By Richard N. Peterson
Academy General Counsel
The Academy recently has received a number of inquiries from orthopaedists interested in forming and joining unions to increase their bargaining strength with third-party payers. This increased interest in physician unions has no doubt been spurred on by several developments:
Physician interest in unionization has skyrocketed as managed care plans have increased their control over independent physicians regarding medical decision-making and payment. According to a UAPD spokesperson, "the whole movement toward managed care is making doctors much more similar to employees and much less like independent contractors." While presenting a united front to third-party payers might be advantageous to physicians in increasing or maintaining fee levels, it may prove difficult for such unions not to violate national and state antitrust and labor laws.
Under current law, unions cannot collectively bargain about fees for a group of unaffiliated private practice physicians. To lawfully negotiate as a group, independent physicians must be organized in a network where they share substantial financial risk or where substantial clinical or functional integration exists.
Federal and state antitrust law prevent competitors from agreeing to charge a set price or prices. For purposes of the antitrust law, independent medical practices are considered competitors. In addition, under the National Labor Relations Act (NLRA), independent self-employed physicians are considered independent contractors; the Taft-Hartley Act, which amended the NLRA, specifically denies independent contractors the rights and protections of the NLRA.
For physicians to be considered as individuals who may collectively bargain with employers, they must be non-management "employees." In 1996, just over 10 percent of the practicing board-certified orthopaedic surgeons were in full-time salaried positions (e.g., employed by HMOs, medical schools or universities or hospitals). These individuals would be eligible to join a union if they are not management employees. Consequently, the vast majority of U.S. orthopaedic surgeons would be considered independent contractors, not employees.
Physicians do not necessarily need to be in a formal contractual relationship in order to qualify as "employees" eligible to join a union. Courts will review the specifics of the relationship between the physicians and the "employer" to determine if the physician is a nonmanagement employee or an independent contractor. Physicians usually appear more like independent contractors rather than employees when assessed against the criteria used by the courts. These criteria include:
Using these criteria, no court has yet found that physicians without formal employment agreements are "employees" for unionization purposes. Consistent with this position, the National Labor Relations Board currently does not recognize a national labor group of physicians, although several organizations have encouraged the agency to change its position.
Possible other roles
Independent physicians who attempt to negotiate as a group with third-party payers run a significant risk of violating the antitrust laws, with or without the protection of a "union." That does not mean that physician "unions" cannot legitimately serve other purposes. For example, with an affiliation with the AFL-CIO, a physician "union" might be able to use the large union's political clout in Congress and the states to achieve legitimate legislative goals. In addition, physician "unions" might provide physicians with a powerful, unified voice as well as with education on how to individually negotiate contracts with third-party payers and others.