October 13, 2013
Brandy Schnautz Mann
Jackson Walker L.L.P.
bmann@jw.com
TEACHING HOSPITALS OF TEXAS
2013 HEALTH LAW SEMINAR
Physician Employment: Peer Review and
Other Concerns for Hospitals
Corporate Practice of Medicine
• Corporate practice of medicine prohibition
– Prohibits practice of medicine by unlicensed
persons – including entities such as
corporations
– Effectively prohibits direct employment of
physicians by non-physicians
• Includes lay individuals and entities
• Applies to governmental entities unless excepted
from the rule
Corporate Practice of Medicine
• Unlike some states, Texas does not
exempt hospitals or other licensed health
care entities from the prohibition*
• Today, however, more hospitals in Texas
than ever before can directly employ
physicians
Physician Employment
• Hospital direct employment of physicians*
– Statutes for particular hospital districts
• e.g., Dallas County Hospital District, Maverick
County Hospital District
– Repeated legislative attempts in the last
decade to exempt certain classes of hospitals
Physician Employment
• Hospital direct employment of physicians
– Since 2011, critical access hospitals, sole
community hospitals, and hospitals in
counties of 50,000 or fewer can employ
physicians*
• Health & Safety Code Chapter 311, Subchapter E
for hospitals listed above
Physician Employment
• Hospital direct employment of physicians
– Other bills passed in 2011 for larger hospital
districts
• Harris, Bexar, El Paso, and Tarrant County
Hospital Districts and Scottish Rite Hospital in
Dallas
– New requirements for 501(a) corporations to
ensure physician independence
Employment Limitations*
• Even with exemptions, hospital
employment is limited
• Governing body of hospital not authorized
to supervise or control the practice of
medicine
Employment Limitations
• Chief Medical Officer (CMO)*
• Policies to ensure independent medical
judgment*
• No discrimination between employed and
not employed physicians with respect to
privileges
• Physician involvement in liability issues*
• Non-competes limited*
Chief Medical Officer
• The CMO is the hospital’s designated
contact with the Texas Medical Board
– Must report that hospital is hiring physicians
– Must report any action or event CMO
reasonably believes in good faith
compromises independent medical judgment
of a physician
Employment Policies
• Written policies must cover:
•
•
•
•
•
•
Credentialing and privileges
Quality assurance
Utilization review
Peer review and due process*
Medical decision-making
Complaint mechanism to process and resolve
complaints regarding interference with medical
judgment
Peer Review Laws
• Chapter 161 of the Health & Safety Code
• Chapters 151 and 160 of the Occupations
Code (Medical Practice Act)
• Federal Health Care Quality Improvement
Act of 1986 (HCQIA)
• Intended to work in concert, but they are
distinct laws*
Peer Review Laws
• “Medical peer review committee” or
“professional review body” defined in the
Occupations Code
• “Medical committee” defined in the Health
and Safety Code
• “Professional review body” defined in
HCQIA
Peer Review Purposes
• Quality assurance/utilization review
• Review of medical staff applications and
requests for reappointment
• Disciplinary actions involving physicians
Peer Review Purposes
• Considerations for public hospitals,
hospital authorities, and hospital districts
– Contracts with health care facilities*
– Applicability of Public Information and Open
Meetings Acts
– Immunity
Due Process for Physicians*
• Triggered by adverse review action
– Notice and hearing
– Right to counsel
– Recording
– Witnesses
– Statement
– Review of written decision
Confidentiality
• Intended to encourage discourse and
candor among participants
• Protects records and proceedings from
– Discovery
– Subpoenas (civil litigation v. TMB)*
– Public Information Act (open records
requests)
– Open Meetings Act*
Confidentiality
• Limitations
– Does not apply to records made or
maintained in the regular course of business
– May be waived
– Permissive disclosures*
– Defense of committee or members*
– Some reporting is required and does not
constitute a waiver*
Immunity
• Participants in the peer review process are
protected from civil liability and discipline
or discrimination
– Committee members and employees
– Witnesses
– Reporting parties
Immunity
• Limitations
– Good faith
– Without malice or knowledge of falsity
– Reasonable belief that action or
recommendation is warranted by the facts
– Does not apply to some actions
• Civil rights suits or actions by the United States or
a state’s attorney general
Reporting Requirements
• To the TMB
– Certain adverse actions taken by the
committee*
– Physician posing a continuing threat to the
public welfare through the practice of
medicine
• TMB reports to the Data Bank*
• Duty may not be nullified through contract*
October 13, 2013
Brandy Schnautz Mann
Jackson Walker L.L.P.
bmann@jw.com
TEACHING HOSPITALS OF TEXAS
2013 HEALTH LAW SEMINAR
Physician Employment: Peer Review and
Other Concerns for Hospitals