Karen Ashley v. Clay County

Dallas, Texas employment law lawyer represented the Plaintiff who sued on a breach of contract theory.



Clay County Memorial Hospital ("CCMH”) is among Texas's last

county-owned hospitals. It operates under the oversight of the Clay County

Commissioners' Court, which appoints a Board of Managers to govern the

hospital's operations pursuant to Chapter 263 of the Texas Health & Safety

Code. To support CCMH financially and ensure healthcare continuity for

County residents, the County also established the Clay County Memorial

Hospital Foundation, a nonprofit 501(c)(3) corporation, in 1992.



In October 2021, CCMH hired Ashley as its Chief Nursing Officer

("CNO”). During her tenure, Ashley allegedly raised concerns about patient

safety issues, including missing fentanyl and procedural errors in blood

transfusions. She allegedly reported these issues internally to CCMH

personnel and its Board of Managers. On September 21, 2022, purportedly,

she publicly addressed these concerns at a CCMH Board meeting.



Ashley also internally advocated for CCMH to terminate its contract

with Concord Medical Group PLLC ("Concord”) and partner instead with

ACPHealth. Ashley collaborated with CCMH's CEO, Lisa Swenson, and

other staff to pursue this change. Following this advocacy, Ashley alleges that

the County, CCMH, and the Foundation retaliated against her by

terminating her employment, violating her First Amendment rights to free

speech and association.1



On January 17, 2023, Ashley filed suit against the County and Concord

Medical Group, alleging retaliation under the Texas Occupations Code

§ 301.413 and 42 U.S.C. § 1983. The County moved to dismiss, asserting that

it was not Ashley's employer and had taken no adverse actions against her.

In response, Ashley amended her complaint to add CCMH as a defendant,

narrowing her claims against the County to First Amendment retaliation and

conspiracy under § 1983. She later filed another amended complaint,

reasserting her Texas Occupations Code claims against both CCMH and,

alternatively, the County, citing the ongoing uncertainty surrounding

CCMH's legal status. The County maintained it was not Ashley's employer

and moved to dismiss on governmental immunity grounds.



Meanwhile, CCMH invoked an arbitration clause in Ashley's

employment agreement and moved to compel arbitration under its

Alternative Dispute Resolution Agreement ("Agreement”). The County, a

purported nonsignatory to the Agreement, neither moved to compel

arbitration nor sought to participate in it. Nevertheless, the district court sua

sponte compelled the County to arbitration alongside CCMH, denying the

County's motion to dismiss as moot.

Reversed and remanded with instructions for the district court to resolve the issue of governmental immunity as it pertains to the County’s motion to dismiss

before it rules on the motion to compel arbitration.