Disability Claims by Physicians: News for Physician Groups and Medical Staffs

A recent development in the U.S. Court of Appeals for the 9th Circuit (covering the West and Pacific Northwest) establishes that physicians who practice as independent contractors in those regions can sue under the federal Rehabilitation Act (the “Rehab Act”).

While we have known for some time that physician employees generally are protected from discrimination on the basis of disability, there has been disagreement over whether non-employee physicians—independent contractors of physician groups and physicians with hospital medical staff privileges—have the ability to sue for disability discrimination.

With this decision, we receive some clarity on the current disability legal landscape in the 9th Circuit. However, important questions remain under the Rehab Act in most other circuits, and also under the Americans with Disabilities Act (ADA) throughout most of the country.

The Rehab Act: Fleming

In 2005, Dr. Lester Fleming contracted with Yuma Anesthesia Medical Services (the “Group”), an anesthesiology group that contracted with Yuma Regional Medical Center in Arizona (the “Hospital”) to provide anesthesia services on an exclusive basis. When the Group and the Hospital later learned of Dr. Fleming’s sickle cell anemia (precisely how this information was obtained is the subject of another lawsuit by Dr. Fleming against his residency program and its director), Dr. Fleming was informed it would not be possible to make any special practice arrangements for him. As a result, Dr. Fleming never commenced work for the Group at the Hospital. Instead, he sued both entities. 

While Dr. Fleming first argued that he was an employee of the Group, he later conceded that he was an independent contractor. The trial court granted summary judgment in favor of the Group on that basis—i.e., as an independent contractor he could not sue the Group under the Rehab Act—and the parties then stipulated to dismissal of Dr. Fleming’s claims against the Hospital. Interestingly, Dr. Fleming took the position that, as an independent contractor, he could not sue under the ADA. Dr. Fleming appealed the district court’s determination that the Rehab Act does not cover independent contractors.

In pertinent part, Section 504 of the Rehab Act provides that “[n]o otherwise qualified individual with a disability … shall, solely by reason of his or her disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.” The phrase “program or activity” is broadly defined to include “all of the operations of … an entire corporation, partnership, or other private organization,” if the entity receives federal financial assistance or “is principally engaged in the business of providing education, health care, housing, social services, or parks and recreation,” as well as some other specified services. Section 504 of the Rehab Act imports from the ADA that law’s standards—“as they relate to employment”—for determining whether an employment discrimination complaint adequately states a claim for violation of the law.

When Dr. Fleming appealed the lower court’s ruling against him, the 9th Circuit reversed it. The court determined that the issue was whether the Rehab Act incorporates only the ADA’s standards for determining what conduct is covered, or whether the Rehab Act also incorporates the ADA Title I limitations for determining who is covered, thereby limiting the Rehab Act’s scope to employees. In support of their position, the defendants pointed to cases holding that § 504 of the Rehab Act covers employees only.

The 9th Circuit opined that the scope of activities covered by the Rehab Act is wider than that of ADA Title I because the Rehab Act covers “all of the operations” of private entities such as health care providers and not just their employment practices. The court acknowledged that (as discussed further below) other types of conduct are addressed elsewhere in the ADA, but not in Title I.

The Fleming court rejected the U.S. Court of Appeals for the 8th Circuit's contrary decision in Wojewski v. Rapid City Regional Hospital, Inc., on the purported ground that “[s]ection 504 [of the Rehab Act] does not even mention employment, while Title I [of the ADA] deals exclusively with employment[.]” In a seeming contradiction, the Fleming court then acknowledged, “[s]ection 504(d) plainly refers us to Title I of the ADA ‘as such sections relate to employment’[.]”

Further, Rehab Act § 504(d) also declares that ADA Title I’s standards must be “used to determine whether this section has been violated in a complaint alleging employment discrimination” (emphasis added). Thus, § 504 actually refers to “employment” twice, but the Fleming court still insisted that § 504 cannot be limited to employment relationships. The court failed to consider how someone who never even applied to be an “employee” can bring a complaint for “employment discrimination” under § 504 of the Rehab Act or any other law. 

The ADA: Are physicians covered?

Regardless of whether the Fleming court’s § 504 analysis is correct, the court was accurate in observing that Congress did not clearly articulate who is covered by either the Rehab Act or the ADA. The ADA has been used by physicians to argue that they are protected against disability discrimination both as employees and as independent contractors. The former claims are recognized by the courts. The latter claims—those of independent contractors—continue to produce differing results.

Title I of the ADA covers employees. Title III of the ADA covers “individuals” for the “full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation[.]” Traditionally, courts extended coverage under Title III to clients and customers of places of public accommodation. In 1998, however, the U.S. Court of Appeals for the 3rd Circuit held in Menkowitz v. Pottstown Memorial Medical Center that a physician with medical staff privileges could bring a Title III ADA claim, in addition to a Rehab Act claim. Some lower courts have followed Menkowitz. No other circuit court has decided the Title III ADA question.

Where do we go from here?

Where do these cases leave physician groups and hospitals? Even in the absence of an employment relationship, physician groups and hospitals in the 9th Circuit now have a legal obligation to extend the protections of the Rehab Act to their physician contractors—who likely include both physicians with written professional services agreements and physicians with medical staff membership and privileges. (However, the obligation to medical staff members is less clear in states like California, where common law indicates that medical staff bylaws ordinarily do not constitute a contract, but where medical staff members without written agreements nevertheless may be considered independent contractors.) It remains an open question in the 9th Circuit whether these physicians also are entitled to protection under the ADA, and the circuits are split on the Rehab Act issue.

Unless and until the U.S. Supreme Court chooses to resolve these questions, we recommend that physician groups, hospitals and their medical staffs work with their legal counsel to analyze carefully how to make credentialing, privileging and other determinations about physicians who may be disabled, including decisions about possible accommodations.