By: Francine Foner, Esq. and Ty Hyderally, Esq.

The Appellate Division recently reversed a lower court ruling dismissing the discrimination and whistleblowing claims of Suketu H. Nanavati, M.D. (“Dr. Nanavati”), a board-certified cardiologist, against a hospital which failed to reappoint him as a staff physician and terminated his clinical privileges. Nanavati v. Cape Reg’l Med. Ctr., 2020 N.J. Super. Unpub. LEXIS 952. [1]

The Appellate Division found that not only had the Trial judge abused his discretion in denying Dr. Nanavati’s adjournment request, but the judge had also improperly converted a motion to dismiss for failure to state a claim to a summary judgment application, since no discovery had been taken regarding hotly contested material facts.

The Appellate Division observed that the Law Division judge prematurely dismissed Dr. Nanavati’s claims upon the erroneous assumptions that Dr. Nanavati was an independent contractor, and that because he was an independent contractor, he was also necessarily excluded from the protections of the New Jersey Law Against Discrimination (“LAD”), N.J.S.A. 10:5-1, et seq.  However, as the Appellate Division explained, such a determination could not be made without the benefit of discovery.

With regard to Dr. Nanavati’s claims under the LAD, the Appellate Division reviewed the provision of the LAD that expressly applies to non-employee relationships, and prohibits discrimination in contracting, N.J.S.A. 10:5-12(l), opining that a hospital cannot refuse to contract for an independent contractor’s service for discriminatory reasons.  Nanavati, at *20. Thus, the Court concluded that Dr. Nanavati might still be able to “enjoy[] the protection of NJLAD despite being an independent contractor.”  The Appellate Division held that the lower Court’s rejection of Dr. Nanavati’s claim under the LAD, prior to discovery, based upon the contention that he was an independent contractor was error, as discovery would be necessary to determine if the hospital had refused to contract with Dr. Nanavati for discriminatory reasons.

With regard to Dr. Nanavati’s claim under the Conscientious Employee Protection Act (“CEPA”), N.J.S.A. 34:19-1, et seq., the Appellate Division held that “even where an employee is labeled an independent contractor, he or she may enjoy the protection under CEPA after consideration of the Pukowsky factors.”  The Court referenced the factors set forth in Pukowsky v. Caruso, 312 N.J. Super. 171 (App. Div. 1998), which were adopted by the New Jersey Supreme Court in D’Annuzio v. Prudential Insurance Co. of America, 192 N.J. 110, 121 (2007). The

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[1] The Appellate Division also simultaneously reversed another order for summary judgment in a separate Chancery action brought by Dr. Nanavati appealing the hospital’s Fair Hearing Committee’s (“Committee”) failure to reappoint him as a staff physician, and the termination of his clinical privileges at the facility, because the wrong standard was applied by the Committee.

Appellate Division stated that “[t]he issue was highly fact-sensitive—and ordinarily should not be decided based on unopposed submissions by defendants on a motion for summary judgment.” Nanavati, *21. For the same reasons, the Appellate Division found that Dr. Nanavati’s common law whistleblowing claims under Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980) were also prematurely dismissed.

The Appellate Division’s decision here bolsters the right of New Jersey employees and independent contractors to conduct discovery prior to dismissal of their claims under the LAD and CEPA, and makes clear that an independent contractor is protected by the LAD against an employer’s refusal to contract for discriminatory reasons.

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