October 19, 2012 | Comments Off on Emergency Department Staffing Company Liable for Acts of “Independent Contractor” Physician
Posted by Beth Christian
Last week, the Appellate Division issued its decision in Monk v. Emergency Physician Associates. The decision could have significant ramifications for emergency department, “Nighthawk” Radiology, and other staffing companies that contract with physicians to provide services at hospitals and other licensed health care facilities.
The Monk case involved a suit for damages arising from the death of a physician who presented at the emergency department of Virtua Hospital in Voorhees complaining of pain from kidney stones. The physician was allegedly administered an overdose of Dilaudid by an emergency department physician and died while he was in the emergency department. Emergency Physician Associates (“EPA”) provided physician staffing for the hospital’s emergency department. Under the physician staffing arrangement, EPA entered into contracts with independent contractor physicians who were retained to staff specific shifts in the emergency department pursuant to EPA’s staffing contract with the hospital.
The estate of the physician sued Virtua, the treating emergency department physician, two nurses, and EPA. The lower court granted EPA’s motion for summary judgment, concluding that the EPA physician who treated the patient was an independent contractor, and was not EPA’s employee. As a result, the lower court found that EPA was not vicariously liable for the physician’s actions.
The Appellate Division reversed the decision of the lower court and found that EPA could be held liable for the acts of its independent contractor physician. The court found that under the contract with the emergency department physician, EPA retained broad authority over the physician’s actions, but for the ability to dictate the physician’s exercise of his professional judgment in particular cases. The court also found that since EPA provided physician division directors for the emergency department, EPA physician managers affected the manner in which the emergency department physician performed his tasks. The Appellate Division also found the following factors to be dispositive of its determination that the emergency department physician was, in actuality, functioning as an employee of EPA: (1) the fact that the emergency department physician was compensated by EPA, by payment of a fixed hourly compensation, plus bonus; (2) EPA assumed responsibility for providing educational resources to emergency department physicians; (3) EPA retained the right to terminate the emergency department physician for cause, or upon 30 days’ notice without cause; (4) EPA indirectly exercised control over the emergency department physician by supervising and assessing his work, and retaining the power to intervene with training, if appropriate, or termination; (5) EPA assumed responsibility for billing for services rendered to the emergency department physician’s patients; (6) EPA’s contract with the physician prohibited the physician from contracting separately with Virtua, or Virtua’s patients; (7) EPA retained the remaining balance of the patient’s or insurer’s payments after paying the emergency department physician his fixed hourly salary plus bonus; and (8) EPA retained a continuing interest that its physicians perform their services competently and capably, in order to preserve EPA’s relationship with Virtua.
It is common for entities providing physician staffing to hospitals to enter into independent contractor agreements with physicians who provide services under the staffing arrangement. While the specific facts of this case centered around the staffing of an emergency department, the decision could have broader implications for companies providing staffing of other healthcare services, including, but not limited to, Nighthawk radiology services and telepsychiatry. To the extent that the decision is upheld by the New Jersey Supreme Court, or is not the subject of a further appeal, it will significantly expand the liability exposure of staffing companies who have independent contractor relationships with physicians who provide services under a separate agreement between the staffing company and a health care facility.