August 11, 2025|Publications
August 11, 2025 | United States District Court for the Northern District of Indiana, Hammond Division | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Gretchen S. Lund of the Northern District of Indiana adopted a magistrate judge’s findings and rejected Plaintiff Ibrahim Mansour’s claim that Community Health Systems, Inc. (“CHSI”) acted as his employer or joint employer. Mansour, an interventional cardiologist, alleged discrimination and retaliation under the ADA, FMLA, and Title VII. He attempted to pull CHSI into the case by arguing that the parent company controlled his employment through overlapping officers, centralized compliance policies, and benefits programs. CHSI countered that it is merely a holding company, not involved in day-to-day operations. Judge Lund agreed with CHSI, holding that the record lacked evidence of control sufficient to establish joint employer liability or to pierce corporate formalities.
Relevant Background
Mansour worked for La Porte Clinic, LLC and La Porte Hospital Company, LLC, affiliates within the Community Health Systems network. He named multiple entities in his complaint, including CHSI and CHSPSC, LLC, a subsidiary that provides administrative and legal services. Mansour argued that CHSI blurred the lines between itself and its subsidiaries by requiring a uniform Code of Conduct, consolidating purchasing decisions, and controlling employee benefits.
Magistrate Judge John Martin held an evidentiary hearing in August 2024. Mansour testified that CHSI approved amendments to his employment agreement and that company-wide policies governed his conduct. He also pointed to CHSI’s public reports and branding, which referred broadly to “Community Health Systems” and described operations across multiple states. CHSI’s witnesses testified, however, that the holding company owned no assets, maintained no operations, and employed no staff. They explained that local management at the Clinic and Hospital oversaw day-to-day operations and that subsidiaries—not CHSI—handled employment agreements and payroll. Judge Martin found the defense evidence more credible and recommended findings against Mansour. Judge Lund reviewed the record de novo and adopted those findings.
Decision
Judge Lund began with the governing test for employer status. The Seventh Circuit’s Knight v. United Farm Bureau Mut. Ins., 950 F.2d 377 (7th Cir. 1991), requires courts to weigh five factors: “(1) the extent of the employer’s control and supervision over the worker, including directions on scheduling and performance of work; (2) the kind of occupation and nature of skill required; (3) responsibility for the costs of operation; (4) method and form of payment and benefits; and (5) length of job commitment and/or expectations.”
On control, the court emphasized that “there is no evidence that CHSI directed Plaintiff’s work as a cardiologist in any detailed manner.” CHSI did not schedule his hours, hire him, assign patients, or dictate how he performed procedures. His employment agreement identified the Clinic as his employer, and his W-2 form listed “1591-La Porte Clinic Company,” not CHSI. The court also noted that an email confirming an amended contract referred only to “Community Health Systems” and the Clinic’s authorized signatory, not CHSI.
Mansour argued that CHSI’s system-wide Code of Conduct demonstrated control. Judge Lund disagreed: “While the code of conduct places limits on employees, it does little in terms of requiring employees like Plaintiff to take specific actions or perform their occupations in specific ways.” The court observed that the Clinic and Hospital adopted and administered the Code locally, and that subsidiaries—not CHSI—handled any discipline for violations.
On operational costs and benefits, the record showed that CHSI had no revenues, bank accounts, or employer identification number. The Clinic and Hospital maintained their own accounts and received payments directly from patients. Benefits were administered through CHSPSC, LLC, with language in agreements that they would be made available to employees of affiliates “on a group-wide or sub-group-wide basis.” Judge Lund found this evidence tied benefits to subsidiaries, not CHSI.
The court next addressed corporate formalities. Citing IDS Life Ins. v. SunAmerica Life Ins., 136 F.3d 537, 540 (7th Cir. 1998), and Cent. States v. Reimer Express World Corp., 230 F.3d 934, 939 (7th Cir. 2000), the court emphasized that normal oversight by a parent is “insufficient to justify piercing the corporate veil for the exercise of personal jurisdiction.” Although CHSI shared some executives with its affiliates and required adoption of the Code of Conduct, those connections did not amount to “the unusually high degree of control required” to disregard corporate separateness.
Finally, Judge Lund rejected the theory that CHSI operated through CHSPSC, LLC as an agent. CHSPSC’s vice president testified that an oral agreement existed for CHSPSC to provide services, including legal work, to CHSI. But the court credited testimony that the Clinic and Hospital maintained their own accounts and that “their money remains their money at all times. It does not become the money of any other entity unless it is paid to that entity.” That evidence, the court found, defeated any inference of agency.
The court overruled Mansour’s objections and adopted the magistrate judge’s recommendations. It held that CHSI was not Mansour’s employer or joint employer, that CHSI observed corporate formalities, and that it was not involved in the operation of the Clinic or Hospital.
Looking Forward
This ruling provides comfort to corporate parents and franchisors facing joint employer allegations. Courts in the Seventh Circuit continue to apply the Knight factors strictly, requiring proof of direct and substantial control before attaching liability. Codes of conduct, consolidated purchasing programs, and overlapping officers did not suffice here. As Judge Lund emphasized, “Plaintiff lacks evidence tying this directly to CHSI, an entity with no operations or assets of its own.”
For franchisors, the parallels are clear. Just as CHSI avoided joint employer liability by keeping employment decisions with local entities, franchisors can reduce exposure by maintaining system-wide standards without directing franchisees’ daily employment practices. At the same time, the case underscores the importance of preserving corporate formalities and documenting franchisee independence. Plaintiffs bear the burden of proof, but franchisors and parent companies must provide clear evidence of operational separation to prevail at this stage.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
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