Company doctor who shielded employee medical records can be fired, NY court rules.

A doctor employed by the New York Times who refused to divulge employees' medical records without their consent does not meet a 1992 exception to the state's at-will employment doctrine and cannot sue for breach of contract after being fired, New York's highest court has ruled. (Horn v. New York Times, No. 11298, 2003 WL 443259 (N.Y. Feb. 25.2003).)

Sheila Horn was associate director of the newspaper's medical department. She listed her primary duties as providing medical care, treatment, and advice to employees--including determining whether their injuries were work-related and whether they qualified for workers' compensation. Her lawsuit alleged that the company's human resources, labor relations, and legal departments ordered her to provide confidential employee medical records without obtaining the employees' consent.

When she asked the state Department of Health whether it was legal and ethical to follow these orders, the agency answered that releasing medical records without patients' consent would violate state law provisions, the Code of Ethical Conduct of the American College of Occupational and Environmental Medicine, the Americans with Disabilities Act, and various federal regulations. Horn refused to share the information with nonmedical personnel.

The Times decided to restructure its medical department, "phasing out" three positions, including Horn's. Believing her job was eliminated because she would not violate patient confidentiality, she filed suit for breach of contract.

Although the courts have found few exceptions to the state's at-will employment doctrine, which allows termination by either party at any time without cause or notice, the trial court denied the defendant's motion to dismiss. The at-will employment exception defined by Wieder v. Skala (609 N.E.2d 105 (N.Y. 1992)), it ruled, should be extended to cover a doctor employed by a nonmedical entity.

In that case, Wieder, a law-firm associate, asked the firm partners to report another associate's mishandling of a personal matter (a transaction sanctioned by the partners) to the disciplinary committee, as required by the New York Code of Professional Responsibility. The firm didn't report the misconduct and later dismissed Wieder, who sued for breach of implied contract.

The New York Court of Appeals allowed the suit to go forward, ruling that Wieder's duties as a lawyer and as an employee were "so closely linked as to be incapable of separation" and that he and his firm "were engaged in a 'common professional enterprise,' the practice of law," which imposed a mutual obligation on both parties to follow the profession's standards of conduct.

In the 5-1 Horn decision, the same court called the exception a "unique confluence of specific, related factors" that were not present in the doctor's case. "Because of the absence of a common professional enterprise between Horn and the Times, the ... provisions cited by Horn do not impose a mutual obligation on the employer and the employee in this case," Judge Susan Read wrote for the majority.

Read reasoned that Horn called on her knowledge as a doctor not only to treat employees, but also to help corporate management make decisions. The ethical standards she was allegedly ordered to violate were "not central to her conduct of her practice on her employer's behalf."

The court cautioned that it has made only a few very specific substitutes for a written employment contract. "We have consistently declined to create a common law tort of wrongful or abusive discharge, or to recognize a covenant of good faith and fair dealing to imply terms grounded in a conception of public policy into employment contracts ... and we again decline to do so."

In his dissent, Judge George Smith wrote that when the newspaper hired Horn, it knew or should have known that she was bound by the patient confidentiality provision of the medical profession's ethics code.

"The critical similarity between the rule governing Dr. Horn and the rule governing the associate in Wieder is not that the rule needs to reflect the profession's self-governing function--this is just a particular function of the legal profession. What is critical is that the profession regards the rule as intrinsic to its survival as a profession," Smith wrote.

The majority countered that Smith would have the courts widen the exception too far and "create a brand new exception to the presumption of at-will employment, applicable to hosts of professional employees."

Smith wrote that he was not considering all professions, but merely noting that the rules that govern the conduct of doctors are similar to those governing lawyers, particularly regarding confidentiality.