Third Circuit Applies Pennsylvania's At-Will Employment Doctrine and Holds that Hospital Did Not Breach Contract with Terminated Physician
February 8, 2012
Discharged physicians often seek astronomical damages from hospitals for breach of physician employment contracts. Just recently, an ophthalmologist won a $2.27 million lawsuit against a Mississippi hospital after he claimed the hospital breached a recruitment contract. The physician's attorney convinced a jury that the hospital "refused to abide by contractual terms" and "brutalized" the physician's career.
In contrast to the Mississippi physician's multi-million dollar verdict, the Third Circuit Court of Appeals recently decided a physician breach of contract appeal where a Pennsylvania health care provider, Geisinger Clinic ("Geisinger"), won summary judgment and avoided a trial. Edwards v. Geisinger Clinic, No. 11-1528 (3d Cir. Jan. 23, 2012). Edwards provides useful guidance for hospitals determined to avoid the Mississippi hospital's painful outcome of trial, contract liability verdict and money judgment.
Edwards involved physician recruiting issues that many hospitals face: medical staffing recruiting needs; a foreign, non-citizen physician-applicant; a recruiter's vague oral solicitations of employment for a definite term; an offer letter; a practice agreement; an immigrant work visa; and board certification.
Edwards is a licensed physician from the United Kingdom who specializes in interventional radiology. Geisinger's interventional radiology department began recruiting Edwards to work for Geisinger. During the interviews, Edwards discussed that he wanted to obtain board certification from the American Board of Radiology (ABR). Geisinger requires that new physicians be board certified or work towards becoming board certified. To obtain ABR board certification, a physician must complete four years of uninterrupted employment at an approved program. Geisinger and Edwards understood that Geisinger would develop a program that would enable Edwards to obtain board certification within four to six years. Geisinger delivered to Edwards a formal offer letter, which reiterated that board certification was a job requirement.
Geisinger then sponsored Edwards in connection with his application for a H-1B visa. In 2007, Edwards received his visa, moved from the United Kingdom to the United States and eventually began working for Geisinger.
After Edwards began working for Geisinger, he signed the Practice Agreement referenced in the offer letter. The Practice Agreement provided that Edwards "acknowledge[s] that [his] employment with Geisinger is 'at will' and may be terminated at any time by either party for any or no reason." Edwards claimed that he did not see the "at will" language when he signed the Practice Agreement.
In May 2008, Geisinger terminated Edwards' employment. Edwards then sued Geisinger for breach of contract claiming that he had an express contract of employment for four to six years, which was the length of time that he and Geisinger understood it would take for him to become board certified.
The Legal Rulings
The Third Circuit, affirming the district court's summary judgment decision, made four significant legal rulings based upon Pennsylvania's at-will employment doctrine. First, the Court ruled that the Geisinger recruiter's statements concerning employment for four to six years during recruitment discussions and in Edwards' offer letter were too vague to establish an express contract for a definite term.
Second, the Third Circuit rejected Edwards' argument that Geisinger guaranteed employment for a definite term by failing to include an at-will disclaimer in its offer letter. Pennsylvania law presumes that employment is at-will. The absence of an at-will disclaimer does not indicate that the parties contracted for employment for a definite term.
Third, the Court rejected Edwards' contention that Geisinger expressed its intent to enter into a contract for a definite term by communicating to the ABR that Edwards was participating in its four-year board certification program. Edwards had no evidence that Geisinger ever represented to the ABR that it was guaranteeing Edwards four years of employment.
Last, the Court rejected Edwards' contention that Geisinger expressed its intent to enter into a contract for a definite term by sponsoring Edwards for a three-year H-1B visa. The Court recognized that an H-1B visa does not guarantee employment for the visa's maximum duration. Sponsorship of an H-1B visa alone does not imply that the employer-sponsor has guaranteed employment for the visa's duration.
The Practical Lessons
- Hospital recruiters should be cautious about unwittingly creating the impression that their hospital seeks to recruit a physician for a definite term of employment.
- Hospitals should include at-will disclaimers in offer letters as well as employment applications, particularly those that list circumstances under which a physician-recruit may not be terminated.
- Hospitals should include at-will disclaimers in all written communications with board certification authorities.
- Hospitals should include at-will disclaimers in all written communications with national immigration authorities.
The Opinion is available at http://www.ca3.uscourts.gov/opinarch/111528np.pdf.
Disclaimer: This E-Flash does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this E-Flash without first seeking the advice of counsel.