Opinion ID: 2023864
Heading Depth: 1
Heading Rank: 8

Heading: Applicability of Doctrine to Hospitals in Other Jurisdictions

Text: Although the corporate practice of medicine doctrine has long been recognized by a number of jurisdictions, the important role hospitals serve in the health care field has also been increasingly recognized. Accordingly, numerous jurisdictions have recognized either judicial or statutory exceptions to the corporate practice of medicine doctrine which allow hospitals to employ physicians and other health care professionals. See, e.g., Cal. Bus. 2400 (West 1990) (exception for charitable hospitals); Colo.Rev.Stat. § 25-3-103.7(2) (West Supp. 1997) (hospitals may employ physicians); Rush v. City of St. Petersburg, 205 So.2d 11 (Fla.App.1967); St. Francis Regional Medical Center, Inc. v. Weiss, 254 Kan. 728, 869 P.2d 606 (1994); People v. John H. Woodbury Dermatological Institute, 192 N.Y. 454, 85 N.E. 697 (1908); see generally 17 Cumb. L.Rev. at 494. A review of this authority reveals that there are primarily three approaches utilized in determining that the corporate practice of medicine doctrine is inapplicable to hospitals. First, some states refused to adopt the corporate practice of medicine doctrine altogether when initially interpreting their respective medical practice act. These states generally determined that a hospital corporation which employs a physician is not practicing medicine but rather is merely making medical treatment available. See, e.g., State ex rel. Sager v. Lewin, 128 Mo.App. 149,155, 106 S.W. 581, 583 (1907) ([H]ospitals are maintained by private corporations, incorporated for the purpose of furnishing medical and surgical treatment to the sick and wounded. These corporations do not practice medicine but they receive patients and employ physicians and surgeons to give them treatment); State Electro-Medical Institute v. Platner, 74 Neb. 23, 29, 103 N.W. 1079, 1081 (1905) (A hospital which is controlled by a corporation, and which receives patients, and contracts to care for them and to furnish them with medical attendance, does not by so doing practice medicine within the meaning of [the Medical Practice Act]); State Electro-Medical Institute v. State, 74 Neb. 40, 43, 103 N.W. 1078, 1079 (1905) (The intention of the [Medical Practice Act] is that one who undertakes to judge the nature of a disease    must have certain personal qualifications; and, if he does these things without having complied with the law he is subject to its penalties. Making contracts is not practicing medicine. Collecting the compensation therefor is not practicing medicine within the meaning of this statute. No professional qualifications are requisite for doing these things). Under the second approach, the courts of some jurisdictions determined that the corporate practice doctrine is inapplicable to nonprofit hospitals and health associations. These courts reasoned that the public policy arguments supporting the corporate practice doctrine do not apply to physicians employed by charitable institutions. See, e.g., Group Health Ass'n v. Moor, 24 F.Supp. 445, 446 (D.D.C.1938) (actions of nonprofit association which contracts with licensed physicians to provide medical treatment to its members in no way commercializes medicine and is not the practice of medicine), aff'd, 107 F.2d 239 (D.C.Cir.1939); People ex rel. State Board of Medical Examiners v. Pacific Health Corp., 12 Cal.2d 156,159-61, 82 P.2d 429, 431 (1938) ( en banc) (same); Goldwater v. Citizens Casualty Co., 7 N.Y.S.2d 242 (N.Y.Mun.Ct.1938) (charitable hospital corporation sanctioned by law to treat sick is exception to general rule that corporation may not practice medicine), aff'd, 36 N.Y.S.2d 413 (N.Y.Sup.Ct.1939); see generally 45 Cornell L.Q. at 466-79. In the third approach, the courts of several states have determined that the corporate practice doctrine is not applicable to hospitals which employ physicians because hospitals are authorized by other laws to provide medical treatment to patients. See, e.g., Rush, 205 So.2d 11; Weiss, 254 Kan. 728, 869 P.2d 606; John H. Woodbury Dermatological Institute, 192 N.Y. 454, 85 N.E. 697; Republic Reciprocal Insurance Ass'n v. Colgin Hospital & Clinic, 123 Tex. 31, 65 S.W.2d 286 (1933). We find the rationale of the latter two approaches persuasive. We decline to apply the corporate practice of medicine doctrine to licensed hospitals. The instant cause is distinguishable from Kerner, Allison, and Winberry. None of those cases specifically involved the employment of physicians by a hospital. More important, none of those cases involved a corporation licensed to provide health care services to the general public. See Weiss, 254 Kan. at 746, 869 P.2d at 618. Accordingly, we decline to extend the Kerner corporate practice rule to licensed hospitals. The corporate practice of medicine doctrine set forth in Kerner was not an interpretation of the plain language of the Medical Practice Act. The Medical Practice Act contains no express prohibition on the corporate employment of physicians. [1] Rather, the corporate practice of medicine doctrine was inferred from the general policies behind the Medical Practice Act. See Kerner, 362 Ill. at 454, 200 N.E. 157. Such a prohibition is entirely appropriate to a general corporation possessing no licensed authority to offer medical services to the public, such as the appellant in Kerner. However, when a corporation has been sanctioned by the laws of this state to operate a hospital, such a prohibition is inapplicable. [2] Accord Rush, 205 So.2d at 13-14; Weiss, 254 Kan. at 744-45, 869 P.2d at 617; John H. Woodbury Dermatological Institute, 192 N.Y. at 457-58, 85 N.E. at 698-99; Republic Reciprocal Insurance Ass'n, 123 Tex. at 34, 65 S.W.2d at 287. The legislative enactments pertaining to hospitals provide ample support for this conclusion. For example, the Hospital Licensing Act defines hospital as: any institution, place, building, or agency, public or private, whether organized for profit or not, devoted primarily to the maintenance and operation of facilities for the diagnosis and treatment or care of    persons admitted for overnight stay or longer in order to obtain medical, including obstetric, psychiatric and nursing, care of illness, disease, injury, infirmity, or deformity. (Emphasis added.) 210 ILCS 85/3 (West Supp.1995). In addition, the Hospital Lien Act (770 ILCS 35/0.01 et seq. (West 1994)) provides [e]very hospital rendering service in the treatment, care and maintenance, of such injured person a lien upon a patient's personal injury cause of action. (Emphasis added.) Pub. Act 89-280, eff. January 1, 1996 (amending 770 ILCS 35/1 (West 1994)). [3] Moreover, the Hospital Emergency Service Act (210 ILCS 80/0.01 et seq. (West 1994)) requires [e]very hospital    which provides general medical and surgical hospital services to also provide emergency services. (Emphasis added.) 210 ILCS 80/1 (West 1994); see also 210 ILCS 70/1 (West 1994) (requires licensed providers of professional health care, including hospitals, to provide emergency medical treatment in life-threatening situations, regardless of patient's ability to pay). The foregoing statutes clearly authorize, and at times mandate, licensed hospital corporations to provide medical services. We believe that the authority to employ duly-licensed physicians for that purpose is reasonably implied from these legislative enactments. Accord Weiss, 254 Kan. at 745, 869 P.2d at 618; Albany Medical College v. McShane, 66 N.Y.2d 982, 983, 489 N.E.2d 1278, 1279, 499 N.Y.S.2d 376, 377 (1985); John H. Woodbury Dermatological Institute, 192 N.Y. at 458, 85 N.E. at 699; Republic Reciprocal Insurance Ass'n, 123 Tex. at 33-34, 65 S.W.2d at 287, We further see no justification for distinguishing between nonprofit and for-profit hospitals in this regard. The authorities and duties of licensed hospitals are conferred equally upon both entities. [4] Accord Weiss, 254 Kan. at 746, 869 P.2d at 618. In addition, we find the public policy concerns which support the corporate practice doctrine inapplicable to a licensed hospital in the modern health care industry. The concern for lay control over professional judgment is alleviated in a licensed hospital, where generally a separate professional medical staff is responsible for the quality of medical services rendered in the facility. See 210 ILCS 85/4.5 (West Supp.1995); 77 Ill. Adm.Code §§ 250.150, 250.310 (1997); see also 45 Cornell L.Q. at 445-46. [5] Furthermore, we believe that extensive changes in the health care industry since the time of the Kerner decision, including the emergence of corporate health maintenance organizations (see 215 ILCS 125/1-1 et seq. (West 1994) (Health Maintenance Organization Act)), have greatly altered the concern over the commercialization of health care. In addition, such concerns are relieved when a licensed hospital is the physician's employer. Hospitals have an independent duty to provide for the patient's health and welfare. See Gilbert, 156 Ill.2d at 518,190 Ill.Dec. 758, 622 N.E.2d 788 (recognizing hospital's duty to review and supervise the medical treatment of a patient); Darling, 33 Ill.2d at 332-33, 211 N.E.2d 253 (recognizing hospital's duty to assume responsibility for the care of its patients); see also 410 ILCS 50/0.01 et seq. (West 1994) (Medical Patient Rights Act) (establishing right of patient to receive health care from hospital which is consistent with sound medical practices); 45 Cornell L.Q. at 446. We find particularly appropriate the statement of the Kansas Supreme Court that [i]t would be incongruous to conclude that the legislature intended a hospital to accomplish what it is licensed to do without utilizing physicians as independent contractors or employees.    To conclude that a hospital must do so without employing physicians is not only illogical but ignores reality. Weiss, 254 Kan. at 745, 869 P.2d at 618. Accordingly, we conclude that a duly-licensed hospital possesses legislative authority to practice medicine by means of its staff of licensed physicians and is excepted from the operation of the corporate practice of medicine doctrine. Consequently, the employment agreement between the Health Center and Dr. Berlin is not unenforceable merely because the Health Center is a corporate entity. The circuit court has not yet adjudicated the substantive merits of the instant employment agreement. Therefore, we remand this cause to the circuit court to proceed with the original action in a manner consistent herewith.