Mercy Hospital, Inc. v. Massachusetts Nurses Ass'n

United States Court of Appeals
For the First Circuit

No. 05-1525

THE MERCY HOSPITAL, INC.,

Plaintiff, Appellant,

v.

MASSACHUSETTS NURSES ASSOCIATION,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Michael A. Ponsor, U.S. District Judge]
[Hon. Kenneth P. Neiman, U.S. Magistrate Judge]

Before

Boudin, Chief Judge,

Selya, Circuit Judge,

and Stahl, Senior Circuit Judge.

Edward J. McDonough, Jr., with whom Maurice M. Cahillane and
Egan, Flanagan and Cohen, P.C. were on brief, for appellant.
Mark A. Hickernell, with whom Alan J. McDonald and McDonald &
Associates were on brief, for appellee.

November 21, 2005
 SELYA, Circuit Judge. In this case, the district court

confirmed an arbitration award that directed a hospital to

reinstate an intensive-care nurse. The hospital, citing the pains

that must be taken by health-care professionals to restrict the

distribution of controlled substances, appeals on the ground that

the reinstatement order transgresses public policy. After studying

the matter, we agree with the district court that the arbitral

award should be confirmed.

I. BACKGROUND

We start by rehearsing the underlying facts. We then

limn what transpired before the arbitrator and the district court,

respectively.

Plaintiff-appellant Mercy Hospital (the Hospital)

operates an acute care hospital facility in Springfield,

Massachusetts. Defendant-appellee Massachusetts Nurses Association

(the MNA) is the authorized collective bargaining representative of

the nurses who toil there. The Hospital and the MNA are (and were

at all relevant times) parties to a collective bargaining agreement

(CBA). The CBA recognizes the Hospital's right to "discipline or

discharge employees for just cause" and establishes a multi-step

grievance procedure, culminating in binding arbitration, for the

resolution of employment-related disputes between the Hospital and

the nurses.

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 The Hospital hired Nancy Dufault as a nurse in 1977. In

the pertinent time frame (2001-2002), Dufault worked the twelve-

hour night shift in the intensive care unit (ICU). Part of her

responsibilities included administration of Ativan, morphine, and

other controlled substances designed to relieve pain or anxiety.

Dufault also served as a preceptor charged with ground-level

oversight of fledgling ICU nurses (orientees).

Over her estimable quarter-century career, Dufault

developed a reputation as an industrious, highly skilled nurse. In

1995, the Hospital gave her a special commendation for her service

as a preceptor. Her last performance evaluation, prepared shortly

before the events in question occurred, describes her as "a very

strong expert critical care nurse" and remarks that she had

exceeded hospital standards in a number of performance areas.

In the fall of 2001, storm clouds gathered. The Hospital

revised its system for administering medication to ICU patients and

installed an Omnicell machine in that unit. The machine functions

as a computerized medicine cabinet. To obtain medication, a nurse

must enter into an electronic keypad her personal code, the

patient's personal code, the type of drug, and the dosage. The

Omnicell processes this information and automatically unlocks the

compartment housing the requested medication.

After administering the medicine to the patient, the

nurse records the time, the identity of the drug, and the dosage in

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a separate database known as SMS. Each night, a patient-specific

medicine administration schedule (MAS) displaying the data entered

into the SMS system is printed out and filed in the patient's

chart. The purpose of this double-entry regime is to enhance the

Hospital's ability to track and correlate requests for and

administration of medications in the ICU.

In June of 2002 a nursing supervisor approached Dufault

about a possible discrepancy in the dual entries for a patient in

her care. The supervisor accepted Dufault's on-the-spot

explanation and allowed the incident to pass without further

inquiry.

The following month, the same supervisor detected what

appeared to be inconsistencies between the Omnicell record and the

MAS of one of Dufault's patients. The supervisor conducted an

independent review of Dufault's entries into the Omnicell and SMS

systems. Based on that review, the supervisor and a nurse who had

assisted her concluded that, on a number of occasions, Dufault had

withdrawn medication from the Omnicell without recording an

offsetting entry for administration in the SMS system. They

related their conclusions to the director of nursing, Mary Brown,

who placed Dufault on administrative leave pending further

investigation.

On August 27, 2002, Brown met with Dufault, an MNA

representative, and the two nurses who had conducted the initial

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review. Brown presented Dufault with the Omnicell and SMS

printouts for five different patients and asked her to explain the

inconsistences in her entries. With respect to an instance in

which she had withdrawn eighteen milligrams of Ativan but had made

no record of dispensing such a dose to the patient, Dufault stated

that she had retrieved the unusually large quantity of Ativan so

that she could prepare an intravenous drip bag and avoid having to

return periodically to the Omnicell to obtain the smaller doses

prescribed in the physician's orders. The other four instances

dated back nearly two months, and Dufault complained that, without

forewarning, she could not recall the particulars. She speculated,

however, that incomplete documentation by her and an orientee

probably explained the discrepancies. The meeting ended on that

note.

Brown convened a second meeting two days later. She

regarded Dufault's explanation of the discrepancy involving the

eighteen milligrams of Ativan as implausible; the patient's

intravenous drip had been discontinued several hours before Dufault

withdrew the Ativan, and the physician's orders called for the drug

to be injected rather than administered by intravenous drip.

Dufault stood by her previous account. Brown then presented

Dufault with two more alleged inconsistencies in her entries and

served her with a termination notice. The stated reason for

termination was: "Failure to adhere to the standards of

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narcotic/controlled substance administration — suspected drug

diversion."

Following Dufault's discharge, the MNA filed a grievance

on her behalf. The parties eventually submitted two imbricated

matters to binding arbitration: (i) whether there was just cause

for Dufault's termination and (ii) if not, what consequences should

ensue.

The arbitrator conducted an evidentiary hearing. She

subsequently issued an opinion concluding that the preponderance of

the evidence did not support the claim that Dufault had engaged in

drug diversion but, rather, supported her repeated denials of

culpability. In the arbitrator's view, Dufault's testimony that

the discrepancies were most likely the result of documentation

errors was worthy of belief for four reasons: (i) Dufault and other

nurses testified credibly that they commonly caught up on their SMS

entries during breaks or at the end of their shifts when they could

not always remember the exact medications and dosages administered;

(ii) Dufault's explanation of the probable cause of the

discrepancies had remained consistent throughout the investigation

and the grievance process; (iii) Dufault's testimony that ICU

nurses occasionally deviated from established documentation

protocols had "been more corroborated than rebutted" by the other

evidence in the case; and (iv) there was absolutely no proof to

substantiate the Hospital's accusation that the discrepancies in

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the records were attributable to the diversion of drugs.1 The

arbitrator also found that Dufault had received no formal training

as a preceptor and that the Hospital had no established policy as

to which nurse — the preceptor or the orientee — was responsible

for documenting the medications administered to patients who were

under their joint care.

With specific reference to the Ativan incident, the

arbitrator accepted the testimony of two non-party witnesses that

it was common practice for ICU nurses to prepare intravenous drip

bags well in advance of the time when they would be needed (either

for use during their own or succeeding shifts). The arbitrator

also credited testimony that although it was not good practice, a

nurse might deviate from a doctor's orders and administer

medication intravenously rather than by syringe as a time-saving

device.

On the basis of these findings, the arbitrator concluded

in pertinent part:

The Hospital failed to carry its burden . . .
in this matter. The preponderance of the
evidence in the record supports [Dufault's]
denial of any culpability with respect to the
Hospital's charges of drug diversion. . . .
[Dufault] credibly testified as to what she
believed were the most likely actions she took
(or did not take) with respect to the
narcotics she removed from the Omnicell . . .

1
In this vein, the arbitrator noted that Dufault had submitted
to three drug tests, each of which had proved negative for the
presence of Ativan, morphine, or any other controlled substance.

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 . In light of the Hospital's failure to
submit a preponderance of evidence that
contradicts [Dufault's] account, . . . the
termination . . . is found to be without just
cause.

The arbitrator then moved to the remedy question and, taking into

account the idiosyncratic facts of the case, ordered the Hospital

to reinstate Dufault with back pay and without any loss of

seniority.

The Hospital was not pleased. It asked the federal

district court to vacate the award on the ground that reinstating

Dufault would violate public policy. The MNA cross-filed for

confirmation of the award. The district judge referred the case to

a magistrate judge, see 28 U.S.C. § 636(b)(1)(B), who recommended

confirmation. On de novo review, see Fed. R. Civ. P. 72(b), the

district judge adopted the magistrate judge's recommendation and

entered judgment for the MNA.2 This timely appeal ensued.

II. ANALYSIS

Where, as here, the employer and the union have bargained

for an arbitrator's construction of a CBA, a court's authority to

vacate an arbitral award is closely circumscribed. Boston Med.

Ctr. v. SEIU, Local 285, 260 F.3d 16, 21 (1st Cir. 2001); Teamsters

Local Union No. 42 v. Supervalu, Inc., 212 F.3d 59, 65 (1st Cir.

2
For simplicity's sake, we do not distinguish hereafter
between the magistrate judge and the district judge but, rather,
take an institutional view and refer to the determinations below as
those of the district court. See, e.g., United States v.
Maldonado, 356 F.3d 130, 134 n.1 (1st Cir. 2004).

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2000). Thus, a party who challenges an arbitrator's award in the

labor-management context must be prepared to undertake a steep

uphill climb. Typically, the challenge will fail if the award

"draws its essence from the collective bargaining agreement" rather

than from the arbitrator's "own brand of industrial justice." USW

v. Enter. Wheel & Car Corp., 363 U.S. 593, 597 (1960). "[A]s long

as the arbitrator is even arguably construing or applying the

contract," the fact that he or she may have made a mistake — even

a serious mistake — will not afford a basis for defenestrating the

award. United Paperworkers Int'l Union v. Misco, Inc., 484 U.S.

29, 38 (1987). That remains true whether the mistake concerns a

matter of fact or a matter of law. Id.

There are, however, a few exceptions to the general rule

that the arbitrator has the last word. See 9 U.S.C. § 10(a)

(codifying certain exceptions); Supervalu, 212 F.3d at 66

(discussing other exceptions). One such exception, which traces

its roots to the common law doctrine that courts may refuse to

enforce illegal contracts, holds that a court may vacate an

arbitral award that violates public policy. W.R. Grace & Co. v.

Local Union 759, Int'l Union of United Rubber Workers, 461 U.S.

757, 766 (1983). This exception is narrow. The mere fact that

"general considerations of supposed public interests" might be

offended by an arbitral award is not enough to make the exception

available. Id. (citation and internal quotation marks omitted).

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Rather, the award must violate an "explicit . . . well defined and

dominant" public policy, as ascertained "by reference to . . . laws

and legal precedents." Id. (citations and internal quotation marks

omitted).

In the context of an arbitration award that reinstates a

fired employee, the question is not whether the charged conduct

offends public policy or whether some remedy short of unconditional

reinstatement (say, a probationary period or a suspension without

pay) might have been preferable. Rather, the sole question is

whether the award itself — the order for reinstatement — gives

offense. See E. Assoc'd Coal Corp. v. UMW, Dist. 17, 531 U.S. 57,

62-63 (2000). We turn, then, to that question and ask whether the

order to reinstate Dufault as an ICU nurse contravenes some

explicit, well-defined, and dominant public policy as ascertained

by reference to the positive law of Massachusetts (which, of

course, includes applicable federal law). See id.

This inquiry is not free-form. In determining whether

Dufault's reinstatement contravenes Massachusetts's declared public

policy, we cannot forget that the parties, through the collective

bargaining process, chose arbitration as the preferred means of

resolving workplace disputes. Accordingly, we must read the

pertinent statutes and regulations "in light of background labor

law policy that favors determination of disciplinary questions

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through arbitration when chosen as a result of labor-management

negotiation." Id. at 65.

The Hospital relies on federal and state statutes and a

state regulatory scheme to undergird its claim that Massachusetts

has an explicit, well-defined, and dominant public policy in favor

of restricting the distribution of controlled substances. See

generally 21 U.S.C. §§ 801-971; Mass. Gen. Laws ch. 94C. It notes

that these provisions collectively establish strict controls on the

handling of controlled substances and evince a strong concern for

preventing the unauthorized distribution of such substances by

health-care professionals. Zeroing in on the facts of this case,

the Hospital emphasizes that the state's regulations governing the

licensure of nurses set out strict standards of conduct with

respect to the administration of controlled substances. See 244

Mass. Code Regs. 9.03. Pertinently, those regulations require

nurses to (i) comply with the Controlled Substances Act, Mass. Gen.

Laws ch. 94C; (ii) maintain the security of controlled substances;

(iii) refrain from unlawfully obtaining or possessing controlled

substances; (iv) administer drugs only as prescribed; and (v)

document the handling, administration, and destruction of

controlled substances. 244 Mass. Code Regs. 9.03(6)(a)(8), (35),

(37), (38), (39).

Building on this elaborate foundation, the Hospital

asserts that Dufault breached the regulations by diverting drugs

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away from patients, by failing properly to document the

dispensation of medications, and by administering Ativan through a

medium other than that prescribed in the physician's orders.

Consequently, the Hospital says, the arbitrator's award offends

public policy because it reinstates a serial regulatory violator to

a highly sensitive position.

The principal problem with this line of argument is that

it ignores the arbitrator's resolution of disputed issues. With a

few limited exceptions not relevant here, an inquiring court is

bound by an arbitrator's findings of fact. See El Dorado Tech.

Servs., Inc. v. Union Gen. De Trabajadores, 961 F.2d 317, 320 (1st

Cir. 1992). Once due deference is accorded to the arbitrator's

factual findings here, the Hospital's argument withers.

The Hospital suggests that the arbitrator glossed over

Dufault's unauthorized diversion of drugs and that even accidental

diversion is serious business. After stuffing this straw man, the

Hospital proceeds to shred it, telling us that because Dufault

improperly diverted drugs in contravention of the state regulatory

scheme, reinstating her to a sensitive position violates public

policy. This construct overlooks that the arbitrator, far from

glossing over the discrepancies in the Omnicell and SMS records,

explicitly found that the Hospital had failed to prove that Dufault

diverted any drugs away from patients. Thus, even if the mandated

reinstatement of a nurse found to have deliberately diverted drugs

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might violate an explicit, well-defined, and dominant public policy

— and we intimate no view as to whether such a policy has been

established — the mandated reinstatement of a nurse who has been

exonerated of all charges of intentional drug diversion, such as

Dufault, plainly would not. Cf. Misco, 484 U.S. at 44 (refusing to

vacate a reinstatement order when the employer had failed to prove

its allegations of employee misconduct).

The Hospital's attempts to tease a violation of public

policy out of Dufault's documentation errors and her use of an

unauthorized method of administering Ativan are equally

unconvincing. It argues that failure properly to account for

controlled substances, even if not deliberate, is nevertheless a

grave matter. While we agree with that premise — Dufault's conduct

seems to have violated the Massachusetts nursing regulations, see,

e.g., 244 Mass. Code Regs. 9.03(38)-(39) — we do not accept the

Hospital's conclusion that this fact somehow undermines the

reinstatement order. After all, this appeal tests only whether the

reinstatement award, on the facts as found by the arbitrator,

contravenes an explicit, well-defined, and dominant public policy.

See E. Assoc'd Coal, 531 U.S. at 62-63. Once the issue is framed

in that manner, it becomes nose-on-the-face plain that the Hospital

has failed to establish any barrier at all to Dufault's

reinstatement.

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 Indeed, the Hospital has not identified a single

iteration of positive law that prohibits the reinstatement of a

nurse who, without causing injury to patients, made a few

documentation errors or deviated slightly from doctors' orders on

a single occasion in a long and distinguished career. This failure

strongly suggests that the reinstatement order does not violate

public policy. See id. at 66 (relying heavily on the fact that the

reinstatement order did not violate a "specific provision of any

law or regulation" in concluding that the order did not run

contrary to public policy); Boston Med. Ctr., 260 F.3d at 25

(similar).

To be sure, there is reason to believe that an employer

is not invariably required to point to a specific provision of

positive law in order to bring a case within the ambit of the

public policy exception. See E. Assoc'd Coal, 531 U.S. at 63

(dictum). But cf. id. at 67-69 (Scalia, J., concurring)

(questioning this view). In a prior case in which a reinstatement

order did not breach a specific provision of positive law, we

required the employer to show that the reinstatement order subsumed

employee conduct so egregious that resumed employment would offend

some deep-rooted public policy. See Boston Med. Ctr., 260 F.3d at

25. That precedent does not advance the Hospital's cause.

In endeavoring to make the showing that Boston Medical

Center requires, an employer cannot relitigate the facts as found

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by the arbitrator. See Misco, 484 U.S. at 44-45. In this case,

based largely on the testimony of the Hospital's own witnesses, the

arbitrator found that Dufault was a competent, hard-working nurse

who had exceeded her employer's standards for many years; that

neither Dufault's documentation bevues nor the single instance of

her improper administration of Ativan had caused any harm to

patients; that her explanation for the discrepancies in the records

was credible; and that, in all events, there was no evidence of

missing medication, let alone drug diversion. The arbitrator did

not find that Dufault posed a risk of harm to patients, that she

was incapable of properly documenting the administration of

medication, or that she had displayed a pattern of failing to

comply with doctors' orders.

We are constrained to credit the various parts of this

factual assessment.3 El Dorado Tech. Servs., 961 F.2d at 320.

Doing so, we find no principled basis for concluding that Dufault's

underlying conduct was such as to render her reinstatement

offensive to public policy. See MidMich. Reg'l Med. Ctr. — Clare

v. Prof'l Employees Div. of Local 79, SEIU, 183 F.3d 497, 504 (6th

Cir. 1999) ("Even highly skilled professionals err on occasion, and

we think it clear that it cannot violate . . . public policy . . .

3
We note, in passing, that this assessment does not seem to be
chimerical. During the pendency of this appeal, the Massachusetts
Board of Registration in Nursing dismissed the Hospital's complaint
against Dufault for insufficient evidence.

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to contract to retain a nurse guilty of committing some acts of

carelessness.").

In arguing for the opposite result, the Hospital relies

on a trio of decisions that vacated reinstatement awards under the

public policy exception. See Russell Mem'l Hosp. Ass'n v. USW, 720

F. Supp. 583 (E.D. Mich. 1989); City of Boston v. Boston Police

Patrolmen's Ass'n, 824 N.E.2d 855 (Mass. 2005); Ill. Nurses Ass'n

v. Bd. of Trs. of Univ. of Ill., 741 N.E.2d 1014 (Ill. 2001). A

court must be wary of reliance on precedents which, like these

three decisions, involve state policies different than the one at

issue. See Boston Med. Ctr., 260 F.3d at 25 n.7 (disregarding the

plaintiff's citation of "conclusions of other courts that the

public policies of other states forbid the reinstatement of an

employee" in factually dissimilar cases). At any rate, the cases

cited by the Hospital are readily distinguishable. In each of

them, the affected employee committed acts far more blameworthy

than those that the arbitrator attributed to Dufault. See Russell

Mem'l Hosp., 720 F. Supp. at 587 (involving a nurse who was guilty

of negligence and insubordination and who had "a propensity for

misconduct"); Boston Police, 824 N.E.2d at 859 (involving a police

officer who had intentionally filed false charges and then

committed perjury); Ill. Nurses, 741 N.E.2d at 1023-24 (involving

an "inattentive . . . [and] . . . below average" nurse who had

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endangered the lives of two patients, intentionally falsified a

patient's chart, and provided negligent care).

A much more instructive case is Boston Medical Center, in

which an arbitrator ordered the reinstatement of a nurse whose

slipshod care had resulted in a patient's death. 260 F.3d at 18-

20. Relying on the nurse's unblemished ten-year work record and

the arbitrator's finding that she had not "willfully or callously

provided substandard care," we concluded that the reinstatement

order did not transgress Massachusetts's public policy. Id. at 25.

The facts in the instant case are considerably more favorable to

the employee than the facts in Boston Medical Center; after all,

the arbitrator determined not only that Dufault had achieved an

exemplary twenty-five-year nursing career but also that her

relatively minor miscues had not threatened the welfare of any

patients.

Our refusal to vacate the reinstatement order in Boston

Medical Center adumbrates the result we must reach here: upholding

the district court's confirmation of the arbitrator's reinstatement

order. While a single documentation or dispensing error may

contravene the state's nursing regulations, not every such error or

set of errors necessarily furnishes just cause for termination of

a nurse's employment. Context is important. Here, the nature of

the errors, the employee's history, the lack of any harm to

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patients, and the other circumstances as found by the arbitrator

persuade us that reinstatement is not an affront to public policy.4

III. CONCLUSION

We need go no further. In this matter, the arbitrator

supportably found that the Hospital had cashiered Dufault without

just cause and ordered her reinstatement. The Hospital's attempt

to upset that award is unavailing: although an employer may secure

vacation of an arbitrator's reinstatement order in the rare case in

which the employer can show that the order itself transgresses an

explicit, well-defined, and dominant public policy, the Hospital

has wholly failed to bring this case within the isthmian confines

of that doctrine.

We understand and appreciate the Hospital's concern with

accountability for dangerous drugs. Each case, however, must be

judged on its own facts. Here, the arbitrator appears to have

weighed that concern in the balance. Given the idiosyncratic facts

of the case, we are not at liberty to disturb her decision. What

may transpire in different circumstances or if Dufault proves to be

a repeat offender is, of course, an open question.

4
At oral argument in this court, the Hospital suggested for
the first time that the arbitrator erred in not imposing some
lesser penalty once she found discharge unwarranted. This argument
was not made in the district court and is, therefore, not properly
before us. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir.
1990). In all events, the sole question raised by this appeal is
whether the reinstatement order offends public policy. That does
not encompass the question of whether the imposition of some remedy
short of unconditional reinstatement might have been desirable.

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Affirmed.

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