Physician Performance Improvement Recommendations

 

            Most health lawyers counsel professional review committees of healthcare entities to design performance improvement recommendations to target the problematic performance of the affected physician. Specific education programs, skills building or training, mentoring, and proctoring are often used. As continuous professional performance monitoring becomes more widespread, it is likely hospitals will see their professional review committees making more of these types of recommendations in the future. In light of recent case law, health lawyers advising clients about such matters should consider that a recommendation to obtain education or a mentor may strengthen the claim of non-hospital employed physicians that they ought to be entitled to the protections of the federal employment laws thereby exposing the hospital to claims under Title VII of the Civil Rights Act of 1964.

 

The Holding And Facts of the Case

 

            In Salamon v. Our Lady of Victory Hospital, the Second Circuit Court of Appeals reversed summary judgment for the hospital and medical staff leaders in a Title VII of the Civil Rights Act of 1964 sex discrimination case filed by a female medical staff member.  The lower court granted summary judgment in favor of the hospital and others based on its finding that the physician was not a hospital employee and had no standing to bring a Title VII claim. Viewing the circumstances in the light most favorable to the plaintiff, the court of appeals reversed and held that the physician demonstrated a genuine factual conflict regarding the degree of control the hospital exerted over her practice through the peer review process.  Significant to the Second Circuit was the fact that the peer review did not result in a termination or ultimatum to improve outcomes but instead resulted in a detailed re-education program designed expressly to change the methods by which the physician arrived at diagnoses and treatment.

 

            Dr. Barbara Salamon claimed that the chief of her division made inappropriate comments to her and unwanted sexual advances and that after she complained of being repeatedly sexually harassed, the chief retaliated by intensifying his level of supervision and by giving her undeserved negative performance reviews.  After her cases were subject to several levels of review, Dr. Salamon was "ordered" to undergo a three month re-education and mentoring program and was told that "failure to complete the program would result in a suspension."  In the end, no physician mentor could be found.  514 F.3d at 220. The Court of Appeals decision does not reveal whether Dr. Salamon was suspended.

 

            Applying factors set forth in Community for Creative Non-Violence v. Reid, the appeals court recognized the most important factor was "that control or right of control by the employer which characterizes the relation of employer and employee and differentiates the employee or servant from the independent contractor."  At issue was not merely the right to dictate the outcome of the work, but the right to control the "manner and means" by which Dr. Salamon accomplished that outcome.  The most significant mechanism of supervision over Dr. Salamon was the quality assurance program, in which she was required to participate.  The hospital also had a peer review process for further examining the practice of doctors whose cases had been flagged through the quality assurance program.  Dr. Salamon argued that the hospital's quality management did not merely measure the quality of her patient treatment outcomes.  It also mandated performance of certain procedures and the timing of others, and impacted her choices about which medications to prescribe. 

 

            Taking Dr. Salamon’s allegations as true, the appeals court concluded the hospital exercised "substantial control" over the treatment outcomes of her practice, and over the details and methods of her work.  The court found significant that the hospital's review of Dr. Salamon's practice did not result in termination or a simple ultimatum to improve patient treatment outcomes. Instead, the review resulted in a detailed re-education program designed expressly to change the methods by which she arrived at diagnoses and treatment.   Discounting the fact that the re-education never occurred, the court focused instead on the level of review contemplated and present in this hospital-physician relationship.  Whether the methods that the hospital required of the physician merely reflected the professional standard or rather showed a greater degree of control sufficient to establish an employment relationship was a factual issue left unresolved by the record.

 

Other Jurisdictions

 

            The Second Circuit in Salamon conceded that other jurisdictions have found that hospital peer review programs do not constitute exercises of control over the manner and means of physician’s practice.  The controlling case in the United States Court of Appeal for the Seventh Circuit is Alexander v. Rush North Shore Medical Center, in which an anesthesiologist brought a Title VII action against the hospital for discriminatory termination of his staff privileges.  As a condition of his privileges, the physician was required to spend a specified amount of time per week "on call" for the hospital's emergency department.  One evening, an emergency department physician called the anesthesiologist for help, and the anesthesiologist did not report to the emergency department.  The incident was reported, and after consideration and deliberation by several panels of the hospital's hierarchical internal review structure, the board of trustees revoked the physician's staff privileges for violation of the hospital's on-call policy.

 

            Like Salamon, the main factor considered in Alexander was "the employer's right to control."  The Seventh Circuit highlighted the following facts: the anesthesiologist did not supply his own equipment or assistants, but did possess significant specialized skills; on his income tax returns, he listed his personal wholly owned professional corporation that was responsible for paying his malpractice insurance premiums, employment benefits, and income and social security taxes; he was responsible for billing his patients and he collected his fees directly from them; he never received any compensation, paid vacation, private office space, or any other paid benefits from the hospital; he had the authority to exercise his own independent discretion concerning the care he delivered to his patients based on his professional judgment as to what was in their best interests; he was not required to admit his patients to the hospital; and he was free to associate himself with other hospitals if he wished to do so.  The appeals court concluded that the manner in which the anesthesiologist rendered services to his patients was primarily within his sole control.  Therefore, the anesthesiologist was an independent contractor, and had no standing to bring a Title VII claim.

 

            In conclusion, when counseling healthcare entities considering the use of performance improvement recommendations designed to target the affected physician’s problematic performance, health lawyers should assess whether any proposed recommendation may strengthen the argument of a non-hospital employed physician to the entitlement of Title VII protections as demonstrated in the Salamon case. Whether a termination or ultimatum to improve outcomes is better than trying to educate and mentor remains to be seen. Although designing performance improvement recommendations allowing the physician the opportunity to self-correct seems to be the fair course of action, it could subject the hospital and medical staff leaders to another theory of liability.

 

            For more information on how your healthcare entity might better protect you, contact Sherry Fabina-Abney and Carly Everett of Ice Miller LLP.

 

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.