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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Beach v. Handforth-Kome (11/29/2013) sp-6845

Beach v. Handforth-Kome (11/29/2013) sp-6845

         Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

         Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

         303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, e-mail  


MICHELE LYN BEACH,                                       )  

                                                         )     Supreme Court No. S-14811  

                           Appellant,                    )  

                                                         )     Superior Court No. 3UN-10-00054 CI  

         v.                                              )  

                                                         )     O P I N I O N  

SONIA HANDFORTH-KOME,                                    )  

Individually, and ILIULIUK FAMILY                        )    No. 6845 - November 29, 2013  

HEALTH SERVICES, INC.,                                    )  


                           Appellees.                     )  


                  Appeal from the Superior Court of the State of Alaska, Third  


                  Judicial District, Unalaska, Pat L. Douglass, Judge.  

                  Appearances:    Joe  P.  Josephson,  Josephson  Law  Offices,  

                  LLC, Anchorage, for Appellant.  Elizabeth P. Hodes, Davis  



                  Wright Tremaine LLP, Anchorage, for Appellees.  

                  Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  


                  Bolger, Justices.   

                  MAASSEN, Justice.  


                  Michele  Beach  was  fired  from  her  job  at  Iliuliuk  Family  and  Health  

Services, a health clinic, when the clinic's executive director concluded that prescription  


drug records had been systematically falsified and that Beach was responsible.  Beach  

sued the clinic and its executive director, alleging that they had breached the implied  


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covenant  of  good  faith  and  fair  dealing  by  conducting  an  unfair  investigation  and  


unlawfully  retaliating  against  Beach  for  her  suggestions  about  improvements  in  the  

clinic's  security  systems.              The  superior  court  granted  summary  judgment  to  the  

defendants, and Beach appeals.  We affirm.  


                   In July 2008, Michele Beach was hired as a medical assistant at Iliuliuk  


Family and Health Services, a family health clinic.  In the months following her arrival,  


Beach identified what she considered to be serious issues with the clinic's handling of  


prescription  drugs,  staffing,  and  necessary  medical  equipment,  and  she  suggested  

improvements in some of these areas to her supervisors.  

                   On December 18, 2008, a patient told the clinic's Medical Director, Dr.  

Heidi Baines, that she had bought Vicodin, a prescription narcotic drug, from a woman  


who claimed to have obtained the pills from a clinic employee.  Dr. Baines passed this  

information on to the clinic's Executive Director, Sonia Handforth-Kome.  Handforth- 


Kome left a message for the police "that we [probably have a] drug issue that we need[]  


the police to investigate," then met Dr. Baines at the clinic that evening after closing  

time.  The two of them began reviewing the records for July through October 2008, the  


period that seemed relevant based on the patient's report.   

                   The clinic's dispensary records included "drug logs" maintained separately  

for each narcotic drug, which identified among other things the patient, the date the drug  


was dispensed, the dispensing health-care provider, the number of pills dispensed, and  


the clinic employee who dispensed them.  Clinic practice required that these logs be  

cross-checked daily or almost daily by a tally of the pills still remaining in the clinic's  


inventory.  Also relevant to the review were patients' medical charts, which usually  

                                                            -2-                                                      6845

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included the provider's notes about the number of pills that had been prescribed along  


with a sticker signed by the employee who dispensed them, verifying the number; and  


documents  called  "superbills,"  which  were  detailed  lists  for  each  patient  of  all  the  

charges made to the patient and the patient's insurer.  

                    In their review of these records for the drug Vicodin, Handforth-Kome and  


Dr. Baines found a pattern of discrepancies, beginning in September 2008 and increasing  

in frequency into December.  They found that although the daily pill counts matched the  


logs, the number of pills being dispensed for some patients was far in excess of those  


being prescribed for and billed to those patients; in other cases there were records of pills  


being dispensed to patients who had not been seen on the date of the entry or patients  


who  did  not  even  exist.    In  many  instances  the  log  showed  that  40  pills  had  been  


dispensed while comparison with the other records showed that the patient had been  

prescribed and billed for only 20, leaving the other 20 pills unaccounted for.  On every  


entry for which the discrepancy could not be explained by a cross-check of the medical  

charts or superbills, the person who had initialed it was Beach.  Handforth-Kome could  


think of no valid explanation for the many discrepancies and concluded that what they  


had uncovered was a "flagrant, systematic and extensive falsification of the dispensary  


log"  and  "a  serious  and  significant  policy  violation"  by  Beach.    Handforth-Kome  

testified  by  affidavit  that  she  was  surprised  to  reach  this  conclusion,  as  she  had  


"previously considered [Beach] an asset to [the clinic]."  

                    Having confirmed through this review that none of the suspect entries could  

be attributed to the clinic's Director of Clinical Services, Ramona Thompson, Handforth- 

Kome called Thompson and asked her to come to the clinic and help with the ongoing  


audit.  Handforth-Kome also informed Thompson that as Beach's direct supervisor she  

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would have to terminate Beach immediately, and that Beach could not be allowed any  


more access to the clinic.  Thompson accordingly fired Beach when she arrived for work  


the next morning, informing her that the reason was her falsification of records.  There  


is no evidence that Thompson, Handforth-Kome, or any other supervisory employee of  

the clinic attempted to elicit Beach's side of the story before the decision to discharge her  


was made and carried out.  

                    The police conducted their own investigation of the loss of Vicodin and  

other drugs from the clinic, and in March 2009 Beach and another former employee of  

the clinic were indicted on various counts of misconduct involving controlled substances.  

The criminal charges against Beach were dismissed in July 2010. In December 2010 she  


brought this suit against Handforth-Kome and the clinic.  She admitted in her complaint  


that she was an at-will employee but alleged that her discharge had breached the implied  


covenant of good faith and fair dealing in two ways: first, because the clinic had failed  


to conduct a fair investigation, and second, because it had terminated her in retaliation  


for her attempts to improve the clinic's security procedures.  

                    The defendants moved for summary judgment on both theories, and the  


superior court granted their motion.  The court rejected the unfair-investigation theory  


on grounds that Beach was an at-will employee who was subject to immediate dismissal  


for falsifying records, with no contractual right to an investigation before termination.  


It rejected her retaliatory-discharge theory on three independently sufficient grounds:  

that her complaints about clinic security were not protected activity, that there was no  


evidence her discharge was related to her complaints, and that she could not disprove the  


legitimacy of the defendants' justification for her discharge.   

                                                               -4-                                                         6845

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                   Beach appeals.  She argues that there is a genuine issue of material fact as  


to whether her termination was objectively fair, given that the clinic failed to interview  


her or relevant doctors and patients or to consider progressive discipline.  She also argues  

that her complaints about clinic security were protected activity and the superior court  


therefore erred in rejecting her retaliatory-discharge claim.  


                   We review a superior court's grant of summary judgment de novo.1                                      We  


determine  whether  any  genuine  issue  of  material  fact  exists  and  whether  on  the  


established facts the moving party is entitled to judgment as a matter of law.2 

                                                                                                                "We draw  


all factual inferences in favor of, and view the facts in the light most favorable to, the  



party  against  whom  summary  judgment  was  granted."     Contract  interpretation  is  a  

question of law reviewed de novo.4  


          A.	       There Was No Genuine Issue Of Material Fact As To Whether The  

                    Clinic's Investigation Was Objectively Fair.  


                   The parties agree that Beach was an at-will employee.  Even an at-will  



employment contract contains an implied covenant of good faith and fair dealing. 


implied covenant has an objective component requiring that the employer act in a manner  

          1        Hoendermis  v.  Advanced  Physical  Therapy,  Inc. ,  251  P.3d  346,  351  

(Alaska 2011) (citing Nielson v. Benton , 903 P.2d 1049, 1052 (Alaska 1995)).  

          2        Id. (quoting Nielson , 903 P.2d at 1052).  

          3        Id. (citing Rockstad v. Erikson , 113 P.3d 1215, 1219 (Alaska 2005)).  

          4        Rathke v. Corr. Corp. of Am., Inc., 153 P.3d 303, 308 (Alaska 2007) (citing     

Smith v. Cleary, 24 P.3d 1245, 1247 (Alaska 2001)).  

          5        Mitford v. de Lasala , 666 P.2d 1000, 1007 (Alaska 1983).  

                                                             -5-                                                          6845  

----------------------- Page 6-----------------------


that  a  reasonable  person  would  regard  as  fair.     Beach  alleges  that  the  clinic  acted  


unfairly when it failed to question her or other potential witnesses about the allegations  

against her before deciding to terminate her employment.  


                     The  investigation  in  this  case  was  prompted  not  because  the  clinic  


suspected wrongdoing on Beach's part, but because the clinic's medical director had  

received what she considered to be a credible report from a patient that an unnamed  

clinic employee was distributing Vicodin illegally.  Handforth-Kome repeated the details  


of the investigation in both an affidavit and deposition testimony, and her description of  


it -  summarized above -  was not disputed.  In short, Handforth-Kome and Dr. Baines  


conducted  a  thorough  review  of  the  records  relevant  to  the  clinic's  dispensing  of  

Vicodin,  and  the  review  led  them  to  believe  that  (1)  the  drug  logs  had  been  


systematically falsified, and (2) Beach was responsible for the falsification. When asked  

at  her  deposition,  Beach  could  not  think  of  any  evidence  she  could  have  given  


Handforth-Kome to change her conclusion that the log entries had been falsified; further,  


she agreed that the records review was "extremely . . . pointing in [her] direction," that  

it was reasonable for the clinic to conclude that Beach was the one responsible for the  


logs' falsification, and that there was no evidence that, "at that time," would have pointed  

to somebody else as the culprit.  


                     Beach nonetheless argues that the clinic's procedure falls short of objective  


fairness, pointing to the clinic's failure "to consult [Beach], to talk to doctors, to speak  


with patients, or to put [Beach]  on administrative leave or suspension," particularly  


"when coupled with [Beach's] good record as an employee."  She does not identify any  


information that could have been gleaned from interviews and could have changed the  



                     Smith v. Anchorage Sch. Dist., 240 P.3d 834, 844 (Alaska 2010) (quoting  

Mitchell v. Teck Cominco Alaska Inc. , 193 P.3d 751, 761 (Alaska 2008)).  

                                                                 -6-                                                               6845  

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clinic's conclusion.   In her deposition she pointed to details in a few entries that she  


believes could have directed suspicion away from herself, but she does not appear to  

argue that these were sufficient to make the clinic's original conclusion unreasonable.7  


                     Beach argues that our case law required at least that she be interviewed  


about the alleged wrongdoing before being terminated.  In Mitchell v. Teck Cominco  


Alaska Inc. , on which Beach relies, we held there was a triable issue of fact as to the  


fairness of the process when an employer terminated an employee without informing him  

of the sexual-harassment charges against him and giving him the opportunity to respond.8  


But important to this holding was Teck Cominco's agreement "that under its policies and  


procedures, it was required to investigate the sexual harassment allegations against [the  


employee]  before  firing  him"  and  its  further  concession  at  oral  argument  "that  the  


implied covenant requires some minimal level of fairness to the employee during an  

                                          9  Mitchell  holds  that  if  there  is  a  duty  to  investigate,  the  

employer's  investigation."                                                      

investigation must be fairly carried out.   


                     In this case, the employee handbook identifies certain types of misconduct  


for which the clinic may impose discipline, up to and including "immediate dismissal,"  

                                                                                                   10   In a non-exhaustive  


"without prior warning based on the seriousness of misconduct."  

          7          Beach testified that as a newcomer to the community, she would not have   

known  some  of  the  names  to  which  prescriptions  were  falsely  attributed.    She  also  

testified  that  a  "scribble  through  [a]  name"  on  one  suspect  entry  was  unlike  any  


correction she would have made:  "If there was a mistake . . ., a line went through it, not  


a scribble like that."    

          8          193 P.3d at 761.  

          9         Id.  



                     We note Beach's assertion in her reply brief that she was not familiar with  


                                                                -7-                                                              6845  

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list of misconduct warranting immediate dismissal, the employee handbook includes  

"willful  falsification  or  misrepresentation  on  .  .  .  work  records"  and  "unauthorized  

alteration   of   clinic   records   or   other   clinic   documents."      Beach   conceded   the  


reasonableness of the clinic's conclusion that its records had been falsified and that she  

was responsible.  


                    Given the clinic's reasonable conclusion about what had occurred and who  

was  responsible,  the  "immediate  dismissal"  of  Beach  "without  prior  warning"  was,  

according  to  the  handbook,  among  its  options  for  disciplining  her.    Our  decision  is  


therefore controlled not by Mitchell but by Ramsey v. City of Sand Point , in which, as  


                                                                                            We held in Ramsey that  

here, there was no promise of a pre-termination investigation. 


"[a]s a matter of law, a jury  could not find [the employer's] termination without an  

investigation  violated  [the  objective  prong  of]  the  implied  covenant"  where  the  


employment contract at issue "authorized [the employer] to terminate [the employee] for  

any  reason  whatsoever,  so  long  as  it  paid  him  an  additional  six  months'  salary  as  

          10        (...continued)  

the clinic's discipline policies.  At her deposition, however, she admitted signing an  

acknowledgment  that  stated  she  had  received  a  copy  of  the  handbook,  "read  and  


understood" it, "agree[d] to comply with all policies[,] and underst[ood] that a breach of  


these policies may result in disciplinary action up to and including termination."  The  

clinic relied on the handbook and Beach's written acknowledgment of it in its motion for  


summary judgment.  In her opposition to the summary judgment motion, Beach made  


only a single oblique reference to clinic discipline policies but did not dispute their  

existence, claim ignorance of them, or otherwise identify any genuine issues of material  


fact  that  might  suggest  that  the  clinic's  reliance  on  those  policies  was  reasonably  

disputed.  By raising this argument for the first time on appeal, Beach has waived it.  In  

re Estate of Blodgett, 147 P.3d 702, 709 n.47 (Alaska 2006) (citing  Willoya v. State,  


Dep't of Corr. , 53 P.3d 1115, 1120 (Alaska 2002); Brandon v. Corr. Corp. of Am. , 28  


P.3d 269, 280 (Alaska 2001)).  

          11        936 P.2d 126, 128, 133 (Alaska 1997).  

                                                             -8-                                                          6845  

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severance pay."             We held in Ramsey , as we have held in other cases, that an employer  


is not required to provide an employee with procedural protections that conflict with  


those to which they have agreed; "[t]he covenant of good faith cannot be interpreted to  


                                                                                                     In this case, it is  

prohibit what is expressly permitted  by  [the parties'] contract." 

undisputed that Handforth-Kome and Dr. Baines conducted a methodical review of the  


records  necessary  to  allow  them  to  reach  a  reasonable  conclusion  about  what  had  


happened  and  who  was  responsible  for  it.    Once  they  had  discovered  grounds  for  


Beach's immediate dismissal as described in the handbook, the implied covenant of good  



faith and fair dealing did not require them to give her additional procedural protections. 

          B.	       There  Are  Sufficient  Alternative  Bases  For  Affirming  Summary  

                    Judgment On Beach's Retaliation Claim.  

                    A discharge in retaliation for the employee's legitimate complaints about  

job safety and health may give rise to a claim for breach of the implied covenant of good  


faith and fair dealing.15  To make out a prima facie case, an employee must show that she  


engaged in protected activity, her employer subjected her to an adverse employment  

          12        Id. at 133.  

          13        Id. ; see also  Era Aviation, Inc            . v. Seekins, 973 P.2d 1137, 1141 (Alaska  


          14        Beach  alludes  to  progressive  discipline  as  an  alternative  to  immediate  

discharge but makes no focused argument about it in her ope                               ning brief.   Any right she  

had  to  progressive  discipline  is  subject  to  the  same  analysis  as  her  right  to  a  pre- 

termination investigation; that is, the covenant of good faith and fair dealing will not  


impose  procedural  requirements  that  conflict  with  what  is  required  by  the  parties'  

agreement.  See Hoendermis v. Advanced Physical Therapy, Inc., 251 P.3d 346, 355-56  


(Alaska 2011).  

          15        Willard v. Khotol Servs. Corp., 171 P.3d 108, 115 (Alaska 2007) (citing  

Reed v. Municipality of Anchorage , 782 P.2d 1155, 1158-59 (Alaska 1989)).  

                                                              -9-                                                          6845  

----------------------- Page 10-----------------------

action,  and  there  was  a  causal  link  between  the  protected  activity  and  the  adverse  


action.       The burden then shifts to the employer to offer evidence of a legitimate reason  



for the adverse action.             Upon such a showing, the burden shifts back to the employee  

to offer evidence that the employer's explanation is merely a pretext.18  

                   The superior court rejected Beach's retaliation theory on three alternative  


grounds.  It held first that her complaints about security procedures were not protected  

activity, and second, even if the complaints were protected, that the evidence showed  

they  were  well  received  by  her  employer,  "strongly  refuting  any  causal  connection  


                                                                                               The court further held  

between her proffered protected activity and her termination." 


that even if there were evidence supporting these elements of a prima facie case, the  

clinic had proffered a legitimate, non-retaliatory explanation for her discharge - the  


falsification of drug records - and, with the burden shifting back to her, Beach had  

failed to offer evidence that this explanation was pretextual.  

                   The  only  argument  Beach  makes  on  appeal  regarding  her  retaliatory  

discharge claim is that her complaints about security were protected activity.  She does  

not address the alternative bases for the superior court's rejection of the claim.  She does  


not point to any evidence indicating that her complaints, even if protected, caused her  

          16       See, e.g., Kinzel v. Discovery Drilling, Inc. , 93 P.3d 427, 433 (Alaska 2004)   

(citing  Veco, Inc. v. Rosebrock, 970 P.2d 906, 921 (Alaska 1999)).  

          17       Id .  

          18       Id .  

          19       Indeed, Beach herself stated that her various suggestions for change in  

clinic  procedures  were  well  received  by  her  supervisors.    And  when  asked  at  her  

deposition whether she had any evidence to support her theory that Handforth-Kome  


"sought to scapegoat [Beach] because of [her] criticism of dispensary security," Beach  

conceded that she had none.  

                                                            -10-                                                          6845  

----------------------- Page 11-----------------------

termination, nor does she point to evidence showing that the clinic's explanation was  


pretextual.  As Beach has waived two independently sufficient bases for the superior  



court's resolution of her retaliatory discharge claim, we do not consider it any further. 

V.         CONCLUSION  

                      We AFFIRM the superior court's grant of summary judgment.  

           20         Hitt v. J. B. Coghill, Inc. , 641 P.2d 211, 213 n.4 (Alaska 1982) (holding that     

arguments not raised in the appellant's opening brief are waived).  

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