Guest Article

(From the Employer's Guide to HIPAA Privacy Requirements, Thompson Publishing Group)

In-House Physician May Be Fired for Refusing to Disclose Employee Health Information, N.Y. High Court Rules

A company may fire an in-house physician for refusing to disclose employees' health information, according to the New York Court of Appeals, the state's highest court. The court thus overruled an appellate court's March 2002 decision that the company, publisher of The New York Times, was obligated not to prevent the doctor from practicing medicine in compliance with the profession's ethical standards, including confidentiality.

By a five-to-one vote, with one abstention, the Court of Appeals dismissed Dr. Sheila Horn's claim for breach of contract, noting that she had been employed on at "at-will" basis, and declining to create a new implicit exception to employment at will. The case is Horn v. New York Times, 2003 WL 443259 (N.Y. Ct. App., Feb. 25, 2003).

Facts of the Case

Dr. Sheila Horn was the associate medical director of the Times' medical department, where her duties included treating employees and examining those who sought workers' compensation to determine whether their injuries were work-related. She alleged that other departments of the company frequently asked her for employees' medical records without their knowledge or consent. After consulting the New York State Department of Health, which advised her that turning over the records would be illegal and unethical, Horn refused to do so and, she alleged, was terminated as a result.

Horn sued the Times for wrongful discharge, alleging that, while she had been employed on an "at-will" basis, implicit in her employment relationship with the company was an understanding that, having been hired to serve as a physician, she would conduct her practice in accordance with the ethical standards of the medical profession.

Horn cited the case of Wieder v. Skala (80 N.Y.2d 628), in which the New York Court of Appeals found such an ethical exception to the general rule of "employment at will" regarding the legal profession. The Wieder court ruled that an attorney had been wrongfully discharged from his firm for insisting that the firm report an associate's professional misconduct to the state bar's disciplinary committee. However, this ruling had not been extended to other professions. The Times argued that unlike an attorney, who is an independent officer of the court, Horn simply performed professional services to further her corporate responsibilities, such as determining eligibility for workers' compensation.

The trial court ruled, and the Appellate Division affirmed, that the Wiederrule should be extended to medical professionals hired by nonmedical entities because of "the implied understanding in their relationship that the employer will not impede or discourage the physician's compliance" with the profession's ethical rules. (Horn v. New York Times, 293 A.D.2d 1 (March 21, 2002.)

Majority Opinion

In its opinion, the Court of Appeals first noted the general rule of employment at will. "American courts have proved chary of creating common law exceptions to the rule and reluctant to expand any exceptions once fashioned," Judge Susan Read wrote for the majority. "The only exceptions to the employment-at-will rule ever adopted by this court have involved very specific substitutes for a written employment contract"-- one instance in which an employee relied on an explicit promise and the other, the Wieder case, in which the ethical rule was "fundamental and essential to the parties' shared professional enterprise."

Regarding Horn, however, "whatever medical care and treatment she rendered was provided only to fellow employees and only as directed by her employer," Read wrote. "She was applying her professional expertise in furtherance of her responsibilities as a part of corporate management."

The court also found that physician-patient confidentiality was, unlike the legal ethics at issue in Wieder, "not central to Horn's 'conduct [of] her practice on her employer's behalf.'" Therefore, the court ruled, the state confidentiality requirements cited by Horn "do not impose a mutual obligation on the employer and the employee in this case."

"Our dissenting colleague would compensate for the absence of a mutual obligation flowing from a common professional enterprise by substituting the notion that the Times knew or should have known about Horn's professional responsibility to protect patient confidentiality," Read wrote. "By loosing Wieder from its analytical moorings, however, the dissent would create a broad new exception to the presumption of at-will employment, applicable to hosts of professional employees."

Dissenting Opinion

In his dissenting opinion, Judge George Smith argued that "the Times impliedly committed to permitting [Horn] to perform her professional responsibilities in a manner not inconsistent with the ethical practice of medicine." In the Wieder decision, he explained, "this court recognized that in certain contractual situations, an obligation of good faith and fair dealing arises which limits an employer's unfettered right to terminate at will."

Smith disputed the majority's attempt to distinguish Horn's situation from Wieder's. "Dr. Horn makes no allegation that can reasonably be read to assert that she was hired to do anything but perform as a physician," he wrote. "Like the associate in Wieder, Dr. Horn remained a duly admitted member of a professional body and was bound by its rules."

Implications

Although this case does not address privacy directly, it does relate to the status of employer health clinics under HIPAA. Such clinics are excluded from HIPAA's definition of "health plan" but could be covered providers if they engage in electronic transactions. If the physician in this case were covered by HIPAA, she probably would have violated HIPAA by making the disclosures she made to New York Times management. Perhaps the court would reach a different conclusion about the employment-at-will doctrine if she had been faced with violating not just professional ethical rules, but federal law.

Reprinted with permission from the April 2003 newsletter of the Employer's Guide to HIPAA Privacy Requirements, © Thompson Publishing Group, Inc., 2002. All rights reserved.

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