New York Federal Court sends Title VII suit against hospital by physician with staff privileges to trial, holding that staff privileges may create "employee" relationship
A New York federal court recently ruled that a Buffalo, New York hospital is not entitled to summary judgment on a claim of employment discrimination, sexual harassment, and retaliation brought by a physician in private practice who enjoyed staff privileges at the hospital. In Salamon v. Our Lady of Victory Hosp., 2012 U.S. Dist. LEXIS 47176 (W.D.N.Y. Mar. 30, 2012), Judge William Skretny, Chief Judge of the U.S. District Court for the Western District of New York, ruled that Barbara E. Salamon, M.D., a board-certified gastroenterologist and internist, presented sufficient evidence to create a material issue of fact for trial as to whether the hospital exercised enough control over her practice to create an employer-employee relationship triggering the protections of Title VII of the 1964 Civil Rights Act.
Dr. Salamon was a sole practitioner who was initially granted staff privileges at the hospital in 1995 and remained on staff for nine years, during which time she was subject to the hospital’s staff rules and regulations and quality control standards. Her clinical privileges included use of the hospital’s facilities and when treating patients, the hospital required her to use hospital nursing and support staff.
In 1999, Dr. Salamon filed a lawsuit against the hospital alleging that she suffered adverse employment actions in retaliation for complaining of sexual harassment by the chief of the hospital’s gastroenterology division. Dr. Salamon claimed that administrative intervention into her practice increased, that her cases were reviewed and criticized at every staff meeting, and that the hospital subjected her to a higher level of scrutiny than any other doctor in the division.
Dr. Salamon also allegedly began receiving negative performance reviews, and a “re-review” of her previously peer-reviewed cases resulted in the hospital ordering her to undergo a three-month “re-education” program. That re-education program never materialized because no mentor could be found, and her privileges expired in 2003 when the hospital was acquired by another health system.
The district court issued its decision on remand from a 2008 decision by the U.S. Court of Appeals for the Second Circuit—a federal appellate court with jurisdiction over New York, Connecticut, and Vermont. The Second Circuit had reinstated Dr. Salamon’s claims after the trial court had previously granted the hospital’s motion for summary judgment on the issue of whether she was an employee and entitled to the protection of the civil rights laws. Notably, the Second Circuit’s ruling on this issue was contrary to the rulings of several other federal appellate courts that had previously considered the issue of whether a physician with staff privileges is considered to be an “employee” of a hospital under federal employment discrimination statutes.
The Second Circuit ruled that there was sufficient evidence that Dr. Salamon was a hospital employee—based on the degree of control the hospital exercised over her practice and the fact that the control appeared to establish a common law agency relationship—to allow her claims to be tried before a jury. The Second Circuit distinguished between the exercise of discretion and professional judgment generally required of a physician, and the actual “substantial control” the hospital exercised over the details and methods of her work. The Second Circuit noted that the hospital did not pay her a salary, wages or benefits, and that she set her own hours and maintained her patient load. However, the Court found questions of fact based on other evidence of control, noting that she was required to comply with staff rules and regulations and hospital by-laws, she was obliged to participate in one-hour staff meetings every three months and spend a certain amount of time “on call,” and, while on call, she was obliged to treat patient needs at the hospital as they arose, whether or not they were her patients.
In finding summary judgment inappropriate, the Court focused on the hospital’s “quality assurance program”, a program the hospital required Dr. Salamon to participate in as a condition of her staff privileges. When cases were flagged as potentially problematic, they were discussed at mandatory GI division meetings, and the hospital’s peer review process provided for further examination of the practice of doctors whose cases had been flagged.
Salamon argued that these quality management standards did not merely measure the quality of her patient treatment outcomes, but mandated performance and timing of certain procedures and impacted her choices about which medications to prescribe, not in the interest of medical judgment, but to maximize hospital profit. While recognizing that other circuits had rejected claims of employee status by physicians with staff privileges, the Second Circuit concluded that the facts relating to Dr. Salamon could require a different result: “If Salamon’s allegations are true, as we must assume at this stage of the proceedings, a reasonable fact-finder could conclude that [the hospital’s] quality assurance program exceeded the control exerted in [those cases], particularly as evidenced by what occurred after the alleged instances of harassment.”
On remand, District Court sends Dr. Salamon’s employment claims to trial
Following remand, the hospital renewed its motion for summary judgment. Relying heavily on the Second Circuit’s decision vacating the previous grant of summary judgment, the trial court ruled that Dr. Salamon presented sufficient evidence to create an issue of fact as to whether the hospital controlled the “manner and means” by which she completed her assigned tasks.
The court relied upon the hospital’s alleged control of plaintiff’s practice schedule and its requirements about how Dr. Salamon performed certain procedures as among the factors that raised an issue of fact as to whether she was an employee for purposes of Title VII. Dr. Salamon asserted that the hospital did not simply review the quality of her patient treatment outcomes, but mandated performance of certain procedures, the timing of others, directing which medications she should prescribe, and recommending changes to her practice based on their financial impact to the department. For example, Dr. Salamon alleged that she was “repeatedly instructed to discharge [her] patients before their treatment could be completed and to perform endoscopic procedures on an outpatient basis to economically benefit the Hospital,” was required to attend division meetings “where [she] was instructed on how to perform services consistent with [the hospital]’s particular manner,” and that “she was required to follow a GI Division policy mandating the performance of unindicated or prophylactic procedures.”
The hospital’s review of Dr. Salamon’s practice resulted in a detailed re-education and mentoring program requiring plaintiff to be re-trained to perform services at the hospital in a particular manner. That re-education requirement controlled specific details of her work at the hospital, which included appropriate treatment, removal, monitoring, length of procedures, and level of sedation. The court also cited to Dr. Salamon’s assertion that, despite the fact that she enjoyed privileges at two other facilities, nearly all of her patients were seen at the hospital.
Implications for hospitals
While physicians with staff privileges generally have wide latitude in their practice and their ability to diagnose and treat patients and are not treated or regarded as employees, hospitals should be prepared to defend against claims asserting employment status.
Courts in other circuits have generally held that a physician with hospital privileges has the status of an independent contractor. See Wojewski v. Rapid City Reg’l Hosp., Inc., 450 F.3d 338, 343 (8th Cir. 2006); see also Shah v. Deaconess Hosp., 355 F.3d 496 (6th Cir. 2004) (holding that a surgeon with surgical privileges was not an employee of the hospital and thus could not bring suit under either the ADEA or Title VII); Vakharia v. Swedish Covenant Hosp., 190 F.3d 799, 805-806 (7th Cir. 1999) (holding that an anesthesiologist, whose staff privileges were terminated, was not a hospital employee and therefore could not bring suit under either the ADEA or Title VII); Cilecek v. Inova Health System Svcs., 115 F.3d 256, 262 (4th Cir. 1997) (holding that a physician was an independent contractor and thus could not sue the hospital under Title VII); Diggs v. Harris Hosp. Methodist, Inc., 847 F.2d 270, 271 (5th Cir. 1988) (holding that a physician with staff privileges was not an employee and thus could not bring a claim under Title VII).
However, in Salamon, the Second Circuit has emphasized the fact-specific nature of this analysis, and the trial court has now determined that the issue of whether Dr. Salamon was an independent contractor can only be resolved upon trial of the disputed material facts. As a result of the Salamon decisions, hospitals—and particularly those hospitals located in New York, Connecticut, and Vermont—should carefully consider the terms of their relationships with physicians who have been granted staff privileges and proceed with caution in dealing with any claims by staff physicians asserting rights under employment laws.