New Tennessee Legislation of Interest to Tort Lawyers – Post 4

This is the fourth in a series of posts that addresses new laws of interest to Tennessee tort lawyers.  For other changes go to the Legislation 2009 category of this blog.

Those of us who keep an eye on the Tennessee General Assembly know that there is an ongoing battle over whether hospitals will be permitted to employ physicians.  As of now, hospitals can employ hospitalists but they cannot employ ER doctors, anesthesiologists, radiologists, etc. 

The renal dialysis clinics have cracked the door open slightly and won the right to employ doctors under certain circumstances.  This will be of interest to medical malpractice lawyers, who will need to explore the vicarious liability of clinics for the acts of nephrologists and others caring for ESRD patients.  The law will also be of interest to those representing such doctors, in tort as well as contract litigation.

Here is a summary of the legislation:

This bill authorizes renal dialysis clinics to employ licensed physicians to provide medical services, subject to the following conditions:

(1) Employing entities may not restrict or interfere with medically appropriate diagnostic or treatment decisions;
(2) Employing entities may not restrict or interfere with physician referral decisions unless: the physician so employed has agreed in writing to the specific restrictions at the time that the contract is executed; the restriction does not, in the reasonable medical judgment of the physician, adversely affect the health or welfare of the patient; and the employing entity discloses any such restrictions to the patient; and
(3) In the event that there is any dispute relating to (1) or (2), the employing entity would have the burden of proof.

This bill prohibits clinic from restricting the employed physician’s right to practice medicine upon the termination or conclusion of the employment relationship, except as allowed by present law governing non-compete covenants for physicians (see TCA Section 63-1-148). However, in the event that the employment contract with a physician employed independently of a bona fide practice purchase is terminated by the clinic for reasons other than breach by the employee, any such restrictions would be void.

This bill specifies that it does not prohibit any of the following from employing physicians:

(1) A licensed physician; or
(2) A group of licensed physicians, including, but not limited to, either of the following: a physicians’ professional corporation; or a 501(c)(3) domestic nonprofit public benefit corporation that operates as a "faculty practice plan" for purposes of the federal Social Security Act, a purpose of which is to engage in medical education and medical research in conjunction with a college or university operating an accredited medical school in Tennessee and whose physician-employees are restricted to the medical faculty of such a college or university.

With respect to any such domestic nonprofit public benefit corporation, physician employees of any such faculty practice plan who practice in the specialties of radiology, pathology, anesthesiology and/or emergency medicine are restricted to practice as faculty practice plan employees in those health care institutions, including but not limited to hospitals or surgery centers, in which they were practicing as employees of the nonprofit public benefit corporation on May 30, 1997.

This bill prohibits an affiliate of a renal dialysis clinic that employs physicians from engaging in any business other than the employment of physicians, the management of physicians and health care facilities, or the ownership of property and facilities used in the provision of health care services, or a tissue bank or organ procurement agency. Any violation of this bill by an affiliate would subject any renal dialysis clinic at which the physician has staff privileges, and that controls or is under common control with the affiliate, to the penalties and sanctions applied to renal dialysis clinics that employ physicians.

No radiologist, anesthesiologist, pathologist, or emergency physician may be employed by a renal dialysis clinic or an affiliate of a renal dialysis clinic, and no renal dialysis clinic or an affiliate of a renal dialysis clinic may employ any physician to provide medical services provided by radiologists, anesthesiologists, pathologists, or emergency physicians; provided, that a physician may be employed to provide emergency medical services if such physician is employed to provide other medical services.

This bill prohibits the clinics from requiring, by contract or policy, that as a condition or consequence of employment, written or otherwise, employed physicians relinquish staff privileges, or the rights related to staff privileges, upon the commencement of, upon any event during the pendency of, or at the termination or conclusion of, the employment relationship. This bill specifies that it does not affect or negate the ability of an employing renal dialysis clinic to revoke or suspend a physician’s staff privileges in accordance with the procedures set forth in the staff bylaws. Renal dialysis clinics may not substitute physician employment contracts for staff privileges. Non-employed and employed physicians holding staff privileges at a renal dialysis clinic that is an employing entity, or renal dialysis clinics at which employed physicians hold staff privileges that are affiliates of employing entities, would enjoy the same privileges, rights and protections with respect to staff membership. Employment of a physician would not affect any other physician’s staff privileges. Physicians who hold membership on staff at a renal dialysis clinic which is an employing entity, or a renal dialysis clinic at which employed physicians hold staff privileges that are affiliates of employing entities, would be provided with the rights and protections, including rights of self-governance, afforded by the applicable state licensing board, and, when accredited, the accrediting entity or agency.

If a physician, in connection with a claim for breach of contract or other dispute related to the present law provisions governing the practice of medicine and the employment of a physician by a hospital, renal dialysis clinic, or other entity to employ physicians, establishes in a court of competent jurisdiction, or other forum, including in a peer review action or arbitration proceeding, that the conditions of those provisions have been violated by the employing entity, the physician would be entitled to recover the physician’s cost of litigation, arbitration, or peer review defense, and a reasonable attorney’s fee.

This bill prohibits renal dialysis clinics from restricting or interfering with patient referral decisions in a manner that unnecessarily increases the cost to the patient of the medical services provided.

Here is a copy of Public Acts, 2009 Public Chapter 70.