Dodge the legal mess of a without-cause’ firing
Is your group open to dismissal suits?
While providers fight for legislation allowing patients to sue their HMOs for putting profits before proper care, practices should also review their internal compensation and practice management polices to ensure they are not open to similar lawsuits by their own physicians, warn legal experts.
A case in point is a lawsuit in which a jury last year awarded $1.75 million to a San Diego physician for being wrongfully terminated by his practice employer. The physician claimed he was fired simply because he insisted that patients be given medically appropriate care, which cut into the group’s profits (Self v. Children’s Associated Medical Group, 695870 San Diego County Superior Court).
"This decision sends a powerful message to medical groups: Do not assume that a without-cause’ termination provision in an employment contract will always protect you from being sued," advises Carol Isackson, partner in the San Diego law offices of Foley & Larder.
"Medical groups need to make sure that their clinical and business decisions do not become the basis of a wrongful-termination lawsuit, while also protecting the rights of their physicians to act as an advocate for their patients," she notes.
The background
In the California case, the plaintiff 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.
Shortly before his departure, the group hired a new physician to help deal with a large backlog of patients. In his lawsuit, the suing physician contended that the group hired a "younger replacement" to see more patients and produce more revenue for the group.
During the trial, the plaintiff basically argued the real reason his contract was not renewed was because he spent too much time with patients and refused to make appointments and perform procedures at the rate demanded by the group. He also used the high revenue immediately generated by the newly hired physician to reinforce his point.
"This novel and successful litigation claim poses new questions for physicians and medical groups," when it comes to balancing the economic realities of managed care against physician concerns about the quality of patient care, says Isackson.
One way for groups to avoid similar legal problems is to adopt and implement uniform processes and standard criteria for reviewing each physician’s clinical and economic performance, advises Julie Ashby, another health care lawyer at Foley & Larder.
"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 underperforming than one making a similar decisions on an ad hoc basis," says Ashby.
For instance, if a group wants to terminate a physician’s contract because it feels the demand for their particular services does not justify their compensation, professional competence is not considered 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 this was in retaliation for being a strong patient advocate, " says Isackson.
Ways to protect yourself
Some ways a group can provide itself from such wrongful termination suits include:
• Contract language. Contracts between the medical group and its physicians should explicitly require they meet the requirements imposed by the group’s managed care agreements. This could, in turn, be translated into such performance criteria-setting benchmarks for ratios for time spent with patients and income generated.
• Standard setting. Make it a policy to re-
view clinical literature and gather objective data intended to ensure your business standards are consistent with good clinical practices — for instance, when a particular test is required or
not. "This helps the group 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. The group’s physician contracts need to reference those policies, making clear the physician is subject to termination if performance standards are not met.
• Credentialing. A credentialing policy ensures each doctor’s education, malpractice history, licensing status, clinical skills, and personality are consistent with the group’s standards. When a physician’s credentials are measured against established written criteria, this minimizes the possibility of a successful suit that the group acted unreasonably by not renewing an employment contract.
• Peer review. Peer review policies enable the group to determine whether a physician’s professional judgment and performance are consistent with the group’s standards, says Isackson.
If it is decided a doctor’s clinical decisions are not consistent with group standards, then it may take corrective action, requiring the physician remedy the problem.
• Hearings. So-called fair-hearing plans provide procedures physicians can take to challenge a disciplinary action or termination of their contract for quality-of-care reasons. While it may look like the group is just covering its legal backside — which
it is — such polices also "provide the individual physician with greater protections in their contractual relationship" with the group, says Isackson.
For instance, those kinds of formal procedures make sure that the practice identifies issues and initiates a dialogue with a physician sooner rather than later while giving physicians the right to respond to the group’s allegations before any punitive action can be taken.
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