Issue: Staff physician cannot maintain state law civil rights claim of discrimination when his relationship to the hospital fits that of “employee”

For the week of February 25, 2008

Last month, the 2d U.S. Circuit Court of Appeals held that a hospital’s “quality assurance program” that led a physician into its peer review process may have created an employment relationship, allowing the physician to move forward with claims under Title VII. (Salamon v. Our Lady of Victory Hospital, et al., No. 06-1707-cv, January 31, 2008) Less than a month later, the Ninth Circuit has determined that a physician working under the terms of a professional service agreement with a hospital was in a position equivalent to that of an “employee” for purposes of an anti-discrimination statute, based upon the fact that the hospital controlled certain aspects of his work in the ER. In this case, that designation led to a dismissal of the doctor’s state law discrimination claims. Johnson v. Riverside Healthcare System, LP, 9th Cir., No. 06-55280, February 13, 2008.

Christopher Johnson worked as a physician and as a member of the medical staff under the terms of a professional agreement with Riverside Community Hospital. His responsibilities included performing plastic surgeries and providing trauma consultations in the hospital’s emergency room. While the professional agreement designated Johnson as a “contractor,” Riverside retained control over several of the material aspects of Johnson’s work at the hospital. For instance, the hospital determined which shifts Johnson would work, assigned the nurses who would work with him, designated specific credentials that Johnson had to display while inside the hospital, and required Johnson to remain a member in good standing on the Medical Staff at Riverside.

In February of 2002, Johnson’s medical staff privileges were revoked when he failed to pay membership dues that would have kept those privileges current. When Johnson applied for reinstatement, he was told that he would have to reapply to the Staff as a new applicant. That application included a hearing before the Medical Staff Credentialing Committee. At the hearing, numerous co-worker complaints were presented, all related to Johnson’s behavior. Based upon complaints, the Committee denied Johnson’s application for staff membership, and reported the comments to the California Medical Board.

Johnson, who designates himself as “African American and bisexual,” claimed that he had regularly been harassed because of his sexual orientation, that he had been the victim of at last one particularly serious incident of racial harassment, and that he had been denied continuing employment because of his race and sexual orientation. Johnson filed a lawsuit in federal court claiming racial discrimination in violation of 42 U.S.C. §1981, and under a California anti-discrimination statute (known as the “Unruh Civil Rights Act”), claiming racial and sexual orientation discrimination.

Johnson’s claims were dismissed by the district court, and he appealed that dismissal. On appeal, the Ninth Circuit first addressed Johnson’s §1981 claim. Section 1981 guarantees all persons the right to “the enjoyment of all benefits, privileges, terms, and conditions of [a] contractual relationship,” which has been interpreted by the courts to include a prohibition against racially hostile work environments. To prove a hostile work environment based upon racial harassment, an individual must show conduct sufficiently severe and pervasive to “create an abusive work environment.” Johnson alleged only one particularly serious incident of discrimination – an encounter with a fellow doctor who referred to Johnson by using a racial epithet. The Ninth Circuit upheld the claim’s dismissal on the basis that isolated incidents typically are insufficient to state a claim for hostile environment.

The Court then turned its attention to the state-law claims. The statute under which Johnson brought his claims, California Civil Code §51, codifies the Unruh Civil Rights Act, and provides that all persons within the State of California are entitled to “. . . full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind. . . .” However, California courts have held that employment discrimination claims are excluded from Section 51 protection, on the basis that other statutes exist to provide relief for such claims. While Johnson argued that Section 51 applied because he was not an employee of the hospital, the Court disagreed. Factors viewed by the Court as creating an employment relationship included the fact that Johnson was paid to be on call, was compensated for trauma patients treated (up to a monthly cap), and retained control over certain of the “material aspects” of Johnson’s work at the hospital. The Court specifically cited the facts that Riverside determined Johnson’s work shifts, and that it assigned nursing staff to work with him during those shifts, and enforced criteria for his continued good standing on the Medical Staff. Based on these factors, the Court held that Johnson’s Section 51 claims were “foreclosed by the fact that his relationship with Riverside was materially indistinguishable from that of an employee.”

This recent holding could be problematic, because the factors used by the Court to establish that Johnson’s status was more similar to an “employee’ than to a “contractor” for purposes of the state’s anti-discrimination statutes are factors present in nearly every relationship between a hospital and its staff physicians. While this case has limited geographic applicability (9th Circuit and California state law), and the holdings in both cases are specific to hospital/employers, the context is beginning to be applied more generally by various federal courts. Employers with contract or temporary employees should be aware of the criteria being used by courts to determine whether an individual is an "employee" for purposes of state and federal anti-discrimination statutes.