TMA Opposes Physician Assistants Hiring Physicians

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February 17, 2010

Mari Robinson, JD, Executive Director
Texas Physician Assistant Board
P.O. Box 2018
Austin, Texas 78768

Re: Comments on Proposed Draft Rules Chapter 185.16 (e), January 4, 2010.

Dear Ms. Robinson:

The Texas Medical Association ("TMA") is a private, voluntary, nonprofit association of Texas physicians and medical students.  TMA was founded in 1853 to serve the people of Texas in matters of medical care, prevention and cure of disease, and improvement of public health.  Today, our maxim continues in the same direction: "Physicians Caring for Texans."  TMA's diverse physician members practice in all fields of medical specialization.

On behalf of the more than 45,000 member physicians of the Texas Medical Association (TMA) we appreciate this opportunity to review and offer comments on the draft proposed rule relating to a physician assistant employing his or her supervising physician.

A physician assistant (PA) cannot legally "employ," even as an "independent contractor," his or her supervising physician. The scope of practice of the PA is set out in Section 2004.202, Occupations Code.  In particular, Subsection (e) states:

(e)  A physician assistant is the agent of the physician assistant's supervising physician for any medical services that are delegated by that physician and that:

(1)  are within the physician assistant's scope of practice; and
(2)  are delineated by protocols, practice guidelines, or practice directives established by the supervising physician.

This provision of the Physician Assistant Licensing Act clearly establishes that the PA is the agent of the physician. The law of agency allows one person to employ another to do her or his work, sell her or his goods, and acquire property on her or his behalf as if the employer were present and acting in person. The principal may authorize the agent to perform a variety of tasks or may restrict the agent to specific functions, but regardless of the amount, or scope, of authority given to the agent, the agent represents the principal and is subject to the principal's control. More important, the principal is liable for the consequences of acts that the agent has been directed to perform. The agent does not and cannot employ or control the principal.

Perhaps the most important element of a principal-agent relationship is the concept of control: the agent agrees to act under the control or direction of the principal. The extent of the principal's control over the agent distinguishes an agent from an Independent Contractor, over whom control and supervision by the principal may be relatively remote.

In effect, the proposed rule turns agency law upside down and is in direct contradiction of the Physician Assistant Licensing Act.

On the subject of PAs owning a clinic (and the related issue of the role of the supervising physician), one needs to address the argument that PAs should be able to own a clinic as nurses can own their own clinics. It should be noted that PAs have an additional statutory requirement besides the agency issue mentioned above; a PA must have a supervising physician to be able to practice in Texas. The Nurse Practice Act has neither the agency requirement (although a nurse may become an agent of a physician through action or contract) nor a requirement that the nurse have a supervising physician. Therefore, definition of scope of practice and practice itself are different for PAs and nurses. After analysis, these contrasts in licensure statutes lead to different results.

Both Advanced Practice Nurses (APNs) and PAs can have physician delegated prescriptive authority. The APN, if he or she wishes to exercise his or her right to accept such delegated prescriptive authority, must have a delegating physician. In this instance, both PA and APN practice under the same legal authority and proscriptions. If the APN does not wish to exercise prescriptive authority, then the nurse may provide such services as are within the nurse practice act and do not need a delegating or supervising physician. Should the APN desire to exercise prescriptive authority, the same legal impediments to employing his or her delegating physician would arise.

The proposed rule also runs afoul of the doctrine of the prohibition on the corporate practice of medicine. (See Occupations Code Sections 164.052 (a) (13) and (17); 165.155 and 165.156). The prohibition on the corporate practice of medicine has had a long history in Texas. The doctrine has been upheld by the Supreme Court of the United States. See Garcia vs. Texas State Board of Medical Examiners (1974), 384 F. Supp434, affirmed by the U.S. Supreme Court on June 2, 1975, holding that the Texas Statutes prohibiting lay-controlled corporation from hiring physicians as employees for the practice of medicine are not unconstitutional, and are a reasonable exercise of the police power of t he State.  The following cases are illustrative.

F.W.B Rockett v. Texas State Board of Medical Examiners , 287, S.W. 2nd 190 (Tex.Civ. App-San Antonio 1956, writ ref'd n.r.e.) Dr Rockett was employed by a non doctor owned clinic and received a monthly salary and no fees. The order of the TSBME cancelling his license was upheld).

Watt v. Texas State Board of Medical Examiners , 303 S.W. 2 nd 884 (Tex. Civ. App. - Dallas 1957, writ ref'd n.r.e.   Dr. Watt was paid a salary from the Hoxsey Clinic for reading x-ray films and asserted that he was not associated in the practice of medicine with Harry Hoxsey. Here all patients were patients of the Hoxsey clinic; the patients were billed by the Hoxsey Cancer Clinic and paid the Hoxsey Cancer Clinic. The Dallas Court of Appeals ruled in favor of the TSBME upholding the suspension of Dr. Watt.

Flynn Brothers, Inc. v. First Medical Associates , 715 S.W.2d 782 (Tex. Civ. App.-Dallas 1986, writ ref'd n.r.e.). In an effort to circumvent the problem with the prohibition on the corporate practice of medicine doctrine, the Flynn Brothers (non-physicians) formed a professional association which contracted with S. Paul to staff its emergency room and the Flynn Brothers formed a for-profit corporation which entered into an exclusive management agreement with a corporation formed by Dr. Adcock to manage the St. Paul contract. Under the management services agreement, the Flynn Brothers were to receive 67% of Dr. Adcock's professional association net profits. The relationship eventually developed disagreements and the various contracts were terminated and subsequently, lawsuits were filed. The issue raised on appeal was whether or not the agreements made by the parties were illegal. If the contracts were illegal, the court would not enforce them.

The court of appeals found that the whole contractual scheme was developed to indirectly do that which they freely conceived they could not do directly under the Medical Practice Act. The design, effect and purpose of the management contract contravened the Medical Practice Act and therefore would not be enforced.

The proposed rule of the Physician Assistant Licensing Board is an attempt to circumvent the Medical Practice Act by permitting a non physician to employ or use a physician to control the authority of a physician to direct the activities of the person he is employed to supervise. A physician cannot meaningfully supervise the person paying his salary or fees as an independent contractor. The physician will know that if he or she does not accede to the wishes of the person paying his salary or fees, he or she will be fired or the contract terminated. It is an effort to do indirectly that which cannot be done directly.

The biblical adage from Matthew 6:24 rings true. "One cannot serve two masters."

Therefore, the Texas Medical Association requests that Subsection (e) of Section 185.16, as proposed, not be adopted. Should the Physician Assistant Board adopt the proposed rule, the Texas Medical Association respectfully requests that this comment letter be provided to the Texas Medical Board when it reviews this rule as required under Section 204.102, Occupations Code.


William H. Fleming III, MD

WHF: ama

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May 21, 2016