Doctor-hospital relationships are typically characterized as independent contractor arrangements. The hospital provides access (“privileges”) to physicians who then treat their patients using the hospital's facilities. The hospital does not dictate how patients are treated, although there is usually some type of quality assurance mechanism in place to monitor the physician's overall performance, as required by state or federal law. A recent decision out of the Second Circuit shows how even this type of traditional relationship can evolve into an employment relationship that subjects the hospital to liability under the federal discrimination law. The case also provides a useful guide on how not to manage claims of sexual harassment by physicians against the hospital staff.
A female physician was a board-certified gastroenterologist and internist with privileges at the defendant hospital. At the hospital, she was required to comply with so-called Staff Rules and Regulations and Hospital By-Laws. She was also required to participate in quarterly staff meetings and spend a certain amount of time both on call treating hospital patients as the need arose, as well as maintaining follow-up treatment regimens for the patients she saw during this time. She was subject to the hospital quality assurance program. This program involved practitioner review of problematic cases and also a peer review process examining individual physicians whose cases had been flagged through the quality assurance mechanism. One of the things that the plaintiff alleged was that the quality assurance program included detailed requirements as to when and how her work was to be performed and, in some cases, focused on maximizing profits, rather than patient care.
The plaintiff alleged she was repeatedly sexually harassed by the hospital's Chief of the Gastroenterology Division. She complained of what has now become the standard litany in these types of cases: unwanted and inappropriate remarks; comments about her clothing, appearance and attractiveness; and being physically cornered by this doctor and asked if she was available for him on weekend afternoons.
One of the enduring characteristics of sexual harassment defendants is their absolutely overwhelming lack of originality.
After the plaintiff refused his advances and reported them to the hospital president and chief of staff, two things happened. First, the hospital did nothing about the harassing division chief. Second, the hospital allegedly began an organized campaign to force her out.
Had the hospital simply removed her privileges, this case might not have gotten any further. But the hospital president, and other physicians began a systematic review of all of the plaintiff's cases, even those already peer reviewed and approved. In doing this, the hospital violated its own usual protocols, examining her cases in greater depth than it did for other physicians. Other doctors, aware of the campaign against her, stopped referring patients to her, and some even confided to her that she was a target because of her complaint against the division chief.
Ultimately, the hospital ordered her to undergo a three-month "re-education" and mentoring program. Note to HR practitioners -- for those of you establishing corrective action programs for your employees, try not to name them in a manner reminiscent of the concentration camps for political dissidents used in communist dictatorships.
The re-education program focused on redirecting a plaintiff's practice of medicine into a more suitable style and method. Ultimately, because no one in their right mind at this hospital wanted to be associated with her, there was no physician mentor and the requirement vanished when the hospital was sold to another organization. The plaintiff sued when she could not get another job.
Although the district court found that the plaintiff doctor was not an employee but an independent contractor, the Second Circuit reversed on appeal. The Court determined that the hospital's quality assurance program mandated performance of certain procedures, selections of specific medications, and a focus on "lost revenue", notwithstanding the physician recommendations for treating a patient. It also noted that the "re-education" program was aimed directly at the critical "manner and means" by which the plaintiff physician accomplished her work. In evaluating the key issue of balance between the employee's judgment and the employer's control, the court determined that the plaintiff raised issues of material fact about whether the hospital's control overrode the employee's judgment. The court noted that it was significant that the hospital's review of the plaintiff's practice did not result in the termination of her contract or a simple ultimatum to improve her patient treatment outcomes, but rather in a detailed program that was expressly designed to change the methods by which she arrived at diagnoses and treatment.
In other words, when the hospital moved into the role of supervising how the physician did her job, it was stepping into the shoes occupied by an employer, not a contract supervisor.
This is an excellent case to review for healthcare organizations, but it also provides solid guidance for anyone who is operating an independent contractor workforce.