In one of two opinions released today, the Supreme Court of Virginia unanimously reversed the trial court’s decision that Chesapeake Regional Medical Group was entitled to sovereign immunity from Sentara’s tortious interference claim, but left open the possibility that proper factual development in future cases could establish that it does enjoy immunity.
Dr. James Klena, a cardiovascular surgeon, was employed by Sentara under a contract with a one-year noncompete clause. He left Sentara in June 2024 to work for Chesapeake Regional Medical Group (CRMG) at Chesapeake Regional Medical Center, which was a facility within the restricted geographic area. Sentara sued CRMG for tortious interference with their employment agreement with Dr. Klena. CRMG responded with a plea of sovereign immunity, arguing that because it was created as a subsidiary of the Chesapeake Hospital Authority—a legislatively created public body—it automatically shared in the Authority’s immunity. The circuit court agreed and dismissed the claim against CRMG.
But the Supreme Court rejected that reasoning. It explained that sovereign immunity operates on a sliding scale: the Commonwealth and its agencies enjoy absolute immunity, counties share in that immunity, and municipal corporations are immune only when performing governmental functions. Agents and employees of immune entities do not automatically inherit their principal’s immunity. Rather, they must independently establish entitlement under the four-factor framework articulated in James v. Jane, which examines the nature of the function performed, the immune entity’s interest and involvement, the degree of governmental control over the agent, and whether the act involved judgment and discretion.
The Court held that this framework, though developed for individual employees, provides an appropriate starting point for corporate agents like CRMG as well. It endorsed the approach taken by then-Judge Lemons in Stevens v. Hospital Authority of the City of Petersburg, which applied the James test to corporate defendants through a fact-intensive evidentiary inquiry. The Court emphasized that this determination requires a totality-of-the-circumstances review considering the corporate agent’s nature and structure, its relationship with the immune entity, the degree of governmental control, and whether the agent was necessary (versus merely convenient) to performing a governmental function.
The Court also rejected Sentara’s more extreme position that CRMG could never share in the Authority’s immunity and would need to independently qualify as a state agency or municipal corporation. That view, the Court noted, cannot be reconciled with longstanding precedent allowing agents of immune entities to share in derivative immunity under appropriate circumstances.
Ultimately, however, because CRMG chose to rely solely on the allegations in Sentara’s complaint without presenting evidence at the plea hearing, the record contained almost no information about CRMG’s corporate structure, governance, operations, or the degree of control the Authority exercised over it. Since CRMG bore the burden of proving its entitlement to immunity and failed to establish the necessary facts, the circuit court erred in sustaining the plea.
A Virginia Appellate Law Blog 