Portal de Periódicos da CAPES

Independent Contractors, Employees, and Shareholders

2004; Lippincott Williams & Wilkins; Volume: 26; Issue: 8 Linguagem: Inglês

10.1097/00132981-200408000-00006

1552-3624

Jonathan Glauser,

Legal Systems and Judicial Processes

In 2001, the first emergency physician union in the nation filed a legal complaint against Third Coast Emergency Physicians, P.A. The dispute was over the union's effort to obtain collection data and billing costs from the company owner. The owner, Dr. Moscow, insisted that the union was not entitled to obtain collection data and billing costs from the company.FigureHis stance was that for the purposes of collective bargaining, the union was not entitled to confidential financial information. Third Coast also expressed concern that such data could be improperly disclosed to those unconnected with collective bargaining. There also was a claim that bonuses were withheld in retaliation for union activities after the National Labor Relations Board first recognized the union in February 2000. (Emerg Phys Mthly 2001;8[4]:1.) The most contentious contractual issues in emergency medicine pertain to access to billing and collection data — how much EPs are making versus what they are being compensated, how much is being “skimmed off the top” by contract holders, other aspects of “the rape of emergency medicine,” and of course, restrictive covenants. But having to form a union to obtain information for which they themselves are responsible? How disenfranchised have EPs become that, not only are they unable to access data they are legally entitled to from management, but that they have to unionize? A Historical Note Unionization of doctors is not unique to emergency medicine. The American Medical Association has created an organization, Physicians for Responsible Negotiation (PRN), to be an independent labor organization. Physicians who join PRN agree not to strike or withhold essential medical services, but may participate in information picket lines, lobbying, and publicity campaigns. The topic of contract law in emergency medicine is filled with controversy, most prominently regarding access to dollars billed in one's name and fair compensation for one's work. Certain conflicts inevitably have arisen, especially regarding the corporate practice of medicine. After all, the primary responsibility of any corporation is to its shareholders, not necessarily to its employees. When corporations are involved, the two groups are not the same. This month's column digresses a bit to examine particularly unique aspects of emergency medicine, even as it compares with other historically hospital-based specialties such as pathology, anesthesiology, or radiology. As of 1999, 77 percent of EPs were either employees or independent contractors. In contrast, other hospital-based physicians, such as radiologists and anesthesiologists, had a much higher percentage of ownership of their medical practices. (Am J Emerg Med 2000;18[1]:102.) The Center for Health Policy Research in 1997 listed emergency medicine as the specialty with the lowest number of self-employed physicians (21.6%) and the highest number of independent contractors. (Center for Health Policy Research. American Medical Association, 1998.) Emergency medicine had the highest percentage of physicians as employees of group practices or freestanding centers (18.3%), indicating less willingness on the part of group owners to share governance and profits of the group by creating new owner-partners. With 77 percent of EPs working as employees or independent contractors, clearly significant changes in emergency medicine organization and practice must occur to establish a modicum of self-determination for most EPs. Some comments regarding independent contractor versus employee status may be in order. I personally have never seen the charm in being an independent contractor. Granted, independent contractor status affords some business expense deductions perhaps not available to physicians with employee status. And an independent contractor may establish his own retirement funds for more tax savings. (Ann Emerg Med 2000;36:530.) Of course, the IRS may not recognize the contractual arrangement between an EP and the group or hospital for which he works. Historically, so many EPs have been independent contractors that as a long-standing practice of a significant segment of the industry, the IRS has cut employers some slack. (Am Med News August 9, 1999:17.) Because the issue of employee versus IC comes down to control, I have not understood how any EP working full-time could be reasonably considered to be an independent contractor. After all, every full-time EP is assigned shifts and provided with the equipment necessary to treat patients. In general, malpractice is provided, and clinical guidelines must be followed. Furthermore, full-time emergency physicians work at the pleasure of their employer, who will assign them shifts as necessary to cover the ED. Employees receive health insurance, paid vacation, continuing education allowance, disability insurance, and matching FICA taxes courtesy of the hospital or group. Granted, when the IRS looks askance at independent employee status for the purpose of collecting more money, it may be to recoup those FICA taxes from the employer — and to leave the employee alone. After all, the EP already has paid much more FICA tax for the privilege of being an independent contractor. I am not aware that the independent contracting physician ever sees a refund of the extra social security taxes already paid, even if the IRS exacts its share of payroll tax from the employer. Independent contractor status may be a thing of the past at any rate because an independent contractor may assign billing right to a hospital, but cannot assign Medicare billing rights to a contract group. (Ann Emerg Med 2000;36:530.) What About Democratic Groups? The buzzword in job advertisements seems to be “democratic groups.” Of course, having the word “democratic” bandied about does not make it so. Hardly anyone, Democrat or Republican, believes that the People's Democratic Republic of Korea has anything to do with democracy (or a republic). The governance of EP groups may or may not be determined by popular vote. Access to books, bonuses, profit-sharing (the two are not the same) and especially equity is rarely, in my experience, democratic. To the extent that real risk was assumed by shareholders to get the contract in the first place, democracy perhaps should have its limitations. The doctors who assumed risk with lines of credit and 24/7 staffing before they had staffing lined up, and who worked for less than market share before accounts receivable started rolling in, should be compensated adequately and deserve extra consideration, as any shareholder should. Before the word “democratic” is embraced or rejected, it should be defined in specific cases. The bottom line is that I believe that independent contractor status degrades the status of EPs in certain essential ways. My free and unsolicited advice is never to have such status in one's full-time job, which nearly always should be the one withholding taxes, paying matching FICA, and covering one's health care. Keep independent contractor status for moonlighting when you need some extra cash. I have no love for the extra accountants and lawyers required to set up benefits and calculate estimated tax payments. Independent contractor status diminishes the EP in the community, and reflects less physician autonomy even compared with other hospital-based specialties. Equity ownership and decision-making in organization governance may really make a difference. In previous articles, I have blamed much of EPs' lack of autonomy on hospital administrators, for whom 24/7 coverage of their EDs is paramount and who claim that they assume all EPs are competent. By this reasoning, EPs are a commodity, and emergency departments are distinguishable by the quality of the hospitals, not by the quality of the EPs employed there. In fairness to hospitals, administrators are restricted from some of the startup and finance activities by anti-kickback statutes. They can't provide financing for initial loans nowadays, and large contract groups do have a track record of delivering the 24/7 coverage needed.