Khoiny v. Dignity Health

Facts

The case arises under the California Fair Employment and Housing Act (FEHA), Gov. Code § 12900 et seq., which makes it unlawful to discharge or discriminate against an employee because of sex and which forbids retaliation against an employee who complains of discrimination. (See Gov. Code § 12940.) FEHA’s “‘fundamental foundation for liability’” is the “‘“existence of an employment relationship”’” between the parties — a feature the court repeatedly stressed in distinguishing the academic cases the defendant relied on. (Khoiny v. Dignity Health (2022) 76 Cal.App.5th 390, 398, quoting McCoy v. Pacific Maritime Assn. (2013) 216 Cal.App.4th 283, 301.)

From June 24, 2012 to August 11, 2014, Dr. Noushin Khoiny “was a paid resident in the internal medicine program at SMMC” — Dignity Health, doing business as St. Mary Medical Center — “in Long Beach, California.” (Khoiny, supra, 76 Cal.App.5th at p. 396.) “After completing the second year of the three-year program, Dr. Khoiny was dismissed from the program.” (Ibid.) She alleged her dismissal “was retaliatory and based on gender discrimination.” (Ibid.)

The realities of the residency mattered to the analysis. The Accreditation Council for Graduate Medical Education (ACGME) “requires a minimum of two-thirds of residents’ time to be spent in patient care,” with “no minimum requirement for time spent in didactic sessions.” (Khoiny, supra, 76 Cal.App.5th at p. 399.) Residents “have graduated from medical school and are being paid ordinary taxable income to provide medical services to a hospital or medical center while also receiving clinical training; much of the service they provide is indistinguishable from that provided by fully licensed physicians.” (Id. at p. 398.) Indeed, the SMMC program itself “was not in compliance with ACGME’s guidelines concerning the academic aspects of its program”; ACGME placed it on probation as of January 2014 and found the program “did not demonstrate that its core curriculum includes a didactic program based upon the core knowledge content of internal medicine.” (Id. at p. 402.) “Thus, if anything, SMMC’s residency program before and during Dr. Khoiny’s tenure was less academic and more service oriented than an average residency program.” (Ibid.)

On the merits, the evidence of discrimination, retaliation, and pretext was substantial. “Two experts testified her patient care was not marginal.” (Khoiny, supra, 76 Cal.App.5th at p. 412.) A residency expert opined that her clinical evaluation scores were “satisfactory and superior in various categories,” and a critical-care expert who “review[ed] the actual patient records … opined that Dr. Khoiny’s patient care was satisfactory and not inadequate or substandard.” (Id. at p. 413.) Two patient-management accusations “showed different criteria being applied to male and female residents”: in an intubation incident a male resident actually made the decision not to perform the procedure, yet only Dr. Khoiny was reprimanded — falsely accused of having “abandoned the patient” — and then “replaced in the ICU rotation by the same male resident.” (Ibid.) When disciplined for “‘potentially’ ordering an incorrect sodium treatment,” she identified male residents who had committed comparable or worse errors without discipline; the response was that those male residents “were being disciplined ‘[in] private.’” (Id. at pp. 413–414.)

The retaliation evidence tracked her complaints. During her first year she “complained that SMMC was violating ACGME guidelines for number of required work hours,” complaints “reported to ACGME.” (Khoiny, supra, 76 Cal.App.5th at p. 414.) Evaluators “appeared to change oral positive evaluations of Dr. Khoiny to negative after her complaints,” and one peer “wrote a negative evaluation … and filed it only after Dr. Khoiny had complained about staffing problems.” (Id. at p. 414.) Statistically, “less than 1 percent of residents are terminated nationwide,” yet although SMMC’s program “was evenly split by gender, all discretionary terminations appear to have been 100 percent women.” (Id. at p. 415.)

Procedural history

Dr. Khoiny filed suit on March 11, 2015, and filed the operative second amended complaint on November 5, 2015, pleading FEHA causes of action for gender discrimination, retaliation for reporting gender discrimination, and failure to prevent discrimination or retaliation (Gov. Code § 12940), along with whistleblower-retaliation claims under Health and Safety Code section 1278.5 and Labor Code section 6310. (Khoiny v. Dignity Health (2022) 76 Cal.App.5th 390, 396.) An earlier appeal in the matter addressed a discovery dispute over medical records. (Id. at p. 403, fn. 6, citing Khoiny v. Dignity Health (Apr. 2, 2018, B280304) [nonpub. opn.].)

“Trial by jury began in 2018. The trial court declared a mistrial after the jury could not reach a verdict.” (Khoiny, supra, 76 Cal.App.5th at p. 396.) “The second trial began in 2019,” and the court gave special instruction SI 28, “which the trial court described as ‘dealing with academic deference.’” (Ibid.) The special verdict form’s first question, “entitled ‘ACADEMIC DEFERENCE,’” asked whether the termination “was arbitrary and capricious, not based on academic criteria, or motivated by bad faith or ill will, or motivated by retaliation or discriminatory reasons unrelated to academic performance?” If the jury answered “No,” it was “directed to skip to the end of the 13-page special verdict form and sign it.” (Id. at pp. 396–397.) “The jury answered, ‘No.’” (Id. at p. 397.) Judgment was entered for Dignity Health. The Court of Appeal, Second District, Division Eight, in a unanimous opinion by Justice Stratton, reversed and remanded for a new trial. (Id. at pp. 396, 420.)

Issue

The court framed the question as one “of first impression under California law: whether a medical resident’s claim that she was dismissed from her residency program due to gender discrimination and in retaliation for complaints about discrimination and workplace safety is subject to the rule of academic deference.” (Khoiny v. Dignity Health (2022) 76 Cal.App.5th 390, 396.) If the doctrine did not apply, a secondary question followed: whether instructing the jury with SI 28 was prejudicial error requiring reversal. (Id. at p. 409.)

Holding

Reasoning

The court began by contrasting two incompatible analytical frames: FEHA’s burden-shifting test and the rule of academic deference. Under FEHA, once a plaintiff makes out a prima facie case, “the employer is required to offer a legitimate, nonretaliatory reason,” after which “the presumption of retaliation and discrimination ‘drops out of the picture,’ and the burden shifts back to the employee to prove intentional retaliation or discrimination.” (Khoiny v. Dignity Health (2022) 76 Cal.App.5th 390, 397–398, citing McDonnell Douglas Corp v. Green (1973) 411 U.S. 793, 802–805.) That test exists because “direct evidence of intentional discrimination is rare,” allowing “discrimination to be inferred from facts that create a reasonable likelihood of bias and are not satisfactorily explained.” (Id. at p. 398.) Academic deference is its mirror image: in challenges to “the academic decision of a private university,” courts “exercise a highly deferential and limited standard of review,” overturning a decision only if it is “arbitrary and capricious” and upholding it “‘unless it is such a substantial departure from accepted academic norms as to demonstrate that the person or committee responsible did not actually exercise professional judgment.’” (Ibid., quoting Banks v. Dominican College (1995) 35 Cal.App.4th 1545, 1551.)

The court held that residents are predominantly employees, not students. The deference cases all involved “students enrolled in traditional academic institutions,” none of whom “received financial compensation for services rendered” or “brought a FEHA claim.” (Khoiny, supra, 76 Cal.App.5th at p. 398.) A medical student “is not similarly situated to a medical resident,” because a resident has a medical degree and “received compensation for providing patient services on behalf of an institution whose primary purpose is to provide patient care.” (Ibid.) Drawing on the collective-bargaining test of Government Code section 3562, former subdivision (e), the court asked “whether the program views and treats its residents as primarily students or primarily employees.” (Id. at pp. 400–401.) Authority pointed one way: the California Supreme Court had upheld a finding that residents are employees, noting they “work very long hours” with “[m]ore than 75 percent of that time … usually spent in direct patient care” (id. at p. 401, quoting Regents of University of California v. Public Employment Relations Bd. (1986) 41 Cal.3d 601, 619); the NLRB had repudiated its contrary view and likened residents to employees (id. at pp. 401–402, citing Boston Med. Center Corp. (1999) 330 NLRB 152); and the U.S. Supreme Court had treated residents as “‘workers,’” even if also “‘students of their craft’” (id. at p. 400, quoting Mayo Found. for Med. Educ. & Research v. United States (2011) 562 U.S. 44, 60).

The court found the record did not support that Dr. Khoiny was terminated for genuinely academic reasons. “[T]here is no clear explanation in the record of how or why respondent’s decision to terminate Dr. Khoiny was an ‘academic’ one.” (Khoiny, supra, 76 Cal.App.5th at p. 403.) The asserted deficiencies “involved almost exclusively patient care … or ‘deficiencies’ in her personality, such as a lack of assertiveness,” which “is not what is traditionally meant by ‘academic’ performance.” (Ibid.) Tellingly, the program’s own mixed-motive defense claimed it would have terminated her anyway for “poor job performance” — leaving the court “wondering” whether the program “believed that poor ‘job’ performance was the same as poor ‘academic’ performance, or if respondent was simply hedging its bets.” (Ibid.)

The court rejected the program’s out-of-state and disability-law authorities, then adopted the tenure-denial framework of Mawakana. The Fifth Circuit’s Davis v. Mann (5th Cir. 1989) 882 F.2d 967 was a procedural-due-process case involving a dental resident, and it did not even contain the phrase the program attributed to it. (Khoiny, supra, 76 Cal.App.5th at pp. 404–405.) The ADA and Rehabilitation Act cases applying deference “raise[d] entirely different issues” because those statutes do not require schools to lower academic standards. (Id. at p. 405.) The court found “most useful” Mawakana v. Bd. of Trustees of University of the District of Columbia (D.C. Cir. 2019) 926 F.3d 859, a Title VII tenure-denial case holding that a university “was not entitled to special deference,” because “a Title VII claim requires a court to evaluate whether a university’s decision … was made in good faith (i.e., for academic reasons rather than for an impermissible reason such as the applicant’s race).” (Id. at pp. 405–406, quoting Mawakana, at p. 865.) The court adopted this reasoning with force: “We hold that there is no such thing as ‘academic deference’ in a California employment case. Nor should there be. FEHA is a power tool in the effort to root out and stop discrimination.” (Id. at pp. 407–408.) Judges and juries, it added, “are as equipped as anyone to decide whether an academic institution acted in good faith or for discriminatory reasons.” (Id. at p. 407.)

The court explained how the corrected framework interacts with pretext. This is the article’s thesis in operation. Applying McDonnell Douglas “without any presumption of good faith or validity,” the court held that on remand “Dr. Khoiny is only required to prove that her gender or retaliation … was a substantial motivating factor in her termination.” (Khoiny, supra, 76 Cal.App.5th at p. 408.) Crucially, she “may offer the same evidence as any other FEHA plaintiff to show that respondent’s proffered reason was not its true or genuine reason but a pretext for discrimination,” and she may prevail “even though other factors also motivated the decision.” (Ibid.) The practical payoff: “she need not disprove that her allegedly poor academic performance was a factor, or show that her performance was not poor.” (Ibid.) The court even sketched textbook pretext proofs in a footnote — showing her academic performance “compared favorably to other residents,” or that the program “relied on inaccurate information” about her exam scores. (Id. at p. 408, fn. 8.)

The court held SI 28 created a forbidden presumption of validity. The instruction told the jury that “‘St. Mary’s academic judgment should not be overturned unless’” specified facts were proved, and that the jury “‘must uphold the decision … unless’” it found “‘a substantial departure from accepted academic norms.’” (Khoiny, supra, 76 Cal.App.5th at p. 397.) Parsing the words, the court reasoned that “overturn” means “to invalidate or to destroy the power or validity of,” and “uphold” means “to say that a decision that has already been made … is correct” — language signaling “that SMMC’s decision is to be treated as correct or valid unless Dr. Khoiny proves” otherwise. (Id. at pp. 409–410.) That fit the legal definition of a “presumption,” yet “[u]nder FEHA, there is no presumption of validity as to the employer’s proffered reason.” (Id. at p. 410, citing People v. McCall (2004) 32 Cal.4th 175, 182.) The instruction “required less of respondent and more of Dr. Khoiny than the law does,” forcing her to prove the decision was “a substantial departure from academic norms” rather than merely that gender or retaliation was “a substantial motivating reason.” (Id. at pp. 410–411.)

The court found the error prejudicial under the four-factor Mayes test. Reviewing the record, the court assumed “the jury might have believed appellant’s evidence and, if properly instructed, might have decided in appellant’s favor.” (Khoiny, supra, 76 Cal.App.5th at p. 412, quoting Mayes v. Bryan (2006) 139 Cal.App.4th 1075, 1087.) First, “[t]he state of the evidence presented a probability of discrimination, retaliation, and pretext,” given expert testimony rebutting the marginal-performance label, the disparate treatment of male residents, the post-complaint shift to negative evaluations, and the all-female termination statistics. (Id. at pp. 412–415.) Second, “[o]ther jury instructions did not offset the effect of SI 28,” because SI 28 was “the conflicting, more specific instruction” that “effectively trumped the CACI form instructions.” (Id. at p. 416.) Third, defense counsel’s closing “argued the concept of academic deference,” urging the jury that if the first verdict question was answered “‘No,’ … ‘You are done.’” (Ibid.) Fourth, the jury’s own conduct showed reliance: it asked for definitions tied to “Question 1 … Academic Deference,” and after being directed to SI 28 “asked no further questions on this topic.” (Id. at pp. 416–417.) The court concluded it was “reasonably probable that Dr. Khoiny would have achieved a more favorable outcome” absent the error. (Id. at p. 417.)

The court rejected the program’s forfeiture and invited-error defenses. Because SI 28 was “erroneous as given,” no objection was required under Code of Civil Procedure section 647. (Khoiny, supra, 76 Cal.App.5th at pp. 417–418.) In any event, counsel had objected at the first trial — answering “‘We are not’” when asked if she agreed to an academic-deference instruction — and registered a “continuing objection” at the second trial. (Id. at p. 418.) Invited error did not apply because it “requires some form of active advocacy for the decision now claimed as error,” and Dr. Khoiny’s insertion of the words “‘or motivated by retaliation or discriminatory reasons’” into the program’s proposed instruction was merely “making the best of a bad situation” after the court had already ruled deference applied. (Id. at pp. 418–420.) As to the verdict form, “[a]t most, Dr. Khoiny agreed to the verdict form proposed by respondent. She in no way advocated for it.” (Id. at p. 420.)

Significance

Khoiny resolves a question of first impression and closes a potential escape hatch for institutional employers that happen also to be teaching institutions. Before Khoiny, a hospital could plausibly argue that any decision touching a resident’s clinical competence was an “academic” one entitled to the deferential Banks/Paulsen standard of review — effectively requiring a FEHA plaintiff to prove the decision was arbitrary, capricious, and a departure from academic norms. Khoiny forecloses that argument categorically: “there is no such thing as ‘academic deference’ in a California employment case.” (Khoiny, supra, 76 Cal.App.5th at pp. 407–408.) The decision thus aligns California with the federal authorities — Mawakana, Doe v. Mercy Catholic Med. Center, Takele v. Mayo Clinic, and Maynard — treating residents and academic employees as ordinary FEHA/Title VII claimants. (Id. at pp. 405–406.)

For pretext doctrine, Khoiny reinforces a point that is easy to lose in the deference-laden setting of professional evaluations: the McDonnell Douglas framework carries “no presumption of good faith or validity” for the employer’s stated reason. (Khoiny, supra, 76 Cal.App.5th at p. 408.) A plaintiff disproves the reason by the usual circumstantial means — disparate treatment of comparators, suspicious timing of negative evaluations after protected complaints, and statistical disparities — without having to negate the reason’s underlying truth. The substantial-motivating-factor standard means an employer cannot launder a discriminatory firing through a partially legitimate academic rationale. The holding’s limit is jurisdictional in character: it leaves intact the deference doctrine for true academic decisions reviewed outside the employment context — i.e., when “a court is being asked to review the substance of a genuinely academic decision,” not whether an employment decision “was made in good faith.” (Id. at pp. 405–406, quoting Mawakana.)

Key quotes

“We hold that there is no such thing as ‘academic deference’ in a California employment case. Nor should there be. FEHA is a power tool in the effort to root out and stop discrimination.” (Khoiny v. Dignity Health (2022) 76 Cal.App.5th 390, 407–408.)

“Dr. Khoiny may offer the same evidence as any other FEHA plaintiff to show that respondent’s proffered reason was not its true or genuine reason but a pretext for discrimination. … Thus, she need not disprove that her allegedly poor academic performance was a factor, or show that her performance was not poor.” (Id. at p. 408.)

“[A] residency program’s claim that it terminated a resident for academic reasons is not entitled to deference. … [T]he jury should be instructed to evaluate, without deference, whether the program terminated the resident for a genuine academic reason or because of an impermissible reason such as retaliation or the resident’s gender.” (Id. at p. 404.)

Read the full opinion (official slip opinion, PDF) →

Practice pointer

Open questions

The court expressly reserved the line between employment decisions and genuinely academic ones. It endorsed Mawakana’s recognition that academic-freedom deference remains “appropriate where a court is being asked to review the substance of a genuinely academic decision, not, as in Title VII claims, whether the decision was made in good faith.” (Khoiny v. Dignity Health (2022) 76 Cal.App.5th 390, 406.) Where exactly that boundary falls — for instance, in a pure academic-dismissal challenge brought without a FEHA theory — is left for another day.

The court also declined to resolve the merits, holding only that on remand Dr. Khoiny “is only required to prove that her gender or retaliation for her complaints was a substantial motivating factor in her termination.” (Khoiny, supra, 76 Cal.App.5th at p. 408.) Whether the program’s patient-care rationale was genuine or pretextual remains for the jury at the new trial. Finally, the court resolved the “me too” evidentiary dispute narrowly — affirming exclusion of one text and the handshake testimony as “very vague,” “cumulative,” or “speculative” — without setting any broader rule on the admissibility of such evidence. (Id. at p. 417.)