Court finds that physician with staff privileges qualifies as an employee under EMTALA

February 2014
BY Mary M. Bearden and Allison Shelton, Brown & Fortunato, P.C.

In Muzaffar v. Aurora Health Care Southern Lakes, Inc., the U.S. Court for the Eastern District of Wisconsin addressed the issue of whether a physician qualifies as an employee under the Emergency Medical Treatment and Active Labor Act (EMTALA) on November 27, 2013. Finding that a physician does qualify as an employee for purposes of the statute, the federal court in Wisconsin follows the decision issued by the U.S. Court for the Southern District of Texas in Zawislak v. Memorial Hermann Hospital System (October 26, 2011). The issue concerning EMTALA’s definition of “hospital employee” presented a case of first impression for both courts.

Under EMTALA, hospitals may not deny a person emergency medical treatment or transfer patients before emergency conditions are stabilized. The purpose of EMTALA is to prevent “patient dumping” which is the practice of either refusing to treat persons with emergency medical conditions who are unable to pay or inappropriately transferring such persons. To promote compliance with the statute, Congress included a private right of action and protection for whistleblowers under EMTALA.

According to the whistleblower provision in EMTALA, a “hospital may not penalize or take adverse action against a qualified medical person . . . or a physician because the person or physician refuses to authorize the transfer of an individual with an emergency medical condition that has not been stabilized or against any hospital employee because the employee reports a violation” of the statute. Therefore, EMTALA protects two categories of whistleblowers: (1) qualified medical personnel and physicians who refuse to authorize a transfer of an unstable patient and (2) hospital employees who report violations of EMTALA. In the event a hospital violates EMTALA and an individual suffers personal harm as a result of the violation, the individual may bring a private cause of action against the hospital under EMTALA. In both Zawislak and Muzaffar, a physician claimed that he had the right to sue a hospital under EMTALA because he was a “hospital employee” against whom the hospital retaliated for reporting EMTALA violations.

In Zawislak, Dr. Walter Zawislak was a member of the medical staff and had clinical privileges at Memorial Hermann Hospital. He reported suspected EMTALA violations to the hospital’s Emergency Department Medical Director and Root Cause Analysis Committee. Specifically, Dr. Zawislak alleged that on two separate occasions unstable patients were transferred because the on-call trauma surgeon was either unqualified or unavailable. After he filed the reports, Dr. Zawislak was subject to a peer review action and ultimately suspended from the hospital’s medical staff. As a result of the suspension, the hospital filed a report with the National Practitioner Data Bank, and Dr. Zawislak’s employer terminated his employment. According to Dr. Zawislak, the peer review action and suspension were taken in retaliation for his reports concerning the EMTALA violations.

The hospital filed a motion to dismiss Dr. Zawislak’s suit. In the motion, the hospital claimed that it was immune from liability under the Health Care Quality Improvement Act (HCQIA) and that Dr. Zawislak did not have the right to bring a private cause of action under EMTALA. To be specific, the hospital claimed that because (1) Dr. Zawislak did not refuse to transfer unstable patients and (2) Dr. Zawislak was not an employee of the hospital, he did not qualify for whistleblower protection under EMTALA.

The U.S. Court for the Southern District of Texas disagreed with the hospital. According to the court, physicians are “in an advantageous position to observe whether a hospital is encouraging and instructing physicians to dump patients.” Therefore, to conclude that a physician is not a “hospital employee” under EMTALA would hinder the purpose of the statute— that is, to prevent patient dumping. Based on this policy concern, the court concluded that “the whistleblower provision must be construed to include physicians with medical privileges within the definition of ‘hospital employee.’” The court also refused to dismiss Dr. Zawislak’s suit based on the hospital’s immunity claim under HCQIA.

Congress enacted HCQIA in order to promote robust peer review of physicians and to enable interstate monitoring of incompetent physicians. To achieve the first goal, HCQIA extends immunity to professional review bodies and participants engaged in professional review actions that meet certain requirements. Because Dr. Zawislak alleged that the peer review action was taken as retaliation for his EMTALA reports, the court concluded that questions existed as to whether the peer review action met HCQIA’s requirements for immunity. Accordingly, the court refused to dismiss Dr. Zawislak’s suit.

Until 2013, no federal court, other than the U.S. Court for the Southern District of Texas, had addressed the issue of whether or not physicians qualify as hospital employees under EMTALA. Then on November 27, 2013, this issue was addressed by one other court in Muzaffar v. Aurora Health Care Southern Lakes, Inc.

Under the facts of Muzaffar, Dr. Kamal Muzaffar was a member of the medical staff at Aurora Lakeland and was required to take call under the Medical Staff Bylaws. In his lawsuit against Aurora, Dr. Muzaffar claimed that Aurora retaliated against him because he reported patient transfers that he thought violated EMTALA. Aurora sought dismissal of Dr. Kamal’s suit because he did not qualify as an employee under EMTALA. Furthermore, Aurora asserted that (1) call coverage was a condition of Dr. Muzaffar’s medical staff membership, not any employment arrangement; (2) Aurora did not compensate Dr. Muzaffar in any way; (3) Aurora did not provide any employment benefits to Dr. Muzaffar; and (4) Dr. Muzaffar was not required to admit patients at Aurora or to affiliate exclusively with Aurora. Applying court cases concerning Title VII employment discrimination, Aurora argued that, for these reasons, Dr. Muzaffar qualified as an independent contractor, and not an employee of the hospital. Accordingly, Dr. Muzaffar could not bring a private cause of action under EMTALA.

The court disagreed with Aurora. Citing Zawislak, the court found that the purpose of EMTALA would be hindered if physicians with clinical privileges were not considered hospital employees under the statute. As a result, the U.S. Court of the Eastern District for Wisconsin refused to dismiss Dr. Muzaffar’s claim and became the second federal court to find that physicians qualify as hospital employees under EMTALA’s whistleblower protections.

Physicians who are subject to adverse actions often claim that the actual purpose of the peer review action was retaliation. Under the decisions in Zawislak and Muzaffar, physicians may use such claims to challenge peer review actions through EMTALA. Furthermore, as evidenced by the decision in Zawislak, such claims may defeat a hospital’s motion to dismiss a suit based on HCQIA. Therefore, a hospital may have to engage in litigation to prove that the peer review action met the requirements for immunity under HCQIA. Thus, it is vital for committees of a hospital’s medical staff to document the basis for and steps taken during peer review actions. Also, such committees must prudently follow the medical staff bylaws and policies when a committee engages in peer review activities.