Lack of firing procedures can be costly for practices
June 1, 1999
Lack of firing procedures can be costly for practices
Physician wins $1.75 million in lawsuit
A San Diego jury recently awarded $1.75 million to Thomas Self, MD, for having his employment contract wrongfully terminated by the medical group he worked for (Self v. Children’s Associated Medical Group, 695870 San Diego County Superior Court).
Although the medical group contended it simply exercised its contractual right not to renew Self’s employment, the jury decided that the group wrongfully terminated Self because he pushed for what he felt was appropriate — and more costly — care for his patients.
"This lawsuit sends a powerful message to medical groups: Do not assume that having a without cause’ termination provision in your employment contracts will always protect the group from a physician’s claim of wrongful termination," says Carol Isackson, partner in the San Diego law offices of Foley & Lardner.
Self’s defense was based on a California statue (Business & Professions Code Section 2056) that says it is a violation of public policy for any entity, including a medical group, to terminate a contract or otherwise penalize a physician principally for advocating for medically appropriate care.
Self had been employed by his 77-member specialty medical group as a pediatric gastroenterologist for over 10 years. In June 1995, the group decided not to renew his employment agreement "without cause."
Like many medical groups, Self’s group had no written policies, procedures, or standards for evaluating the clinical and economic performance of group members, although the group had held several meetings with Self in the months leading up to its decision not to renew his contract.
Shortly before Self’s departure, the group hired a new physician to help deal with the large backlog of patients. In his lawsuit, Self contended that the group hired a "younger replacement" to see more patients and produce more revenue for the group.
The trial included introduction of a letter from a referring medical group to Self’s practice complaining that his "shotgun" approach to testing unnecessarily exposed patients to painful and costly procedures.
Self argued that the tests he ordered were medically appropriate and that the letter was evidence of how his group stressed cost containment over quality patient care.
In turn, Self asserted his contract was not renewed because he spent too much time with patients and refused to make appointments and perform procedures at the rate demanded by the group.
One way groups can avoid similar legal problems is to adopt and implement uniform processes and standard criteria for review of physi cians’ clinical and economic performance, advises Julie Ashby, another health care lawyer with Foley & Lardner.
"If a group can establish that it uniformly evaluates and addresses all clinical and economic issues according to established standards and procedures, it will be in a far better position to defend a decision to terminate a physician for poor clinical care or for under-performing than a group that makes such decisions on an ad hoc basis," says Ashby.
Some common ways of establishing clinical standards include:
• Credentialing. Credentialing policies screen a physician’s professional training and competence at the time he or she is hired. When followed, a credentialing policy makes sure each doctor’s education, malpractice history, licensing status, clinical skills, and personality are consistent with the group’s standards.
The physician’s credentials must be measured according to established written criteria to deflect any claim that the group acted unreasonably. Each physician’s performance also should be re-evaluated in accord with these written standards at the time of reappointment or contract renewal.
• Peer review. Setting corrective-action or peer-review policies will establish standards of practice and require ongoing, routine review of each physician’s clinical decisions. "This enables the group to determine whether the physician’s professional judgment and performance are consistent with the group’s standards," says Isackson.
If the group determines that the doctor’s clinical decisions are not consistent with group standards, then it may take "corrective action," requiring the physician to remedy the problem. A group that consistently follows a corrective-action policy must advise its physicians of any clinical issues that may affect their continued affiliation with the group.
• Hearings. Fair-hearing plans provide physicians with a set of fair procedures the group must follow before disciplining a physician or terminating his or her contract for quality-of-care reasons. For example, if a group follows a fair procedure process, it permits the physician to challenge an adverse recommendation through a hearing.
Setting economic performance standards
Just as credentialing, corrective action plans, and fair-hearing plans ensure physician competence and provide physicians with due process rights, economic performance standards also protect both the group and the physician.
"If a group wants to terminate a physician’s contract because the group’s need for services does not warrant his or her compensation, the physician’s professional competence would not be an issue in the group’s decision. But if the group simply terminates the physician without cause, it risks a challenge from the physician that the termination was in retaliation for patient advocacy," says Isackson.
Even when a physician’s termination from the group is based on economics, there are several ways the group can protect itself from charges the termination was wrongful. These include:
• Contract language. Contracts between the medical group and its physicians should explicitly require that the physician meet the requirements imposed by the group’s managed care contracts. These contractual requirements may include a ratio of time spent with patients and income generated, among other things.
• Standard setting. The group should adopt a practice of reviewing clinical literature, objective data, and actual experience to ensure that its business standards are consistent with good clinical practice. Based on literature review and objective data, for instance, a group may establish that a particular test is required in certain circumstances (or no test at all). "This practice will permit the group to justify its position if a physician deviates from the group’s standard of practice," says Isackson.
• Procedures. The group should adopt and follow basic procedures for review of economic performance based on the relevant clinical standards of practice, advises Isackson. The group’s physician contracts also should refer to these policies and make clear that the physician may be subject to termination if performance standards are not met.
Standards also protect individual physicians
"You can argue the Self verdict suggests that individual physicians should resist efforts by their groups to implement written policies and standards so that the physicians can preserve their right to challenge medical groups that take retaliatory action because of patient advocacy," says Isackson. "However, these standards and policies, while clearly protecting medical groups, also give the physician greater protection in the contractual relationship."
For example, when following procedures governing assessment of clinical and economic performance, groups will be required to identify issues and initiate a dialogue with a physician sooner rather than later. Physicians will be offered the right to respond to the group’s allegations, to correct or improve their actions (if indicated), and to prevent an adverse decision altogether. Written procedures also ensure that a written record is established so that a physician is not subjected to a group’s post-hoc justifications for business and clinical decisions. If a group follows these procedures, it will be evident if it is taking retaliatory action against a physician for advocating for patients.
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content