An Illinois trial court has ruled that hospitals can't directly employ physicians to provide medical services.
The ruling, if upheld on appeal, exposes the untold number of hospital-physician employment agreements in Illinois to legal attack and may make the terms of the agreements unenforceable.
Although technically illegal in Illinois, such employment deals are common because the state's prohibition against the corporate practice of medicine is rarely enforced, said attorney D. Cameron Dobbins, who represents the physician who prevailed in the case.
The unclear legal standing of hospital-physician employment arrangements has forced hospitals in other states to seek special legislation to clarify the issue.
The physician in the Illinois case, Richard Berlin, entered into an employment arrangement with Sarah Bush Lincoln Health System in Mattoon, Ill., in January 1993. The 161-bed hospital had recruited the general surgeon to the area two years earlier, but his attempt at setting up an independent practice was not successful, court papers said.
About a year after becoming an employee of the hospital, Berlin quit to become an employee in the branch office of a competing provider, the Carle Clinic, a multispecialty group practice.
The hospital then sued Berlin, claiming he violated the noncompete clause in his employment contract.
Berlin argued that the terms of the contract were unenforceable because Illinois law doesn't permit hospitals to employ doctors in the first place.
In a June 15 decision, Judge Dale Cini of the 5th Judicial Circuit Court in Charleston, Ill., agreed. "The activities of Sarah Bush under the contract are clearly at odds with longstanding legislative restrictions on the practice of medicine," he wrote.
The hospital is expected to appeal the decision.