Cases and Comments on Contracts

Part 13: Due Process/Where Do You Find The Clause In Your Contract?

by Robert V. West, MD JD FAAEM

I recently received a request from an AAEM member requesting a model "due process" clause to insert into a contract with his friendly CMG. The contract holder was denying that such clauses existed in employment contracts for the practice of Emergency Medicine and yet the physician was trying to establish that they did. In fact he was trying to find an example of one and get it inserted into his contract. Here are some options for that physician to consider:

1. In the specific context of negotiating a contract, any covenant or clause in a contract exists only if the parties to a contract agree that it exists. That is, he could have bargained for a clause that said he would be entitled to 10 shifts per month for the next year with automatic annual renewals, provided that the doctor did not lose his license or his hospital privileges. That, in essence, is a termination for cause provision which insures due process under the terms of the contract.
   
   
2. In the broader hospital context, Congress enacted the Health Care Quality Improvement Act (HCQIA) of 1986 to set minimum standards for the professional review of physician conduct and their right to hold privileges (see 42 USCA Section 1011-1152). Peer review is the generic term for this sort of due process and usually begins at the department level. Most hospitals offer some due process to protect your privileges if that hospital participates in the federal Medicare program, and these days almost all do. The hospital peer review process is in essence a quasi-judicial proceeding. Moreover, the review process as outlined in a hospital's bylaws is contractual in nature because a physician, by accepting appointment to the hospital staff, agrees to be bound by the bylaws. What is involved here is an internal, contract-based professional review body performing the functions of an administrative law court (see: Walls Regional Hospital, et al. v. Altaras, 903 SW 2d 36 (Tex App-Waco 1994)). This process was covered in detail the last edition of Common Sense.
   
   
3. In California things are a little better. If a hospital wishes to terminate the staff privileges of a doctor or take you off the schedule, it must do so in a procedure comporting with the minimum common law requirements of due process, usually peer review by the medical staff. Furthermore, in California, if the doctor does not agree with the outcome, he or she can go to court and get a trial on the merits of the dispute with the hospital. The doctor does not have to show malice or bad faith on the part of the peer review panel.
   
   
4. Beware not to waive any rights which protect your shifts or credentials. Despite your best intentions and the representations of the contract recruiter, your rights to "peer review" can be waived. That is, if you sign a contract that contains a provision that says you relinquish your privileges if you are taken off the schedule. That would be analogous to termination without cause and you have accordingly waived any rights to due process and delegated the decision regarding your privileges to the arbitrary judgment of the contract holder. This certainly creates job insecurity and may be okay for the short term, but clearly can lead to nothing but instability in the divisive world of an emergency practice.

In essence, if you want more than hospital peer review, then you have to negotiate for more in your employment contract. Most important is to realize the fine line drawn between exclusion from a roster and revocation of your hospital privileges. In California, under Fenton, removal from a roster elevates your claim to a revocation of privileges. This is the exception to the rule-in most states your privileges may be left intact but you can be removed from the schedule at the discretion of the "closed" system contract manager. That means no peer review. The majority of states follow an "employment at will" doctrine, which means you can be taken off the schedule for a good reason, a bad reason, or no reason at all. In this scenario without a clause in your contract protecting your shifts, your privileges must be revoked in order to trigger the federal minimum requirements of due process. Once again, that means your situation may controlled by the quasi-judicial powers of a hospital-based peer review committee in regards to the granting or denial of hospital privileges. In the event that the peer review panel upholds the termination of your privileges, the only legal recourse you have in most states is if you can allege and prove malice or tortuous activity on the part of the hospital peer review panel.

Remember, in most contracts that you will be asked to sign, the contract holder can take you off the schedule and leave your hospital privileges intact. In other words, if you accept shifts and credentialing through a contract holder, you can be credentialed at a given hospital and yet not be given any shifts on the schedule if your contract holder deems it his or her will. The net result in this scenario is that you may not even be entitled to hospital peer review, unless your hospital privileges are revoked in the process of being terminated. You have to insert a clause in your contract to assure you of a certain number of shifts and provide for recourse in the event that these are denied.