August 2019, Volume XXXIII, No 5

Medicine and the Law

Physician employment rights

A new legal landscape

mployment laws matter more than ever for physicians, as practitioners move from smaller, private clinics and into salaried positions at large hospitals or HMOs. In these salaried roles, they may assert their rights as employees, rather than as independent contractors, who have far fewer legal rights and remedies. When issues arise about a physician’s clinical competence or behavior, most often culminating in a process called “peer review,” physician employees have a broad array of enforceable rights.

Peer review refers to the policy/procedure that applies when internal complaints are made concerning physician care or behavior. This is wholly distinct from public complaints made to the Board of Medical Practice. Internal complaint policy and procedures can apply to any medical professional who provides services at the organization, and to both employed and independent practice physicians who have been granted privileges at the organization.

While no generally available statistics are available, it is likely that most hospital practitioners will be subject to peer review at some point in their career, and for some this could be a more frequent occurrence.

Complaints triggering peer review can involve multiple issues, including problematic behavior and attendance concerns, failure to complete paperwork, a careless approach to protecting patient privacy, and serious concerns about patient care and outcomes. These complaints can be formally raised by an individual or individuals, and can come from a supervisor, colleague, subordinate, patient, or family member. A complaint or concern can also stem from routine organizational audits detecting anomalous or concerning patient outcomes or outcomes that could be considered a deviation from an acceptable standard of care.

Current and future employment, credentialing, and the ability to preserve or secure professional privileges, may depend on a successful resolution of a peer review complaint. Given these high stakes, knowledge of the legal rights of employee physicians is critical throughout any peer review.

Knowledge of the legal rights of employee physicians is critical.

How the peer review process generally works

Though many of the specifics of an internal institutional review depend on a given institution’s bylaws and/or policies, the peer review process generally involves four standard steps:

Disclosure and remediation. First, there is usually an initial “informal” disclosure to the physician by someone in a supervisory capacity that a complaint has been made, followed by an attempt to remediate expeditiously and without serious consequences, if the complaint does not allege serious misconduct or a significant deviation from a generally acceptable standard of care. Remediation can range from discussion and perhaps a documented warning; required attendance at CME or related courses tailored to the concerns raised; a formal plan to measure future care or behavior to ensure no similar issues arise; formal “proctoring” arrangements (e.g., supervision by a more experienced physician); and/or limits to the scope of procedures the physician has privileges to conduct. Interviews and meetings are held in an effort to uncover all relevant facts and to resolve the matter informally through means short of serious adverse impact on privileges.

In Minnesota, every step of peer review is governed by the Minnesota Peer Review Statute, which provides confidentiality and immunity from damages for “review organizations,” defined to generally include committees of hospitals, clinics, and HMOs that gather and review information related to the care and treatment of patients. Similar immunity protections apply under the federal Healthcare Quality Immunity Act (HCQIA).

Confidentiality and immunity protections under these statutes will only apply if the organization strictly abides by certain prescribed procedural steps. Importantly, at this point in a review (disclosure of a complaint and informal remediation), a physician may be allowed to resign without a report being sent to the state licensing board or the National Practitioner Data Bank (NPDB). Established under HCQIA, NPDB is the nationwide repository for all “reportable” incidents concerning physicians, regardless of which state these physicians are licensed to practice. The NPDB data is public and readily accessible to anyone inquiring, ensuring that a physician experiencing serious care or behavioral issues in one state couldn’t simply move to a different state, secure licensing, and begin practicing with a clean slate.

If the physician does not resign, an NPDB report may still be avoided if the resolution of the complaint is exoneration or some relatively mild correction action, such as those listed above, which does not involve a suspension of privileges for 30 days or more.

A formal investigation. When the initial disclosure and remediation step fails, a decision is made (usually by the designated committee over the affected physician’s specialty) whether to elevate the issue(s) to “formal investigation.” This escalation is significant, because it means a suspension or termination may occur that would require reporting to the state licensing authority and, potentially, the NPDB. After a formal investigation commences, a physician cannot resign and terminate the investigative proceeding without an NPDB report being made, and this report thereafter being publicly available.

If the investigation concludes that no “reportable” incident has occurred, the process generally concludes with some minor remediation obligations by the physician, and no further adverse consequences. The HCQIA defines a reportable incident as any action that “revokes or suspends (or otherwise restricts) a physician’s license or censures, reprimands, or places on probation a physician, for reasons relating to the physician’s professional competence or professional conduct… .” 42 U.S.C. §11132(a)(1)(A) (emphasis added).

A “reportable incident” determination. The third step commences when the internal investigation concludes with a recommendation that a reportable incident has in fact occurred. Such a conclusion is again generally reached by committee, and often accompanied by a recommendation that privileges be terminated and the employment relationship end immediately.

This typically occurs when, for instance, the behavioral issues are so severe (e.g., sexual harassment, extremely abusive interactions, or chronic failure to complete appropriate documentation or respect patient privacy), or the clinical competence issues lead to a conclusion that the physician’s continued practice would pose an “imminent” risk to patient care and cannot be otherwise effectively remediated.

The appeal. The last step is the appeal from an adverse recommendation. This recommendation usually involves suspension and/or termination of privileges, which usually allows termination of the underlying employment relationship. Appeal generally involves a hearing with at least a 30-day notice provided (usually before a panel of physicians, at least one of whom should be familiar with the practice area). The physician can generally be represented by legal counsel in this appeal, and has the evidentiary “burden of proof” to establish that the recommended action is an abuse of the considerable discretion afforded to the decision-making authority/committee. Typically, this burden requires the physician and counsel to show either that the alleged complaint is not supported by persuasive evidence, or that the recommended adverse action is wholly out of proportion to the actual offense.

Once this internal process is exhausted, and if the final recommendation is adopted by the appeal committee and/or Board of Directors, there is the possibility of further legal action to challenge the final decision, but the scope and likelihood of success of such action depends significantly on the evidence developed during the investigation and the nature of the employment relationship. In other words, if the physician is an employee rather than an independent contractor, there are generally far more potentially productive legal claims to assert.

The health care industry is rife with antitrust disputes.

The employment rights available to physicians

It is critical to understand the circumstances where legal protections can be trumped and/or significantly influenced by other legal rights arising in the workplace, which are available to employee physicians, but generally not for independent contractor physicians.

For example, if a peer review is initiated based on discriminatory, retaliatory, or anti-competitive intent—with a goal of developing a pretextual reason to get rid of a physician or force a resignation—a discrimination, retaliation, or antitrust claim can be far more readily proven by an employee physician than by an independent contractor.

That’s because most discrimination and anti-retaliation or “whistleblower” laws are intended to benefit employees, but not independent contractors. More important, the statutory immunity described earlier generally must yield to these claims. Courts have consistently ruled that a physician challenging a termination resulting from peer review on discrimination, retaliation, or antitrust grounds can get access to the otherwise confidential records involved in this process, and to records of how similar individuals who are not in the protected class have been treated in peer reviews. For example, a female physician terminated as a result of peer review can get access to records of how similarly situated male physicians have been treated in this process when similar complaints are raised. If these male physicians were not terminated, a strong gender discrimination claim can be asserted and proven.

Hospitals often have a strong incentive to overlook troubling conduct by their most productive physicians, so access to documentation when this occurs can be critical in establishing disparate treatment, which the U.S. Supreme Court has described as “the essence” of discrimination.

The Minnesota Whistleblower Act has a specific provision protecting employees who complain about health care issues. Health care workers, including physicians, are the largest group of whistleblowers in the health care industry, making protected reports under laws such as the Health Insurance Portability and Accountability Act (HIPAA), or parallel state laws, such as the Minnesota Patients’ Bill of Rights.

Finally, the health care industry is rife with antitrust disputes, which can be raised by both independent contractor and employee physicians. These laws can often be implicated when physicians try to use the peer review process to eliminate or take adverse action against competitors.

Asserting discrimination, retaliation, or antitrust rights can have a positive impact on peer review

Asserting these claims can have a dramatic impact on the dynamic and outcome of any peer review process. Physician employees who can raise credible discrimination, retaliation, or antitrust claims can effectively go on the offensive, and the leverage created by these claims can often result in agreed-upon resolutions to otherwise career-threatening peer review complaints without NPDB reports or any impact on future employability, privileging, and/or licensure.

Even before a peer review complaint issues, employee physicians must be certain (generally through legal advice) that the contractual terms of any employment relationship contain the right provisions to allow maximum legal protection in the event of peer review. The Medical Staff Bylaws and similar peer review policies should be provided upon request to any practitioner considering employment, and should be referenced in any such contract as a required process to be followed. Then, if these policies are not subsequently followed when a peer review complaint occurs, a viable breach of contract claim can also be asserted.

Finally, independent contractor physicians can also challenge adverse peer review decisions (for instance, by alleging an antitrust violation as described earlier), but this will often be limited to proving that the underlying peer review process was infected by “malice,” a more difficult standard than proving discriminatory or retaliatory intent.

Physician employees need to know that when difficult issues arise in the workplace, they have rights. Effectively enforcing these rights can often turn a career-threatening complaint into an opportunity to transition to another professional opportunity.

Lawrence P. Schaefer, JD, is the owner and president of Schaefer Halleen, LLC. He concentrates his practice representing medical professionals and other employees who are adversely affected by employment discrimination practices or unfair and unwarranted discipline or termination.

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Lawrence P. Schaefer, JD, is the owner and president of Schaefer Halleen, LLC. He concentrates his practice representing medical professionals and other employees who are adversely affected by employment discrimination practices or unfair and unwarranted discipline or termination.