Last June the American Academy of Emergency Medicine (AAEM) filed suit in Texas seeking to block contract management giant TeamHealth from taking over eight emergency department contracts. The suit was on behalf of Crystal Cassidy, MD, who had previously started a Rule 202 proceeding (pre-suit depositions) against theformer contract holder Emergency Care Consultants, Inc. During these proceedings, the staffing contract for all the emergency departments, all part of the Memorial Hermann Health System (MHHS) was awarded to TeamHealth. That’s when AAEM stepped in through its Texas chapter. The issue is not a new one for AAEM, going all the way back to the reason for the founding of the Academy by Dr. James Keaney. AAEM claims that such contracts put lay individuals in charge of a physician practice, a violation of a Texas prohibition on the corporate practice of medicine. In defense of the national management group, TeamHealth CEO Lynn Massingale adamantly holds that “The emergency physicians at Memorial Hermann practice medicine without direction or control by TeamHealth or its related entities, and the physicians make all patient
care decisions based upon their own experience and judgment.”
AAEM is using its web site (www.aaem.org
) to raise money for the legal action, which it calls “a pivotal case related to the professional control of the practice of emergency medicine”. The specific impact in Texas would seem less pivotal, however, admits Robert McNamera, former president of AAEM. “Team-Health is replacing ECI (Emergency Consultants Incorporated), one CMG for another,
so not much will change.” Regardless, McNamara adds that AAEM is committed to seeing the case through to a definitive ruling.
AAEM Joins Florida Class Action
AAEM has also put their support behind a class action suit against TeamHealth originating out of Broward County, Florida. In December 2006, Dr. David Soria, formerly a regional medical director for TeamHealth and the Chief Medical Officer for ScriptRx, filed suit against TeamHealth, alleging that the management company had wrongfully inflated their costs in order to avoid paying incentive bonuses to its employee physicians at Wellington Regional Medical Center.
Interestingly, Soria’s class action suit followed another, perhaps more inflammatory, lawsuit in which TeamHealth accused Soria of violating a non-compete contractual agreement, another favorite target of AAEM . In court filings, Team-Health claimed that Dr. Soria hid a malpractice claim as well as a conspiracy on his part to pirate the contract away from TeamHealth and award it to another group, Medical Edge, with whom he had a proprietary relationship.
Dr Soria’s position is that he could see that the hospital was going to end their relationship with TeamHealth and wanted to be in a position to continue working there. His problem was that it appears
that he was working for the new group while still holding a leadership role, and “fiduciary duty” to his employer, Team-Health.
AAEM and the Non-Compete Battle
AAEM has yet to support Dr. Soria’s case monetarily, but it’s not for lack of interest.
“AAEM supports both cases,” said Tom Scaletta, president of AAEM. “AAEM is not financially supporting the Soria case at this time because our resources are committed to the (Texas) case.”
AAEM has openly stated its opposition to non-compete clauses in employment contracts. A position paper on the subject published by AAEM states:
“Many emergency physicians assume that contract holders use restrictive covenants to prevent competition. However, preventing competition is not a legitimate business interest. Legitimate business interests supporting the use of restrictive covenants include the protection of (1)trade secrets, (2)referral sources, and (3)confidential information. Employers sometimes argue that since they expend considerable funds to educate or recruit physicians, the restrictive covenant protects
their “investment.” However, emergency physicians rarely possess trade secrets and do not disrupt referral patterns when they leave an emergency department. Confidentiality laws prevent physicians
from divulging personal patient information.”
The question remains: how far will AAEM go in its fight against non-competes? No official position statement supports a physician openly violating their contract with a CMG in order to gain the contract for themselves. Their published position paper only addresses situations where the contract holders attempted to prevent their employee physicians from working at a hospital after they had lost the contract.
AAEM makes the case that states have applied the “Rule of Reason” to the application of restrictive covenants to emergency physicians and have enforced them only to the extent that is necessary
to protect a legitimate business interest on the part of the contract holder for a “reasonable” period of time. TeamHealth argues that “restraining an employee from accepting similar employment with a
competitor company in servicing a prior customer of the employer is a valid activity to restrain.”
At the date of publication, no ruling had been issued on either the claim of violation of the restrictive covenant or the counter class action claim, but both Drs. Scaletta and Massingale seem hopeful
that the courts will see it their way.
“We think that the court system may bring positive changes that will improve patient care and physician working conditions,” says Scaletta.
“Our most recent physician survey indicates that 95% of our affiliated physicians would recommend TeamHealth to a colleague,” says Massingale. “Every year, more and more hospitals choose TeamHealth for a simple reason—our model works.”