Opinion ID: 2299760
Heading Depth: 1
Heading Rank: 6

Heading: Applying the Tests

Text: The cases suggest a tiered inquiry to determine whether a person is an employee under the Tort Claims Act. New Jersey Property, supra, 195 N.J.Super. at 10-11, 477 A. 2d 826. If the court determines that a person is an employee under the control test, then the inquiry ends there. Ibid. If, however, the control test is inconclusive, then the court must determine whether it is appropriate to apply the relative nature of the work test. Marcus, supra, 58 N.J.Super. at 603, 157 A. 2d 3 (Conford, J.A.D., dissenting). When examined according to the four factors of the control test, defendant's status as an employee of UMDNJ is a close question. UMDNJ apparently exercised little control over the means by which defendant administered medical treatment to plaintiff and other patients. Defendant concedes that he did not inform UMDNJ of his plans to perform surgery on plaintiff, nor does it appear that he consulted with any other UMDNJ doctors. However, defendant's sole compensation was his UMDNJ salary, and UMDNJ furnished defendant with offices, staff, and other UMDNJ facilities. UMDNJ also retained the right to terminate defendant, although a KMH oversight board retained control over defendant's staff privileges. The Appellate Division found that KMH exercised greater control over defendant than did UMDNJ. Lowe, supra, 305 N.J.Super. at 95-96, 701 A. 2d 961. We disagree. Applying the control test to defendant's relationship with KMH reveals that KMH resembled UMDNJ in its permissive approach to defendant's activities. Although defendant was required to schedule operating room time with KMH to perform surgery on plaintiff, defendant did not have to secure KMH approval for the surgery itself. Plaintiff emphasizes that KMH governed the days defendant performed surgery, and that KMH assigns nurses, assigns anesthesiologists, and designates labs to defendant. Plaintiff also emphasizes that defendant must follow KMH's rules regarding paperwork and other administrative procedures. However, those functions do not constitute control over the way in which defendant operated on plaintiff, or defendant's choice of treatment for his patients. Because KMH did not pay defendant for the work he performed, and KMH did not retain the right to end defendant's employment with UMDNJ, KMH did not exercise greater control over defendant than did UMDNJ. Neither UMDNJ nor KMH dictated how Dr. Zarghami exercised his professional judgment in treating plaintiff. Indeed, UMDNJ employs practicing physicians as clinical instructors because UMDNJ expects those physicians to exercise independent, professional judgment while educating medical students and treating patients. The relative nature of the work test allows the Court to account for that necessary exercise of independent judgment. The relationship between defendant and UMDNJ presents a clear case in which it is not in the nature of the work for the manner of its performance to be within the hiring party's direct control. Marcus, supra, 58 N.J.Super. at 597, 157 A. 2d 3 (Conford, J.A.D., dissenting). As in Marcus, it would be inconsistent with the nature of a physician's work for his employer to dictate the details of how he performed the practice of medicine. 58 N.J.Super. at 597, 157 A. 2d 3. As with other publicly employed professionals, control is inimical to the task to be performed, since the nature of the work depends on the professionals' independent exercise of judgment. Delbridge, 238 N.J.Super. at 322, 569 A. 2d 854 (finding public defender to be public employee though State could not exercise any control, because public defender was appointed to represent adverse parties); Dunellen, 273 N.J.Super. at 28, 640 A. 2d 1185 (finding municipal engineer to be public employee although, as with all professional employees, governing body did not control details of how services were performed). Thus, we find that the relative nature of the work test is more appropriate than the control test to determine Dr. Zarghami's employment status. We reach that conclusion not only because of the work Dr. Zarghami performed but also because of the public policy concerns expressed in UMDNJ's enabling legislation. The Legislature granted the Board of Trustees of UMDNJ broad authority over the conduct of the University. N.J.S.A. 18A:64G-6. The Board's use of that authority is deemed to be public and essential governmental functions necessary to the welfare of the State and the people of New Jersey. N.J.S.A. 18A:64G-3. Included in the Board's powers is the authority to enter into agreements with both public and private organizations. N.J.S.A. 18A:64G-6( l ). The Board used that authority to enter into affiliation agreements, under which full-time UMDNJ faculty participate in supplemental medical practices. The Board requires faculty to participate in those practice plans to broaden students' clinical experiences, to provide a supplemental source of funding for faculty salaries, to establish an in-State location for specialized care for New Jersey citizens, and to refine and retain clinical skills. The public policy considerations expressed in the UMDNJ enabling legislation support a more liberal evaluation of the working relationships created by the University. Particularly important to that conclusion is the Legislature's desire to grant the Board the structural flexibility necessary to maintain productive and varied relationships with other health-care organizations. N.J.S.A. 18A:64G-2. In Wajner, the Appellate Division concluded that house-staff medical residents at affiliated hospitals were UMDNJ employees. Wajner, supra, 298 N.J.Super. at 121, 689 A. 2d 143. Medical residents were subject to sufficient UMDNJ authority to satisfy the control test; however, the court also considered the relative nature of the work test. Ibid. The court observed that UMDNJ was created through social legislation... to provide a superior academic health center, an educational tool for residents, and a research and patient care service. Id. at 120, 689 A. 2d 143. To accomplish those goals, the Legislature granted UMDNJ extensive autonomy, and the authority to place residents and faculty members in affiliated hospitals. Although residents are subject to strict control, the nature of the medical profession prevents UMDNJ from exerting substantial influence over faculty practice. The application of the limiting standards of the control test to the flexible working relationships designed by UMDNJ would significantly impair the faculty practice in affiliated private hospitals. The liability limiting goals of the Tort Claims Act do not render the relative nature of the work test inapplicable. The Tort Claims Act was intended to limit the liability of public entities. Brooks, supra, 150 N.J. at 402, 696 A. 2d 619. In 1994 the Act was amended to extend immunity from liability to public employees to the same degree that public entities are immune from suit. The amendment also applied the notice requirements of the TCA to public employees. N.J.S.A. 59:8-3. That amendment demonstrates a legislative intent to protect State employees and to limit the State's liability. The amendment also limits a public entity's exposure by providing a prompt opportunity to investigate the circumstances surrounding the dispute and settle meritorious claims. UMDNJ assumes responsibility for purposes of ordinary liability and malpractice insurance for faculty members practicing at an affiliated hospital. In those circumstances, the TCA's liability limiting goals are best served by evaluating a worker's status under a liberal standard, thereby providing prompt notice in any dispute potentially involving a public employee. The relative nature of the work test also considers the extent of the economic dependence of the worker upon the business he serves. Marcus, supra, 58 N.J.Super. at 603, 157 A. 2d 3 (Conford, J. dissenting). In Wajner, the Appellate Division concluded that medical residents were highly dependent upon UMDNJ, because the University paid their salaries. Wajner, supra, 298 N.J.Super. at 120, 689 A. 2d 143. Like the residents in Wajner, Dr. Zarghami's sole source of compensation is a UMDNJ salary. UMDNJ furnishes Dr. Zarghami with an office, facilities and office staff. Furthermore, UMDNJ bills Dr. Zarghami's patients for his services, and pays the salaries of his office staff. Thus, the doctor is economically dependent upon the University not only because UMDNJ pays his salary, but also because UMDNJ assumes responsibility for all of the economic aspects of his practice. In addition to economic dependence, the relative nature of the work test requires the Court to evaluate the relationship of the nature of [the] work to the operation of that business. Marcus, supra, 58 N.J.Super. at 603, 157 A. 2d 3 (Conford, J. dissenting). Any evaluation of a working relationship, therefore, must consider whether the goals of the business are served by concluding that the particular worker is an employee. UMDNJ's primary business is the education of medical students. The faculty practice plan creates opportunities for clinical faculty to both treat patients and instruct residents. At least two medical residents were present during Lowe's surgery. A second goal of the UMDNJ faculty practice plan is to create a patient-referral service. Another physician referred Lowe to Dr. Zarghami. UMDNJ intended faculty practices to provide a supplemental source of funds for faculty salaries. UMDNJ billed Lowe for her surgery, and was paid by Lowe's insurer. If UMDNJ faculty practicing at affiliated hospitals are not public employees, then a number of the goals of the faculty practice program are defeated. First, the status of UMDNJ faculty members would be contingent on where they performed procedures. UMDNJ faculty treating patients in public hospitals would be public employees, and UMDNJ faculty treating patients in affiliated private hospitals would be independent contractors. Such a distinction would create confusion, and limit the accessibility of UMDNJ faculty for patient referrals. Second, if UMDNJ faculty operating in affiliated private hospitals are considered independent contractors, they may be personally liable for their malpractice. If personal liability becomes the rule, physicians may either decide to practice only in public hospitals, or eschew UMDNJ faculty status. Either result would limit the quality of UMDNJ doctors and reduce clinical opportunities for medical students. Third, if UMDNJ elects to indemnify faculty members practicing in private affiliated hospitals, then costs will increase. Rather than providing a new source of funding for faculty salaries, the faculty practice plan could drain resources from UMDNJ. Those factors weigh heavily in favor of concluding that Dr. Zarghami's operation on Lowe was part of a UMDNJ program under which the doctor must be considered a public employee. Because Dr. Zarghami was totally economically dependent on UMDNJ and his work constituted an integral part of UMDNJ's business, both aspects of the relative nature of the work test are satisfied. Therefore, we conclude that UMDNJ faculty, like Dr. Zarghami, practicing in affiliated private hospitals are public employees. That conclusion is supported by Attorney General Formal Opinion No. 23-1976. In 1976, the Attorney General issued Formal Opinion No. 23. The opinion found that the Board of Trustees of the College of Medicine and Dentistry [soon to be reorganized as part of the University of Medicine and Dentistry] was clearly authorized to establish faculty practice programs calculated to enhance the clinical skills of the faculty, to provide a means to supplement the patient population thereby increasing clinical education opportunities, and to supplement faculty income. The opinion stated that professional activities undertaken by participating faculty physicians are considered within the scope of employment for purposes of ordinary liability and malpractice coverage. The opinion described the features of the faculty practice plan and determined that the plans are subject to all appropriate College regulations and are subject to all applicable State statutes and regulations in the same manner and degree as the College. The opinion also determined that administrative, professional and clerical personnel working directly for the faculty practice plans are employees of the College rather than the individual plan. Moreover, each person working for the faculty practice plan is entitled to all benefits normally accorded College employees including vacation and sick time, allowances, leave of absence, policies and pension benefits. UMDNJ and its employees have acted in reliance upon Formal Opinion 23-1976 for the past twenty-two years.