The Brave New World of At-Will Employment

During training, Dr. Smith was taught that, when the standard of care is not being met, he should  make an issue of it, and keep doing so until the problem is resolved. Following training, he goes  to work for a Non-Profit Health Organization that is effectively controlled by a hospital. He  finds things at the hospital to be, in his opinion, quite substandard: equipment not properly  maintained and calibrated, technicians not supervised and performing procedures without  authorization, and physicians (especially “heavy admitters”) making medical errors without  accountability.

So Dr. Smith does what he was trained: he makes an issue of these things. Nothing is done, and  he keeps making an issue of them. Though frustrated, he believes he is doing the right thing.

One day at work he is handed a letter informing him that he is fired for “no cause” on 60 days  notice. Shocked, he reads his contract, which says: “Either party shall have the right to terminate  this Agreement at any time on sixty (60) days written notice to the other party.” He thinks: “I  haven’t done anything wrong! How can the hospital do this to me? Where’s my due process?”

Hospital - physician relations over the last few decades have frankly been terrible. Bitter lawsuits  over peer review, antitrust and discrimination have been all too common. In an attempt to halt to  this, hospitals - often using the ruse of setting up “integrated delivery systems” - have created  Non-Profit Health Organizations (“NPHOs”) to employ as many of the medical staff as possible.  NPHOs were originally intended to facilitate medical education, research and charity care - and  employ physicians to do so without engaging in corporate practice.

However, Texas allows any non-profit to have for-profit members. So many NPHOs have for profit hospital members who essentially run the organization by appointing cooperative  physicians to the board of directors. So technically Dr. Smith has been fired by his colleagues.  And, because it was not alleged that he violated the standard of care in his treatment of a patient,  peer review due process rights don’t apply here.

Texas law also provides that anyone’s employment may be terminated by the employer -or the  employee - for good cause, bad cause, or no cause at all. This is “at will” employment. Even  telling someone they will be able to keep their job as long as they are doing it, and won’t be fired  unless there is a good reason or good cause does not change this.1 This isn’t unlimited: an  employer may not fire some one for discriminatory reasons or in violation of specific federal or  state laws. Thus an employer is prohibited from taking an “adverse employment action”  because of race, gender, age, disability, national origin, or other protected characteristic or  activity. A person may also have a wrongful termination claim for refusing to commit an illegal  act, or for being fired for complaining about illegal behavior (like consumer protection, product  safety or financial fraud). For example, complaints about unsafe working conditions that violate  OSHA rules are protected.

But what did Dr. Smith complain about? Was it a specific federal or state law or rule violation? A JCAHO standard? A policy of the hospital or the NPHO? The further away from a demonstrable  violation of a specific law, the harder it is to make a case for him. 

Currently the only protection a NPHO physician has is this: an NPHO may not discipline a  physician “for reasonably advocating for patient care” (there are no guidelines as to what  constitutes this). Dr. Smith might make a complaint to the Texas Medical Board if he can show a  nexus between his concerns and patient care, but not necessarily be entitled to a private lawsuit.2

In a situation like this Dr. Smith should consult with competent counsel experienced in such  issues. Filing an ill-advised lawsuit, only to have it dismissed, could jeopardize his future  employment prospects.

1. Montgomery County Hospital Dist. v. Brown, 965 S.W.2d 501 (Tex. 1998). 2. Senate Bill 833 in the 2017 Legislature would have offered additional protections for NPHO physicians who make good faith reports of violations of applicable federal or state laws, or initiate an investigation of such. However, it did not pass.