United States: Dealing with Physicians’ Misconduct at the Hospital

Hospitals usually have written policies that explain the concepts of sexual harassment and hostile work environments, including descriptions of the types of impermissible conduct, and the remedial actions that may be taken against employees pending an investigation. Despite their legal obligation to provide a safe and harassment- free workplace, few hospitals have adopted work environment policies that are drafted for and adopted by the medical staff. Hospitals often fail to establish a process separate from their bylaws for investigating and curtailing a physician’s alleged misconduct. This may lead to employee complaints that physicians charged with misconduct receive preferential treatment over other hospital workers accused of the same behavior. In years past, hospitals were unable to swiftly investigate and remediate complaints involving alleged physician misconduct as the due process requirements of medical staff bylaws were an impediment, especially when a hospital lacked a harassment policy applicable to both staff and physicians.

Hospitals have an obligation to protect employees from sexual harassment, whether the alleged perpetrator is another employee, independent contractor, or physician. This article explores the tension created between the fair hearing and due process rights of doctors in a hospital setting and the hospital employer’s obligation to investigate and correct a discriminatory, sexually harassing, and/or hostile work environment arising out of physician misconduct.

The Hospital’s Obligations as an Employer

As an employer with control of the workplace, a hospital is prohibited under Title VII of the Civil Rights Act of 1964 from allowing its employees to engage in discrimination on the basis of sex, among other types of impermissible conduct. In addition to Title VII, the fair employment practice law of a majority of states cannot limit the protections of Title VII, but may exceed them.

Until recently, sexual discrimination claims were divided between quid pro quo claims (in which sexual favors were demanded in return for employment considerations or in order to prevent adverse employment consequences) and "hostile environment claims" (involving severe or pervasive sexually harassing conduct). See Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 65 (1986). After Meritor, plaintiffs were encouraged to couch their complaints in terms of quid pro quo claims because courts of appeals held that, if the plaintiff established a quid pro quo claim, the employer was subject to vicarious liability. Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998).

Because the Ellerth plaintiff had not suffered an adverse employment action, but only unfulfilled threats of such, the Court held that her claim should be categorized as a hostile work environment claim, which required a showing of severe or pervasive conduct. The Court accepted the district court’s finding that the plaintiff had proved "severe or pervasive" harassing conduct. It then held that when discrimination is proved, the factors discussed below, and "not the categories quid pro quo and hostile work environment, will be controlling on the issue of vicarious liability." Ellerth, 524 U.S. at 754. The Court affirmed the court of appeals’ reversal of summary judgment that had been granted for the employer, holding that the plaintiff should have the opportunity to prove she has a claim for which the employer is vicariously liable. Id. At 766.

The Ellerth decision means that employers such as a hospital may be vicariously liable for a sexual harassment claim by an employee, even where the alleged harassment took the form of a hostile work environment rather than quid pro quo sexual demands. The labels are not controlling for purposes of establishing employer liability. The Supreme Court formulated this test (id. at 765):

An employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor with immediate (or successively higher) authority over the employee. When no tangible employment action is taken, a defending employer may raise an affirmative defense to liability or damages. . . . The defense comprises two necessary elements: (a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

The Court concluded, however, that no affirmative defense was available when the supervisor’s harassment culminates in a tangible employment action such as discharge or undesirable reassignment.

Bear in mind a fundamental distinction between physicians and others in the hospital setting. Doctors typically are private practitioners, not employees of the hospital; they are said to enjoy "privileges" to practice at the hospital. On the other hand, non-physicians in the hospital, such as nurses, medical technicians, administrators, and orderlies, are usually direct employees1of the hospital. While an increasing number of physicians are employed by hospitals, action in response to their misconduct and the hospital’s obligation to protect the worksite are not employment-dependent. Hospital employees subjected to severe or pervasive sexual harassment by a non-employed physician with staff privileges may seek to have the hospital held vicariously liable for the physician’s alleged harassment. The hospital has a duty to remedy an alleged abusive condition created by a doctor even though he or she is not an employee but simply has privileges in the hospital. The same duty to investiga te and remediate arises as in co-worker or third-party harassment. Under 29 C.F.R. §1604.11(e), an Equal Employment Opportunity Commission regulation, employers may be liable for sexual harassment perpetrated by nonemployees "in the workplace, where the employer . . . knows or should have known of the conduct, and fails to take immediate and appropriate corrective action."

The Ninth Circuit, for example, has held that employers may be liable for failing to prevent or remedy sexual harassment by co-workers. Ellison v. Brady, 924 F.2d 872, 881 (9th Cir. 1991). The employer may even be liable for behavior by third parties such as patrons, where the employer "ratifies or acquiesces in the harassment by not taking immediate and/or corrective actions when it knew or should have known of the conduct." Folkerson v. Circus Circus Enterprises, Inc., 107 F.3d 754, 756 (9th Cir. 1997), citing Trent v. Valley Electric Association Inc., 41 F.3d 524, 526 (9th Cir. 1994) (where employer hires an outside trainer to train its employees, a function often carried out by company supervisors, and outside trainer harasses employees, company may be liable under Title VII). The case law of other federal circuits is in accord. See, e.g., Lockard v. Pizza Hut, Inc., 162 F.3d 1062 (10th Cir. 1998).

The hospital’s duty to investigate claims of and alleviate sexual harassment arises when an employee reports misconduct by another employee or a non-employee on the premises, such as a physician. The hospital’s duty includes taking all necessary steps to prevent the sexual harassment. Its action upon learning of the sexual harassment must be prompt and reasonably calculated to prevent future harassment. See Knabe v. Boury Corp., 114 F.3d 407, 411 n.8 (3d Cir. 1997). However, where the alleged offender is a physician with privileges to practice at the hospital, the hospital’s compliance with this duty may conflict with the physician’s right to due process and traditional provisions of the medical staff bylaws.

Absent a contract or other circumstances establishing specific restrictions, the hospital may suspend or discharge an employee without notice at any time. See, e.g., Falcone v. Columbia Pictures Industries, Inc., 805 F.2d 115 (3d Cir. 1986). Absent a workplace policy putting physicians on notice of the hospital’s duty to safeguard the workplace, however, even if a physician is an at-will employee of the hospital, suspending or terminating him or her may not be so simple. There are protections unique to a physician with hospital privileges that must be considered in determining the appropriate and allowable action to be taken where sexual harassment or other misconduct is alleged. These due process protections, discussed below, include notices, fair hearings, statutory and regulatory licensure proceedings, and those rooted in a hospital’s internal bylaws.

Section 1983 of Title 42 of the United States Code provides a cause of action for deprivation of any rights under the Constitution or other law by a governmental entity. Physicians often bring suit against hospitals under §1983, arguing that privileges to practice at a particular hospital are a "property right" or "liberty interest" that cannot be terminated without due process. A threshold requirement for the physicians in maintaining an action under §1983 is to show that the hospital at issue is a "state actor." Many hospitals are governmental or quasigovernmental entities. Private hospitals may also be deemed state actors if they are subject to sufficient government regulation, receive sufficient government funding (including Medicare and Medicaid), perform traditional public functions and enjoy a significant "symbiotic relationship" with the state. Rendell-Baker v. Kohn, 457 U.S. 830, 839-43 (1982).

If a hospital is a state actor, a physician has a right to due process before a hospital may terminate his or her privileges. Some courts have held that due process rights are implicated in revocation of hospital privileges where the revocation occurs for disciplinary reasons. Aluko v. Charlotte-Mecklenburg Hospital Authority, 959 F.Supp. 729 (W.D.N.C. 1997). Citing the Supreme Court’s decision in Board of Regents of State Colleges v. Roth, 408 U.S. 564, 569 (1972), the Aluko court noted that "where a person’s good name, reputation, honor, or integrity is at stake because of what the government is doing to him, notice and an opportunity to be heard are essential." 959 F.Supp. at 735. However, the issue of whether the physician’s participation in an interview conducted as part of the employer’s investigation of sexual harassment allegations satisfies due process has not been addressed.

A further issue is whether the hospital may summarily suspend a physician’s hospital privileges under a hostile work environment policy prior to notice and a fair hearing being conducted pursuant to the hospital bylaws. Summary suspension of privileges carries a risk of the stigma of medical incompetence, and affects the doctor’s ability to earn an income during the suspension. As a summary suspension may damage a doctor’s reputation, it may also1permanently damage his or her earning capacity. See McMillan v. Anchorage Community Hospital, 646 P.2d 857 (Alaska 1982).

Courts have found that summary suspension does not violate a physician’s due process rights in some situations. Gureasko v. Bethesda Hospital, 116 Ohio App.3d 724, 730, 689 N.E.2d 76, 80 (1996), rev. denied, 78 Ohio St.3d 1467, 678 N.E.2d 223 (1997). In fact, the Health Care Quality Improvement Act specifically provides that nothing in that Act shall be construed as "precluding an immediate suspension or restriction of clinical privileges, subject to subsequent notice and hearing or other adequate procedures, where the failure to take such action may result in an imminent danger to the health of any individual." 42 U.S.C. §11112(c)(2) (emphasis added). The Gureasko court, in upholding a summary suspension of a physician’s privileges, noted that "[i]n order to avoid liability for damages based upon a due process violation, the action must have been taken with the reasonable belief that the failure to take such action might result in an imminent danger to the health of a patient and the suspension must be followed by adequate notice and hearing procedures." 689 N.E.2d at 81, citing 42 U.S.C. §11112(c)(2).

The court’s analysis in McMillan v. Anchorage suggests that a doctor’s alleged sexual harassment of a hospital employee, without more, may not rise to the level required to justify summary suspension by the hospital. Opinions on this issue uniformly rely on the proposition that the only clear justification for a summary suspension of hospital privileges is to eliminate an imminent threat to patient safety. Unlike professional incompetence, a physician’s difficulty in working with others does not automatically endanger patients, and justify summary suspension. The McMillan court noted that:

Of the two interests—professional competence and ability to work with others— the hospital clearly has a stronger interest in being able to act quickly to protect patients from professional incompetence. Where a physician’s competence has been called into question, the risk to patient safety is obvious and immediate. In such situations, courts have uniformly held that the hospital’s interest outweighs the physician’s, and that summary suspension is justified.

646 P.2d at 865, citing Citta v. Delaware Valley Hospital, 313 F.Supp. 301, 309-10 (E.D.Pa. 1970) (right to perform gastrectomies suspended following death of patient). Summary suspension of a physician’s privileges for sexual harassment is justifiable when there is a reasonable basis to conclude that there is a danger that the physician’s misconduct will have an adverse impact on patient care. For example, should a nurse begin avoiding interaction with the harassing physician—by not placing calls to clarify orders, or not communicating changes in patient conditions—the hospital may be able to justify the suspension on the grounds of risk of patient harm.

Another factor that has an impact on the hospital’s response to a sexual harassment allegation against a physician (not applicable to some other hospital employees) is the requirement that the physician be licensed to perform his or her services. Each state has a statutory and/or regulatory scheme governing licensure of physicians to practice medicine. Courts have found that a license to practice medicine is a property right, of which the physician may not be deprived without due process of law. See, e.g., Lowe v. Scott, 959 F.2d 323, 334 (1^st Cir. 1992). A physician is entitled to notice and a hearing before his or her medical license may be suspended or revoked by the state.

Remedial action taken by the hospital in response to an employee complaint of sexual harassment, including temporary suspension of privileges, may prompt a report to the licensing agency and be a catalyst to initiate an investigation. The effect of the hospital’s suspension on a physician’s privileges, whether temporary or permanent, and the potential liability for any harm to the physician for improper action, is an additional consideration in determining how to respond to a sexual harassment allegation made against a physician.

The hospital may have bylaws that provide additional protections and procedural requirements prior to any disciplinary action being taken against a physician with hospital privileges. A federal court in California has analyzed whether hospital bylaws constitute a contract between physicians and hospitals. In Janda v. Madera Community Hospital, 16 F.Supp.2d 1181, 1184 (E.D.Cal. 1998), the court noted that the majority of jurisdictions have held that bylaws constitute a binding and enforceable contract between a hospital and a physician. If the bylaws form a contract, the hospital may be required to provide the protection set forth in the bylaws during its work place investigation of alleged physician misconduct and consideration of disciplinary action.

However, if the hospital maintains specific medical staff policies or bylaw provisions authorizing suspension when the hospital reasonably concludes after investigation that a violation of sexual harassment and/or hostile workplace policies occurred, those specific contractual provisions support the hospital’s ability to act speedily in response to a finding of sexual harassment or hostile work environment based on the employer’s investigation.

Another physician-specific factor is the requirement to report disciplinary actions taken against the physician to a national clearinghouse. No such requirement exists for most nonphysician employees.

The Health Care Quality Improvement Act (HCQIA) of 1986 was drafted in order to deal with the issues arising from the confidentiality requirements of peer review statutes, which prohibit disclosure of committee findings. Previously, incompetent physicians whose hospital privileges were revoked continued to practice by simply relocating. The successor hospital had no means to secure information about the physician’s prior practice from the predecessor hospital. The HCQIA established the National Practitioner Data Bank (NPDB), a national reporting system that must receive notice of all settlements in medical malpractice claims and/or whenever a peer review committee decision adversely affects a physician’s hospital privileges for longer than 30 days. 42 U.S.C. §§111131, 111133. The HCQIA also provides conditional immunity and privilege provisions to a hospital for reporting to the NPDB.

If the hospital investigates the employee’s complaint as a part of the peer review process and suspends a physician’s privileges for longer than 30 days, the hospital needs to report the suspension. The hospital enjoys immunity as long as the report demonstrates reasonableness and protection of the physician’s due process rights. 42 U.S.C. §11112(a)(1)-(4). The requirement to report a suspension based upon a peer review committee’s findings to the NPDB, and the potential for liability for causing damage to the physician’s reputation for erroneous reporting, place an additional burden to ensure that the hospital’s investigation and remediation in response to the harassed employee’s complaint, if taken as a part of the peer review process, comply with "reasonableness" and protect the physician’s due process rights.

It is not clear that a hospital’s investigation of a physician-on-employee sexual harassment claim and suspension of a physician’s privileges taken pursuant to a work environment policy would be reportable to the NPDB. The adverse "professional review" actions reportable to the NPDB include only those that are "based on a practitioner’s professional competence or professional conduct that adversely affects, or could adversely affect, the health or welfare of a patient." 45 C.F.R. §60.3. If a suspension of privileges is a remedy identified in a work environment policy for the medical staff, and arises out of a hospital employer’s investigation of an allegation of sexual harassment, the suspension is not reportable if it did not result from a peer review committee decision and was not related to patient safety.

Hospital administrators and human resource directors should work closely with lawyers representing the hospital to determine which investigatory track will be followed. The hospital has a strong interest in avoiding the penalties for failure to disclose reportable events or wrongfully reporting events to the NPDB. Upon receipt of an employee’s allegations against a physician, the hospital must review its work environment policies, applicable bylaws, state and federal employment statutes and regulations, and case law regarding due process before formulating the plan for the investigation. The "goal" of the investigation needs to be clarified, and any interviews, findings, etc. must be designated appropriately as confidential under either peer review provisions or attorney-client privilege.

The hospital has a duty to take actions that are "prompt and reasonably calculated to prevent future harassment."

The first action is to interview the complainant to determine the basis of the allegations, assess the complainant’s credibility, and find out if there were witnesses to the alleged misconduct. Is the complainant aware of other allegations of misconduct by the physician? What action does the complainant believe is appropriate to remedy the situation? Is he or she fearful for personal safety or patient safety? Does the employee desire a change to a shift or location where the physician spends less time at the hospital? Does the employee need a brief leave of absence to cope with the impact of the alleged misconduct? The answers to these questions will direct the hospital’s next steps.

Hospital employees with relevant knowledge, other potential victims, and the allegedly misbehaving physician also need to be interviewed promptly. After completion of the interviews, the investigator(s) need to assess the likelihood of the alleged acts having occurred. If it appears that the conduct in fact occurred, does that conduct violate hospital policy? What action is necessary or appropriate to prevent any further harassment of the complainant or any other person? Finally, hospital counsel must consider whether, and how, any other action is needed to prevent future occurrences—such as training or education in the work setting.

In order to prevent further sexual harassment of the complainant, or any retaliation for reporting the harassment, it may be necessary to prevent the alleged harasser from being in close physical proximity to the complainant, especially when other staff are not present. The hospital needs to balance the prevention of further harassment with the least punitive sanction appropriate to the conduct.

Suspension of privileges should be reserved for severe and well-documented misconduct. Lesser remedial measures include counseling, change of shift coverage, warnings to the doctor to cease engaging in misconduct, re-assigning patient care, or attendance in sensitivity training classes. The hospital must also consider the possibility that the alleged perpetrator may be harassing employees other than the complainant. If the hospital’s investigator and/or legal counsel decide that the only action that is "prompt and reasonably calculated to prevent future harassment" is to take the perpetrator out of the hospital, summary suspension may be considered.

As discussed above, the law does not require notice to a non- licensed employee prior to his or her termination. He does not have a property right or liberty interest in his at-will employment. See, e.g., Martin v. Unified School District No. 434, 728 F.2d 453 (10th Cir. 1984). However, summary suspension of a physician’s hospital privileges under the hospital’s bylaws may not be permissible unless it is necessary to eliminate an imminent threat to patient safety. A physician who has problems working with others, and is the target of allegations that he has sexually harassed coworkers, may not be a sufficient basis to invoke a suspension under the bylaws. However, the hospital is obligated to uniformly respond to and address allegations that the work environment at the hospital is hostile.

If the appropriate medical staff policies are in place, and investigation is conducted by the employer outside the peer review process, suspension of a doctor’s privileges may be upheld in spite of the rigorous bylaws protections. Therefore, although in appropriate circumstances hospital counsel may recommend summary suspension of a non- licensed employee during an investigation of the complainant’s allegations, summary suspension of the physician’s employment or privileges is a step that should be taken only after careful consideration of all of its potential ramifications.

After taking steps to preve nt any further sexual harassment of the complainant, the hospital must then determine whether the conduct complained of occurred and, if so, to determine whether and how to sanction the offender. The law requires that an investigation into sexual harassme nt allegations must be conducted, but does not specify the manner in which the investigation must be performed. Flanagan v. Ashcroft, 316 F.3d 728 (7th Cir. 2003); McDonnell v. Cisneros, 84 F.3d 256 (7th Cir. 1996) (affirming dismissal of complaint, holding investigation that exceeds proper limits is not actionable sexual harassment); Malik v. Carrier Corp., 202 F.3d 97 (2d Cir. 2000) (claim for negligent infliction of emotional distress may not be premised on an employer’s sexual harassment investigation).

Any decision to suspend or terminate a physician’s hospital privileges by hospital bylaws requires the full panoply of due process protections. He or she needs to receive notice and an opportunity to be heard, as well as the opportunity to examine the evidence and cross-examine witnesses. If suspension arises out of a work environment policy applicable to the medical staff and separate from the bylaws, the hospital may protect itself by doing a timely, thorough, neutral investigation, including an interview of the physician.

The lawyer representing the hospital must consider practical impacts. The state licensing board will be interested in the temporary or permanent revocation of a physician’s hospital privileges due to an allegation of sexual harassment. The lawyer must consider the possibility of an action by the physician against the hospital if the state begins its own investigation, or even elects to revoke the physician’s license based upon the facts as established by the hospital’s investigation.

The hospital must also consider the effect on its recruitment and retent ion of physicians if the medical community develops the impression that the hospital’s investigation was "a witch hunt" or otherwise unjust or inappropriate. Finally, it must assess the possible impact on recruitment and retention of nurses and other employees if it develops a reputation of being ineffective in handling allegations of sexual harassment or being unwilling to act upon employee’s allegation of sexual harassment against doctors.

If the hospital elects to suspend a physician’s privilege, a plan for transition of patient care must be formulated. In addition, careful scripting of the "message" to be given to patients explaining why care is being transferred is essential to prevent prospective claims of slander, defamation and tortuous interference of business.

The hospital employer’s duty to respond swiftly to investigate and remediate a work environment and/or sexual harassment claim, commonly clashes with the traditional peer review and due process provisions of the medical staff bylaws. Lawyers representing the hospital need to be mindful of all policies applicable to the work environment and are encouraged to assist their client in drafting work environment policies approved by the medical staff. Work environment and anti-harassment training and disclosure of the remedial responses available to remedy harassment claims must be provided to the medical staff. An informed medical staff should be encouraged to promote a lawful work environment.

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