About Us Alliances News Education Resources
PHTS Logo PHTS Logo PHTS Logo
New Account?  Forgot Password?     
Viewpoint


E-zines


Media Releases
News

Attorney Column: Does Regulatory Compliance an Employee Make?
8/30/2011
 
By Walter H. Barefoot, Esq.
Of all the things one can be certain of in life, one is that medical providers, and hospitals, particularly, have to work within the framework of a huge amount of government regulations. These regulations require hospitals and healthcare facilities to do many, many things, all geared toward improving the quality of care and protecting the safety of patients and healthcare workers, alike. These regulations can often create confusion whenever other areas of the law, such as workers’ compensation, come into play. Recently, the South Carolina Court of Appeals had to deal with such a situation. Specifically, they had to determine whether a locum tenens worker at a hospital was a direct employee of that hospital or not. In determining whether a worker is an employee or an independent contractor, the courts look at four specific factors, all of which evaluate whether the alleged employer has the right to control the alleged employee. Thus, the question became whether the actions the hospital was required to take by regulations constituted control over the locum tenens such that the locum tenens became an employee of the hospital in the eyes of the law.

In the recent case of Shatto v. McLeod Regional Medical Center and Key Risk Management and Staffcare and Travelers Insurance (S.C.Ct.App. Opinion No. 4865, filed Aug. 10, 2011), the Claimant was a Certified Registered Nurse Anesthetist (CRNA) who was placed at McLeod by Staffcare to do locum tenens work. The Claimant had signed a contract with Staffcare, a locum tenens staffing company, stating Staffcare “does not have the right to give, direct or control the manner in which I practice my profession.” Further, that agreement included an independent contractor declaration form in which Shatto acknowledged she was not an employee of Staffcare, was responsible for paying local, state, and federal taxes, and was not entitled to unemployment and workers’ compensation benefits from Staffcare.

In South Carolina, though, the parties themselves do not get to control whether someone is an employee or an independent contractor simply by a written agreement. Instead, the courts have to make that determination every time the issue arises. The law on this issue was recently changed in the case of Wilkinson ex. rel. Wilkinson v. Palmetto State Transp. Co., 382 S.C. 295, 676 S.E.2d 700 (2009). In that case, the court reiterated the four factors that have been the standard of analyzing a work relationship but noted that a positive finding of one factor alone is really not enough to establish an employee/employer relationship. The four factors are: (1) direct evidence of the right or exercise of control; (2) furnishing of equipment; (3) method of payment; and (4) right to fire.

The Claimant in Shatto had filed a workers’ compensation claim against both McLeod and Staffcare alleging she was an employee of both when she fell and had an injury while working at McLeod. The matter went to a Single Commissioner hearing and the Single Commissioner found, among other things, that the Claimant was a direct employee of McLeod since McLeod had the right to control her work. McLeod appealed to the Full Commission, which affirmed. McLeod then appealed to the South Carolina Court of Appeals.

In analyzing the facts of the case, the Court of Appeals noted that the Commission had found that McLeod exercised control over Shatto based mostly on actions McLeod was required to do by law. As an example, the Commission had found that McLeod exercised control over the Claimant because she had to wear a nametag and comply with McLeod’s corporate integrity program and confidentiality policies. The Commission also found that McLeod exercised control over Shatto because she had to undergo a physical with McLeod before being allowed to start working and had to undergo an orientation with McLeod. But as the Court of Appeals noted, McLeod was required to provide Shatto with an orientation and to ascertain her health history and health status, as well as her educational and training background, pursuant to the Minimum Standards for Licensing Hospitals and Institutional General Infirmaries regulations under the South Carolina Code of Regulations. In fact, the Court wrote:

We are aware the hospitals are subject to an array of legal and governmental regulations to ensure proper medical standards for healthcare professionals providing optimal patient care. However, because McLeod’s control over Shatto was, in substantial part, derived by law, we find the right to control factor does not favor an employer-employee relationship based on the preponderance of the evidence in the record.

In regard to the factor regarding furnishing of equipment, the Workers’ Compensation Commission found that McLeod had furnished the Claimant with anesthesia and monitoring equipment, blood pressure cuffs, scrub suits, disposable paper hats and paper booties. The Commission felt this was indicative of an employee-employer relationship. At the hearing, though, the Claimant admitted that she herself had never owned an anesthesia machine and that temporary CRNAs do not bring anesthesia equipment while on assignment. While she had been required to wear scrubs in the operating room, her supervisor had told her that she did not need to bring a stethoscope, laryngoscopes and blades because McLeod already had plenty. A supervisor from McLeod testified that a locum tenens CRNA on assignment to McLeod had never brought anesthesia equipment because the law mandates the hospital is responsible for anesthesia equipment. He also testified that individuals are required to wear scrubs prior to entry into the operating room to guarantee a sterile environment. Once again, the Court of Appeals noted that the regulations governing the minimum standards for hospitals required McLeod to maintain anesthesia in operable condition and to maintain a sterile environment in an operating room. Thus, the Court of Appeals concluded that McLeod did not provide the Claimant’s equipment for purposes of creating an employer/employee relationship.

Regarding the method of payment for the Claimant, the Workers’ Compensation Commission had concluded that McLeod was ultimately responsible for payment of the Claimant’s salary and expenses per the terms of agreement they had with Staffcare. A representative from McLeod’s payroll department testified at the hearing that a search of McLeod’s payroll records did not reveal any payment of wages or earnings directly from McLeod to Shatto. Further, the Claimant’s supervisor testified that CRNAs employed by McLeod receive benefits such as vacation time, group health insurance, 401K retirement plan, continuing education and medical malpractice insurance. The Claimant herself acknowledged that she did not receive any of those benefits from McLeod. The Court of Appeals reversed the finding of the Commission and found that the preponderance of the evidence showed that this factor did not weigh in favor of an employee/employer relationship. The court specifically found it particularly noteworthy that the Claimant did not receive any employee benefits from McLeod.

In analyzing the last factor, that being the right to fire, the Court of Appeals also reversed the Commission. The Commission had found that the Claimant had ultimately been fired by McLeod on December 28, 2007. Thus, McLeod had the right to fire her. The Court of Appeals disagreed. They noted that the contractual agreement between McLeod and Staffcare specifically provided a cancellation section. McLeod had properly complied with the cancellation section thus cancelling their contract with Staffcare rather than “firing” the Claimant. That is a significant distinction.

So what do we learn from Shatto? Well, perhaps most importantly we learn that simply complying with the myriad of rules and regulations governing hospitals does not make a locum tenens an employee of the hospital. At the same time we learn that hospitals need to be careful when dealing with locum tenens or any other temporary staffing personnel. If a hospital were to go substantially beyond the requirements of the law and exercise direct control over a locum tenens then that locum tenens may well be found a direct employee of the hospital. Finally, it is always a good practice to make sure that a locum tenens worker has workers’ compensation insurance either purchased by them or the staffing agency.