Organizational Information
The hospital is licensed for 30 beds and has an attached 50-bed skilled nursing facility and an off-campus 20-unit assisted living facility. The organization is managed by a religious community health system that consists of nine hospitals, 85 nursing homes, a management company, a foundation, and an elderly housing management company. The hospital is a nonprofit corporation with a self-perpetuating board of eight directors. The hospital was first opened in 1952, with additions of the skilled nursing facility and assisted living facility in 1972 and 1994, respectively. The management company was engaged in 1995 and continues to operate the facility today. The hospital is the only acute care facility in the city of 3,600 and the entire county. Three tertiary hospitals operate within a 30-mile radius of the hospital. The medical staff consists of 15 physicians.

Brief Summary of the Problem
An administrator in the hospital was allowed for years to under-perform relative to the job responsibilities of his position. His superior, the CEO, was fearful of imposing disciplinary action because of the employee’s threats to file a discrimination complaint with the Department of Human Rights based on sexual orientation discrimination. When this CEO retired, the new CEO began a process of performance improvement with the administrator. Unfortunately, the administrator was unable to meet performance expectations and was eventually terminated. Subsequently, a discrimination complaint was filed by the administrator, investigated by the Department of Human Rights, and dismissed with a finding of no probable cause.

Description of the Problem
The administrator was hired in 1991 by the CEO of the organization, who himself had been hired as CEO in 1980. The administrator’s work history showed progressive promotions from staff technician through traditional management positions, and at least on paper seemed well qualified for the administrator’s position. He had no previous experience as an administrator. Over a two-year period it became evident that he lacked the necessary skills to be an effective leader of his department. However, prior to this discovery, he had developed social relationships with key management employees, including the CEO. These friendships added to the difficulty the CEO had in effectively pursuing a progressive disciplinary process. The administrator was also very demonstrative about the fact that he was homosexual and bragged to coworkers about using his sexual orientation as a tool to buy his resignation from previous employers. This knowledge paralyzed the CEO from initiating a performance disciplinary process. In part the CEO felt uncomfortable dealing with the issues of nonperformance because of his friendship with the administrator. The CEO was also concerned about the financial implications if the administrator filed a discrimination complaint against the facility and just cause was proven. The CEO chose not to deal with the issue directly and continued to look the other way relative to the administrator’s poor performance.

The CEO’s decision to do nothing had obvious negative ramifications throughout the rest of the organization—that is, the confidence and trust in the CEO’s ability to lead the organization was eroded and morale throughout the facility declined rapidly.

During this same time period of the administrator’s performance decline, the CEO experienced some personal health problems, which in retrospect contributed to his unwillingness to deal with the problem. The CEO subsequently resigned, received a disability, and left behind a quagmire of organizational problems. On his resignation, the CEO recommended to the board of directors that a team of four senior managers be placed in charge of the facility and that they forego hiring another CEO. One of the four managers would obtain a nursing home administrator’s license to satisfy state and federal regulations, but the four would otherwise function as a team in managing the facilities. This suggested management team was to be composed of: the poorly performing administrator, who was to pursue the nursing home administrator’s license; the CFO, the administrator’s assistant, and the director of human resources. The board accepted this recommendation and made the necessary appointments. Within 45 days, the management team convened a special meeting with the board and requested reconsideration for appointing a new CEO; the management team concept was failing because consensus could rarely be reached on any issue. The administrator was clearly positioning himself for succession to CEO; however, because of his history of poor performance, the administrator did not have the support of the other senior managers, which was communicated to the board. The board subsequently agreed with the management team’s assessment and hired an interim CEO while a professional search was conducted.

The board conducted a brief planning and self-evaluation process about the future of the organization and their roles as board members. From this process, the board decided to hire a healthcare management company in lieu of hiring their own CEO. After interviewing several companies, they engaged a religious healthcare system to manage the facility and present candidates for CEO. Through this process I was subsequently selected as CEO of the organization.

The first three months were spent conducting in-depth assessments of the organization’s infrastructure: governance, financial systems, clinical systems, human resources, and physical plant systems. This analysis demonstrated significant deficiencies in all areas, particularly in the financial systems. For the purposes of this discussion I will focus primarily on the human resource systems, with brief comment on the financial systems.

As is found in many smaller organizations, most of the department managers had been promoted over time from within the technical ranks. Their careers in management began as a result of their technical expertise, not management or leadership abilities. This was especially true for the administrator in question, who had very good clinical skills but virtually no formal management or leadership education or training. This fact became a critical organizational issue in the resolution of this management problem and proved to be pivotal in the ultimate finding of no probable cause for discrimination.

Assessment of the critical needs of the organization made it readily apparent that the key management positions in support of the CEO needed to be capable of making some hard decisions. The CFO, though lacking leadership training, was capable in the technical aspects of her responsibilities. In addition, she had demonstrated over time an interest in continued education toward developing her leadership skills. This proved very effective, and she has earned the respect and support of her subordinates.

The administrator, however, had effectively distanced himself from his peers, subordinates, and superior. The result was that this administrator received no respect or support and was not someone other employees felt they could trust or be assured of follow through on even the simplest of issues.

Approximately 90 days after I was appointed CEO, I initiated a performance review process with each of the departmental managers. The review included: (a) my initial assessment of their management abilities; (b) the financial condition of the facility in general; (c) the financial condition of their departments; (d) my expectations of each of them for the ensuing nine months as managers; and (e) an assessment of their leadership skills and capabilities in accomplishing a financial turnaround.

For the administrator in question, my evaluation of his performance was surprising in comparison to prior performance evaluations. Previously he had received evaluations of satisfactory to outstanding in all aspects of his job. I identified three deficiencies in leadership that I deemed crucial to his success as an administrator and to the success of the his department: interpersonal relationships, effective managerial delegation, and organizational skills.

In the first area, interpersonal relationships, I indicated: (1) that his level of integrity throughout the organization was very low and virtually non-existent, (2) that his dominant tendency was to exercise strength from his power of position and authority, and (3) that his ability to influence others was minimal without leveraging his position and authority.

The second area, effective managerial delegation, was deficient because he delegated everything downward without any further participation, and he issued top-down directives using his power of position but without any follow through.

The third area, organizational skills, presented the most challenging areas for improvement because: (1) the frequency and number of regulatory deficiencies from state and federal surveys was consistently above the norm; (2) he refused to accept responsibility for a division’s performance because it was located off campus; (3) he was unable to detect improper work habits in subordinates, which contributed to under-achieving productivity targets; (4) he lacked a vision for his department; (5) he was unable to develop critical evaluation systems in his department; (6) he was sometimes absent from the facility without informing anyone of his whereabouts; and (7) the staff generally perceived him as an ineffective manager.

My review was the first negative evaluation of job performance since he began employment with the organization. The former CEO had chosen not to address the behaviors. Unfortunately this history set the stage for a lengthy disciplinary process for an individual who never should have been promoted to management.

Administrative Decisions
After reviewing my assessment with him, I gave him one week to develop an action plan to correct the performance issues. The action plan, if accepted, would be reviewed for progress every 30 days for the following three months. I encouraged him to take a day off for some serious introspection to decide whether he would be able to consistently meet the new performance expectations—a standard that had been raised for all managers—and be instrumental in turning around an organization in crisis.

I met with him as agreed one week later to review his plan of action or his decision relative to continuing as administrator under the new performance expectations. He reported that he believed he had the talent to achieve success under the enhanced performance expectations and reviewed his plan of action to correct the performance deficiencies I had identified. However, his plan lacked ownership of the performance shortcomings, and shifted blame for his poor evaluation to everyone around him. In discussing the plan, I pointed this out to him and he reluctantly agreed and eventually owned up to the problems. We set firm deadlines to accomplish each of the action plan steps and agreed to meet again in 30 days to review progress.

Two weeks later, he came into my office with an order from his physician stipulating that he was to request a medical leave of absence for a stress-induced illness. He would be reevaluated by his physician in ten days to determine when he could return to work. His request was granted. At this point I became suspicious of his motives and reviewed all of the circumstances with the health systems director of human resources and legal counsel. My earlier assessment of the administrator’s management and leadership shortcomings became pivotal in defining a strategy to protect the organization from discriminatory action(s). That assessment was that he was incapable of performing at a satisfactory level and seemed to have no desire to work any harder than he had to.

For this reason, we mapped out a worst-case scenario of where the administrator might try to define discriminatory practice(s):

1. Under Title VII of the Civil Rights Act of 1964, employers are prohibited from discrimination on the basis of race, color, religion, national origin, and sex. ¹ As state and federal civil rights laws have opened up new opportunities for women in the workplace, women are now advancing into supervisory roles and constitute a majority in some workplaces. In addition, males are more frequently working at traditionally female jobs. Consequently, claims of sex discrimination against males have increased.
2. Under the state’s human rights act, sexual orientation was listed as a protected category. The human rights act defines sexual orientation (known as “affectional preference”) as “having or being perceived as having an emotional, physical, or sexual attachment to another person without regard to the sex of that person or having or being perceived as having an orientation for such attachment, or having or being perceived as having a self image or identity not traditionally associated with one’s biological maleness or femaleness.” The administrator was openly homosexual and, as noted earlier, had told coworkers about using this orientation to his advantage with previous employers.
3. Under the Age Discrimination in Employment Act of 1967, employers are prohibited from victimizing older employees because of stereotypes about age and about the job performance of older employees.² Generally, this act prohibits discrimination against workers over age 40. The administrator was over 40 at the beginning of the disciplinary process.
4. Under the Americans with Disabilities Act³ and the state’s human rights act, “qualified” disabled persons are entitled to special protection. Both acts prohibit discrimination against a qualified individual with a disability because of the individual’s disability, in all aspects of employment, including both the application process and the terms and conditions of employment such as compensation, advancement, training, and discharge. The administrator’s request for a medical leave of absence because of job-related stress triggered this possible avenue for discrimination.
5. A constructive discharge as found under Title VII of the Civil Rights Act is deemed to occur when the “employer, instead of severing the entire relationship with the employee, deliberately makes an employee’s working conditions so intolerable that the employee is forced into an involuntary resignation.”¹ Based on greater performance expectations and responses by the administrator relative to the same, we assumed that this might be one additional route pursued to establish grounds for discrimination.

I finally met with the administrator after an additional extension to his medical leave of absence, 45 days after reviewing his action plan, to assess progress in meeting target date activities. Instead of spending time reviewing his progress, he handed me a six-page memorandum documenting his concerns about his position with the organization and left for the rest of the day. The memorandum was a rambling of attacks: (1) on my character and management methods, (2) allegations of creating a hostile working environment that has affected him mentally and physically to the point of requiring surgery as well as the use of anti-anxiety medications; (3) an accusation of discrimination based on the fact that he is homosexual and that I work for a religious health system with zero tolerance for his sexual orientation; and (4) numerous statements calling me a liar and demanding an immediate apology with no further scrutiny of his performance.

Because of the seriousness of the allegations and the insubordinate tone of the memorandum, a response was crafted with legal assistance. Prior to discussing the response with the administrator, I had a meeting with him to conduct his 60-day performance review as established previously. This review was necessary to demonstrate consistency in following through on previously agreed-on performance measurements. Not surprisingly, he had made very little progress toward completing any of the objectives. The review concluded in my issuing him a final warning to complete the objectives or be subject to termination. We agreed to meet again in 30 days.

Subsequently I delivered to him the response to his earlier memorandum, a ten-page, paragraph-by-paragraph response as suggested by legal counsel. As we had suspected, the gist of his memorandum identified flaws in my management process that if left unanswered would have provided plausible argument of discrimination along any one of the aforementioned protections by federal and state laws.

In December I met with the administrator as agreed to review progress toward completion of the action plan objectives that he had submitted in September. The review substantiated that he was noncompliant with four of the six objectives. This finding, in conjunction with the cumulative effect of the other problems noted over the past several months, led to notification that his employment as administrator was terminated as of December 31. Effective immediately, however, he would cease being employed by the facility and would relinquish all titles and authorities he had with respect to the facility. He was instructed to be out of his office by 4:00 p.m. on the day of that review, and informed that he would receive his regular salary and benefits through the end of December. All of these findings and termination language were well documented and signed by him as having been discussed with him.

Results
Forty-five days following the administrator’s termination I received a notice from the state’s Department of Human Rights that a charge of discriminatory practice had been filed by the former administrator against the facility. In the charge, he stated, among other things:

1. That he had complained to me about being harassed by coworkers regarding his homosexuality and was told by me to handle it himself;
   
2. That his job duties were increased unfairly and I was micromanaging his department; and
   
3. That he believed his sexual orientation and complaints of discrimination were factors in my actions ultimately leading to his termination.

Thus began a very lengthy 18-month process of filing briefs in response to the allegations.

It was important for our organization, and I believe for any organization, to obtain legal counsel representation that is familiar with discrimination investigations. Organizations battling such an accusation should note that although recipients of a complaint have a short time frame in which to respond, the Department of Human Rights’ process of determining cause, or no probable cause, may be a lengthy one. Respondents have 45 days to file a response to the discrimination charges but a final determination by the Department of Human Rights may take as long as three years.

Our organization’s response was submitted within the required time frame, and a copy was sent to the charging party by the Department of Human Rights. The lead investigator subsequently contacted the facility’s attorney with a list of employees to be interviewed via telephone by the investigator. These employees were identified by the charging party as being sympathetic to his complaint and able to corroborate his case. Some of the employees on the charging party’s list were also identified by our organization for interviews in substantiating the facts as outlined in the employer’s response. The interviews were conducted as scheduled; the subjects on the charging party’s list were contacted at their homes, and those on the respondent’s list were interviewed with the organization’s attorney present in the counsel’s office. From this point on, the organization had no further contact with the Department of Human Rights investigator for nearly 11 months.

One year after the initial complaint was received, the Department of Human Rights completed their investigation and determined that they had no probable cause to believe that the organization had engaged in an unfair discriminatory practice. Therefore the Department of Human Rights issued an order dismissing the charge. The charging party, if aggrieved by the decision, had two options: (1) to file an appeal requesting reconsideration of the determination, and/or (2) to file a private civil action against our organization. The charging party did file an appeal, and the commissioner for the Department of Human Rights remanded the case for further processing. This action had the effect of erasing the no probable cause determination and returning the charge to a predetermination status. In all of the cases that our attorney had processed, he had never seen a reversal of the determination as in this case. Counsel’s conjecture was that this ruling might be indicative of a potential problem or might simply indicate that the Department of Human Rights was making sure that all the evidence presented had been appropriately considered.

Approximately six months later, after another exhaustive volley of new allegations, rebuttals, interviews, and legal discourse, the Department of Human Rights again made a determination of no probable cause. This time, however, the charging party had no further appeal process available because state rules establish “…a redetermination of no probable cause will not be reconsidered by the commissioner.” The charging party still had the option to bring a private civil action against the organization in a state district court within 45 days after the dismissal pursuant to state statutes. The charging party never filed a private civil action within the prescribed time frame and subsequently the case was closed.

That the investigation ultimately found in favor of our organization is attributable to the fact that a consistent management process was followed to affect the change. The findings by the investigator concluded:

1. The evidence presented by the charging party failed to support the charge that the organization knew of and condoned conduct that created an offensive and hostile work environment based on sexual orientation, or that the charging party’s sexual orientation was a factor in his termination.
2. Some evidence did indicate that statements were made about the charging party’s protected class status; however, no evidence suggested that these statements were said to the charging party.
3. Witness statements failed to substantiate that derogatory comments were so pervasive that organization knew, or should have known, of them and failed to take timely and appropriate action.
4. Evidence failed to demonstrate that if the charging party had complained, the organization took reprisal against him by increasing the essential job functions of his position, constructing a performance plan, and terminating him after he failed to meet four of the six expectations.
5. Witness statements and documents corroborated that the organization’s operations were in flux, and that tighter regulatory demands, less revenue, and higher performance expectations of the organization’s new administration forced everyone to do more with less.
6. The organization’s documentation of the charging party’s poor performance and unwillingness to change significantly supported the findings to dismiss the case.

Careful and detailed performance documentation, the recognition that the employee could create problems if terminated, and a clearly communicated turn-around plan of action to an organization in crisis proved to be effective in defeating what otherwise could have been a disastrous employment situation. As we have all heard numerous times in employment law seminars…document, document, document!

Source Material
The following source materials were used in the preparation of this case study. Citations of state legislation are not included.

¹ 42 USC §§ 2000e-17 (1964).

2 29 USC §§ 621-634 (1967 & Supp. 1982).

³ 42 USC § 12101 et seq. (1994).

This case study represents a part of an ACHE affiliate’s Fellow project and was voted one of the best case studies of 1999.