68-11-205 - Practice in healing arts or medicine by partnership, person, association or corporation unauthorized. - Tennessee Statutes

68-11-205. Practice in healing arts or medicine by partnership, person, association or corporation unauthorized.

(a)  Nothing in this part shall authorize any person, partnership, association, corporation, or any state, county, or local governmental unit, or any division, department, board or agency of the governmental unit, to engage, in any manner, in the practice of the healing arts, or the practice of medicine, as defined by law; provided, that nothing in this section shall prohibit a person, corporation, organization, or other entity from employing a physician to treat only its own employees, the entity's retirees, or dependents of the entity's employees or retirees, in accordance with § 63-6-204.

(b)  (1)  Notwithstanding the provisions of this section, nothing shall prohibit a hospital licensed under this chapter or an affiliate of a hospital from employing physicians, other than radiologists, anesthesiologists, pathologists, or emergency physicians, licensed under title 63, chapter 6 or 9, subject to the following conditions:

          (A)  Employing entities shall not restrict or interfere with medically appropriate diagnostic or treatment decisions;

          (B)  Employing entities shall not restrict or interfere with physician referral decisions, unless:

                (i)  The physician so employed has agreed in writing to the specific restrictions at the time that the contract is executed;

                (ii)  The restriction does not, in the reasonable medical judgment of the physician, adversely affect the health or welfare of the patient; and

                (iii)  The employing entity discloses any such restrictions to the patient; and

          (C)  In the event that there is any dispute relating to subdivision (b)(1)(A) or (B), the employing entity shall have the burden of proof.

     (2)  Employing entities shall not restrict the employed physician's right to practice medicine upon the termination or conclusion of the employment relationship, except as follows:

          (A)  For physicians from whom the employing entity has made a bona fide purchase of the physician's practice, the employing entity may impose reasonable geographic restrictions upon the employed physician's practice; provided, that:

                (i)  The maximum allowable area of the restriction is the greater of:

                     (a)  The county in which the primary practice site is located; or

                     (b)  A ten-mile radius from the primary practice site;

                (ii)  The duration of the restriction is two (2) years or less, unless a longer period, not to exceed five (5) years, is determined by mutual agreement of the parties in writing to be necessary to comply with federal statutes, rules, regulations, or internal revenue service revenue rulings or private letter rulings;

                (iii)  Any employment agreement or medical practice sale agreement restricting the right of a physician to practice shall:

                     (a)  Allow the physician to buy back the physician's medical practice for the original purchase price of the practice, or, in the alternative, if the parties agree in writing, at a price not to exceed the fair market value of the practice at the time of the buy back, at which time any such restriction on practice shall be void; and

                     (b)  Not require that the physician give more than thirty (30) days' notice to exercise the repurchase option; provided, that this provision shall not otherwise affect the contract termination notice requirements; and

                (iv)  If the buy back provision is dependent upon a determination of the fair market value of the practice, the contract shall specify the method of determining fair market value by independent appraisal, in the event that the parties cannot agree as to the fair market value. The contract shall also include the following language:

“In the event that the employing entity and the physician cannot agree upon the fair market value of the practice within ten (10) business days of the physician's notice of intent to repurchase the practice, the physician may remove any contractual restrictions upon the physician's practice by tendering to the employing entity the amount that was paid to the physician for the practice. The employing entity or the physician may then seek a determination of the fair market value of the practice by the independent appraisal method specified by contract.”;

          (B)  For physicians employed independently of a bona fide practice purchase, and who have practiced for more than five (5) years in the county in which the hospital or primary practice site is located, the employing entity may restrict the employed physician's right to treat for compensation or to directly solicit by telephone or mail the patients treated during the course of the employment relationship, but only for one (1) year or less following the termination or conclusion of the employment relationship; and

          (C)  For physicians employed independently of a bona fide practice purchase, and who have practiced for less than five (5) years in the county in which the hospital or primary practice site is located, the employing entity may only restrict the employed physician's right to directly solicit by telephone or mail the patients treated during the course of the employment relationship, but only for one (1) year or less following the termination or conclusion of the employment relationship.

     (3)  Notwithstanding the provisions of subdivision (b)(2)(B) and (C), in the event that the employment contract with a physician employed independently of a bona fide practice purchase is terminated by the employing entity for reasons other than breach by employee, any such restrictions shall be void.

     (4)  In any event, nothing in this section shall prohibit a licensed physician, group of licensed physicians, including, but not limited to, a physicians' professional corporation registered under title 48, chapter 101, from employing physicians.

     (5)  A hospital affiliate that employs physicians shall not engage in any business other than the employment of physicians, the management of physicians and health care facilities or the ownership of property and facilities used in the provision of health care services. An affiliate of a hospital that employs physicians pursuant to this part shall be subject to the authority of the applicable licensing board under either chapter 11 of this title, or title 33, chapter 2, in connection with employment of physicians. Any violation of this subdivision (b)(5) by an affiliate shall subject any hospital, at which the physician has staff privileges, and that controls or is under common control with the affiliate, to the penalties and sanctions applied to hospitals that employ physicians.

     (6)  No radiologist, anesthesiologist, pathologist, or emergency physician may be employed by a hospital or an affiliate of a hospital and no hospital or an affiliate of a hospital may employ any physician to provide medical services provided by radiologists, anesthesiologists, pathologists, or emergency physicians; provided, that a physician may be employed to provide emergency medical services if the physician is employed to provide other medical services.

     (7)  Employing entities shall not require, by contract or policy, that as a condition or consequence of employment, written or otherwise, employed physicians relinquish medical staff privileges, or the rights related to medical staff privileges, upon the commencement of, upon any event during the pendency of, or at the termination or conclusion of, the employment relationship. In any event, nothing in this section shall be construed as affecting or negating the ability of an employing hospital to revoke or suspend a physician's staff privileges in accordance with the procedures set forth in the medical staff bylaws. Hospitals shall not substitute physician employment contracts for medical staff privileges. Nonemployed and employed physicians holding staff privileges at a hospital that is an employing entity, or hospitals on which employed physicians hold staff privileges that are affiliates of employing entities, shall enjoy the same privileges, rights and protections with respect to medical staff membership. Employment of a physician shall not affect any other physician's medical staff privileges. Physicians who hold membership on medical staffs at a hospital which is an employing entity, or a hospital on which employed physicians hold staff privileges that are affiliates of employing entities, shall be provided with the rights and protections, including rights of self-governance, afforded by the applicable state licensing board, and, when accredited, the accrediting entity or agency.

     (8)  If a physician, in connection with a claim for breach of contract or other dispute related to § 63-6-204, establishes in a court of competent jurisdiction, or other forum, including in a peer review action or arbitration proceeding, that the conditions of § 63-6-204 have been violated by the employing entity, the physician shall be entitled to recover the physician's cost of litigation, arbitration, or peer review defense, and a reasonable attorney's fee.

     (9)  (A)  No radiologist, anesthesiologist, pathologist, or emergency physician may be employed by a hospital or an affiliate of a hospital, and no hospital or an affiliate of a hospital may employ any physician to provide services provided by radiologists, anesthesiologists, pathologists, or emergency physicians; provided, that a physician may be employed to provide emergency medical services, if the physician is employed to provide other medical services.

          (B)  Notwithstanding the provisions of subdivisions (b)(6) and (b)(9)(A), a radiologist, anesthesiologist or pathologist may be employed by a research hospital, as defined in subdivision (e)(9). The radiologist, anesthesiologist or pathologist shall be employed by the research hospital under the same terms and conditions as other physicians.

     (10)  Notwithstanding the provisions of this subsection (b) to the contrary, the general assembly finds that it is unreasonable per se to require a racial minority physician who practices in a county with a racial minority population in excess of twenty percent (20%) to move more than two (2) miles from the physician's primary practice site. Because such a requirement is also harmful to and will adversely affect the public interest and health, nothing in this subsection (b) shall operate to require the physician to move more than two (2) miles from the primary practice site.

     (11)  Employing entities shall not restrict or interfere with patient referral decisions in a manner that unnecessarily increases the cost to the patient of the medical services provided.

(c)  (1)  Notwithstanding this section, nothing shall prohibit a renal dialysis clinic licensed under this chapter or an affiliate of a renal dialysis clinic from employing physicians, other than radiologists, anesthesiologists, pathologists or emergency physicians licensed under title 63, chapter 6 or 9, subject to the following conditions:

          (A)  Employing entities shall not restrict or interfere with medically appropriate diagnostic or treatment decisions;

          (B)  Employing entities shall not restrict or interfere with physician referral decisions, unless:

                (i)  The physician so employed has agreed in writing to the specific restrictions at the time that the contract is executed;

                (ii)  The restriction does not, in the reasonable medical judgment of the physician, adversely affect the health or welfare of the patient; and

                (iii)  The employing entity discloses the restrictions to the patient; and

          (C)  In the event that there is any dispute relating to subdivision (c)(1)(A) or (c)(1)(B), the employing entity shall have the burden of proof.

     (2)  Employing entities shall not restrict the employed physician's right to practice medicine upon the termination or conclusion of the employment relationship, except as allowed by § 63-1-148 or any successor section.

     (3)  Notwithstanding § 63-1-148 or any successor section, in the event that the employment contract with a physician employed independently of a bona fide practice purchase is terminated by the employing entity for reasons other than breach by employee, the restrictions shall be void.

     (4)  In any event, nothing in this section shall prohibit a licensed physician, group of licensed physicians, including, but not limited to, a physicians' professional corporation registered under title 48, chapter 101 from employing physicians.

     (5)  An affiliate of a renal dialysis clinic that employs physicians shall not engage in any business other than the employment of physicians, the management of physicians and health care facilities, the ownership of property and facilities used in the provision of health care services or a tissue bank or organ procurement agency. An affiliate of a renal dialysis clinic that employs physicians pursuant to this part shall be subject to the authority of the applicable licensing board under this chapter in connection with employment of physicians. Any violation of this subdivision (c)(5) by an affiliate shall subject any renal dialysis clinic at which the physician has staff privileges and that controls or is under common control with the affiliate to the penalties and sanctions applied to renal dialysis clinics that employ physicians.

     (6)  No radiologist, anesthesiologist, pathologist or emergency physician may be employed by a renal dialysis clinic or an affiliate of a renal dialysis clinic and no renal dialysis clinic or an affiliate of a renal dialysis clinic may employ any physician to provide medical services provided by radiologists, anesthesiologists, pathologists or emergency physicians; provided, that a physician may be employed to provide emergency medical services if the physician is employed to provide other medical services.

     (7)  Employing entities shall not require, by contract or policy, that as a condition or consequence of employment, written or otherwise, employed physicians relinquish staff privileges or the rights related to staff privileges upon the commencement of, upon any event during the pendency of or at the termination or conclusion of the employment relationship. In any event, nothing in this section shall be construed as affecting or negating the ability of an employing renal dialysis clinic to revoke or suspend a physician's staff privileges in accordance with the procedures set forth in the staff bylaws. Renal dialysis clinics shall not substitute physician employment contracts for staff privileges. Nonemployed and employed physicians holding staff privileges at a renal dialysis clinic that is an employing entity or renal dialysis clinics at which employed physicians hold staff privileges that are affiliates of employing entities shall enjoy the same privileges, rights and protections with respect to staff membership. Employment of a physician shall not affect any other physician's staff privileges. Physicians who hold membership on staff at a renal dialysis clinic that is an employing entity or a renal dialysis clinic at which employed physicians hold staff privileges that are affiliates of employing entities shall be provided with the rights and protections, including rights of self-governance, afforded by the applicable state licensing board and, when accredited, the accrediting entity or agency.

     (8)  If a physician, in connection with a claim for breach of contract or other dispute related to § 63-6-204, establishes in a court of competent jurisdiction or other forum, including in a peer review action or arbitration proceeding, that the conditions of § 63-6-204 have been violated by the employing entity, the physician shall be entitled to recover the physician's cost of litigation, arbitration or peer review defense and a reasonable attorney's fee.

     (9)  Employing entities shall not restrict or interfere with patient referral decisions in a manner that unnecessarily increases the cost to the patient of the medical services provided.

(d)  No teaching institution shall be held vicariously liable for any act or omission of an intern, resident or fellow in the course of a training program of a medical school owned or operated by the state of Tennessee, under a legal theory of implied or apparent agency, ostensible agency, or any other theory of vicarious liability except actual agency. In determining whether the intern, resident or fellow was an actual agent of the teaching institution, the fact that the intern, resident or fellow was in the teaching institution and providing treatment or services or otherwise caring for patients and was following the institution's bylaws, rules and regulations, policies, procedures, and protocols is insufficient, standing alone, to prove that the intern, resident or fellow was acting as the institution's actual agent.

(e)  For purposes of this section, unless the context otherwise requires:

     (1)  (A)  “Affiliate” of a hospital means an entity that directly or indirectly is controlled by, or is under common control with, a hospital licensed under chapter 11 of this title or title 33, chapter 2. “Affiliate” does not mean, however, a health maintenance organization licensed under title 56, chapter 32;

          (B)  “Affiliate” of a renal dialysis clinic means an entity that directly or indirectly is controlled by or is under common control with a renal dialysis clinic licensed under this chapter. “Affiliate” does not mean, however, a health maintenance organization licensed under title 56, chapter 32;

     (2)  “Anesthesiologist” is defined as a physician who has completed a residency in anesthesiology and whose practice is primarily limited to anesthesiology, including, but not limited to, nerve block, pain management, cardiac and respiratory resuscitation, respiratory therapy, management of fluids, electrolyte and metabolic disturbances;

     (3)  “Emergency physician” is defined as a physician who has completed a residency in emergency medicine, or practiced emergency medicine full time for a three-year period, and whose practice is limited to emergency medicine. “Emergency physician” does not include, however, a physician who has been previously employed to provide non-emergent medical services who, over a period of twelve (12) months or more, becomes a full-time emergency physician and who remains employed by mutual agreement;

     (4)  (A)  “Employing entity” means a hospital licensed under chapter 11 of this title, or title 33, chapter 2, or an affiliate of such an entity that employs one (1) or more physicians. “Employing entity” does not mean, however, a health maintenance organization licensed under title 56, chapter 32;

          (B)  “Employing entity” for purposes of subsection (c) means a renal dialysis clinic licensed under this chapter or an affiliate of such an entity that employs one (1) or more physicians. “Employing entity” does not mean, however, a health maintenance organization licensed under title 56, chapter 32;

     (5)  “Intern”, “resident” or “fellow” means any person receiving instruction through, and acting within the scope of, a training program of a medical school owned or operated by the state of Tennessee and who, in such capacity, receives compensation payable by the state of Tennessee and is entitled to individual immunity as an employee of the state of Tennessee pursuant to § 9-8-307(h).

     (6)  “Pathologist” is defined as a physician who has completed a residency in pathology and whose practice is primarily limited to pathology, including, but not limited to, anatomic and clinical pathology;

     (7)  “Physician” means a person licensed pursuant to title 63, chapter 6 or 9;

     (8)  “Radiologist” is defined as a physician who has completed a residency in radiology and whose practice is primarily limited to radiology, including, but not limited to, diagnostic radiology, radiation therapy, and radiation oncology;

     (9)  “Research hospital” means a hospital at which fifty percent (50%) or more of the inpatients treated during the previous calendar year were treated pursuant to research protocols; and

     (10)  “Teaching institution” means a hospital or mental health hospital, operating within the scope of an affiliation agreement with any medical school owned or operated by the state of Tennessee, and shall further include, but not be limited to, any sole proprietorship, partnership, corporation, limited liability company, or other public or private entity that owns, controls, or is affiliated with any such institution.

[Acts 1947, ch. 13, § 7; C. Supp. 1950, § 5879.6 (Williams, § 4432.7); T.C.A. (orig. ed.), § 53-1306; Acts 1995, ch. 200, § 2; 1995, ch. 466, § 3; 1996, ch. 986, §§ 1, 4; 2004, ch. 944, §§ 1, 2; 2009, ch. 70, §§ 2-4.]