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Legal issues of physician unionization

By Philip H. Lebowitz, Esq.

In recent months, South Jersey physicians were told they cannot organize as a union, Arizona physicians were certified as a collective bargaining unit and Massachusetts residents were not—at least for now. Is there a rationale underlying these decisions or is random inconsistency another hallmark of the medical profession in the 90s?

This apparent conflict among recent National Labor Relations Board (NLRB) decisions about physicians’ ability to unionize raises important questions about when the Board will recognize bargaining units for doctors. An overview of recent decisions shows that there is no conflict—the NLRB has consistently applied NLRB precedent in interpreting the Labor Management Relations Act (Act), the federal law that grants the NLRB authority to decide whether a particular group should be certified to act as a labor bargaining unit.

The NLRB was established in 1935 and has existed in its current form since 1947. Its purpose is to interpret and administer the Act, to issue regulations refining the terms of the Act, and to make quasi-judicial decisions enforcing the Act. The NLRB has thirty-four regional offices that make decisions on all matters within the NLRB’s jurisdiction. Decisions of the regional offices may be appealed to the full Board; decisions of the Board may be appealed to a federal court of appeals, but will only be reversed by the Court in cases of clear error.

Regional NLRB offices are obligated to follow NLRB policy in deciding individual cases. NLRB policy is found in written decisions of the full Board, and in published regulations and other policy statements of the Board. Only the full Board has the authority to change its policy or resolve conflicting decisions by regional offices. Federal courts give great deference to the Board’s interpretation of the Act.

All decisions regarding physician unionization are governed by the Act. The Act allows all employees who are not employed by the federal or state government to self-organize, to form, join, or assist labor organizations, to bargain collectively through representatives, and to refrain from such activities. The Act covers physicians, allowing them to form bargaining units and otherwise act collectively, if they are employees of health care facilities. The word “employee” is key. The Act does not protect the organizing rights of students, independent contractors or supervisors, exceptions that explain much of the apparent inconsistency in recent Board decisions.

The most recent, and perhaps most talked-about NLRB decision, issued on January 8, 1998 by Region 4 in Philadelphia, rejected a group of New Jersey physicians’ attempt to organize a collective bargaining unit to aid them in their dealings with AmeriHealth Corporation, a Blue Cross affiliate that operates six HMOs in New Jersey. The New Jersey doctors claimed that AmeriHealth was their de facto employer because, through non-negotiable provider service agreements, AmeriHealth controlled their pay and, to some degree, how they ran their medical practices.

Dorothy Moore-Duncan, the NLRB Regional Director in Philadelphia, refused to allow the New Jersey physicians to organize. Simply put, Region 4’s Director found that the New Jersey physicians were not “employees” whose unionizing rights the Act protected. Instead, based on the facts both sides presented, Regional Director Moore-Duncan adjudged that the New Jersey doctors were independent contractors, not AmeriHealth’s employees. Although AmeriHealth controlled physicians’ remuneration for patient services and applied certain quality-control measures to the physicians’ practices, the Regional Director found that the New Jersey physicians essentially controlled their own medical practices, including their practices’ profitability, the number of hours that they provided services to patients, and their ability to enter into provider agreements with multiple HMOs.

Regional Director Moore-Duncan recognized that the New Jersey physicians’ relationship with AmeriHealth contained some components of the employee-employer relationship. Like many employment agreements, AmeriHealth’s provider service agreements allowed for little, if any, negotiation of the agreement’s terms. Also, like many employment agreements, either AmeriHealth or the physician could terminate the contractual relationship at any time. On the other hand, while the Regional Director acknowledged that AmeriHealth exercised certain controls over the physicians’ business, i.e., requiring precertification for hospitalization of patients, subjecting their offices to frequent AmeriHealth inspections for certification purposes and requiring constant contact with AmeriHealth, she noted that state law mandated many of those requirements, which, according to the NLRB, negated their impact on the employee-employer analysis. Thus, despite some factors supporting an employee-employer relationship, the Regional Director concluded that the New Jersey physicians were independent contractors with no rights to organize under the Act. The New Jersey doctors are appealing Regional Director Moore-Duncan’s decision to the NLRB in Washington, D.C.

In contrast, in an unpublished decision in July 1997, NLRB Regional Director Cornele Overstreet certified an Arizona physicians’ collective bargaining unit because the doctors were employees of Thomas-Davis Medical Centers, P.C. and its parent company and owner, FPA Medical Management, Inc. Apparently, the employer did not contest the physicians’ status as medical center employees. Instead, the employer challenged the doctors’ right to organize by claiming that the doctors were supervisors, whose bargaining rights the Act does not safeguard because supervisors are not deemed to be “employees” under the Act. The NLRB rejected the employer’s contention and certified as an appropriate bargaining unit all full-time and part-time physicians, including department chairs, that the medical center employed in facilities located in Pima County, Arizona.

Although the Arizona decision was unpublished, a portion of a recent decision issued by Region 1 Director, Rosemary Pye, in Boston sheds light on the NLRB’s position that the Arizona doctors were not supervisors but employees with the right to unionize. In 1997, chief residents, interns and fellows at the Boston Medical Center sought to form a collective bargaining unit. Although the NLRB rejected their attempt to organize, the case contained another ruling that likely explains why Regional Director Overstreet found that chief residents were not supervisors or managers in Arizona.

Under the Act, a “supervisor” is someone vested with authority, in the employer’s interest, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline or direct other employees, or to recommend such action based on independent judgment. Based on NLRB precedent, highly skilled professionals, such as registered nurses, chief residents and doctors, are not necessarily supervisors even though their training and skills necessitate that they direct other, lesser skilled employees about patient care, ensuring that the work is done properly. Unless these highly skilled professionals perform, on the employer’s behalf, the functions that define a supervisory role, such as recommending that employees be hired, fired or disciplined, the NLRB has decided that the fact that they direct other employees’ work does not transform them into supervisors.

Based on the NLRB interpretation of the meaning of the word “supervisor,” those Arizona doctors whom the NLRB classified as employees, rather than supervisors, may have directed employees with lesser skills but likely were found not to have the power to hire or fire those employees on the employer’s behalf. Thus, the NLRB allowed the Arizona doctors to form a collective bargaining unit. If they appeal, Boston Medical Center and Thomas Medical Centers may have a chance to overturn the NLRB decisions in federal court. Federal courts have frequently criticized the NLRB’s narrow interpretation of the term “supervisor” in union representation cases.

The Region 1 decision also directly considered the rights of residents, interns and fellows to unionize. In an attempt to overturn 20 years of precedent, the House Officers’ Association/Committee of Interns and Residents recently sought union election for 430 interns, residents and fellows at Boston Medical Center. Regional Director Pye rejected the attempt, finding that residents, interns and fellows were students, not hospital employees, because they were primarily engaged in graduate educational training; the training was a prerequisite for a medical license; and a significant number of the residents’, interns’ and fellows’ time was spent in educational conferences, rounds and other “purely didactic activities.”

However, the decision contained indications that the NLRB’s position on residents, interns and fellows may change. Regional Director Pye’s refusal to allow an election appeared based, in part, on the belief that only the full Board should reverse its earlier precedent. In the residents and interns’ favor, Regional Director Pye noted recent changes in NLRB thinking about “working” student-employees. In February 1997, for example the NLRB Connecticut regional office issued a complaint to Yale University alleging that the school engaged in unfair labor practices against striking graduate students in 1995 and 1996. The Yale case indicates that the Board may soon reconsider the status of residents, interns and fellows.

In summary, although recent decisions about doctors’ right to organize appear contradictory, a closer look at the underlying facts demonstrates that the NLRB consistently has allowed doctors who are medical facility employees to unionize, a right guaranteed by the Labor Management Relations Act. Although the New Jersey physicians have appealed the decision that AmeriHealth is not their employer, the fact that individual doctors still exert sufficient control over their own practices and can contract with other health maintenance organizations beside AmeriHealth to sustain a healthy medical practice supports Region 4’s Director Moore-Duncan’s decision that their relationship with AmeriHealth is not an employment relationship.

As these and other decisions progress to the full Board and into federal courts, there will be interesting future developments to watch in the area of physician unionizing. Will doctors affiliated with a single HMO be permitted to organize? Will the federal courts overturn the NLRB’s decisions on physicians’ non-supervisory status? Will the NLRB allow medical residents, interns and fellows to organize?

The system of regional NLRB offices funneling decisions to the full Board, with a subsequent federal court appeal, provides a mechanism for case-by-case resolution of seemingly contradictory decisions. The system works slowly, however, and principles gleaned from the interim decisions must guide decision-making until a definitive answer is provided.

Philip Lebowitz, Esq., a partner in the Health Care Practice Group at Pepper Hamilton LLP, was assisted in the preparation of this article by Lawrence Coburn, Esq., and Margo Buckles, Esq. of Pepper Hamilton’s Labor Practice Group.

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