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Physician Collective Bargaining

Robert T. Bernat , JD, MD Executive Director of Physicians for Responsible Negotiation Washington, D.C. and Mark G. Flaherty , JD Flaherty & Associates Kansas City, MO. This article is reprinted from The Health Lawyer , a publication of the American Bar Association.

Introduction
Physicians who are employed in the private sector of the U.S. economy have enjoyed collective bargaining rights since the National Labor Relations Act ("NLRA") became law in 1935. Very few physicians were "employed," as that term is defined in Section 152 of the NLRA, however, until hospital based health care systems began their grab to control physician hospital admissions in the 1980s. Their aim was to direct the flow of inpatients to specific facilities by "employing" physicians who would send their patients to such facilities. Whereas physicians receiving graduate training, residents and fellows in the public sector have had the ability to bargain collectively for many years, such physicians in the private sector hospitals were not extended collective bargaining rights until the November 1999 Boston Medical Center decision' by the National Labor Relations Board ("NLRB" or the "Board").

The Sherman Act of 1890 declared unlawful "[e]very contract, combination in form of trust or otherwise, or conspiracy in restraint of trade or commerce..." In the 1907 case of Loewe vs. Lawler (Danbury Hatters), the U.S. Supreme Court held such prohibition applied to labor unions. By 1914, Congress had passed the Clayton Acts restricting courtsí ability to issue injunctions against labor organizations under the Sherman Act. Then came the Railway Labor Act in 1926; the Norris-LaGuardia Act in 1932, designed to promote recognition of unions by employers; and the National Labor Relations Act or Wagner Act of 1935, amended by the Taft-Hartley Act of 1947 and the Landrum-Griffin Act of 1959, which together established three key rights of all employees. These rights include (1) the right to organize, (2) the right to bargain collectively, and (3) the right to engage in concerted activity without employer interference or coercion of any sort. As discussed below, this long line of acts has most recently been supplemented by the proposed Campbell/Conyers bill, H.R.1304.

Physicians fall into three categories: (1) residents and fellows who negotiate with the hospitals that employ them; (2) non-self-employed physicians (who have completed their residencies and fellowships) who negotiate with their employers; and (3) self-employed doctors who negotiate with insurers, health maintenance organizations, and hospitals. Residents and fellows can attempt to conduct negotiations on an individual basis; can attempt to voice their views through independent housestaff associations (although employers risk recognizing such associations as unions should they enter actual negotiations); or can, since the 1999 Boston Medical Center case, create a collective bargaining unit to conduct negotiations on their behalf. Similarly, non-self-employed physicians can attempt individual negotiations with employers or can form a collective bargaining unit which cannot include managers and supervisors. Self-employed physicians currently have fewer options. They may, of course, merge their practices and negotiate as one entity, as long as the size of the group produced does not cause it to run afoul of antitrust law. They may attempt negotiations using the messenger model whereby an individual or entity functions as a go-between among the physicians and the party with whom they wish to negotiate. This model is highly impractical as it risks being construed as a sham with physicians essentially communicating with each other through an intermediary. Finally, independent physicians can attempt individual negotiations, but often have little bargaining power to accomplish their aims.

Recent changes in the law have permitted residents and fellows to exercise collective bargaining rights and future changes may similarly assist self-employed physicians. The Boston Medical Center decision involved a situation in which Boston City Hospital, a public hospital with a residents union in place, was merged with Boston University Medical Center that did not have unionized physicians. The question presented was key to the physician collective bargaining movement: were the interns, residents and fellows to be considered employees despite the fact that they participated in a training program with an educational component? The NLRB overruled the prior precedent of Cedar-Sinai Medical Center from 1976 finding that these physicians met sufficient indicia of employment to be characterized as employees including: (1) they work for an employer; (2) they are compensated for their services, including the receipt of fringe benefits; (3) they provide patient care for the hospital; and (4) they do not have the traditional indicia of being students within a traditional academic setting, such as paying tuition or student fees. For self-employed physicians, changes are on the horizon to allow them to bargain collectively much like their non-self-employed counterparts. The Campbell/Conyers bill, which would permit this collective bargaining through an exception to the federal antitrust laws, has already passed the House of Representatives. On a state-by-state approach, Texas has become the most recent state to pass a State Action Doctrine bill allowing self-employed physicians jointly to negotiate patient care and other issues, including fees. The State Action Doctrine, derived from the 1943 Supreme Court case of Parker v. Brown , is an exception to federal antitrust laws under which such laws do not apply to a state acting in its sovereign capacity or to private conduct compelled or approved by a state.

As health care systems, and the insurance companies and Health Maintenance Organizations ("HMOs") which effectively control such systems, began "managing" the care delivered by employed physicians in ways that reduced the quality of care physicians could deliver to their patients, employed physicians began to explore the potential benefits of collective bargaining. Several labor organizations developed exclusively for the purpose of representing employed physicians in their collective bargaining and physicians have begun to select these labor organizations to represent them in dealing with their employers. The most recent of these is Physicians for Responsible Negotiation, called for originally by the House of Delegates of the American Medical Association. As unionization shifts control of medical decision making back into the hands of physicians, the hospitals and HMOs that employ physicians are fighting this new development with every weapon available to them. The purpose of this article is to acquaint the reader with the employer strategies physicians can and should expect when they begin to exercise their collective bargaining rights. These strategies and theories are set forth below.

Our Physicians Are All Supervisors or Managers, So They Can't Collectively Bargain
This is the universal response by employers of physicians when faced with an NLRB Petition. The specific arguments advanced are: 1) all of our physicians exercise supervisory authority in the delivery of patient care and are, therefore, excluded from the protections of the NLRA; 2) certain physicians, because of their special duties or assignments, are super-supervisors and excluded from the protections for that additional reason; and 3) certain physicians' participation on employer committees qualify them as "managerial" employees, an additional reason to be excluded from NLRA protections. In non-hospital settings an additional argument is generally added: if there are any non-supervisory physicians, any unit of physicians only would be inappropriate. An appropriate unit must include registered nurses, physician assistants, podiatrists, and all other medical professionals employed by the employer as well as non-supervisory physicians.

Supervisors Are Not "Employees" and Can Not Organize
The NLRA clearly defines "Supervisors" as:

" Any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment."

Besides engaging in one of the 12 above listed supervisory activities under the Act, a supervisor must exercise the authority in his/her independent judgment and in the interest of the employer." With respect to independent judgment, the Board recognizes a distinction between professional "employees" who exercise expert or professional judgment because of their superior skills, training or knowledge, and "supervisors" who exercise independent judgments and direct others because of their affiliation with management. Thus, employees, such as physicians, who make decisions requiring expert judgment is the quintessence of professionalism and the mere communication of those decisions and coordination of their implementation do not make the professional - or physician - a "supervisor."

All Physicians Are Supervisors
The first defense employers raise to a NLRB petition is that its physicians can not organize under the Act because they exercise supervisory authority in the delivery of patient care. The employer who raises the supervisor issue as a defense, in most cases, also has the burden of proof. In an attempt to satisfy its burden, the employer will produce evidence that the physicians, in their delivery of patient care, direct nurses and other staff members on patient treatment and care, patient discharge, proper methods of assisting and supporting physicians, etc. The Board has consistently held, however, that the mere direction of patient care is not the exercise of supervisory authority. To strengthen their position, employers will also attempt to produce any evidence of physicians performing or "effectively recommending" the enumerated supervisory traits listed in the NLRA, i.e., hiring, transferring, suspending, laying off employees, etc. Most employed physicians have made some recommendation, at some time, concerning these subjects, so the battle is fought over whether the physician's recommendations are routinely followed. Some employers of physicians have begun assigning these tasks to physicians, for the sole purpose of defeating any collective bargaining effort.

Some Physicians are Super-Supervisors
Besides its position that all physicians are supervisors, and excluded from coverage under the NLRA, the employer will also "cherry pick" physicians for exclusion from representation by attempting to show that certain physicians, because of their special circumstances or assignments, are super-supervisors. Physicians likely targeted by the employer are those physicians who fill in for "true" supervisors on vacations, etc. or physicians who have a special job assignment in addition to treating patients, such as coordinating physician schedules. Physicians who have a job title different from the majority of the physicians, even though their main job responsibility is the treatment of patients, may also be targets. Generally, however, the employer's argument will be defeated by evidence that the demands of treating patients prevents the physician, who is not a "true" supervisor, from exercising much, if any, supervisory authority on any regular basis.

If They Aren't Supervisors, They're Managers
Another tactic employers may use to prevent physicians from exercising their collective bargaining rights is to allege that the physicians are "managerial" employees. Unlike the NLRAs definition of "supervisor," the Act does not define "managerial employees;" but the definition, and exclusion from NLRA coverage are well established through Board case law. Managerial employees are defined as those who "formulate and effectuate management policies by expressing and making operative the decisions of their employer... normally a physician may be excluded as "managerial" only if he/she represents management interests by taking or recommending discretionary actions that effectively control or implement employer policies." ""Managerial" employees must exercise discretion within, or even independently of, established employer policy and must be aligned with management."

The most common use of the employer's "managerial" defense arises when it is alleged that the physicians serve on various employer committees that engage in "key" decision making for the employer's operation and, therefore, the physicians, as managerial employees, should be excluded from the NLRA protections. To prevail, the employer must show that the physicians participate in committee decisions that go to the "core of the organization's operations.

The Board has found physicians to be managerial employees where over half of the physicians in the petitioned-for unit routinely served on committees that made key decisions, such as managing the organization's protocol system, overseeing its medical records system, setting its medical prescription policy, reviewing and modifying the benefits and working conditions of its staff, establishing procedures and staff training for medical emergencies, and minimizing the institution's risk of medical malpractice liability. The managerial employee defense will likely fail when physicians merely serve as "figureheads" on the committees without having any real input into key decisionmaking. Additional road blocks for the employer's defense arise when the committee decisions do not lie at the core of the organization's operations or the committee decisions fall within the duties routinely performed by similarly situated professionals." In the health care context, the Board must evaluate the facts of each case to determine whether committee decisions that are alleged to be managerial, are incidental to the physician's treatment of patients.

Physicians Can't Have Their Own Unit
An additional defense raised by employers, especially HMOs and physician employers other than hospitals, focuses on the inappropriateness of the petitioned-for unit of physicians. The employer argues that any petitioned-for unit of all physicians is incomplete without certain non-physician employees. This tactic is employed to thwart those labor organizations that will only represent physicians. Section 9(a) of the Act provides that a representative selected by "a majority of the employees in a unit appropriate for purposes of collective bargaining shall be the exclusive representative of all the employees in that unit." (emphasis added.) The Board need not determine the only appropriate unit, the ultimate unit or even the most appropriate unit; the Act only requires that the unit be "appropriate."

In 1989, pursuant to its rule-making authority, the Board shed some light on the appropriateness of a an all-physician unit when it issued a rule establishing that in acute care hospitals, eight separate bargaining units are appropriate, including one for an all-physician unit." Physician employers outside the hospital setting, in hopes of expanding the petitioned-for unit beyond physicians, argue that, since they are not acute care hospitals, the Board's rule-making decision should not apply to them. They request that the Board follow the traditional community of interest standard" and find that the appropriate unit is one made up of all physicians plus certain non-physician professional employees such as physician assistants, optometrists, etc. Although the employer may find some communities of interest between physicians and non-physician professional employees under the traditional community of interest test, the differences between the physicians' and non-physician employees' skills, interests, and duties likely will be so dramatic that the Board will exclude non-physician employees in the petitioned-for unit. In fact, the Board, in establishing the appropriateness of an all-physician unit in acute care hospitals, recognized the unique interests and concerns of employed physicians.

Conclusion
Physician collective bargaining is clearly on the rise as an increasing number of physicians are employed and as a growing proportion of physicians recognize that they need a collective voice to deal with hospitals, HMOs, and insurance companies. This movement is only in its embryonic stages, however, and the companies that employ physicians will use the strategies discussed above, plus new ones that are yet to be created, in an attempt to maintain their current leverage over physicians and patients rights.

Robert T. Bernat is Executive Director of Physicians for Responsible Negotiation (PRN), the national physician labor organization founded by the American Medical Association (AMA) in 1999. Dr. Bemat's responsibilities include, among other things, coordination of all PRN organizing efforts and daily management of the business of PRN on a national scale. Dr. Bemat received his bachelor's degree magna cum laude , Phi Beta Kappa in Economics from Princeton University, his law degrees from both Oxford University and Harvard Law School, and his MD degree from the University of Chicago. He holds a permanent medical license in the State of Illinois and is a member of the bar in the States of Illinois, Florida, and California.

Mark G. Flaherty specializes in the practice of labor and employment law. He counsels clients throughout the United States and Canada concerning labor relations and collective bargaining. Mr. Flaherty also represents clients in all areas of employment-related litigation, including suits arising under the National Labor Relations Act, OSHA, MEPPA, ERISA as well as age, race, religion, disability and sex discrimination. Mr. Flaherty received his Juris Doctor in 1978 from the University of Kansas School of Law and his Bachelor of Science in Economics from the University of Kansas in 1973.

Note: For the sake of brevity, footnotes have been omitted from the online version of this article. If you would like a copy of the original article, please contact Jean Sawin at the PRN.



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