Why the independent contractor status of doctors leave them vulnerable in the workplace



Most physicians are not employees in the traditional sense, but rather are independent contractors with hospital 'privileges'.


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Most physicians are not employees in the traditional sense, but rather are independent contractors with hospital ‘privileges’.

The pandemic has shone a light on many aspects of society, but nowhere more brightly than on our healthcare system.

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Exposing both its frailties and resilience, COVID-19 has made it clear that the strength of our hospitals lies with our frontline staff: physicians, nurses and other healthcare professionals. However, the independent contractor status of physicians can leave them vulnerable to unfair practices in the workplace. Recently, however, our courts recognized one of the challenges physicians practicing in hospitals face: the dependent nature of many physicians’ practices and the lack of financial protection if their privileges are terminated. Shouldn’t a physician be entitled to compensation if a hospital effectively terminates their job?

Hospitals, and in particular academic hospitals, are complex work environments. Most physicians are not employees in the traditional sense, but rather are independent contractors with hospital ‘privileges’. A hospital grants its physicians the ‘privilege’ of using its resources to provide care to patients. Privileges are very valuable to the physicians who hold them as they have significant financial, professional and reputational benefits.

Increasingly, due to financial considerations, hospitals are seeking to limit the number of physicians on staff. But the loss of privileges has dramatic negative financial consequences for physicians who earn the bulk of their income in a hospital environment, particularly physicians requiring a hospital setting to perform aspects of their jobs, such as complex surgeries.

As privileges are now much harder to come by, some physicians who lose their hospital privileges can find themselves without the ability to earn a living. Recently, the courts acknowledged that some physicians have a relationship of dependence on hospital resources and therefore should be entitled to the same protections as other dependent contractors who have in many respects similar protection to employees, particularly when it comes to dismissal.

The concept of ‘dependent contractor’ is an important one in today’s economy as, freelance, temporary and time-limited contract employment become increasingly the norm in what millennials refer to as the ‘gig’ economy. The concept of dependent contractor evolved at law to protect these workers, which make up an increasing percentage of the workforce, by affording them entitlement to reasonable notice of their dismissal.

In an important recent decision by Ontario’s Court of Appeal, the court acknowledged that dependent contractor status as extending to physicians practicing in hospitals. Doctors Douglas Beattie and George Luczkiw had their privileges cancelled by Toronto-based Women’s College Hospital, where they had been practicing almost exclusively for decades. Dr. Luczkiw and Dr. Beattie had devoted 30 years and 21 years, respectively, to the service of Women’s College Hospital, only to be terminated in their 60s without any severance or financial compensation. Dr. Beattie also served as director of the hospital’s urgent care centre for 12 years.

The termination of these physicians’ privileges was not based on performance issues or due to any fault of their own. Rather, the hospital decided to close its urgent care centre, without providing the doctors compensation for their loss or reasonable notice, leaving these physicians effectively without the ability to practice, profoundly impacting their lives.

It was determined that a statutory exemption in the Public Hospitals Act allowed the hospital to terminate the physicians’ privileges where it had ceased to provide the service entirely, and it was not done as a device to rid themselves of the two physicians. This is a result which would not be conceivable in any other situation where a dependent contractor relies on the arrangement for the majority of his or her income.

At trial, the judge acknowledged that both physicians would be required to “consider new career paths” as the College of Physicians and Surgeons of Ontario required that they complete extensive retraining to practice in emergency of family medicine, as they had spent their careers specializing in urgent care and found themselves with nowhere to practice. Dr. Luczkiw developed cancer shortly after the urgent care centre closed.

Despite the, frankly, tragic result and unfavourable outcome for the physicians in this case, the Court took an important step in finding that the physicians were dependent contractors due to their economic dependence on the hospital and their high level of exclusivity. As a result, where privileges are cancelled, revoked, refused or substantially altered, absent this limited statutory exemption, physicians would be entitled to damages for reasonable notice, as dependent contractors, in the same way as employees — and potentially for dramatically more if their loss of hospital privileges prevented them from getting back on their financial feet for years.

The case exposes the cracks in our system by which independent contractor status leaves our physicians vulnerable and unprotected. For a society that has become acutely aware in recent months of the importance of physicians to the health and functioning of our society, we must ensure more fair and equitable treatment of our healthcare heroes. The court in this case, as in others, has increasingly filled in the gaps and provided deserved protection for a group which was historically, to the surprise of many, vulnerable.

Got a question about employment law during COVID-19? Write to me at levitt@levittllp.com.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers. He practises employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.

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