By Donald H. Smith, M.D.

Vice President

Pennsylvania Medical Society

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Let’s review some background information Physician unions have existed since 1957, but historically have represented publicly employed physicians and residents (Committee of Interns and Residents/NYC). Current physician union membership is estimated at 14,000 to 20,000 and includes 6,000 to 9,000 residents, 3,000 independent practice physicians, and the remainder are publicly employed physicians. Dues usually average several hundred dollars annually, but may be much higher if the union is collectively bargaining for its employed physicians.

There is considerable conflict between the goals of the antitrust laws and the labor laws. Antitrust laws foster competition, labor laws tend to raise and/or standardize wages and working conditions, and permit other collective labor activities that minimize the competitive advantages of the labor component of a product or service. Originally antitrust laws prevailed and labor activities referenced above had to be expressly exempted from antitrust laws. This labor exemption is the product of five sets of statutes and judicial case law (Clayton, 1914: Norris-Laguardia, 1932; National Labor Relations Act (Wagner), 1935; Labor Management Relations Act (Taft-Hartley), 1947; Labor Management Disclosure and Reporting Act (Landrum-Griffin), 1959; and federal court decisions dealing with the interpretation of the scope of a labor exemption. Broadly speaking, these laws and decisions established antitrust laws, declared the exemption(s) to the antitrust laws and defined the scope of activities covered by the exemption.

For the labor exemption to apply, the activities must:

arise out of a "labor dispute",

be of or by a labor organization,

further the goals of the labor organization, not for some other entity, and

involve unilateral conduct of the labor organization, not other entities, especially if those entities are not other labor organizations.

Considerable new activity is occurring on the subject of physicians’ unions. Most of this activity is relative to increased interest in collective bargaining by physicians making them an attractive target for recruitment at a time of sagging union membership. Two recent trends are responsible for this increased interest in collective bargaining and include: increasing control over independent physicians by managed health plans with respect to medical decision-making and physician payment; and the increasing numbers of employed physicians (43% nationally). The following summarizes issues which may assist physicians in deciding whether to participate in a physician union, and if so, what they can expect from that participation.

Eligibility for Union Affiliation and Collective Bargaining:

1. Antitrust exemption for "labor organizations" and the labor laws permit the right of non-supervisory employees to collectively bargain. However, most employers that employ large numbers of physicians (medical schools, large groups, large non-profit staff model HMOs) maintain a tradition of professionalism that does not provide fertile ground for union organizing.

2. The antitrust exemption may apply to supervisory employees although they are not entitled to the protections of the National Labor Relations Act (see below #10).

3. The National Labor Relations Board (NLRB) has broadly interpreted supervisor to include any physician who serves on an HMO peer review committee. Since that time, a number of HMO employee unions have formed.

4. The NLRB has allowed hospital employed physicians (excluding department heads) to unionize. Hospital residents represent the largest concentration of employed physicians, and the most intensive efforts to unionize has occurred with this group of employed physicians.

5. Many physicians are labeled independent contractors in contracts with hospitals and HMOs, but are actually employees.

6. For a union to negotiate (collectively bargain) on behalf of independent physicians, a network of physicians who share substantial financial risk or substantial clinical or functional integration must be established. However, with capitation the physician is at risk more like an entrepreneur (independent) than an employee.

7. An exception exists for independent contractors (minority) who are part of collective bargaining contracts that include other large segments of non-physician employed individual.

Limitations of Union Affiliation:

8. Antitrust laws severely restrict collective bargaining by independent competitors. With limited exceptions, only employees can collectively bargain (i.e. a labor dispute must exist and collective bargaining must concern the terms and conditions of employment).

9. Before physicians can engage in collective bargaining under the labor exemption, the process must be part of a labor dispute which must involve the terms and conditions of employment. Therefore, the physicians must be employees.

10. Independent, self-employed physicians are deemed independent contractors, entrepreneurs or independent businesses by NLRB. The Taft-Hartley Act expressly denies the right and protections of the NLRB to independent contractors.

11. Without protection of the National Labor Relations Act, supervisory employees may not have the ability to collectively bargain because the employer does not have to recognize their union nor bargain with it. Many employed physicians are in management positions and are not eligible for collective bargaining. Even physicians who are not in titled management positions are sometimes categorized as managers because they direct other members of the health care team.

12. Physicians who enter into typical network participation arrangements are still considered independent contractors, and thus ineligible to collectively bargain.

13. Some independent physicians have argued that they are in effect employees when they contract with managed care health plans that are so highly controlled, however most do not meet the definition of an employee (because they own their own office, staff and equipment, and are paid for their services as opposed to salaried or hourly employment). However, courts may be willing to look at the substance of this relationship in the future to determine employee status which will be based on the extent of control the "employer" has over the worker relative to hours of work required, time and place of work, skill and supervision, who supplies instruments, etc.

14. A group model HMO allows physicians to remain in control (partner or shareholder) and the employed physicians are therefore employees of the group and not the HMO which reverses the trend toward employee status.

15. Rather than expect legislative or judicial relief, it is more realistic to expect changes in the law that would remove barriers to allow physician organizations to "risk contract."

16. Unions that recruit and represent independent physicians can do no more that an IPA or any other network of independent physicians regarding collective bargaining (unless-see #6 above).

17. Many physician unions are sponsored by existing national labor organizations (i.e. AFL-CIO). Annual dues and other costs can be nominal or significant and vary with each particular union.

18. Unions cannot negotiate payment rates and other terms for independent physicians and in so doing have been investigated by the U.S. Department of Justice for violation of antitrust laws.

19. A medical society can act as a labor organization under the NLR Act, however conflicts of interest may disqualify it and its tax exempt status may be compromised by providing a benefit to a narrow subset of its members. Qualification of a medical society as a labor organization does not mean that it can engage in collective bargaining. The society must be certified by filing a petition with the NLRB which claims that the "employees" want to be represented by the society. If the majority of physicians are no longer independent, the medical society could act as a labor organization on behalf of both employed (majority) and independent physicians (minority).

In conclusion, only employed physicians generally fall within the labor exemption from antitrust laws and may engage in collective bargaining with employers. Classification as a supervisory or non-supervisory employee is critical for the participation of supervisory employees in collective bargaining. Self-employed physicians in independent practice do not fall within the labor exemption and cannot collectively bargain with health plans. The status of individual physicians in an organization, not the organization itself, defines the ability of that organization to collectively bargain. The climate and courts are changing so be vigilant, but cautious about physician unions.

The author gratefully thanks the legal departments of the Pennsylvania Medical Society (PMS) and the American Medical Association (AMA) for providing much of the information contained in this rebuttal. Although the authors claim that study and restudy of unions by the PMS and opposition to unions by the AMA are current policy, both organizations are committed to providing accurate, decision-making information to physicians and broadening the antitrust laws to permit physicians to negotiate with contracting organizations.