David Henry v. Adventist Health Castle Med.
970 F. 3d 1126 (2020)
Sections
Rule of Law:
Under Title VII, a physician is considered an independent contractor rather than an employee if the hiring entity lacks the right to control the manner and means of the work, evidenced by factors such as tax treatment, lack of benefits, and the physician's ability to maintain a private practice.
Facts:
- Dr. Henry, a surgeon, entered into recruitment and on-call agreements with Adventist Health Castle Medical Center ('Castle') in 2015, both of which explicitly designated him as an 'independent contractor.'
- Henry was obligated to provide on-call coverage for the emergency department five days per month but was not required to be physically present unless an emergency occurred.
- Henry maintained a full-time private practice, leased space for elective surgeries, treated his own patients, and held privileges at a competing hospital.
- Castle paid Henry a flat rate per on-call shift or a fee per emergency intervention, comprising only 10% of his total income.
- Castle issued Henry IRS Form 1099s instead of W-2s, and provided him with no employee benefits such as health insurance or retirement.
- Castle required Henry to use its medical record system, assistants, and equipment, and to abide by its Code of Conduct and professional standards.
- Following Henry's complaints of discrimination, Castle reviewed his surgeries and subsequently suspended his clinical privileges.
Procedural Posture:
- Henry filed a lawsuit against Castle in the United States District Court for the District of Hawaii, alleging racial discrimination and retaliation under Title VII.
- Castle moved for summary judgment, arguing that Henry was an independent contractor and thus ineligible for Title VII protection.
- The District Court granted Castle's motion for summary judgment.
- Henry appealed the judgment to the United States Court of Appeals for the Ninth Circuit.
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Issue:
Does a physician who contracts with a hospital to provide on-call emergency services while maintaining a separate private practice qualify as an 'employee' entitled to protection under Title VII of the Civil Rights Act of 1964?
Opinions:
Majority - Judge Owens
No, the physician is an independent contractor and therefore not protected by Title VII. The Court applied the common-law agency test derived from Nationwide Mut. Ins. Co. v. Darden, focusing on the hiring party's right to control the manner and means of the work. The Court determined that the financial structure of the relationship—specifically payment by procedure, lack of benefits, and 1099 tax status—strongly indicated independent contractor status. Furthermore, Henry possessed significant professional autonomy, evidenced by his ability to run a private practice, work for competitors, and control his own schedule outside of limited on-call hours. The Court rejected Henry's argument that the hospital's provision of equipment and safety regulations created an employment relationship, noting that all doctors require hospital facilities and must adhere to safety standards, which reflects shared professional responsibility rather than employment control.
Analysis:
This decision reinforces the high bar for physicians with hospital privileges to claim employment status under federal discrimination laws. By clarifying that hospital regulations, peer review processes, and the provision of medical equipment are standard safety measures rather than evidence of employment control, the Ninth Circuit aligns with other circuits in limiting Title VII liability for hospitals regarding their medical staff. The ruling emphasizes that financial independence (tax status/benefits) and the ability to work for competitors are often dispositive in the healthcare context, distinguishing modern hospital-physician contracting from traditional employment relationships.
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