Former Chelsea first team doctor Eva Carneiro rejected a £1.2m settlement from the club, documents submitted to her employment tribunal show.
She is claiming constructive dismissal and is also bringing separate legal action against Jose Mourinho.
The former manager called her “daughter of a whore” in Portuguese when she treated a player, the tribunal heard.
Lawyers for Chelsea revealed that she chose to take the case to a hearing rather than accept the payout.
Dr Carneiro, 42, alleges the comment was made by Mr Mourinho, who left Chelsea in December, when she ran on to the pitch at Stamford Bridge during a Premier League match against Swansea in August to treat injured forward Eden Hazard.
She is claiming sex discrimination and harassment against the club’s former manager following the incident and constructive dismissal against Chelsea.
“This is a tale of two employees, one good (Dr Carneiro) and one bad (Mr Mourinho),” said Mary O’Rourke QC, appearing for the claimant
“The bad employee forces the good employee out of the job of her dreams and the employer does nothing to stop it.
“The bad employee berates, sexually harassed and demoted the good employee for carrying out her professional duties, namely her health and safety duties as the first team doctor, pitch-side.
“Rather than investigating and disciplining the bad employee, the employer allows the bad employee to confirm demotion… and to continue with his job.”
Documents submitted by Dr Carneiro’s legal team allege Mr Mourinho – now manager of Manchester United – suggested she should work with Chelsea Ladies following the Swansea game.
They allege that on 10 August Mr Mourinho told Steve Atkins, head of communications and PR at Chelsea, that he did not want the first team doctor on the bench at the next match, saying: “She works in academy team or ladys (sic) team not with me”.
They also claim Chelsea took no action following complaints about sexually explicit chanting at various away games – in particular at Manchester United and West Ham – and a lack of female changing facilities.
Dr Carneiro claims she was not provided with a club suit, and regularly had to endure sexually explicit comments from her colleagues.
She also alleges she was called a “filha da puta” – Portuguese for “daughter of a whore” – during the Swansea game by Mr Mourinho and that she was verbally abused after the match when the team returned to their dressing room.
“As she ran on to the pitch she heard clearly from behind her the words filha da puta,” said Mary O’Rourke QC, for the claimant.
“She’s a Portuguese speaker. It was not filho da puta, it was filha da puta… you say filha da puta when you are denigrating a woman. He is saying it to the back of the claimant who is doing something he didn’t like… that is the context.”
However, Daniel Stilitz QC, for Chelsea, said Mr Mourinho’s evidence was that he shouted ‘filho da puta’.
“Filho da puta is a phrase he often uses,” Mr Stilitz said, adding that it meant son of a bitch. “There is no sexist connotation.”
He said that Mr Mourinho used the phrase frequently at the training ground and during matches.
The FA ruled on 30 September 2015 that “the words used do not constitute discriminatory language” after consulting an independent academic expert in Portuguese linguistics.
Dr Carneiro was “preoccupied with developing her profile” and associating herself with the first team in a way discouraged by the club for backroom employees, Chelsea’s legal team added.
This involved signing autographs and having photographs taken with members of the public, nominating a high-profile first-team player when she uploaded a video to YouTube as part of the “Ice Bucket Challenge”, and seeking to position herself behind Mr Mourinho during televised matches.
Jose Mourinho profiled
Portuguese football manager born in 1963
The self-styled “Special One” of managers
One of only five managers to have won European Cup with two different teams
In 2012 became fifth manager to have won league titles in at least four different countries
Led Chelsea to first English league title in 50 years in 2005
Won title again in 2006, but sacked by Chelsea in 2007
Returned to Chelsea in 2013 and won another league title in 2015
Sacked by Chelsea again last December after disastrous start to season
Chelsea and Mr Mourinho, 53, will also argue that Dr Carneiro would still be in her job if she had not resigned – she argues that she had no choice but to leave the club and was therefore constructively dismissed.
The football club’s legal team said it would show the club had taken steps to settle with Dr Carneiro because it believed that it was “in no-one’s interests that this dispute should be determined through litigation”.
“They are conscious that, whatever the facts of the matter, it is likely to be widely and incorrectly assumed that they could have avoided this coming tribunal,” Chelsea’s legal team added.
The tribunal, which is being heard at the London South Employment Tribunal in Croydon, was adjourned until 14:00 BST on Tuesday.
The case is anticipated to be heard over seven to 10 days