Hospital ‘offer letter’ found not to be binding contract

The hospital where the plaintiff in ‘Moore’ was seeking the position of medical director of the laborist program

A hospital’s emailed “offer letter” did not constitute a valid, binding contract, nor could the doctor who received it establish a promissory estoppel claim, a Superior Court judge in Massachusetts has decided.

At the outset of his decision in Moore v. LGH Medical Group, LLC, et al., Judge William M. White noted that the offer letter was a type of “pre-contractual agreement.” Whether it was enforceable would be controlled by the parties’ intentions, he said.

To determine that intent, one looks both to the language of the agreement and the “subsequent conduct and interpretation of the parties themselves,” according to the judge. Here, both demonstrated that it was not the parties’ intention that the offer letter constitute an employment contract.

“Rather, the Offer Letter was intended to confirm [the plaintiff’s] interest in the position and her acceptance of the proposed compensation,” White wrote.

A hospital executive had also specified that the offer letter was “not a legally binding document” in an accompanying email, which White found persuasive.

“This language clearly indicates that it was not [the defendants’] intention that the Offer Letter constitute an enforceable contract of employment,” White said.

He added that the offer letter’s terms “underscore this notion,” pointing to language such as “offer of potential employment” and the need to “finalize an employment agreement.”

The plaintiff confirmed that she understood the offer letter was “not a binding document” in an email she had sent to her recruiter and in her deposition testimony, White said. Instead, both parties clearly “contemplated the execution of a further written agreement,” he found.

The same facts also helped doom the plaintiff’s promissory estoppel claim, White concluded.

Testing the waters

The defendants were represented by Boston lawyers Jessica Schachter Jewell and Aaron F. Nadich.

Southborough employment attorney Michelle M. De Oliveira said Moore “is a good reminder that to establish an entity is bound by a contract, the parties must have a present intent to be bound.”

That can be shown by either language in the agreement or the parties’ conduct and their interpretation of the language, she noted.

In that sense, calling what the hospital had sent the plaintiff an “offer letter” is a misnomer, agreed Boston labor and employment attorney C. Max Perlman.

“This was more of a test-the-waters letter,” Perlman said, noting that offer letters are usually more definitive as to what the employer is committing to.

Nonetheless, the communication served the hospital’s purposes, getting the doctor to commit to a certain compensation level and buying it time to think about whether it wanted to finalize the relationship, Perlman said.

An experienced job seeker like the plaintiff might have been expected to spot the red flags in the offer letter, Perlman added.

“If she wanted more of a definitive commitment, she could have asked for one,” he said.

While the decision does not mention whether the plaintiff had given notice to her current employer of her intent to leave, Boston employment attorney Brian J. MacDonough said the case offers a “classic” reminder of the need to make sure all the t’s are crossed and i’s are dotted before taking such a step.

At least at the outset of the pandemic, such potholes for employees were popping up fairly frequently, as a downturn in the economy prompted employers suddenly to reconsider their hiring plans, he said.

MacDonough cautioned that employers would be ill advised to take from Moore that a simple one- or two-page offer letter can never constitute an enforceable agreement. Here, the “very express language” in the hospital’s offer letter was part of what helped it carry the day, he noted.

There is a dearth of precedent defining the contours of promissory estoppel claims, making that the more interesting aspect of the Moore decision, according to Boston employment lawyer Christopher S. Feudo.

“[The ruling] is a warning to employers to make sure they are not making an offer of employment unless it is very well drafted and clearly lays out what the conditions of the offer are.”

— Christopher S. Feudo, Boston

While he thought the judge correctly determined that the plaintiff’s reliance on the offer letter was not reasonable, slightly different facts may have led to a different result, he pointed out.

“It is a warning to employers to make sure they are not making an offer of employment unless it is very well drafted and clearly lays out what the conditions of the offer are,” Feudo said. “In this case, the employer did a pretty good job at documenting in writing what its intentions were.”

An employer should reiterate that the job offer is not contractual in nature at each stage of negotiations with a prospective employee, De Oliveira added.

“Individuals, on the other hand, should be careful not to rely on a job offer letter as guaranteed employment — because the reality is that it may very well not be,” she said.

The plaintiff’s attorney, Dan V. Bair II of Quincy, had not responded to requests for comment as of press time.

‘Not a binding document’

Dr. Elizabeth Moore, a Massachusetts physician who specializes in obstetrics and gynecology, has worked at 28 hospitals across the country, making her no stranger to negotiating employment contracts with hospitals.

In 2018, the recruiter with whom she was working directed her to the position of medical director of the laborist program at Lowell General Hospital, operated by LGH Medical Group.

About two weeks after she had a favorable interview, Moore heard from Stacie Swanson, LGH’s executive director of physician services.

In a May 25, 2018, email titled “Offer Letter — Lowell General Hospital,” Swanson conveyed “an offer to join us as the Medical Director of our OB Hospitalist Program.”

Moore’s potential employment was to be for a set term, the length of which was to be a component of the ensuing negotiations.

Swanson wrote: “This is not a legally binding document, but your signature on this will confirm your acceptance of the financial terms which will prompt us to generate an employment contract.”

Attached to the email was a letter detailing the financial terms of LGH’s offer.

“This letter serves as a letter of interest to outline the offer of potential employment from Lowell General Hospital,” the letter read in part. “Upon your signature accepting this offer, we will finalize an employment agreement based on the terms below.”

Four days later, Moore replied, “I am very pleased to say that everything in your letter looks encouraging and positive and as our next step I would like to set up one more call with both yourself and Dr. [Michelle] Cochran,” the hospital’s chief of obstetrics and gynecology.

Ahead of the June 8 deadline she had been given, Moore signed the offer letter and sent it to LGH, informing Swanson by email that she had done so.

Moore then referred to the offer letter in a June 6, 2018, email to her recruiter stating that “it is not an official binding document but I am really hoping that all continues to go smoothly.”

Unfortunately for Moore, Swanson dashed those hopes in a June 19, 2018, email, which informed her that “Lowell General Hospital has decided it will not move forward with an offer of employment and will not propose an employment agreement.”

Swanson concluded, “We will certainly be in touch if circumstances change with regard to our evolving program.”

Moore filed suit against LGH Medical Group and Lowell General Hospital in Middlesex Superior Court on Jan. 10, 2019. The defendants filed a motion for summary judgment on Nov. 23, 2020, which was argued before White on Jan. 8.

No ‘actionable promise’

White ultimately concluded that the plaintiff could not meet either prong of the test to establish a claim under the doctrine of promissory estoppel.

First, she could not show that there had been “a representation that was intended to induce reliance on the part of the person to whom the representation was made.”

Here, LGH had not made an “actionable promise” in the offer letter, and the facts showed that the parties “did not have a present intention to be bound” by the letter, White found.

“Therefore, any purported promise contained therein was not made with the intent of creating a legally binding obligation,” the judge concluded.

Moore also could not show that she “reasonably” relied on the alleged promise, White added.

A “hope or expectation, even well founded,” is not enough, he noted.

Moore had expressed just such a hope in the email she had sent to the recruiter two days after signing the offer letter. She then confirmed during her deposition that her email accurately depicted her understanding of the offer letter, White noted.

“According to Dr. Moore’s own words, her employment with LGH was not guaranteed; rather she ‘hoped’ that LGH would proceed with a formal offer of employment,” White wrote. “However, Dr. Moore’s hope for an offer of employment, even if well founded, is not sufficient to support her promissory estoppel claim.”