Physician "unionization" - a primer and prescription.

AuthorFarmer, Guy O., II

In May 1975, when anesthesiologists protested the spiraling malpractice premiums of the day by refusing to assist in elective surgeries for four weeks, half of the hospitals beds in San Francisco emptied and hospital financial losses soon ran into the millions. Though such action was probably an illegal "group boycott" then--and would almost certainly attract the wrath of the Federal Trade Commission or Justice Department today--the result in 1975 was the passage of legislation capping damage awards to medical malpractice plaintiffs in California and, at least temporarily, the pacification of many physicians.

Enter "managed care," a phenomenon responsible, by some estimates, for reducing physician incomes 44 percent from where they would have stood in its absence.(1) Despite its inroads of managed care in 1996, the income of the average physician in America was still six times the national per capita gross domestic product (compared, for example, with 2.4 times in Japan and Denmark). Nevertheless, physicians with fond memories of the 1975 boycott, particularly those already in unions, have once again begun touting the virtues of physician "unionization." The (frequently) stated goal expressed to a newly receptive physician audience has been preservation of the "quality of care." The actual goal, albeit less frequently or publicly stated, may in fact be the preservation of professional incomes and clinical discretion. This article presents an overview of the legal landscape surrounding this recent phenomenon--popularly referred to (with varying degrees of accuracy) as the physician "unionization" movement.

The Primer

Any discussion of true physician unionization ought to begin with the federal law that governs the right of individuals in the private sector to "unionize"--the National Labor Relations Act (NLRA), the centerpiece of which, [sections] 7, provides that "employees shall have the right ... to form, join, or assist labor organizations ... for the purposes of collective bargaining."(2) Given the NLRA's limitation to "employees" as defined in the statute, however, a brief digression into events predating the 1935 passage of the NLRA by 100 or more years is necessary background for the discussion.

Beginning in the late 1700s, medical societies and elected bodies in several cities and states initiated efforts to transform what had until that time been a loose amalgam of "healing arts" into a "profession," and by 1830, five states--Massachusetts, South Carolina, New York, Maryland, and Ohio--had laid the foundation for the professional regulation of physicians.(3) In 1847, members of the New York Medical Society formed the American Medical Association, an entity which promptly promulgated academic standards for medical education. Eventually, with the active encouragement of the AMA, state courts began to find as a corollary to state professional licensing laws limiting the practice of medicine to natural persons, that corporations could not employ licensed physicians without engaging in the unlicensed "practice" of medicine.(4)

This legal doctrine, which came to be known as the "corporate practice doctrine," has eroded somewhat in recent years, particularly as the proliferation of innovative health care delivery models have made it increasingly difficult for state legislatures (and attorneys general) to maintain outright bans on the employment of physicians.(5) Nonetheless, the doctrine remains viable today in one form or another in more than 30 states,(6) with some states, such as California, enforcing their ban quite aggressively,(7) while others, like Florida, have more or less consigned the doctrine to the dustbin of history.(8) The perdurable impact of this "professional" history, however, is that, even today, probably fewer than 30 percent of the more than 600,000 physicians practicing in the United States are "employed" by entities covered by the NLRA, and are thus even eligible to "unionize" in the traditional sense.(9)

Indeed, even in states where physicians can be "employed" within the meaning of the NLRA, at least two other significant exceptions to the statute's coverage, one found in the statute itself, the other, the product of administrative policymaking, further limit the current ability of many physicians to "unionize" in the traditional sense.(10)

First, the text of the NLRA itself provides that "the term `employee' ... shall not include ... any individual employed as a supervisor," and the statute separately defines a "supervisor" as "any individual having authority in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment."(11) A large body of cases, much of which has arisen in the health care context, interprets this statutory definition, though their conclusions on similar sets of facts are often virtually impossible to reconcile with each other. As a practical matter, however, if a physician...

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