Physicians Cutbacks

By Craig M. Brooks

Physicians are receiving pink slips more than ever before. Hospitals and other practices are cutting back and changing business models. Many organizations employing physicians have seen this day coming and wrote their physician employment contracts in a way to give them greater leeway in terminating a physician, whether that termination is for cause or is part of a larger organizational restructuring. Ninety- or sixty-day notice provisions, with no cause needed, are no longer uncommon. Perhaps the physician has negotiated a severance payment in the event of termination prior to the end of the contract term. If a physician gets a termination or non-renewal notice, is there anything he/she can do if the employer followed the terms of the contract?

The answer is "yes" and all physicians and their employers in this situation should review the potential issues. Just because a contract gives a practice, hospital or other employer, the means to end a physician’s employment, that is not the end of a good legal analysis. Numerous potential claims exist that do not rely upon and are not foreclosed by a contract.

The most common claim that may be made, even if the employer has complied with its contract, is one of employment discrimination. It is unlawful for an employer to terminate a physician (or any employee), even though it followed an employment contract, if the employer’s reason for the termination was based on the physician’s age (if the physician is at least age 40), gender, national origin, race, religion, physical or mental disability, citizenship, and, depending upon the state or locality in which the physician is employed, perhaps other categories as well (e.g., sexual orientation, family status, etc.). Claims can be made not only by recognized minorities in the workplace but also by white males claiming reverse discrimination.

A physician making a claim of employment discrimination does not need "smoking gun" evidence of the employer making obviously biased statements about the physician. Recognizing that most employers who engage in illegal discrimination are sophisticated enough to not make or get caught making obviously biased statements, the courts permit discrimination claims to be based on indirect or circumstantial evidence. The legal analysis can seem complicated on this subject but a good lawyer will be able to review this in a straight-forward manner with an employer or individual physician. Indeed, a physician’s prospects of prevailing in a discrimination claim are increased by having legal counsel in the background guiding the physician before actually bringing such a claim. Such efforts also increase the prospect of negotiating a favorable and prompt settlement. The same is true for employers who benefit from review with counsel prior to finalizing their plans for guidance on engineering good results.

Numerous other potential claims exist as well, depending upon the circumstances. There may be wrongful discharge claims, retaliation claims, whistleblower claims, and/or general tort claims such as defamation, to name a few. Each of these areas of the law has its own requirements and coverage, with some differences by state. Again, a review of the specific situation with counsel is key to improving your situation. The requirements for each of these legal different areas are quite varied and not necessarily based on common sense. For example, whistleblower laws only cover employees in certain employment settings but not others (e.g., whether the employer is a federal contractor, publicly traded corporation, etc.). State common law usually provides for various types of wrongful discharge claims, where employers can be held liable for terminating employees who opposed illegal acts by the employer; but, these protections vary from state to state. The manner in which a physician goes about opposing an employer’s improper actions often makes the difference in whether there is a valid claim.

Many employment laws provide that employees may not be retaliated against for exercising their right to make a claim, even if the original claim is not successful. This opens up a can of worms as to whether an employer terminated an employee because he/she exercised the right to make a prior claim. Again, understanding what it takes to make a retaliation claim is key to navigating through these issues.

This is not to say that employers should never terminate a physician out of fear of one of these claims or that all terminated physicians have valid claims outside their contract. But these are issues to be explored in order to better protect your interests. The law is often structured in such a way that employers acting on assumptions or ego greatly magnify the potential for such claims. What you think is the law may not be so.