Question: Our organization employs an internist, whose contract is set to expire in two months.  We are planning on not renewing the contract per the terms of the agreement because of a long history of problems with the physician’s medical record0keeping, prescribing patterns, and compliance with employment policies. The physician uses a cane for mobility because of a disability, but this has nothing to do with our reasons for not renewing his contract.  Under the circumstances, are we protected from a lawsuit?

Answer: Unfortunately, nothing can stop someone from suing you.  In Ball v. Einstein Cmty. Health Assocs. Inc., an employed physician with a history of similar problems sued his employer claiming that his contract was not renewed in violation of the ADA and ADEA (the physician was 73 years old).  Ultimately, the court found in favor of the employer because the reasons it offered for not renewing the contract were not considered “pretextual,” or a cover for a real discriminatory reason.

However, the interesting aspect of this case is that the court seemed to equate not renewing the physician’s contract with an “adverse event.”  Under many federal laws prohibiting discrimination (including the ADA and ADEA), the employee has to show that he or she suffered an adverse event related to the employment, such as termination or demotion.

This is not the first time we have seen a court treating the non-renewal of a contract as an adverse event.  In another recent case, Skeete v. North American Partners in Anesthesia, LLP, a physician’s race discrimination suit made it all the way to the summary judgment stage before being dismissed, even though the agreement she had with the employer allowed the employer to terminate her agreement without cause or to not renew the agreement (which the employer did).

These early stages of litigation can be expensive and emotionally taxing.  Some of the time, there is simply no way to avoid a lawsuit.  Nonetheless, if you are sued, your best defense is a strong record outlining the legitimate (and legal) reasons you decided not to renew a contract.  This allows you to demonstrate that there was a legitimate, nondiscriminatory reason for the challenged action.  For more information on how to develop that record and other interesting topics related to employed physicians, join Henry Casale, Rachel Remaley, and Charles Chulack on October 3-5, 2013 in Chicago for the Institute on Employed Physicians and Their Impact on the Medical Staff.