The former president and CEO of New Brunswick’s Horizon Health Network has been awarded more than $2 million, including $200,000 in aggravated damages for the way his high-profile dismissal was handled by the province.
Dr. John Doran is a highly educated, licensed physician with a specialty in endocrinology. He had a practice in the Saint John, N.B., area between 1997 and 2021.
In 2021, Doran was hired as the interim president and CEO of Horizon Health Network, one of two health authorities in New Brunswick. Following a lengthy national recruiting process, Doran was hired as the permanent president/CEO on March 7, 2022, for a five-year term.
Call from the Premier
On July 15, 2022, Doran received a call from New Brunswick Premier Blaine Higgs and Bruce Fitch, the newly named Minister of Health. The call was to let him know he was being terminated as CEO and would receive one year’s salary as pay in lieu of notice.
Doran filed a grievance, seeking compensation for the entire five-year term.
Doran’s letter of offer contained a termination clause. It was uncontested that at no time during discussions of the job was there any mention of such a clause, but the letter contained the following wording under the heading “termination”:
You may at your option, terminate this agreement at any time by giving the Minister ninety (90) days prior notice in writing. The Minister may terminate your employment under this agreement without cause subject to providing you with twelve (12) months’ severance pay in lieu of notice if terminated within the first year of this agreement, six (6) months in the second year, seven (7) months in the third year, eight (8) months in the fourth year and nine (9) months in the final year.
The arbitrator noted that the letter of offer did not suggest Doran speak with independent legal counsel before signing it, but did indicate he should contact the director of human resources if he had any questions.
Doran said that, had there been discussions of a termination clause such as this, he would not have accepted the position and would have returned to his previous roles. In his interim role, he became aware of the potential politicization of the position.
When he received the written contact — which arrived after started the new gig — he felt vulnerable. He had already given up his previous secure employment as a clinical physician and as the chief of staff at the Horizon Health Network. Both those positions had been filled on a permanent basis.
He concluded he had no choice but to sign the contract, which he did on April 7, 2022.
Death at a hospital
In July 2022, there was a death in the emergency room of the Dr. Everett Chalmers Hospital in Fredericton. It resulted in a significant amount of negative media coverage, but Doran said an investigation concluded it had nothing to do with his management.
On July 14, 2022, Doran was asked by the Minister of Health to attend a news conference the next day, but was not told the purpose of the press conference. The next day, while on his way to that conference, he received a call from the Premier in which he was told the Minister of Health had been replaced.
Doran thought that was an appropriate decision, and thanked the Premier for the notice.
The Premier then announced that the new Minister of Health, Bruce Fitch, was with him and the conversation continued with Fitch.
Doran said Fitch told him that the “CEO serves at the pleasure of the Minister” and “you are no longer employed.” A letter dated the same day followed the call.
At the press conference, the Premier announced that he had moved the former Minister to another post, appointed Fitch, abolished the two hospital boards and removed Doran from his position.
Doran was unable to find work after the termination. He applied for a job in Saskatchewan, but was told by the agency hired to conduct the search that representatives of the province of New Brunswick did not provide a good reference.
Was the termination clause enforceable?
The key issue to be decided was the enforceability of the termination clause. If it was enforceable, the grievance would be denied. If it wasn’t, then the question would turn to the remedy for Doran.
The arbitrator noted that terms and conditions can, and often are, formed orally. In many situations, they are not put on paper. The fact Doran did not realize that binding contracts can be formed through oral agreements cannot be held against him, it said.
In this case, he negotiated a five-year term as CEO, which was agreed to by the employer. It made a public announcement of the start of his employment as CEO on March 4, 2022.
Two weeks passed between the start of the employment and the presentation of the written contract. It reflected the five-year term had been agreed to orally, but included the termination clause — which had never been discussed with Doran prior to him starting.
The employer argued Doran was a “sophisticated” employee filling a senior management role, and the fact he signed the contract spoke for itself. But the arbitrator disagreed, noting after hearing from Doran it had “no hesitation” in concluding he was not a sophisticated employee and felt he was in a vulnerable position with no other option but to sign.
One can’t forget, it said, that Doran testified he never would have taken the role if he knew about the termination clause in advance.
Was there consideration?
A new employment contract requires consideration — i.e., some benefit — to flow to the worker. Since the contract was signed after Doran started, it would usually require consideration.
The employer argued that it agreed to pay Doran’s licensing fees after the contract was signed, which it said was consideration.
But the offer to pay the licensing fees was made on March 25, the day after the written contract was received by Doran, and was in no way tied to the added termination clause.
“I reject that argument fully,” the arbitrator said.
The termination clause was therefore unenforceable.
The arbitrator said the “obvious” remedy was to pay Doran the full amount of his wages and benefits to the end of the contract, which was March 5, 2027.
In total, Doran sought the following:
- $1,762,554 representing the value of lost salary
- $31,088.49 for lost vehicle allowance
- unspecified damages for loss of pension benefit
- unspecified damages for loss of health and dental benefit.
The arbitrator said it would remain seized of the matter should the parties be unable to resolve the above amounts.
The employer argued Doran failed to mitigate his damages by looking for alternate work.
The arbitrator noted the onus was on the employer to prove the worker failed in this duty. It did not introduce any evidence to support this position, it said.
It pointed out that Doran gave up secure positions as a practicing endocrinologist and chief of staff at Horizon Health Network where he earned about $486,000 a year and that the system in New Brunswick did not allow him to start up a medical practice until there was a “need” determined by the province.
It also noted the evidence around what happened when he applied for a job in Saskatchewan.
“In considering this, I am not certain what the employer expected (Doran) to do to mitigate his losses,” it said.
The arbitrator accepted Doran’s view that the dismissal was done in a “public, disingenuous and callous manner.”
He was asked to attend a news conference in Fredericton, and given no indication what it was about. While on his way, he received the phone call from the Premier and the new Minister of Health.
At the press conference, the death of the patient was discussed along with the reshuffling and Doran’s termination. The arbitrator noted there was no issue that the Minister of Health had the right to terminate him, but the issue — when considering aggravated or Wallace damages — was the manner of termination.
It would be reasonable for a member of the public to conclude the Premier had concluded Doran was responsible for the death at the hospital. That really was the only conclusion one could reach from the press conference, the arbitrator said.
“In my view, these comments were made without proof and caused unjustified harm to the professional reputation of (Doran),” it said.
It awarded him $200,000 for breach of the implied obligation to act in good faith when dismissing Doran.
The arbitrator said its role was to order compensation in order to redress a wrong. It accepted the employer’s argument that it had no statutory jurisdiction to order punitive damages.
Even if it was wrong in that assessment, it said Doran had not made a case to support the awarding of punitive damages.
It also declined to award costs or pre-judgment interest, citing a lack of jurisdiction to do so. It noted that an adjudicator is not a court.
For more information, see Dornan v New Brunswick (Health), 2023 CanLII 10433 (NB LA)