Oliver Stanbery Orthopedics,llc v. Commonwealth of Kentucky, Kentucky Unemployment Insurance Commission

• Court: Court of Appeals of Kentucky
• Decided: December 16, 2021
• Docket: 2021 CA 000125
• Status: Unknown

Opinion

RENDERED: DECEMBER 17, 2021; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals NO. 2021-CA-0125-MR

OLIVER STANBERY ORTHOPEDICS, LLC APPELLANT

APPEAL FROM FAYETTE CIRCUIT COURT v. HONORABLE ERNESTO M. SCORSONE, JUDGE ACTION NO. 19-CI-02804

COMMONWEALTH OF KENTUCKY, KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION AND TRICIA TELLES APPELLEES

OPINION AFFIRMING

** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; DIXON AND JONES, JUDGES.

JONES, JUDGE: Oliver Stanbery Orthopedics, LLC (OSO) appeals from the

Fayette Circuit Court’s opinion affirming a decision by the Kentucky

Unemployment Insurance Commission (the Commission) to award the appellee,

Tricia Telles, unemployment benefits following her termination from OSO. Having reviewed the record and being otherwise sufficiently advised, we affirm

the circuit court.

I. BACKGROUND

Prior to her termination, Telles was a sales representative for OSO,

which is owned by Matt Oliver and Jason Stanbery. In that role, Telles was

required to be in operating rooms to help ensure the orthopedic products she sold

were being used correctly. In May 2018, Telles was in the operating room during a

surgery at St. Joseph Hospital (the Hospital) when she allegedly violated the

Hospital’s policies by retrieving and opening an expired bone graft during the

surgery.

Telles informed OSO of the allegations, denied them, and asked to

have OSO’s counsel intervene on her behalf. Telles also suggested to OSO that

she could meet with a Hospital board member, who she considered a friend, to

discuss the matter and to disclose information which she believed would result in

the removal of the Hospital’s CEO.1 Telles also discussed with OSO the

possibility that she might privately retain an attorney to contact the Hospital. Mr.

Oliver instructed Telles that she should neither discuss her situation or the CEO

1 It appears as if the information Telles threatened to disclose about the Hospital’s CEO was unrelated to the allegations regarding the bone graft.

-2- with the board member nor retain a private attorney to contact the Hospital on her

behalf.

It is undisputed that Telles did not wholly comply with Mr. Oliver’s

instructions. Telles obtained counsel, who sent the Hospital a letter requesting a

meeting so that the matter could be resolved short of litigation. Telles also met

with the Hospital board member. However, Telles testified that she did not discuss

the specifics of the allegations against her at that meeting or divulge any

information about the Hospital’s CEO.

In June 2018, the Hospital decided to suspend Telles’s access to its

facilities for one year. Both Mr. Stanbery and Mr. Oliver testified that the Hospital

was Telles’s main account, and her not being able to be onsite there greatly

reduced the amount of work she was able to perform. OSO terminated Telles in

July 2018, approximately a month after her suspension from the Hospital.

According to Telles, OSO did not give her any reason to support her termination.

In January 2019, Telles sought unemployment benefits. OSO

opposed Telles’s request, arguing that she had been terminated for misconduct

making her ineligible to receive unemployment benefits. See KRS2 341.370(1)(b).

As such, Telles’s claim was initially denied. Telles appealed the denial; after a

two-part evidentiary hearing at which Telles, Mr. Oliver, and Mr. Stanbery each

2 Kentucky Revised Statutes.

-3- testified, the referee upheld the denial of benefits. Telles appealed the referee’s

decision to the Commission. The Commission ultimately concluded that Telles

was eligible to receive unemployment benefits. First, the Commission found that

while Telles had met the board member, OSO had failed to prove that she

discussed any prohibited subjects during the meeting. Second, the Commission

found that while Telles had disobeyed the instruction for her not to obtain counsel

to contact the Hospital, the instruction was not reasonable because it prevented

Telles from “availing herself of the right to seek legal redress.” (Record (R.) at

850.) Since KRS 341.370(6) defines misconduct, in part, as the failure to follow

“reasonable instructions,” the Commission reasoned that Telles did not commit

misconduct with respect to this instruction.

OSO appealed the Commission’s decision to the Fayette Circuit

Court, which issued a decision affirming the Commission. This appeal followed.

II. STANDARD OF REVIEW

“In an appeal of an administrative action by an agency, the circuit

courts are to provide review, not reinterpretation.” Jones v. Cabinet for Human

Resources, Div. for Licensure and Regulations, 710 S.W.2d 862, 866 (Ky. App.

1986). While the courts review pure issues of law de novo, they must afford the

agency’s factual findings considerable deference. The level of deference is

dependent on who bore the burden of proof before the agency.

-4- When the decision of the fact-finder is in favor of the party with the burden of proof or persuasion, the issue on appeal is whether the agency’s decision is supported by substantial evidence, which is defined as evidence of substance and consequence when taken alone or in light of all the evidence that is sufficient to induce conviction in the minds of reasonable people. Where the fact- finder’s decision is to deny relief to the party with the burden of proof or persuasion, the issue on appeal is whether the evidence in the party’s favor is so compelling that no reasonable person could have failed to be persuaded by it.

Kentucky Retirement Systems v. Brown, 336 S.W.3d 8, 14-15 (Ky. 2011) (quoting

McManus v. Kentucky Retirement Systems, 124 S.W.3d 454, 458 (Ky. App. 2003)).

In turn, “CR 52.01 requires that, in appeals of administrative agency decisions,

appellate courts review the determinations of the circuit courts for clear error.”

Fayette County Bd. of Educ. v. M.R.D., 158 S.W.3d 195, 201 (Ky. 2005).

III. ANALYSIS

As framed by the parties, the central issue in this case is whether

Telles should be disqualified from receiving benefits due to her misconduct,

specifically, her alleged refusal “to obey [OSO’s] reasonable instructions.” KRS

341.370(6). There are two specific instructions at issue: (1) the instruction

regarding Telles’s meeting with the board member; and (2) the instruction for

Telles not to retain counsel to contact the Hospital on her behalf.

“[OSO] bears the burden of proof in establishing that [Telles] should

be disqualified from receiving benefits because of misconduct.” Alford v.

-5- Kentucky Unemployment Insurance Commission, 568 S.W.3d 367, 370 (Ky. App.

2018). Thus, with respect to the Commission’s factual determinations, the circuit

court’s task was to determine whether the evidence in OSO’s favor was so

compelling that no reasonable person could have failed to be persuaded by it.

Brown, 336 S.W.3d at 14-15.

With respect to the first instruction issued by OSO, the Commission

determined that the instruction was directed at what Telles was not to discuss with

the board member, i.e., her particular situation and any unfavorable information

about the Hospital’s CEO. This finding was based on the testimony of Mr. Oliver

and Mr. Stanbery. The Commission next found that while Telles did meet with the

board member, she did not run afoul of OSO’s instructions because she did not

discuss her situation or relay negative information about the CEO. (R. at 849.)

This finding was based on Telles’s testimony. OSO did not present any evidence

to contradict Telles’s account of her meeting with the board member. Thus, we

cannot conclude that the circuit court committed clear error when it affirmed the

Commission as to the first instruction.

The second instruction involves a more nuanced review. It is

undisputed that Telles retained counsel who sent a letter to the Hospital against the

instructions of OSO. The question is whether OSO’s instruction was reasonable.

There is no explicit statutory definition of reasonable. We have previously held

-6- that a “reasonable instruction” is one that is within the employee’s “ability to

perform” and will “not result in any undue hardship.” City of Lancaster v.

Trumbo, 660 S.W.2d 954, 956 (Ky. App. 1983). Additionally, “[i]t is not the

practice of a particular employer and employee that determines misconduct. We

are to examine the facts of each case in light of the reasonable employment

relationship.” Douthitt v. Kentucky Unemployment Ins. Comm’n, 676 S.W.2d 472,

475 (Ky. App. 1984).

While OSO may have had some valid concerns about one of its

employees threatening legal action against the Hospital, those concerns must be

considered in light of the facts of the case at hand. Telles believed that she had

done nothing wrong in the operating room, and the Hospital was actively

investigating the incident and determining whether to sanction her for the alleged

violation. Being sanctioned by the Hospital could affect not only Telles’s

employment with OSO but her future employability within her chosen line of

work. While it was certainly reasonable for OSO to make an internal business

decision not to have its own counsel intervene on Telles’s behalf, we cannot agree

with OSO that it was reasonable to instruct Telles that she was not to personally

consult with a private attorney or have a private attorney contact the Hospital on

her behalf, especially where the Hospital was actively investigating allegations of

wrongdoing by Telles. Thus, we agree with the Commission and the circuit court

-7- that OSO’s instruction unreasonably infringed on Telles’s right to protect her

legitimate and significant personal interests with the assistance of the counsel of

her choosing.3 Accordingly, we find no error with respect to the Commission’s

conclusion that the instruction was unreasonable, and we agree with the circuit

court’s decision to affirm.

Very briefly, we now turn to OSO’s argument that the Commission

erred by not making a finding with respect to whether Telles violated the

Hospital’s policy by retrieving and opening the bone graft, and that the circuit

court erred by failing to recognize the significance of this omission. According to

OSO, it was incumbent on the Commission to reach a determination on whether

Telles violated the Hospital’s policies because if Telles did commit the alleged

breaches of Hospital policy then the instruction that Mr. Oliver gave her not to

have counsel contact the Hospital must have been reasonable. Of course, this

ignores the fact the Hospital’s investigation was ongoing when the instruction was

3 In its appellate brief, OSO argues that the Commission’s reasoning in this regard is tantamount to a conclusion that OSO violated Telles’s constitutional rights exposing it to liability for wrongful discharge. OSO explains that it should have been able to terminate Telles in this situation “without fear of being liable for a wrongful or retaliatory discharge claim.” OSO’s argument misunderstands the relationship between an unemployment benefits claim and a claim against the employer for wrongful discharge. The question before the Commission and the circuit court was limited to whether Telles was entitled to receive unemployment benefits, not whether her discharge was “wrongful.” In this limited setting, OSO’s reasons (or lack thereof) for the termination are relevant only for determining whether Telles is entitled to benefits. Hicks v. Floyd County Bd. of Educ., 99 F. App’x 603, 605 (6th Cir. 2004) (citing Berrier v. Bizer, 57 S.W.3d 271, 281 (Ky. 2001)) (“Indeed, turning an unemployment hearing into a forum for thorough exploration of such issues [wrongful discharge] would defeat the purpose of providing fast, cheap resolution of unemployment claims.”).

-8- issued. Additionally, Mr. Oliver unequivocally testified that he would have

terminated Telles regardless of whether she actually breached the Hospital’s policy

for the simple fact that she disregarded his instructions. In this limited setting, the

inquiry is centered on the reasonableness of the instructions at the time they were

given and nothing more. (R. at 32-36.) Accordingly, we agree with the circuit

court that whether Telles actually breached the Hospital’s policy was irrelevant.

Finally, OSO argues that Telles’s mere threat to disclose damning

information to the board member which she believed would lead to the dismissal of

the Hospital’s CEO was misconduct sufficient to deny her benefits in and of itself.

While Telles’s alleged threat was occasionally mentioned by Mr. Oliver and Mr.

Stanbery during their testimony, OSO has not cited us to where in the

administrative record it argued to the Commission that this was a valid basis for

Telles’s termination. Accordingly, we deem this argument to have been waived

for lack of preservation.4 O’Dea v. Clark, 883 S.W.2d 888, 892 (Ky. App. 1994).

4 CR 76.12(4)(c)(v) requires an appellant’s brief to contain “a statement with reference to the record showing whether the issue was properly preserved for review and, if so, in what manner.” OSO’s briefs contain no such preservation statements as to any of its plethora of issues. We have leniently elected to not penalize OSO for failing to provide a preservation statement for the other issues because Telles and the Commission do not actively dispute preservation of those issues. However, Telles asserts on page six of her brief that OSO’s argument that the threat to get the Hospital CEO fired was sufficient standing alone to deny benefits to Telles is “an entirely new reason that was never before the Commission.” We likewise failed to see where that issue was raised before the Commission. In any event, however, it is not our duty to sift through the administrative record to determine if/where/how OSO raised this issue. That burden fell upon OSO, not this Court.

-9- In any event, it seems highly doubtful that Telles’s mere act of discussing this

possible scenario with her supervisor in private rises to the level of actionable

misconduct.

IV. CONCLUSION

For the foregoing reasons, we affirm the Fayette Circuit Court’s

decision affirming the decision of the Kentucky Unemployment Insurance

Commission.

ALL CONCUR.

BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE COMMONWEALTH OF John E. Hanley KENTUCKY, KENTUCKY Hayden A. Holbrook UNEMPLOYMENT INSURANCE Louisville, Kentucky COMMISSION:

Joshua R. Hurley Maria Russell Frankfort, Kentucky

BRIEF FOR APPELLEE TRICIA TELLES:

Thomas D. Bullock Rachele T. Yohe Lexington, Kentucky

-10-