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Fired New Brunswick hospital CEO awarded $2 million, including damages for manner of dismissal

Treating employees in a callous or insensitive way when firing them can be a costly mistake for employers.

The government of New Brunswick learned this the hard way after it was ordered to pay $200,000 in aggravated damages to Dr. John Doran, the former CEO of Horizon Health Network.

And, in an even more expensive mistake, it didn’t have the new executive sign his employment letter before he started the job. That made the termination provision in his five-year employment contract null and void and left the province on the hook for his entire compensation until 2027 — roughly $1.8 million on top of the aggravated damages.

That puts total damages north of $2 million, which his lawyers called the biggest employment compensation award in the province’s history.

The manner of termination

The way the termination was conducted attracted the ire of the adjudicator.

Doran was just a couple of months into a five-year contract that paid him about $385,000 annually when a patient died while waiting in the emergency room at a hospital in Fredericton. The death generated a lot of negative media attention, and Premier Blaine Higgs was quick to act.

On July 14, 2022, the Minister of Health asked Doran to attend a press conference the following day. He was not told about the purpose of the news conference.

On July 15, while on his way to the conference, he received a call from Premier Higgs. Doran was told by the Premier that the Minister of Health had been replaced. Doran said he thought that was appropriate.

Then Higgs handed the phone to Bruce Fitch, who had just been appointed the new Minister of Health. Doran said Fitch told him that the “CEO serves at the pleasure of the Minister” and “you are no longer employed.”

Comments at the press conference

Shortly after, at the press conference, Higgs discussed the death in the emergency room, announced the reassignment of the former minister and the appointment of Fitch as the new health minister. He then said he had abolished the two hospital boards and removed Doran from his position as CEO.

The adjudicator agreed that Doran’s dismissal was done in a “public, disingenuous and callous manner.” He was told to attend a news conference, but given no indication what it was about. While on his way, he was told of the replacement of the health minister. After he told the Premier he felt that was an appropriate move, he was then immediately fired by the new minister.

The minister had the right to fire Doran, there was no question about that, the adjudicator said.

But the manner of termination also matters when it comes to aggravated, also known as Wallace, damages.

“It would be reasonable for a member of the public to conclude that the Premier had concluded (Doran) was responsible for this unfortunate death. Furthermore, the only conclusion to be reached from this news conference was that the announced termination of (Doran) was directly related to the unfortunate death,” wrote arbitrator George P.L. Filliter. “In my view, these comments were made without proof and caused unjustified harm to the professional reputation of (Doran.)”

Doran testified that an investigation into the death at the hospital concluded it had nothing to do with his management.

The termination clause

An even more expensive mistake by the employer was presenting the employment letter to Doran after he had already started his new position.

He had been in the role for two weeks when he was asked to sign the letter which contained a termination clause limiting his severance on a sliding scale from a maximum of 12 months if he was let go in the first year.

The clause was a complete surprise to Doran, and both sides agreed it hadn’t been discussed in advance of his starting as CEO.

While employers can amend contracts, they have to provide a new benefit — known as consideration — to the employee.

The employer argued that Doran was a “sophisticated” employee in a senior management role, and the fact he signed the contract spoke for itself. But the adjudicator felt otherwise because Doran testified he felt he had no choice but to sign the letter.

Had he known about the termination clause, he never would have accepted the job. He gave up secure employment as a practicing endocrinologist and chief of staff at Horizon Health Network where he earned about $486,000 a year.

Interestingly, the employer argued there was some consideration for the new contract as it offered to pay his physician licensing fees. But that offer was made the day after the contract was presented to him, and was in no way directly or indirectly linked to the termination clause.

Doran sought total damages of nearly $1.8 million in lost wages, $31,000 for a lost vehicle allowance and additional payment for loss of pension, health and dental benefits.

The adjudicator declined to award punitive damages, costs or pre-judgment interests, citing a lack of jurisdiction.

For more information see Dornan v New Brunswick (Health), 2023 CanLII 10433 (NB LA).

Todd Humber is the senior editor for Talent Canada.