19 20 2 22 FILED 418 JUN 04 PM 348 KING COUNTY ‘SUPERIOR COURT CLERK E-FILED CASE NUMBER: 16-2-141460)SEA IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR THE COUNTY OF KING TIEN THACH, MD. NO. Plaintiff, COMPLAINT v. MATRIX ANESTHESIA, PS., a Washington corporation: SEAN KINCAID, M_D., an individual person; JOHN COSTELLO, M.D., an individual person; JOHN DOES -XX, individual persons, Defendants. ‘Tien Thach, M.D., by and through her attomeys, FREY BUCK, P.S., alleges the following facts and causes of action against the above-named defendants as follows: 1. PARTIES 1.1 Plaintiff Tien Thach, MD. ("Thach”) is a resident of Bellevue, King County, ‘Washington, 1.2 Defendant Matrix Anesthesia, PS. (Matrix”) is, on information and belief, a Washington Corporation doing business in King County, Washington, 13 Defendant Sean Kincaid, MD. (“Kincaid”) is, on information and belief, aresident FREY BUCK, PS. 1200 FIFTH AVENUE, SUITE 1900 SEATTLE, WA 96102 (206) 488-000 F (208) s02-9650 COMPLAINT 110 uw 12 rr 15 7 18 19 20 2 23 of Snohomish County, Washington. Dr. Kincaid is a shareholder and the Chief Executive Officer of Matrix. Dr. Kincaid is also a member-atlarge of Matrix Anesthesia Evergreen, a division of Matrix. 14 Defendant John Costello,M D. (“Costello”) is, on information and belief, aresident of King County, Washington. Dr. Costello is a member of Matrix Anesthesia Corporation and acts as its Chief Financial Officer. Dr. Costello is also the President of Matrix Anesthesia Overlake. 1.5 John Does LXX are currently unknown corporate leaders of Matrix who were involved in and/or approved the wrongful corporate actions described herein. I, JURISDICTION AND VENUE ion over this matter because Matrix Anesthesia, P. 2.1 This court has juris closely held corporation headquartered and transacting business in King County, Washington. Upon information and belief Matrix, Costello, Does and Dr. Thach all reside, work, and may be found in King County, Washington; defendant Kincaid works in King County. 2.2. Venuein the Superior Court of King County, Washington is proper because all acts and omissions giving rise to plaintiff's claims occurred in King County, Washington. m. FACTUAL ALLEGATIONS 3.1 Plaintiff Tien Thach, M1 was originally employed by Matrix on October 3, 2010. Matrix has two divisions: Matrix Anesthesia Overlake ((MAO"), serving Overlake Hospital and Medical Center in Bellevue, Washington and Matrix Anesthesia Evergreen (MAB") serving Evergreen Hospital in Kirkland, Washington, Dr. Thach worked in the MAO division, originally as an employee and later as a shareholder of Matrix. 3.2 In August of 2013, the MAO divisional board asked Dr. Thach to accept the role of > FREY BUCK, PS. coaaee 200 FIFTH AVENUE, SUITE 2000 SEATTLE, WA S610 (208) 486-2000 F205) 9025680v 4 15 16 17 18 19 ‘MAO’s Divisional Compliance Officer. Dr. Thach accepted the role, She was elected to the position of MAO Board Treasurer on August 25, 2016 for a two-year term from 2017 to 2019. 3.3. Dr. Thach’s responsibilities as the divisional compliance officer included addressing potential legal and practice-related compliance issues. Despite these responsibilities, the Matrix board informed Dr. Thach that she was not permitted to contact corporate legal counsel with questions or concems. Contact with Matrix counsel was expressly limited to the CEO and CPO. Dr. Thach was informed that this rule was enacted by Defendant Kincaid as president of Matrix. 34 On October 18, 2016, 2 MAO divisional meeting included a presentation by Defendant John Costello, M.D. and Dr. Dave Knoepfler, then the Chief Medical Officer of Overlake Hospital. Defendant Costello and Dr. Knoepfler announced that a new administrative position, Medical Director of Surgical Services, had been created at Overlake, and moreover, that Overlake hoped Defendant Costello would accept the position. 3.5 The Medical Director of Surgical Services salary structure described by Defendant Costello concemed Dr. Thach in her role as compliance officer. Defendant proposed splitting his time between the two positions; halftime as an MAO anesthesiologist, and the other half in the administrative role. However, Defendant sought (o retain his full-time anesthesiologist salary of approximately $500,000. Because the new position included a $150,000 stipend, and half-time anesthesiology work would net approximately $250,000, Dr. Knoepfler suggested Matrix should support Costello in the new position; Costello subsequently specifically indicated that to support him in the new position MAO would have to make up the difference of approximately $100,000 in his prospective lost wages annually. Plaintiff was concerned that this financial arrangement risked running afoul of anti-kickback statutes. COMPLAINT: 3 FREY BUCK, P.S. 1200 FIFTH AVENUE, SUITE 100 SEATTLE, Wa 98202 (208) 486-8000 F. (208) 902-966010 uw B 14 15 16 7 18 19 20 2 23 3.6 On October 25, 2016, Dr. Thach brought her concerns related to the new medical director position salary structure to Matrix Corporate Compliance Officer Raphael N. Rodriguez, MLD. in accord with proper procedure and to assure transparency. Dr. Rodriguez confirmed that defendant Costello was asking Matrix to contribute approximately $100,000 to allow him to take the new position without suffering a decrease in his usual earings. Dr. Rodriguez reported that Matrix Counsel Lee Thorson previously approved a similar arangement for two MAE, anesthesilogists, and that Mr. Thorson’s blessing would be sought for the Costello arrangement. Satisfied with Dr. Rodsiguez's response, Dr. Thach didnot pursue the matter further. 3.7 Oneof the two MAE anesthe siologists receiving a similar financial contribution to the one proposed by Defendant Costello is, on information and belief, Defendant Sean Kincaid, M.D., who serves as Medical Staff Vice President at Evergreen Hospital 3.8 In January 2017 Dr. Thach attended the American Society of Anesthesiologists Practice Management conference in Dallas, Texas in her role as divisional compliance officer. On the last day of the conference, she attended a session entitled “ Anti-Kickback Statutes/Stark Law Lecture” presented by Marc Vezina, Esq. The presentation provided detailed information on ant kickback rules and appeared to at least potentially impact the proposed medical director position that Dr. Thach had earlier discussed with Dr. Rodriquez. The presentation rekindled Plaintiff's concems that the arrangement could expose the group to legal liability given the proposed salary “contributions” required to make up Defendant Costello's lessened earnings in the new position Dr. Thach, secking to maintain confidentiality and to protect the group, anonymously approached the presenting attorney at lecture’s end to generally describe her concems. She provided no identifying information regarding the group. 3.9 The presenting attomey informed Dr. Thach that she had good reason {0 be FREY BUCK, PS. 11200 FIFTH AVENUE, SUITE 100 SEATTLE, WA 96302 (206) 488-8000 F (296) 202-9660 COMPLAINT-4v 10 uw 13 4 15 16 concemed over the arrangement, and suggested that she have the group re-evaluate the arrangement fo assure it was not exposing itself to potential sanction. 3.10 On January 30, 2017, pursuant to her fiduciary duties as compliance officer and as 1a shareholder of Matrix, Plaintiff contacted Dr. Rodriguez to again express her concer over the legality/propriety of the medical director arrangement given the information she had gleaned at the conference. Dr. Rodriguez expressed concem, assumed responsibility for all further investigation and follow-up, and accepted Dr. Thach’s offer to provide the presenting attomey’s contact information. Dr. Thach took no further action believing Dr. Rodriguez had the authority to properly investigate and cure any potential impropriety. 3.11 On March 28, 2017, without waming and prompted by her report to Dr. Rodriguez, Dr. Thach was publicly attacked at a Matrix Corporate Board meeting. Defendants Kincaid and Costello displayed a PowerPoint presentation through which they accused plaintiff of a broad range of “wrongdoing.” Significantly, both defendants were personally involved in salary supplement arrangements with Matrix that were the cause of Dr. Thach’s anti-kick-back concerns, ‘as properly presented to Dr. Rodriguez. Each defendant realized personal gain from the arrangements. The defendants’ presentation was factually inaccurate and knowingly false. It directly impacted Plaintiff in her profession, Defendants accused Dr. Thach of several alleged misdeeds: © Bypassing the board and circumventing normal issue-escalation procedure; © Acting on a “personal agenda”, © Failure to fulfill fiduciary duties to serve in the corporation's bestinterest, and, © Impemmissibly seeking outside legal counsel and ignoring the advice of “trusted legal counsel.” COMPLAINT -5 FREY BUCK, PS. 11200 FIFTH AVENUE, SUITE2900 SEATTLE, Wa 96302 (208) 486-8000 F: (206) 902-966010 uw B 14 15 16 7 18 19 20 21 3.12 Defendants’ assault on Dr. Thach’s character failed to address the truth of her actions — that she had expressed legitimate concems through the appropriate corporate structure that the group's agreements with Overlake and Evergreen Hospitals may be in violation of anti- kickback laws. Defendants further failed to express or in any way recognize that it was Dr. Thach’s fiduciary duty to address such potential problems in her role as divisional compliance officer and that it was in her interest as a shareholder of the corporation to bring to light and avoid potential corporate improprieties. 3.13 Plaintiff had received no warning that such attack was coming: defendants presented her with no opportunity to fairly refute the false accusations. 3.14. On April 3, 2017, Corporate Compliance C1 jirman Rodriguez told Dr. Thach she had indeed followed proper protocols by escalating the matter to him, and that he “got in trouble” with Defendant Kincaid for investigating the matter. Dr. Rodriguez indicated that he would soon step dow from the corporation's compliance office. 3.15 On April 5, 2017, the final board meeting minutes were published, but in deviation from standard practice, were made available to MAO members only by written request, and then only via hard copy. Dr. Thach had previously provided a detailed written response to the inaccurate minutes and the unfounded attack by defendants; the approved minutes provided no reference to her facts and corrections. Instead, the minutes simply reported that Plaintiff “disagreed” that her efforts were inconsistent with her duties, and that she had presented “reasons” for her disagreement. The minutes did not provide the shareholders with notice of the potential problem presented by the salary enhancement arrangement. 3.16 Shocked at the attack by the defendants as corporate leaders and their manipulation of the corporate structure (0 intimidate and oppress her in her role as divisional compliance officer COMPLAINT - 6 FREY BUCK, PS. 11200 FIFTH AVENUE, SUITE 1900 SEATTLE, WA 96102 (206) 486-8000 F (206) 202-3680and a shareholder of the corporation, Dr. Thach believed she had no alternative but to proffer a letter of resignation from her positions as MAO Treasurer, Matrix Corporate Board Member, and MAO Division Compliance Officer. Dr. Thach subsequently tumed her focus to the care of her patients. 3.17 Dr. Thach remained an active and engaged shareholder; exerci ing her shareholder rights and responsibilities, she continued to voice her opinions about issues surrounding the proper governance of the group. Her statements as a shareholder of the organization were frequently contrary to the defendants" positions on various issues but uniformly presented in a respectful and appropriate manner. 3.18 Among the issues facing the corporation was a potential sale of the corporation to an outside organization. Corporate leadership, including Costello and Kincaid, strongly supported the sale. Dr. Thach expressed her opinion to other shareholders that the terms of the sale would not benefit the group in the long term. On information and belief, Matrix corporate officers Working to secure approval of the sale of the group 1o the outside company were (0 receive significant personal bonuses from the purchasing company, in addition to their share value. On information and belief, Defendants Costello and Kincaid were working to achieve the sale and ‘stood to benefit from it beyond their individual share values. 3.19 In addition, on information and belief the payout to individual shareholders in the event of a sale to the outside company would increase if the total number of shareholders were reduced. Accordingly, defendants would individually benefit by reducing the number of shareholders. 3.20. In January 2018, according to the group's tradition, Dr. Thach began to plan a retirement party for a fellow shareholder. Defendant Costello responded to her communications FREY BUCK, PS. eee ‘oo Fieri AVENUE, SUITE 1900 StaTTEE, WA 26102 (206) 486-4000 F205) 502-866013 “4 15 16 7 18 19 with factual inaccuracies and inconsistent instructions in an attempt to dissuade her efforts. Other shareholders subsequently noted the propriety of Dr. Thach’s approach and its consistency with prior group practice. Defendant Costello nevertheless steadfastly hewed to his inaccurate position and directed the issue away from the board's consideration, Defendant Costello's resistance took: the character of retaliatory, personal attack bereft of factual support — much like the earlier PowerPoint defamation, 3.21 On January 25, 2018, Plaintiff was told by MAO's scheduler that the MAO Board intended to call her out of service for an impromptu “meeting.” The warning stated that Plaintiff would be pulled from the operating room in the middle of the morning on January 26 to attend a meeting with Dr. Dorothy Ling and Dr. Guy Kuo, rather than at an official board meeting. Dr. Thach located Dr. Ling on January 26 and inquired after the meeting's purpose; Ling responded thatit was a”fiiendly meeting for advice.” 3.22 Dr. Thach was concemed about the aberrant meeting demand given her past treatment by the defendants and the Matrix board. To help avoid any new surprise attacks and to support faimess and transparency, on January 26, 2018 Dr. Thach delivered a written message to Defendant Costello stating that she was concemed about attending impromptu meetings and would not subject herself to another unprovoked surprise attack. Instead, she requested written notification of any planned meetings, including an agenda or at least some indication of the topic and the names of those expected to attend, Plaintiff also requested advance notice so that she could invite counsel to attend if possible and stated that she wished “to fully cooperate...and attend any public or private meetings.” 3.23 On March 13, 2018, the Matrix board responded by terminating Dr. Thach’s employment, effective immediately. The Board subsequently sent a message (o all shareholders FREY BUCK, PS, 11200 FIFTH AVENUE, SUITE 2900 SEATTLE, Wa 98102 'P: (20) 488-8000 F. (206) 902-9660 COMPLAINT-810 u 12 1B openly suggesting her termination was the result of clinical failures or activities contrary to the interests of the corporation. On information and belief, the message was written by and/or approved by Defendants Costello, Kincaid and/or Does. The statement was utterly and knowingly false. 3.24 On information and belief, Defendants subsequently started rumors that Plaintiff = termination was due to a “drug problem”, that it was premised upon an alleged threat made by Plaintiff s long-time companion, and that the companion had attempted to “hack” the group’s common posting wall. All of these allegations are wholly unfounded. 3.25 Matrix Anesthesia, P.S. and the Matrix board are responsible for violations of Washington law related to corporate governance, fiduciary obligations, and minority shareholder rights. Defendants’ actions also constitute the tort of Outrage and have defamed Dr. Thach in her professional endeavors. 3.26 On March 13, 2018, Dr. Thach received an anonymous letter from “The Matrix Board” informing her that her shareholder rights had been terminated. Jn terininating Dr. Thach’s shareholder: ts, defendants Matrix, Kincaid, Costello and Does /XX violated the corporation's bylaws. The termination was beyond the authority of the board and unauthorized under the bylaws. IV. _ FIRST CAUSE OF ACTION: VIOLATION OF CORPORATE BYLAWS, 4.1 Dr. Thach, as a shareholder of the corporation, was entitled 0 the rights and privileges of a shareholder as described in the corporate bylaws. 42 Defendants orchestrated the deprivation of Dr. Thach’s rights under the bylaws by depriving her of her shareholder status in violation of the corporation's bylaws, 43 The wrongful deprivation of Dr. Thach’s shareholder status has caused and will oa sor ave Suse SEATTLE, WA 96102 (200) 486-8000 F: (208) 902-968010 ul 2B 14 15 16 2 22 continue to cause her injury. V. SECOND CAUSE OF ACTION: BREACH OF FIDUCIARY DUTY, DUTY OF GOOD FAITH AND FAIR DEALING 5.1 Defendants Kincaid, Costello and Does as corporate officers had a fiduciary duty to the corporation and its shareholders and a duty of good faith and fair dealing; Matrix had aduty {o treat minority shareholder Thach reasonably and fairly and acted solely through its corporate governance structure overseen by defendants Kincaid, Costello and Does. 5.2 Defendants violated these duties by ignoring legitimate shareholder concerns, intimidating shareholders, violating shareholder protections enscencedia the corporation's bylaws and stifling intra-shareholder communication, Defendants further violated their duties by retaliating against plaintiff for her effort to bring potentially significant legal issues to the corporation for investigation and evaluation. 5.3. Defendants acted oppressively and in bad faith through pervasive intimidating and retaliatory attacks upon Dr. Thach engineered fo protect their own interests over those of the corporation and in subversion of Dr. Thach’s shareholder interests 5.4 On information and belief, defendants Kincaid, Costello and Does also acted for the benefit of their personal interests over those of Dr. Thach in further violation of their fiduciary duty. 5.5 Defendant Matrix also had a duty to treat minority shareholders fairly and not interfere with shareholders’ rights and benefits as owners of the company unreasonably. Defendant Matrix violated those duties. 5.6 AS a result of the violations of these duties, Dr. Thach has and continues to be injured. COMPLAINT. 10 FREY BUCK, PS. 1200 Furret AVENUE, SUITE 1500 SEATTLE, WA 58102 (206) 86-8000 F: (208) 902-986015 16 7 18 19 VI. THIRD CAUSE OF ACTION: MINORITY SHAREHOLDER OPPRESSION 6.1 The pattern of intimidation and retaliation by Defendants Costello, Kincaid, Does ‘and Matrix against Dr. Thach while she served the MAO board as its treasurer and compliance officer and as a board member of the Matrix board was burdensome, harsh and wrongful. This conduct continued well after Dr. Thach’s resignation from the board and impacted her rights as a shareholder. Defendants’ improper oppression eventually led to the usurpation of Ds. Thach’s shareholder status and the unfounded deprivation of her rights and benefits as a shareholder. Defendants’ acts were not for the benefit of the corporation, but rather were for the benefit of individual corporate officers at the expense of a minority shareholder and in retaliation for Dr. ‘Thach’s exercise of her sights and responsibilities as a sharehol er. 62 Defendants’ efforts to diminish Dr. Thach and her diligent investigation of potential anti-kickback statute violations by both Defendants are incontrovertible evidence of a lack of probity and fair dealing in the affairs of Matrix Anesthesia, to the prejudice of its members. 63 Defendants’ ambush of Dr. Thach in front of her peers on the Matrix board and defamatory statements regarding her actions violated standards of fair dealing and fair play on which every shareholder is entitled to rely. 64 Defendants’ conduct meets or exceeds the standards of minority shareholder mn in Washington State. oppress 65 Asaresult ofthe defendants’ oppressive and wrongful conduct, Dr. Thach has and continues to be injured. VU, FOURTH CAUSE OF ACTION: WHISTLEBLOWER 7.1 Defendants’ conduct as described in this complaint constituted retaliation for Dr. ‘Thach’s effort to evaluate and investigate potential corporate misfeasance FREY BUCK, PS. {200 FIFTH AVENUE, SUITE 1200 SEATTLE, Wa 98101 (206) 486-8000 F: (208) 902-9560 COMPLAINT I16 7 18 20 a 2 23 7.2 Dr. Thach's efforts were driven by her duty to the corporation as divisional ‘compliance officer and as a shareholder of the corporati 7.3. Defendants’ actions are in violation of legal protections afforded whistleblowers. 7.4 Defendants’ wrongful actions have caused and continue to cause injury to Dr. Thach. Vill. FIFTH CAUSE OF ACTION UTRAGE 8.1 Defendants deprived Dr. Thach of her shareholder status as a result of her efforts to protect Matrix and its shareholders from potential legal exposure under anti-kickback statutes and for voicing her opinions and opposition to defendants’ corporate leadership. Defendants” behavior was extreme and outrageous, in violation of fiduciary responsibilities and utterly intolerable in a civil societ 8.2 Defendants intentionally or recklessly inflicted emotional distress on Dr. Thach by subjecting her, unannounced and without warning, to a direct, humiliating, unfounded and personal ‘attack in front of the Matrix board in retaliation for her act of exercising her responsibility as a divisional compliance officer and shareholder to assure that the corporation was not operating in contravention of the law. 8.3 Defendants intentionally or recklessly inflicted emotional distress on Dr. Thach through relentless intimidation and character assassination even afier they constructively removed her from her elected positions of trust as the MAO treasurer and a member of the Matrix board. 84 Defendants intentionally or recklessly inflicted emotional distress on Dr. Thach by retaliating against her for pointing out potential Legal incongruities in the corporation’s business af voicing her opinion contrary to corporate leadership and, on information and belief, in their effort to personally gain through the direction of corporate affairs at the expense of Dr. Thach. FREY BUCK, PS. 1200 FIFTH AVENUE, SUTE 1900 SEATTLE, WA 96102 (206) 488-8000 F- (208) 902-9660 COMPLAINT - 1216 17 18 19 8.5 Defendants’ behavior is reprehensible and goes beyond all possible bounds of decency, It is atrocious and utterly intolerable in a society where laws and regulations exist 10 cally protect the public from corporate malfeasance and deception. 8.6 Dr. Thach has suffered and continues to suffer severe emotional distress caused by defendants’ extreme and outrageous acts and behavior. IX. SIXTH CAUSE OF ACTION: DEFAMATION / FALSE LIGHT 9.1 Defendants exposed Plaintiff Tien Thach, M.D., to ridicule and injury to her reputation by publicly and improperly castigating Dr. Thach in front of all MAO shareholders, surgical colleagues, nursing co-workers, and staff at Overlake Hospital Medical Center, the Retinal Surgery Center, and Proliance Highlands Surgical Center, without factual basis and knowing that the charges and allegations were false. 9.2 Defendants further exposed Plaintiff to ridicule and injury to her reputation by immediately terminating her employment and publicly informing others that the termination was necessary due to either a clinical issue or behavior that was contrary to the corporation’ s interests, bases that the defendants knew to be false. 9.3. These acts constitute defamation per se as they have impacted Dr. Thach in her professional cay PRAYER FOR RELIEF Plaintiff Tien Thach, M.D., prays for the following relief: 1 Dissolution of the corporation pursuant to RCW 23B.14.300; 2. Special and general damages in an amount to be proven at trial; 3. Costs and fees; and 4. Allother relief as the Court deems just and equitable, FREY BUCK, PS. 100 Firte AVENUE, SUITE 100 SEATTLE, WA 96202 (206) 486-8000 F: (208) 902-9660 COMPLAINT 1310 wn 13 4 15 17 18 19 20 21 23 DATED this 11" day of April, 2018. COMPLAINT 14 FREY BUCK, PS. By, ce Ted Buck, WSBA #22029 Attorney for Plaintiff FREY BUCK, PS. 100 FIFTH AVENUE, SUITE 1500 SEATTLE, WA 95102 (206) 86-8000 F: (206) 202-9660