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Wood v. Nw. Hosp., LLC - 8/28/2020

Arizona Court of Appeals Division Two confirms that the voluntary payment doctrine does not require a payee to have had a claim of right to the payment in question.

A doctor sued his hospital employer after the hospital refused to pay him the performance compensation he had earned in the prior quarter.  The hospital claimed that it was entitled to withhold the payment to offset amounts it had previously overpaid him based on a compensation cap in his employment contract.  The trial court held that the voluntary payment doctrine prevented the hospital from recouping its earlier “overpayments” and thus granted summary judgment to the doctor, but it denied the doctor’s claim for treble damages under A.R.S. § 23-355(A).

Both parties appealed.  The Court of Appeals affirmed the judgment on the wage claim but vacated and remanded the doctor’s claim for treble damages.

The Court agreed that the voluntary payment doctrine applied and prevented the hospital from withholding the doctor’s performance pay because the amounts it sought to recoup were paid to the doctor voluntarily and with full knowledge of the facts. In reaching that conclusion, the Court rejected the hospital’s argument that the voluntary payment doctrine only applies if the payor made the payment in response to a claim of right because “longstanding Arizona law has applied the voluntary payment doctrine even when the payee manifestly made no claim of right.” 

In light of the longstanding and well-established caselaw refuting the hospital’s basis for withholding the doctor’s performance pay, the Court of Appeals further concluded that the trial court abused its discretion in denying the doctor’s claim for treble damages under A.R.S. § 23-355(A) as a matter of law.  The Court thus vacated the judgment regarding treble damages and remanded for the trial court to consider whether to award such damages in its discretion. 

Judge Eckerstrom authored the opinion for the Court; Judge Eppich and Judge Espinosa joined. 

Posted by: Hayleigh S. Crawford

Posted On: 9/28/2020