Austin, Texas, 78778, fBx it to (512) 463-9318, file it online at www teX!ISworlsforce,orglveydayappC11l or vis~t your local TWC office.

2. Request a review of the case by filing .:sn Appeal to th~ CommisJ:ioo. Section 61.0612 of the Texas Labor Code states, in part, tbat the Commission may pennit any oftbe parties affected by the order to inilil!le a further appeal before the Commission within 14 days. To file an App~al to tho Commission, mail your appeal to Commission Appeals, Texas Workforce Commission,· Room678, 101 E. ·l5111 St., Austin, Texas, 78778, fax it to (512) 475-2044, file it online at · · www texasworlcforce.orelpaydayaopeal. or visit your local TWC office.

lmportantlnslructlons . . Your appeal must include the following infonnatlon: the claimant's name, the Payday Law appeal number, the bearing officer's name, and the date the decision was mailed. If you mail your appeal, it must be postmarked no later than 14 days from the date this decision was mailed to you. If you fax your appeal, TWC must receive it oo later than 14 days from the date tbe decision was mailed. Keep your f!IX. confinnation as proof of transmission. If the 14"' day from the decision mailing date falls on a Texas slate or federal holiday, the time lbnlt for filing an appeal wlll be extended through tho next working day. Appeals made prior to the decision mnlling dote will not be considered. You may also appeal by sub!Jilltlng TWC's online appeal form. Go to www.texasworkforce.org/paydayappcal.

.For more infonnation about the appeals process, visit www,texasworkforcc.org/oaydavaPpcal.

APELACI6N DE LAS DECISIONES EN VIRTUD DE LA LEX DE SALARIOS ATRASADOS DE TEXAS Si us ted no es~ de acuerdo con Ia dccisi6n respecto de Ia Ley de Salarios Atrasados, tlene a su dlsposlci6n dos m~todos de apelaci6n:

1. Solieitud de Reapertura de Audlencla. Sl usted no partlclp6 de su audlencla y tiene una causojustificada para no hab.er aslstido, podri sollcitar la reapertura de Ia nudiencla dentro de los 14 d!as de confonnidad con Ia Norma de Ia Comlsi6n 16 (titulo 40 TAC Articulo 815. 16(5)). Dicha solicitud deb era exp!icar los motivos de su inasistencla. Se lo podrA otorgar Ia reapertura si su solfcitud estableee causa justificada para su Calla de partlcipaci6n. A !in de solicilat Ia reapertura de su Qudiencia, envfe por corrco su solicitud at Special Hearings Department. Texas Workforce Commission, 101 E. 15111 Street, Austin, TX, 78778, o por fax nl (512) 463-9318, Tambien puede presenlarla por Internet en www.texasworkforce.org/paydayapneq! o visite su oficina local de la TWC. ·

2. Solicllud de revision del caso por medio de Apelaci6n ante Ia Comisi6n. El articulo 61.0612 del Codigo Lab oral de Texas establece, en parte, que Ia Comisi6n puede autorizar a cualquiera de las partes afectadas por la orden a presentar otra apelaci6n nnte Ia Comisi6n dentro de los 14 d!as. A fin de lnterponer una apelaci6n ante Ja ComisiOn, deb.era envier Ia apelaci6n por correo a Commission Appeals, Texas Workforce Commission, Room 678, 101 E. 15"' Street, Austin, TX, 78778 o por fax al (5 12) 475-2044. Tambi~n puede presentarla por Internet en www.texasworkforce.org[paydayappeal. o visite su oficina local de.la TWC. . .

lnS1rucciones Importnntes . Su apciaci6n debe incluir Ia siguiente infonnaci6n: nombre del reclamante, el ntimero de apelaci6n seg(ln Ia Ley de Sa Iarios Atrasados, el nombre del Mbitro de Ia audiencia, y Ia fecha de envio de Ia decisi6n. Si us ted envla su apelaci6D pot eorreo, deb era estar sell ada no m~s do 14 dCos desde Ia fecha en que se le envi6 esta deeisi6n. Si usted envla su Apelaci6n IJOr fox, Ia TWC deberli recibir su llpelaci6n no m~s de 14 dlas dcsde Ia fecha en que so cnvi6 Ia decisi6n. Conserve Ia confinnaci6n del fax como comprobante de Ia transmlsi6n. Si el decimocuarto dla de Ia fecha del envio de Ia decisl6n cae en un feriado estatal de TeKas o ferlado federal, el plazo de presentaci6n de Ia apelaci6n se extender! hasta el siguientc dla Mbil. Las apclaciones realizadas con anterioridad a Ia fecha de envlo de Ia decisi6n no seran consideradas. Tambi6n podrA npelar mediante Ia prcsentnci6n del formulorio de apelnci6n en linea de Ia TWC. Visite )Y)V\V,texa.~workforce,org/paydnynppepl.

Para mnyor infonnaei6n sobre el proceso de apelaci6n, visite W\V\V.texasworkforce.orglnaydavappeal,

Equnl Opportunity Employer/Programs

TWC 00003 1 J P1~"'1F. S G~:{i!~ TT (.:'if

/ ~-1(4~) Sre re>'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

Case No.: 13-05563 1-0 Page: 2 CONCLUSIONS: Section 61.001(7)(A) .of the Texas Payday Law states that wages means compensation owed by an emploY,er .for labor or services rendered by an employee, whether computed on a time, task, piece, commission, or other basis.

Section 61.018 of the Texas Payday Law states that an employer may not withhold or divert any part of an employee's wages unless the employer: (J) is ordered to do so by a ~ourt 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.

The Commission does not agree with the Wage· Claim Tribunal's conclusion that the employer had the rig1it to change the pay agreement between the parties. According to the compensation practice and agreement between the parties, the expenses of the business were diVided between all the practicing doctors. The claimant's pay for September 2012 througll April 2013. was improperly withheld. Thereafter, for the period from November 2012 through April 2013 the claimant's compensation ·was not calculated in accordance with the agreement between the parties in that the fourth doctor was not included when splitting business expenses. Thus, the claimant was underpaid. The claimant's original calculation of what he is owed is reasonable and supported by the weight of the evidence.

The elaimant earned $158,003.59 from September 2012 through April20l3. Of this amount, the claimant was paid $32,014.68 (net} in May·2013, The claimant is entitled to the remainder, $125,988.91 (gross before standard deductions for taxes):

DECISION: In accordance with the ~exas P~Y.d~y Law, Labor Qode, Chapter 61, section 61.059, the Wage Claim Appeal Tribunal decisiQn, is modified.

The employer, MOHAMMED FAWWAZ SHOUKFBH MD PA' DBA TEXAS CARDIAC CENTER, is hereby ordered to pay to the order of the Texas Workforce Commission for the use and benefit of the claimant, JAMES G GRATTAN, wages in the amount of $125,988.91, in accordance with the attached instructions for payment

The last day a timely appeal may be filed 'is FEB 2 0 21}14 holidays and weclcends as authorized by CommiSsioL M . This date includes

l Andres Alcantar J dissent Coml)lissioner Representing the Public

Hope Andrade Commissioner Rcprescntin,l! Employers

Ronald G. Congleton Commissioner Representing Labor

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'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)

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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 · S<:ction 6.3 Exceptions ...........,............................................................................................................ ,, ...... 7

ARTICLE VII. NONCOMP:BTITION .......................- ...........................................~......................._ ....................... 7 Section 7.1 Covenant Not to Compete ........................................................................................................ 7 Secti.on 7.2 Essential and Separate Covenants: Reasonableness or Restraints ...........................~ ............... 7

i

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ARTICLE VUL lNDEMNlFICATION.......- ...- .........................................................................:............................ 1

ARTICLE IX. MISCELLANEOUS .......- .......................:......................................................................................... 8 Section 9.1 Arbitration ..................................................................................................... _......................... & Section 9:Z Assignabiley............................................................................................................................. 8 Section 9.3 Notico ....................................................................................................................................... 9 Section 9.4 Enforceability ...................- ...............................- ................................................................... 9 Section 9.5 Governing Law......................................................................................................................... 9 Section 9.6 Construction .....................................................................- ...................................................... 9 Section 9.7 Binding Effect ................................:...................._....................................................- ............ 9 Section 9.8 Entice Agreement, Amendntents ........................................:..................................................... 9 Section 9.9 V/aiver ofBceacb.....- .......- ..........................................."""""""'"'"""'""""'"'""''""'"'"'"" 9

ARTICLE X. NON ENFORCEABILITY

Section 10.1 ...................~........................- ................................................................._. ..............................9

Section 10.2 ......................................................................................................... _, .................................... 10

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·RBCBIVBD JUL 3 a·2013 PIIVSICIAN EMPLOYMENT AGREEMENT LABORLAW4 .AHMAD QADDOUR, M.D.

THIS 'PHYSICIAN EMPLOYMENT AGREEMENT (this "Agreement") is made and entered as of November 19,2012, by nnd between Mohammad Fawwaz Sbould'eh, M.D., P.A. d/b/a Texas Cardiao Center, a Texas professional association("Association") artdAhmad Qaddour, M.D. ("Physician'~.

WHEREAS. the Association is a Texas professional association organized to, among other lhings, eonduct tho authorized professional services that may be perfonned by a doctor of medicine, duly licensed under the laws ofthe Stare ofTexas.

WHEREAS, Physician is doly licensed or reasonably anticipates that he will be licensed to practice medi~ine in the State ofTexas.

WHEREAS, the Association desires to employ and retain Physician to provido professional medical services for the Association's patients md Physician agrees to accept such employment.

NOW, THER.EFORE, for and in consideration of the promises and of the covenants and agreements hereinafter stipulated, the mutuality and adequacy of which is now and forever acknowledged, the parties agree and covenant as follows:

ARI'ICLE L l&MPLOYMENT

Section 1.1 General Terms. The Association em~loys Physician, and Physician a<:cepts employment with tho Association to provide cardiology and nuclear services to the patients of Association on a rull-t!me basis unless otherwise agreed to or determined by the Association. The tenn "cardiology services" shall mean the services of a specialist in the practice of cardiology. Association agJ"eCS to ace¢pt tho conditions imposed for Physician to obtain a FJ. lB Visa.

Physician shall render cardiology services in accordance with the Association's poli.elts and procedures and shall perfonn any other related services that are reasonably assigned or reasonably tequested fl'om time to time by the Association. TI1e Associntlon shall provide office space, staff: and facUlties, as needed, to allow Physician to eany out his duties under this Agreement Physician shall practice llledicine at the offices ofToxa.s Cardiac Center,

Section 1.2 fees Generated. Any and all Professional Fees generated hereunder during the term of this Agreement shall belong to !he Association. "Professional Fee!" shall mean fees, oonrpensation, or remunerntion generated by cardiology services rendered or ordered by or otherwise attributable to Physician ·and by administrative hospital services performed by Physician in his capacily as an employee of the Association; provided, however, that "Professional Fees" shall not include any royalties, honoraria, or the like "from authored documeats, speeches or similar professionally-related activities, con>pensation 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, ei

Except with regard to services which shall be provided by Physician on vacation days, weekends and days off (when not OJ\ call ) Physician may not enter into other administrative or medical services agreements without Association's prior written approval. which shall not be unreasoll8bly wiUihold, and nny income from su.ch agreements shall belong to Physician; provided, however, that Physician shall cany the appropriate insurance for the services he provides under the agreement and that Physician takes 1he appropriate measures to ensure that he is not represented to be an agent of Association wbUe he provides SC«Vices under such agreement. Any income earned for setving on a heallh- relatcd committee shall bo disclosed to the Association.

Secllon 1.3 Managed Care Agreements. From time to time, the .A$sociation may enter into managed care or network agreements with third party payors, employers, or govemmental entities that may require the Association and/or Physician to engage in utilization review or peerrevlew activities.. Physician will fully cooperate in such activities .

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R.EcB'IVBD JUL 3 0 2013 LA.Bo . and will comply with any Wld nll requirements of any mana~ed care or network agreemet~t to which the Association lR LJ\\V'4 becomes a party. Ift'Cqlilied by any managed oaro entity or network, Physician will ex~cute rh.e agreement indivldtmlly, notwithstanding that all Professional Fees generated by such agreement will belong to the &sociation. Physician shall have no authority to, and shall not. execute agreements binding the Association unless Physician has received prior approval ftom the Association. Provided however, it.is understood !hat Physician shall not be required to do anything which would ~olate the law or Physician's exercise of independent medical judgment on behalf his patients.. Assoc.iation agreements to iudemnifY Physician from any liability to such managed care o.r network providers under any . . contraCt sigJJ.Cd pursuant to th1s Section.

Section 1.4 Patients and Records ofthe Association. Without superseding nny patient's right to choose a provider of health or medical services, Physician acknowledges that all patienlll for whom cardiology services are provided shall be palients of the Association and not of Pltysician. 'Ihb Association shall have the authority to determine which persons will be accepted as patients of the Association and to designate which physician employee of tlte Association will handle each patient. During the tmn of this Agreement, Physician shall not indw:e, solicit, or encourage a11y patient who bas received or is receiving health Qr medicul services from the Association to .seek such services from another provid~r. All medical and patient recorrls, papers, and documents generated by Physician, the Association, or employees or agents of the Association shall belong to the Association and Physician shall have no right to keep or retain such records, papers, or documents after this ,Agreement is telDlinated, Section l.S Aceounts; lnspeetfon. The Association shall mainlnln true and auurate records of accounts in aceordance with accounting standards customacy with respect to the practi~ ofmedicine, Such records shall be kept 'at the Association's offico and shall be available during nollt1al business hours for inspection by P~sician solely at Physician's expense.

Sec'Cion 1.6 Locption of Praetlce • Physician agrees to prac~ce medicine under the ~rms of this Agreement and at locations designated by Association. In tbo event the Association sells this practice !hen fue tenns herein shall continue and Physician agrees to IWDl1in with the Association's practice.

ARTICLE U. DUTIFS

Sedion 2.1 l'rofessiOJ!a1 Dudes, Except as provided in Section 1.2 above, Physician shall provide cardiology services exclusively to the Alisociation's patients at the offices ofTexas Cardiac .Center and the hospi(a[s that Physleilm has privileges. Physician shall not engage in the practice of medicine except as an employee of the Association or engage in, carry oo. or be employed by any other bliSines.s 0'( profession so as to adversely a~ct the perfonnance ofhis duties pursuant to this Agreement, except upon approval of tbe Association. Physician agrees to use his best efforts in perfonningJili duties. P~sician's essential duties shall also include, but not be limited to:

(a) providing cardiology services to patieols of the Association subject to the inslructions, directions, and control of the Association; and being responsible for such other duties .related to the cardiology services as the Association may detennine from time to time; provided. however, if Physician reasonably believes Physician ls not qualified to perform a specific procedure in connection with the cardiology services, Physician may immediately 110tify Association and Association shall locate another physicjan who is qualified to perfcmt the specific procedure;

(b) keeping and maintaitling or causing to be kept and maintained. appropriate records, reports, claims, and correspondence necessary and appropriate in connection 1-\'itl! all wdiology services rendered by Physician under this Agreement. All of such records, repor1s, claims, md oarrespondenco shall belong to the Association;

(c) promoting. to the extent permitted by law and the applicable canons ofprofe:>sional 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

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ARTICLE m. COMPENSATION AND BENEFITS

Se<:tion 3.1 Compensation. Physician shall begin employment on November 19,2012, seeing patients and reading tests awaiting his hospital privileges. Until Physician receives his hospital privileges, Associadon will pay and Physician shall receive 45% of Physician's collections of which Association will advance Physician $10,000,00 a month against Physician's collections. Once Physician teceives his priVJ1eges, the Association agrees to pay Physician $20,00().00 per month for a period of 6 months. Attar 6 months with the optiol\ of Physician, Physician shall receive $20,000.00 per month or 45% ofhis collections. After 2 years, Physician shall .receive 100% of net collections and pay his portton of overhead as allocated by '!he ~celation from time to time.

.Secffon3.2 Empfoyment Tsxes, The Association shall withhold on behalf of Physician appropriate employment and other withholding taxes as required by law durl.ng the tenn of fh!s Agreement. Section 3.3 Vat!atfon, Pl'ofesslonal Meetings, and Leave Time. During the tenn of this Agreement, Physician shall be entitled to 3 weeks vacation and I week for medical meetings.

Section 3.4 :Professional Liability Jnsunmce. Duriog the first year, Association shall provide and thereafter Physician shall maintain P.tofessional liability insurance at his sole cost and expense in an nppropriate amount as detennined by the Association, covering Physician for his acts and omissions In the performance of his duties hereunder. Unless agreed in writing. such coverage shall be in at least the amount of $1,000,000 per occurrence and $3,000,000 combined limit. In the event the policy £s a "claims made" policy and Physician retires from the practice of medicine, ceases to be an employee ofthe Association, or otherwise ceases to practice medicine, the Physician shall provide at his sole cost and expense professional liability insurance tall coverage following the date of the tennination of Physician's employment in an amount equal to the malpractice insurance carried during the tenn of this Agt-eement. Physician shall be responsible for paying all premiums for any tail coverage following the termi.aatlon of this Agreement

Section 3.5 Other lnsunmce/Dehcfits. Physician shall be responsible to pay for his ceil phone. medical education and health insuranco. ARTICLE IV. TERM AND TERMINATION Section 4.1 :rmn.. 'I'his Agreement shall be effeetive and employment shall begin November 19. 201~ and is subject to Physician obtaining his Texas medical license and privileges at Covenant Medical Center and the Lubbock Heart Hospital. Tenn shall be until othe~rwise terminated as provided herein.

SectioB 4.2. Termination For Cause.

(a) By tJ1e Association. The Association may renninat.e this Agreement for cause. For this purpose, "cause'' shall mean good cause which reasonably justifies termination on the basis of any of the following reasons:

(i) The suspension, revocation, surrender, or cancellation of Physician's right to practice medicine in the State ofTexas or to prescribe conlrolled substances;

(li) Any adverse action tWn against Physician' s privileges at any location wherein the Association provided cardiology services;

(itO The imposition of any restrictions or limitations by any governmental authority having jurisdiction over Physician to such an extent that be cannot engage in the professional practice on the basis for which he was employed;

(iv) Physician's mate1ial failure to perfonn the duties required herctmdcr or unreasonable failure or unreasonable refusal to comply with the policies, standards and regulations of the Association which from timo to time may be e3tt!blished, as determined in the Board of Directors' sole discretion;

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(v) Physician is found guilty of unprofessional or une1hical conduct by any board, institution, organization or profi:sslonal society having any privilege ol" right to pass upon 1he conduct of Physician;

(vi) Physician's coiJ.Victlon in a court of competent jurisdiction of any felony offense or any misdemeanor offense involving moral tnrpitudc;

(vii) Physician materially breaches this Agreement;

(vii!) Physician's engaging in unreasonable behavior or wu-easonable activities that result tn damage to the Association's rep\llation llllcllor disrupt, Wldermine or threaten to disrupt or undermine tho operations or cobesiven~ of1ho Association or the Physician's Subdiv.ision; (tx) Failure to perform his duties as determined by fue Association;

(1) Physician's engaging in fraud or embezzlement;

(xi) Physician's loss of malpractice insurance as a result of any action or inaction of Peysician which cannot be timely replllC¢d through diligent efforts; or

(xb) A recommendation by the Quality Assurance and Peer Review Committee (or ~e full Board of Directors, if such committee has not been created), based upon substantiw evidence, to terminate Physician's employment with the Association is made after full and fuJr investigation regarding the quality of patient care rendered by Physician is concluded.

lfthe ?resident of the Association has reasonable cause to believe that any item or activity in tbls Section 4.2{a) bas occUlted. the President may restrict Physician's activities ns the President deems necessary and reasonable pending the review ofthe item or activity by the Association's Board ofDirec:tors.

(b) Reporting Obligation, Physician has an affinnative obligation as a condition of employment to report to tho Association any investigation or inquily by any regulatory agency. governmental authority, or professional society regarding any item or activity listed in Section 4.2(a) above.

(e) By Phvstclan. Physician may terminate this Agreement immediately l.lpOll written notice to the Association. which notice shall describe thereasou. for such tenninntion, for any ofthe followingrea.~ons:

(i) The Association dissolves;

(H) The Association loses any certification or otherwise beoornes unable due to any act or omission, to continue to operate; or

(lli) The Association's material breach of chis Agr~em.

. (d) Death or Disqualification. This Agreement shall tenninate upon the death of Physician. This Agreement shall also tetminate upon Association's reasonable determinatlon that Physician is "disqualified." Physician shall be deemed "disqunlified" if the Association reasonably de.tennines, in accordance with the Association's Bylaws, that Physician is unable, even with reasonable acco.romodat!on, to perfonn one or more of the essential job functions ofhis position. including, but not lhnited to, the essemial duties listed in Section 2.1 and any other essential job functions determined by the Association. for more than ninety (90) consecutive days; provided. however, that such ninety (90) day period sha.D not be deemed to be broken if 1he Physician returns to work for no more than tllree (3) consecutive working days during any given attempt to resume lW regular work scbedule.

(e) Notice and Opportunity to Cure. Unless unreasonable or ot11etwise inappropriate under the circumstances, each party shaU provide the other with written notice of any fuct, event, or condition which may fonn the basis for terminali.on for cause and at least thirty (30) days to cure the fact, event, or condition.

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Section 4.3 Terminatinn Without C11use. This Agreement may be tenninated without cause at any time by written notico at any time by Physician upon 180 doys written notico tQ Association. This Agreeme'nt may be terminated without cause at any time by written notice at any time by Association upon sixty (60) days written notice to Physician. In the event of such tenninatlon notice, the Association may limit the Physician's activities during the notice period or the Association may impose any other restrictions It deems necessary and reasonable provided that such reslrictions shall not reduce the compensation due to the Physician. Physician. subjeet to his covenant not to compete, upon notice .oftenninatfon. shall be allowed to apply for and interview for future employment without being in violation of this agreement Physician agrees that upon his tennination with or without cause Physician shall not be entitled to receive any accounts receivable. In the event Physician shall fuil to give notice as required, Physician agrees to pay to Association a sum equal to the amount of time deficit on notice times the highest monlhty revenue produced by Physician on a monthly basis under this Agreement For example, ifPhysician gives only 30 days notice and fue highest month of production by Physician is $20,000.00, the penalty would be $20,000.00 x 5 (S mo.oths) deficit notiee or $100,000.00. Physician agrees that Association may deduct any penalty from Physician's pay checks.

Section 4.4 Effect ofTcrminadon. Upou aey t2rminotion pursuant to this Article. the Association shall pay Physician his compensation check due under 1his .Agreement through the effective date of termination on a pl'o rala basis including arry incentive bonuses provided for as part ofPbysician's compensation package. The compensation due tllrougl\ the effective date of termination shall be paid to Physician as full and final satisfaction of the terms of this Agreement. and Physician shall have no further claims against the Association for compensation.

ARTICLE V. ASSIGNMENT OF RIGHT TO BILL

As a condition of Physician's employment hereunder, Physician hereby assigns to the Association any current and future right Physician might bave from time to time to bill and receive payme.nt: from any third party payor, including, without limitation, any managed care payor and the Medicare and Medicaid programs, for c:anfiology services rendered by Physician under this Agreement. Physician acknowledges that the Association shall submit these billings in its own name, and that Physician is hereby precluded "from billing any thhd party payor for Physician's cardiology services under this Agreement unless required by a third party payor, in which event Physician shall bill such services with the understanding that all fees generated from such billings shall belong to tile Association.

ARTICLE VI. CONFll)ENTIALITY OF JNFORMA'l10N

Section 6.1 Confidential ln(ormation. As of the date of the execution of this Agreement and during the course of Physician's employment, in order to allow Physician to carry out his duties hmunder, the Association has provided and wnl continue to provide to Physlctan Confidentlnllnfolmation. (defined ~elow). Physician. agrees to keep confidential and not to use or to disclose to others during the term of this Agreement and for a period of five (5) years thereafter, except as expressly consented to in writing by the Association or required by law, any financial, accounting and statistical information. marketing plans, business plans, feusibil(ty studies, fee schedules or books, billing information, patient files, confidential technology, proprietary information, patient lisa, policies and procedures, or trade secrets of the Association, or. olher papers, reports, records, memoranda, documents, files, discs, or copies thereof pertnining to tht> 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)

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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

Physician shall have the right to buy out the covenant not to oampete under this Section 7.1 at a reasonable price, which price is agreed to be $500,000.00. This provision controls over Section 9.1.

Section 7.l Essential and Separate Covenants: Reasonableness or Restraints. Sections 7.1 shall be construed as an Agreement independent of any other provision in this Agreement; no claim or cause ofaction asserted by Physician against the Association, whether predicated upon this or other Sections of this Agreement or otherwise shall constitute a defense ofthe enfurcem.ent of Sections 7.1 of this Agreement.

· It Is understood by and between the parties hereto that the covenants set forth in SeGtions 7.1 of this Agreement · are essential elements of this Agreement. and that, but for the agreem6llt of Physician to comply With such covenants, the Association would not have agreed to enter into this Agreement. TI1e Association and Physician agree that the foregoing

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coverumts are appropriata and reasonable when considered in light of the nature and e."

If any provisiOD or subdivision of this Agreement, including. but not limited to, any aspect of the restraints imposed under Se<:tion 1.1 is found by a court of competentjurisdiction to be unreasonable or otherwise unenforceable, o.ny such portion shall nevertheless be enforceable to the extent such coutt shall deem reasonabl~ and, In such event, it is the parties' inte!)tion, desire and request that the court refonn such portion in order to make it enforceable. In the event of such judicial rofom~ation, the parties agree to be bound by Section 7.1 as refom1ed in the same manner and to the sam.e extent as ifthey had agreed to such reformed Sections in the first instance.

ARTICLE VIU. JNDEMNIFI£AJ:ION

Subject to the limitations provided below, Physician acknowledges and agrees that he shall indemnify, hold harmless, and reimburse and/or e>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<;iation.. The costs and expenses referred to herein are those directly or indirectly chargeable and payable by the Physician that are not covered by insurance or other reimbursement t11at may be avru1able or payable to the Physician. 'fhe acts, conduct, or omissions contemplated by this Article apply to an matters, activities, actions, or resulting matters associated with providing cardiology services for or on behalfof the Association, and as such shall apply to any action or conduct th.at may result in an economic detriment to the Assoclntion. The right to indemnlfic;ntion Provided by the As!IOC!Iatfon shall not be gqccted or diminished by the fact that the Physician's negligence is the sole or a concmnnt cause of the liability for which indemnity i9 sought.

ARTICLEJX. M!SCELLANEOUS

Section 9.1 Arbitradon. The parties agree to use good faith negotiation to resolve any dispute, claim, or controversy that may arise lUlder or relate to this AgrccmtmJ, Physician's relationship to fue Association or to a breach of this Agreement and will attempt to reach an amicable resolution of the dispute. In the eve.ot that the parties are not able to resolve any dispute, claim, or controversy by negotiation or mediation, any such dispute, claim, or controversy shall be settled by bindfug arbitration which shall be conducted ln Fort Worth, Texas, in accordance wilh the American Health Lawyers Association Altemative Dispute Resolution Service Rules of Procedure for A.roilration, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof: Each party wlll bear its own costs in the arbitration. ond the fees and expe11ses of the arbitration will be shared equally by tho parties. Notwithstanding the foregoing, tbe arbitrator, in his sole discretion, may determine that the party against whom the decision is rendered shall pay the prevailing party's costs and share of the arbitrator's tees and expenses.

Section 9.2 AsslgrlsbiUty. Neither party may assign its rights or duties under this Agreement without the prior written consent of the other party. 8 RECEIVED ~~oJ5~3i 0 20\3 195 (Page 38 of 85 - This print header c an be changed using the pri ntHeade r KTHL t ag - see the viewONE HTML manua~ fo~ further information)

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Settioq 9.3 Notke. Axty notie6, demand, .or conununication required, permitted, or desired to be given under this Agreement sball be deemed effectively given when personally delivered or malled by prepaid certified mail, return receipt requested, addressed to the party at the prlroruy address of the Association or, if appropriate, at the residence of Physician. on file with the Association, otto such other address and to the attention of such other Jle1'SOn(s) or officer(s) as eilh~ p;uty may designate by written notice.

Section !>.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

Stdlota 9.6 Construdion. Common nouns and pronouns and all other terms shall be deemed to refer to the mnsculine, feminine, neuter. singular and/« plural, as the identity ofthe person or persons, finn or association may require In the context

Sectton 9.7 Binding Effect. The provisions of this Agteement shall inure to the benefit of and shall be binding on the heirs, personal representatives, successors, asslgos, estates and legatees of each ofthe parties hereto.

Sedlon 9.8 Euti~ Agreement. Amendments. This Agreement constitutes the entire agreement betweeo the parties pertaining to the subject matter hereof and supersedes all prior or contemporaneous agreements, understandln~ or negotiations of the parties. k.y employment agreement or Independent contractor agreetne.tlt between Physician nnd !U\Y predecessor entity to the Association is hereby revoked. This Agreement shall not be modified, amended, or supplemented except in a written instrument executed by both parties.

Section 9.9 Waiver ot Breneh. ~waiver by eilher party of ll breach or violation of any provision of 1hl.s Agreement shall not operare as. or be construed to be. a waiver of any subsequent mcacb of the same ot other provision hereof

ARTICLE X. NON-ENFQRQABILlTX

Scctfon lo.t Each and ev~ry tenn of this Agreement is subje<:t to Pltysicinn's H~ lB Visa. If any term violalt$ any condition of Physician's Visa then that tenn or provision shall be unenforceable and all remaining terms shall remain in full force and effect. Seet.lon tO.l If it is detennined that any provision violatus any condition ofPhysicjan•s H-lB Visa then at the option of the Association. this Agreemeutmay be immediately terminated.

IN WITNESS WHEREOF, ~ parties have caused thls Agree~uent to be executed to bo effective as of the date and year first above written.

ASSOCIATION: RECEIVED Mobammad Fawwaz Shoukfeh. M.D., P.A. JUL 30 2013 : d/b/a Texas Cnrdiac C...-----~

_·~--~- · ~~~--~·--~~~~~~ORLAW4 .... PHYSICIAN:

-,==::=::;:;tf-t~:u__·i_-aA-::. Ale,_, ., I ::\. I u . 2 o 1. ·1. Ahmad Qaddour, M.D., Individually 9 TWC 000124 J ?&ML. ·;. ':H:u·~ --~- r t'"".·N 1~0 :1.:? 2 196 TAB 5 9/8/2014 12:28:44 Pl'l.

CAUSE No. 2014-510,479

MOHAMMEDFAWWAZSHOUKFEH, § lN THE 99th DIS'IRICf COURT MD PA, dlb/a TEXAS CARDIAC § TB CENTER § Pklln4fl, § v. § OF § JAMES 0. ORATIAN § TEXAS WORKFORCE COMMISSION § IN/Didllltl. § LUBBOCK COUNTY, TEXAS

AF'FIDAVIT OF SHIRLEY WILLS

STATE OF TEXAS I I COUNTY OF LUBBOCK I Before me, the undersigned authority, on this day personally appeared Shirley Wills a person

whose identity is known to me and who signed below. After I administered an oath to the affiant, she

testified as follows:

"My name is Shirley Wills. I am over the age of eighteen (18), of sound mind, and not

otherwise incompetent to make this Affidavit. I bave personal knowledge of the facts stated

herein and they are true and correct.

I have been a Certified Public Accountant since 1976 and worked as a CPA and partner

for Mason Warner & Co. Since August of 1999 I have been the accoun1ant for Mohammed

Fawwaz Shoukfch, MD., P.A. dlb/a Texas Cardiac Center. As such, I have prepared monthly

calculations of income and expenses for the physicians within the Group. James Grattau, M.D.

was cme ofthe physicians in 1he Group tom Juno of2.006 tbru April of2013. Bach physician

wu well aware that they ware paid under a "eat what you kill" 8CCI18rio wherein I calculatlld each physicilms revenues less the overhead expenses on a monthly basis. The surplus or excess would

be paid to 1he p~ciaDa. If the physician's revenue was not sufflcient to cover the ovmheld

then no draw would be iuuod until there was sufficient revenue to cover the physiclaos'

EXHIBIT I A 260 expenses. Each physician was submitted a monthly accounting oftheir income and expcmea.

Grattan never objected to the accounting until his departure fium dle practice. Grattan was well

awue tbat any new physician joining the practice would have a salary guarantee until he could

become established. Grattan never objected to receiving his share ofthe new physician's income

and the overhead was miniscule as the new physician was not licensed in Texas nor did he have

staffprivileges at local hospitals. When Grattan left the practice and gave his notice he was

owed and was paid $32,014.66. I have reviewed the Summary Judgm.c:nt ofTexas Cardiac and

can state tbat the allegations are true and correct. Exhibit "B" to the Motion for Summary

Judgment is a true and correct copy of Grattan's Physician Employment Agreement setting forth

the manner in wbida he was to be paid. Exhibit "C" to the Summary Judgment is a 1rue and

correct copy of calculations oftbc income and expenses determining the amo1mt of compensation

paid to by Grattan. Exhibit "D" to the Summary Judgment is a true and correct copy ofGrattan's

Departure Notice. Exhibit "E" is the final disbursement check to Grattan which he apparently

and intentionally did not cash and .m.isrepresemrd this to the TWC Hearing Officer when he had

received the check which ultimately did clear. Exhibit ''F" is proof oftbe amount that was taken

out of Grattan's January check for federal income taxes and other mandated deductions by law

whim were an issue befcn the TWC."

"Further affiant sayeth naught"

261 TAB 6 .,.

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LE88:

:rwcooono ('!t:~·~ ~ ~~· 273 TAB 7 § 61.018. Deduction From Wages, TX LABOR § 61.018

Vernon's Texas Statutes and Codes Annotated Labor Code (Refs & Annos) Title 2. Protection of Laborers Subtitle C. Wages Chapter 61. Payment of Wages (Refs & Annos) Subchapter B. Payment of Wages

V.T.C.A., Labor Code § 61.018

§ 61.018. Deduction From Wages

Currentness

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.

Credits Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.

Notes of Decisions (4)

V. T. C. A., Labor Code § 61.018, TX LABOR § 61.018 Current through the end of the 2013 Third Called Session of the 83rd Legislature

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1