Peak Neurology v. Hesselbrock

CourtColorado Court of Appeals
DecidedJuly 3, 2025
Docket24CA1228
StatusUnpublished

This text of Peak Neurology v. Hesselbrock (Peak Neurology v. Hesselbrock) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Peak Neurology v. Hesselbrock, (Colo. Ct. App. 2025).

Opinion

24CA1228 Peak Neurology v Hesselbrock 07-03-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 24CA1228 El Paso County District Court No. 23CV31441 Honorable David A. Gilbert, Judge

Peak Neurology, PC, a Colorado corporation,

Plaintiff-Appellee and Cross-Appellant,

v.

Diane Hesselbrock, M.D.,

Defendant-Appellant and Cross-Appellee,

Brad Priebe, D.O.,

Third-Party Defendant-Appellee.

JUDGMENT AFFIRMED IN PART AND REVERSED IN PART, AND CASE REMANDED WITH DIRECTIONS

Division VII Opinion by JUDGE LUM Lipinsky and Sullivan, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced July 3, 2025

First & Fourteenth, PLLC, Edward A. Gleason, Julian R. Ellis, Jr., Colorado Springs, Colorado, for Plaintiff-Appellee and Cross-Appellant and Third-Party Defendant-Appellee

Sears & Associates, P.C., Hollie L. Wieland, Colorado Springs, Colorado, for Defendant-Appellant and Cross-Appellee ¶1 This matter involves the termination of defendant, Diane

Hesselbrock, M.D., from her position as a physician with plaintiff,

Peak Neurology, PC (PN). Dr. Hesselbrock appeals the district

court’s ruling that she was not an employee of PN for purposes of

the Colorado Wage Claim Act (CWCA), section 8-4-101(5), C.R.S.

2024, and, therefore, that she wasn’t entitled to statutory penalties

and attorney fees under sections 8-4-109 and -110, C.R.S. 2024.

PN and third-party defendant, Brad Priebe, D.O., cross-appeal the

district court’s interpretation of Dr. Hesselbrock’s employment

agreement with PN and its ruling that the agreement’s liquidated

damages provision is unenforceable. We affirm in part, reverse in

part, and remand for further proceedings.

I. Background

¶2 Dr. Priebe is the sole shareholder of PN, a neurology practice.

In 2019, Dr. Hesselbrock joined PN and entered into an “Associate

Physician Employment Agreement” (Agreement) with PN. The

Agreement sets out the terms of Dr. Hesselbrock’s work with PN

and contains a production-based compensation scheme. The

Agreement also states that Dr. Hesselbrock would owe PN

1 liquidated damages if she began practicing neurology within a

thirty-mile radius of PN within one year of leaving the practice.

¶3 Dr. Hesselbrock gave PN a termination notice in November

2022. Her last day at PN (termination date) was January 31, 2023.1

In June 2023, Dr. Hesselbrock began treating patients at UC Health

Neurology, which is located within a thirty-mile radius of PN.

¶4 Shortly thereafter, the parties became embroiled in a

disagreement about the final amount of compensation owed to Dr.

Hesselbrock under the Agreement. PN filed the underlying action

for breach of contract and declaratory judgment, asserting that Dr.

Hesselbrock owed PN (1) compensation she had received in excess

of the amount to which she was entitled under the Agreement and

(2) liquidated damages as a result of her termination and

competition. Dr. Hesselbrock counterclaimed and added Dr. Priebe

as a third-party defendant, asserting that (1) PN breached the

Agreement; (2) PN and Dr. Priebe unlawfully withheld wages from

1 Under Section 6.5 of the Agreement, a physician may terminate it

without cause by providing a ninety-day written notice to PN. During the ninety-day period, the physician is expected to complete their duties as usual. Dr. Hesselbrock left PN fewer than ninety days after she gave notice, but PN didn’t assert a separate breach of contract claim based on a notice period violation.

2 her in violation of the CWCA; and (3) PN and Dr. Priebe retaliated

against and constructively discharged her (further CWCA violations)

after she raised wage concerns.

¶5 The district court conducted a two-day bench trial and made

three rulings relevant here:

• Dr. Hesselbrock wasn’t an “employee” under the CWCA.

• The Agreement entitled Dr. Hesselbrock to payment for

receivables related to work she had performed before her

termination date but that weren’t collected until after her

termination date. (The district court made this ruling

pretrial.)

• The Agreement’s liquidated damages provision was

unenforceable.

¶6 Dr. Hesselbrock appeals the first ruling, and PN and Dr.

Priebe cross-appeal the other two rulings.

II. Dr. Hesselbrock’s Employee Status

¶7 Dr. Hesselbrock contends that the court erred by concluding

she wasn’t an employee of PN under the CWCA. We conclude that

additional findings are necessary.

3 A. Applicable Law and Standard of Review

¶8 The CWCA defines an “employee” as “any person . . .

performing labor or services for the benefit of an employer.” § 8-4-

101(5). However, the statute contains an exception:

[A]n individual primarily free from control and direction in the performance of the service, both under his or her contract for the performance of service and in fact, and who is customarily engaged in an independent trade, occupation, profession, or business related to the service performed is not an “employee.”

Id. For purposes of this opinion, we will refer to individuals falling

under this statutory exception as “independent contractors.”

¶9 When evaluating whether a worker is “primarily free from

control and direction,” both under the contract and in fact, courts

examine contract provisions pertaining to the worker’s duties and

compensation, as well as the nature of the worker’s relationship

with the putative employer. See Bermel v. BlueRadios, Inc., 2017

COA 20, ¶¶ 36-38, aff’d on other grounds, 2019 CO 31.

¶ 10 When evaluating whether a worker is “customarily engaged in

an independent trade, occupation, profession, or business,” courts

examine (1) whether the worker is free to provide services to other

entities during the time she works for the employer; (2) whether the

4 worker is paid a salary instead of a fixed contract rate; (3) whether

the employer provides training, tools, benefits, materials, or

equipment to the worker; (4) whether the employer establishes the

time during which the worker is supposed to perform her duties; (5)

whether the employer can terminate the contract for reasons other

than breach or unsatisfactory work; (6) whether the employer pays

the worker personally or makes payment to the name of the

worker’s trade or business; and (7) any other relevant factor. See

Indus. Claim Appeals Off. v. Softrock Geological Servs., Inc., 2014 CO

30, ¶¶ 1, 15-16 (listing factors for determining whether a worker is

“engaged in an independent trade, occupation, profession, or

business” under the Colorado Employment Security Act); see also

Bermel, ¶¶ 37-38 (reversing a summary judgment ruling that a

worker was an independent contractor because contractual terms

established that (1) the worker was expected to “devote full time,

attention, and energies to the [employer’s] business”; (2) the worker

was prohibited from “engag[ing] in any other related business

activity of” the employer during the contract; (3) the worker was

prohibited from competing with the employer for two years after the

conclusion of the contract; (4) the employer retained the right to

5 reasonably modify the worker’s duties at its discretion; and (5) the

employer contracted to pay the worker at an hourly rate “payable at

regular payroll periods every” two weeks).

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