Employment
Outcome: Very unfavorable
Also under Health plan coverage
Issue
The issue in this case was whether the administrator of an employee benefit plan, operating under a conflict of its own interests with the interests of the plan beneficiaries, must give a reason if it is to overrule the medical evaluation of a treating physician.
AMA interest
The AMA believes that employee benefit plans should be administered for the benefit of the employees in the plan.
Case summary
Kenneth Nord had degenerative disc disease in his back. As a result, his primary treating physician determined that he was incapable of performing his job duties. Nord applied for disability benefits under the Black & Decker Disability Plan, which Black & Decker both funded and administered. Metropolitan Life Insurance Company (MetLife) helped Black & Decker evaluate claims.
Black & Decker initially denied Nord’s disability claim, and Nord appealed. In conjunction with the appeal, MetLife had an independent neurologist review Nord’s claims. The neurologist agreed with the diagnosis of Nord’s disease but found that Nord could perform his job, provided that he took pain reduction medication. After the review, MetLife recommended denial of Nord’s claim, and the plan administrator accepted that recommendation. No reason was given for following the evaluation of the neurologist, rather than that of Nord’s treating physician.
Nord brought suit in the United States District Court for the Central District of California, claiming that the denial of disability benefits violated ERISA §404, which requires that “a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries.” Nord contended that, because the plan administrator was conflicted and, without explanation, disregarded the recommendation of Nord’s treating physician, it had violated this statute. The district court granted summary judgment in favor of the disability plan, holding that it was within its discretion to deny the disability benefits. Nord appealed to the Ninth Circuit Court of Appeals.
The Ninth Circuit reversed the district court and ordered the disability payments. The Ninth Circuit noted that Black & Decker was operating under a conflict of interests, in that it was both the funding source and, through its employee, the plan administrator. Consequently, it said, the administrator must defer to the claimant’s treating physician unless it gives “specific, legitimate reasons for doing so that are based on substantial evidence in the record.”
Black & Decker appealed to the Supreme Court of the United States, which reversed the Ninth Circuit. The Court held that neither the ERISA statute nor its regulations required the treating physician rule, as articulated by the Ninth Circuit. Further, the Court stated that the establishment of such a rule should be within the prerogative of the United States Department of Labor, rather than the courts.
Litigation Center involvement
The Litigation Center filed an amicus curiae brief in the Supreme Court, arguing that under accepted principles of law and of medical practice, the plan administrator should, in this situation, have been required to justify his decision to overrule the treating physician.
Outcome: Very unfavorable
Also under Termination of Employment
Issue
The issue in this case was whether the New York Times could discharge its employee, a physician, because she refused to act unethically.
AMA interest
The AMA supports the right and duty of physician-employees to adhere to medical ethical rules, even when otherwise directed by employers.
Case summary
Dr. Horn sued the New York Times for wrongful termination of her employment relationship. She alleged that the Times’ Labor Relations, Human Resources, and Legal Departments had directed her to provide them with employees’ confidential medical records without those employees’ consent or knowledge. She also alleged that the Human Resources Department, so as to curtail the number of workers’ compensation claims filed against the Times, directed her to misinform employees that certain injuries and illnesses were not work related when, in fact, they were. She claimed that the Times fired her because she refused to follow these illegal instructions.
The Times moved to dismiss the lawsuit, contending that, under New York law, it could discharge Dr. Horn at-will. The trial court denied the motion, and the Times appealed.
By a 3-2 decision, the Appellate Division of the New York Supreme Court affirmed the denial of the Times’ motion to dismiss. Although the general rule in New York State is that employers can discharge their employees at-will, the court created an exception for a physician-employee who was punished for following ethical obligations to patients. The court noted that Dr. Horn was legally required to follow the AMA’s Principles of Medical Ethics and CEJA Opinion E-5.09, which required employed physicians to preserve the confidentiality of their patients’ medical information, even against the wishes of the employer.
The case was then appealed to the New York Court of Appeals, the highest court in New York. By a five-to-one decision, the Court of Appeals reversed the Appellate Division and the trial court. It held that, as in previous cases, it would decline to create a right of action for wrongful or abusive termination of employment or to recognize a covenant of good faith and fair dealing to imply terms grounded in public policy into employment contracts, and it ordered the case dismissed.
Litigation Center involvement
The Litigation Center joined a brief prepared by the Medical Society of the State of New
York (MSSNY) to support Dr. Horn in the Appellate Division of the New York Supreme Court. Additionally, the Litigation Center, on behalf of the AMA, MSSNY, and the American College of Occupational and Environmental Medicine, filed an amicus curiae brief in the Court of Appeals to support Dr. Horn.
Outcome: Favorable
Also under Americans with Disabilities Act and Termination of Employment
Issue
The issue in this case was whether physicians were wrongly terminated from their medical group because they recommended proper medical care for their disabled patients who were enrolled in capitated managed care plans.
AMA interest
The AMA supports the right and duty of physicians to adhere to medical ethical rules and practice standards even when otherwise improperly directed by employers or third party payors.
Case summary
Physicians contended that they had been discharged from their employment because they had recommended proper medical care for their disabled and chronically ill patients who were enrolled in capitated managed care plans. The lawsuit was designed to broaden the scope of remedies available to such physicians. Defendants included a medical clinic, a management services organization, and four health plans. The case was filed in a Texas State court and was removed to the federal district court in San Antonio.
The federal district court held that the plaintiffs had adduced sufficient evidence to defeat a motion by defendants for summary judgment on the primary issues in the case. This published opinion established the right of physicians, under appropriate circumstances, to sue for wrongful discharge under the Americans with Disabilities Act (ADA) and the Rehabilitation Act, if the discharge was motivated by the physicians’ patient advocacy.
The court also entered summary judgment against Martin Guerrero, one of the physician plaintiffs, based on the release language in his employment severance agreement. He was found liable to HealthTexas for filing suit in violation of his agreement. Some of Dr. Guerrero’s claims, however, survived. The defendants made numerous additional motions, but they were all defeated, at least in part.
Ultimately, after the jury began its deliberations, the case settled under confidential terms.
Litigation Center involvement
The Litigation Center, in conjunction with the Texas Medical Association (TMA), contributed financial support to the plaintiffs.
