Yesterday the Tennessee Court of Appeals issued a decision involving two physicians who sued Methodist Healthcare-Memphis Hospitals when the hospital decided that the doctors had "voluntarily relinquished" their medical staff privileges. The physicians argued this decision breached their contract with the hospital and tortiously interfered with their patient relationships (at least those patients who had insurance through the hospital). The hospital took the action it did because the physicians failed to obtain malpractice insurance coverage that satisfied the requirements in the hospital's bylaws (which the court assumed amounted to a contract of employment).
The decision isn't a remarkable one in the traditional HR sense. It is a reminder that employment relationships are contractual, albeit usually a contract for at will employment. Employers, however, must take care to observe any contractual terms when they take action involving a contract employee. The doctors were not, of course, employees in the strict sense but the same basic rules apply nonetheless.
In the world of contract law, a party that breaches the contract can't complain when the other party later refuses to perform the contract. Here, the court held the physicians could not complain when the hospital "fired" them because they failed to maintain a contractually required condition (insurance). The lesson here is that any contract of employment should be clear in stating what is a condition the employee must maintain. If driving is required, then the contract should say so. Don't leave conditions of employment to chance. Of course, being specific about the job prerequisites is a good practice even when there is no employment contract.
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