Tips to Stay Out of Legal Trouble
Practice Management Feature – August 2012
Tex Med. 2012;108(8):33-36.
By Crystal Conde
An off-color joke, a misunderstanding over employment status, or not addressing disruptive behavior can trigger a legal nightmare for a medical practice.
Regina Williams, a board-certified human resources lawyer in Austin, and attorney W. Stephen Cockerham, who chairs the labor and employment group in the Dallas office of Brown McCarroll, LLP, have identified four human resources topics that commonly generate lawsuits for physicians:
- Covenants not to compete,
- Independent contractor status, and
- Disruptive physician behavior.
Ms. Williams says physicians often make some common mistakes in managing employees.
"I would say the source of many lawsuits is a failure to communicate both verbally and in writing and sometimes even in professional evaluations," she said.
A customized manual in a physician's practice can aid in effective communication and in implementing human resources policies and procedures. (See "TMA Policies, Procedures Guide.")
Mr. Cockerham agrees that medical practices could avoid some lawsuits by adhering to sound human resources policies and by allowing employees to report concerns.
"When physicians have problems with employees, they need to follow their policies and communicate. When employees have performance issues, physicians need to address those concerns early with the employees, document that they've been addressed, and then give employees a chance to improve," he said.
He says physicians also would be wise to institute a 60- to 90-day probationary period for all new employees.
"During this period, physicians can evaluate new hires to determine whether they're right for the job," he said.
Both attorneys advise physicians to make human resources a priority. If they don't, they could face lawsuits that cost their practices more than money.
"Employment lawsuits can be disruptive to a medical practice and can hurt productivity. Employees may feel they have to take sides and may be resentful," Mr. Cockerham said.
Covenants Not to Compete
Ms. Williams says in her experience noncompete clauses tend to spark lawsuits when an unhappy physician wants to leave a lucrative group practice. At that point, the physician will look at the employment contract and try to determine how to get out of the covenant not to compete. It's smart to plan ahead initially by having an attorney review the contract to ensure it meets legal requirements and has a buyout provision," she said.
Texas is the only state that grants physicians the right to buy out the covenant. In other words, physicians in Texas can purchase their freedom to compete with a former employer.
Texas law gives physicians two options. Physicians and employers can stipulate the specific buyout amount in the contract or let an arbitrator decide the amount when the physician leaves.
The Texas Covenants Not to Compete Act says noncompete clauses with reasonable limits on when, where, and how a physician can establish a new practice are not enforceable.
In addition, Texas law prohibits the corporate practice of medicine. The Texas Medical Practice Act and the Texas Occupations Code prevent physicians from entering into partnerships, employee relationships, fee splitting, or other situations in which a nonphysician controls the practice of medicine.
A Texas Medical Association Board of Councilors opinion says covenants disrupt continuity of care, deprive the public of medical services, and restrict competition. The board discourages any agreement that limits a physician's right to practice medicine, and it considers such covenants unethical if the geographic scope or duration specified is unreasonable.
The board says physicians should not be subject to a lawsuit for violating a noncompete clause if they continue to treat patients they believe will suffer if they stop seeing them.
When disputes over a noncompete clause occur, a judge will examine the clause to determine if it meets the requirements of Section 15.50 of the Covenants Not to Compete Act. The section says that generally the covenants are enforceable against a Texas physician if they:
- Allow a physician access to patients' medical records;
- Allow a physician access to a list of patients seen within one year after termination of the contract or employment;
- Include a reasonable buyout; and
- Do not prohibit a physician from caring for a patient during an acute illness, even after termination of employment.
TMA offers "Employed Physicians and Contracting Issues," an on-demand webinar that features an overview of physician employment trends in Texas and a discussion of factors to consider before signing an employment agreement.
Physicians can earn 1 AMA PRA Category 1 CreditTM for completing the webinar. To register for the webinar, visit TMA's Education Center. Look under Practice Operations.
Title VII of the Civil Rights Act of 1964 prohibits employers with 15 or more employees from discriminating based on race, color, religion, sex, or national origin. The federal law also features broad prohibitions against sex discrimination. Specifically, it forbids sexual harassment, which encompasses practices from direct requests for sexual favors to workplace conditions that create a hostile environment for men and women. Title VII also covers pregnancy-based discrimination and states that pregnancy, childbirth, and related medical conditions must be treated in the same way as other temporary illnesses or conditions.
A number of other federal laws address workplace discrimination, including retaliation against an employee for filing a charge of discrimination, participating in an investigation, or opposing discriminatory practices; and employment decisions based on stereotypes or assumptions about the abilities, traits, or performance of employees of a certain sex, race, age, religion, or ethnic group. (See "HR Help Online.")
For more information about federal job discrimination laws, visit the U.S. Equal Employment Opportunity Commission website.
Physicians can take steps to maintain an environment free of discrimination and harassment. Ms. Williams recommends every medical practice have a no-harassment policy that covers sexual harassment, as well as discrimination based on age, race, national origin, ethnicity, sex, disability, and religion.
"The policy should provide a mechanism for an employee to complain about harassment and discrimination to someone other than an immediate supervisor, as that person may be the one violating the law," she said.
Mr. Cockerham adds that physicians need to conduct themselves in a professional manner and set the tone for a harassment-free environment in the medical practice.
Independent Contractor Status
Disputes over independent contractor status can be tricky, Ms. Williams says.
"There have been cases in which a physician goes to work for a medical group as an independent contractor and then claims he or she was actually a full-time employee entitled to certain health insurance and financial benefits," she said.
Having a contract with independent contractors is helpful but not enough to defend a potential lawsuit, according to Ms. Williams.
Under the law, an individual could be considered an employee if he or she doesn't work for any other entities and conforms to the same rules and standards as all other employees.
Determining independent contractor status involves a test, Ms. Williams says.
The Internal Revenue Service (IRS) consolidated its "Twenty Factor" test for determining independent contractor status into 11 main tests. The IRS organized them into three groups: behavioral control, financial control, and the type of relationship of the parties.
For more information about the tests, visit the Texas Workforce Commission website.
Medical practices also often have questions regarding whether an employee qualifies for exempt or nonexempt status, says Mr. Cockerham. Nonexempt employees are entitled to overtime pay.
The Fair Labor Standards Act (FLSA) lays out requirements for classifying employees as exempt vs. nonexempt. The FLSA Fair Pay Exemption Questionnaire can help physicians determine which employees are exempt and which employees are nonexempt. You may access the questionnaire on the TMA website.
The U.S. Department of Labor has additional FLSA information on employee exemption on its website.
The TMA Committee on Physician Health and Rehabilitation (PHR) considers any health care professional who blames or shames others for potential breakdowns in safety measures or acts in an intimidating fashion toward the medical team to be exhibiting disruptive behavior.
TMA's PHR Committee recognizes that when any member of the medical team acts out in an uncharacteristically disruptive manner and the behavior becomes a pattern, an underlying medical condition may be to blame. The committee has a program to promote physician health and well-being and to encourage early intervention and care of impaired physicians.
"Psychiatric Illness and Disruptive Behavior in Physicians," available as a home study course and on the TMA website, covers common psychiatric illnesses in physicians, mood and anxiety disorders, recognition of potential for suicide, and addressing disruptive behavior in physicians. Physicians who complete the course earn 2 AMA PRA Category 1 CreditsTM and 2 ethics credits.
To inquire about PHR Committee educational programs, contact Linda Kuhn, TMA Physician Health and Rehabilitation program manager, by calling (800) 880-1300, ext. 1342, or (512) 370-1342, or by e-mailing her.
Ms. Williams says a lawsuit may arise when a physician in a group has a substance abuse problem and acts out in a way that threatens or intimidates colleagues and employees.
"Substance abuse problems may manifest in physician absences and angry outbursts, refusal to comply with directives, or the physician withdrawing from colleagues and employees," she said.
She recommends medical practices draft a substance abuse policy to address these situations. The policy could outline steps the practice can take to accommodate the affected physician's rehabilitation.
If a medical group has a concern that a physician may have a substance abuse problem that could affect patient care, Mr. Cockerham says the group must address the concerns immediately.
"Typically, the group would first meet with the physician. If he or she admits to a problem, the physician can be referred to rehabilitation. If the physician denies a problem, the group may, depending on the circumstance, require the physician to submit to a drug and alcohol test, require an evaluation, or involve a drug and alcohol counselor to intervene," he said.
He adds that in any event "the physician should not be allowed to treat patients until the matter is resolved. It is important to preserve confidentially throughout this process."
Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email.
TMA Policies, Procedures Guide
To help medical practices implement and enforce their own policies and procedures, TMA offers Policies & Procedures: A Guide for Medical Practices. A hard copy of the guide with customizable CD is $295 for members and $395 for nonmembers. The customizable CD alone is $255 for members and $355 for nonmembers.
To order the guide, call the TMA Knowledge Center at (800) 880-7955 or e-mail TMA Knowledge Center.
Attorney Regina Williams consulted with TMA in developing the human resources portion of the policies and procedures guide. She has some advice to help medical practices effectively implement the human resources policies and procedures.
She says the office manager or other designated human resources professional should obtain written proof that the practice furnished new employees with the guide and instructed employees to read the guide. She adds it's a good idea for a practice to conduct an orientation session.
"Practices should arrange for an orientation session with all employees to explain the new policy and procedure guide. The practice should require proof of receipt of the manual and obtain in writing proof the employee attended the orientation session. The employee also has the opportunity to ask questions during the session," she said.
As the practice updates the manual, Ms. Williams says, the same training and notification procedures should be required, with a written record of attendance and written proof the employee received the revised policies.
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HR Help Online
Turn to the Internet for additional information on employment law.
Americans with Disabilities Act
The website includes a guide for small businesses, a guide to disability rights laws, tax incentives for small businesses, enforcement information, and regulations.
Texas Workforce Commission
For employers, the Texas Workforce Commission offers information on labor law and labor market statistics. The Business and Employers section features links to job market and economic data, unemployment and labor law information, laws and requirements for employers, and more.
U.S. Department of Labor
This site includes information on employee benefits, hiring, retirement plans, termination, training, wages, work hours, and workplace safety. You can link to other related federal agencies.
U.S. Equal Employment Opportunity Commission (EEOC)
EEOC laws cover most employers with at least 15 employees. The website explains current regulations, policy guidance, types of discrimination, and other federal laws prohibiting employee discrimination.
U.S. Office of Special Counsel
The website has details on the Uniformed Services Employment and Reemployment Rights Act, which provides employment protections for those who serve or who have served in the U.S. Armed Forces, Reserves, National Guard, or other uniformed services.
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