Did Health-Care Practice Correctly Calculate Doctor's Pay?

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By Caitlin Reilly

“You said overhead expenses would be divided equally among all the doctors here, but only three out of four of us covered them,” said Jack, leader of a cardiac team.

“Our newest doctor has different duties and is paid less, so he should not have to cover a share of the practice's expenses,” said Kate, the head of the medical center.

FACTS: The employment contract of a doctor who worked for a cardiac center defined his compensation as the total revenue from his patients, minus his personal overhead expenses and a prorated portion of the center's expenses.

The doctor's expenses included malpractice insurance and health insurance, phone and pagers and other costs not directly associated with practicing medicine.

At the start of the doctor's employment at the center, the expenses were divided equally among all of the doctors employed there. During six of the seven years the doctor worked for the practice, expenses were divided evenly among four physicians.

Near the end of the doctor's time at the center, another heart specialist left the center and expenses were divided among the three remaining physicians. A few months later, the center hired a new doctor as a salaried employee. The new employee did not have credentials at the two hospitals the center served.

Covering a portion of the center's overhead costs was not included in the new doctor's employment contract. The expenses continued to be split among the three doctors. The new physician's salary was included in the expenses paid by the three other doctors.

The more senior doctor was not consulted on the new doctor's hiring or compensation agreement with the cardiac practice. The doctor realized the prorated expenses were not split with the new physician after resigning from the center.

The employer claimed the new doctor was not a full physician because he lacked credentials from the hospitals served by the center. Additionally, his compensation and duties were different from the other doctors at the center.

The new doctor's compensation was much lower than the rest of the physicians, until he received hospital privileges, the employer said. Deducting a portion of the center's expenses would substantially lower his salary, the employer said.

The senior doctor filed a wage claim with the Texas Workforce Commission and was awarded $126,000 in unpaid wages. He requested about $155,000 in the claim to cover a period of several months.

The center asked a state district court to consider the case. The district court ruled in favor of the employee. The center appealed.

ISSUE: Was the doctor properly compensated under his employment contract?

DECISION: The district court correctly ruled in favor of the employee, the appeals court said.

Under Texas law, an employer may not withhold from an employee's wages unless ordered to do so by a court, authorized to do so by state or federal law or given written permission by the employee, the court said.

The doctor's contract allowed the employer to deduct prorated overhead expenses, the court said.

Before the doctor started working at the center, three doctors on staff split the cost of center expenses. When the doctor joined the staff, he joined the other three in paying the center's overhead, which was evidence the doctor would not have to pay more than his prorated share of the expenses, the appeals court said.

Under the employment contract, the former employee expected to cover a quarter of the center's overhead cost, but instead paid for a third of the expenses, the court said. The contract was never amended to say the doctor would cover more than his prorated share of costs or that the expenses would be split among only three doctors, the court said.

Contracts should be interpreted through what was written in the document, not by what one side claims it intended to say but did not, the court said.

The employer said if the appeals court affirmed the district court decision, the center would be required to deduct costs from the new doctor's salary without his written agreement in violation of state law.

Under the district court's decision, the employer was not required to deduct center costs from the new doctor, only to pay the former employee what he was owed, the appeals court said. Whether the employer decided to renegotiate how center costs were covered was up to the employer and the doctors, the court said ( Shoukfeh v. Grattan, Tex. App., 7th Dist., No. 07-15-00113-CV, 11/18/16 ).

POINTERS: When the district court reviewed the Texas Workforce Commission's decision, it was charged with reviewing the evidence considered by the commission in reaching its decision, the appeals court said.

The district court was required to review whether the commission reasonably came to its decision given the evidence available to it, the court said. The district court was not tasked with determining whether the commission made the right decision, the appeals court said.

To overturn the decision, the employer had to prove the decision was made without regard to facts or law, the appeals court said.

By Caitlin Reilly

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This analysis illustrates how courts resolve pay-related disputes. The names and dialogue are fictitious.

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