The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 6921

October 17, 1996

INCOMPATIBILITY:

Public positions of member of a board of trustees of a county health facility corporation and physician employed by the board of trustees at the county health facility

The public positions of member of a board of trustees of a county health facility corporation and physician employed by the board of trustees at the county health facility are incompatible under section 1(b)(ii) of the incompatible public offices act, 1978 PA 566, and may not be held simultaneously by the same person.

Honorable Philip E. Hoffman

State Senator

The Capitol

Lansing, Michigan 48913

You have asked two questions regarding the propriety of a county health facility corporation trustee contracting to provide medical services to persons needing admission to the county health facility. You first ask whether the incompatible public offices act, 1978 PA 566, as amended, MCL 15.181 et seq; MSA 15.1120(121) et seq, prohibits this arrangement.

According to the information provided with your request, the person in question is a trustee of a county community health facility that is organized under the Municipal Health Facilities Corporations Act, 1987 PA 230, MCL 331.1101 et seq; MSA 14.1148(101) et seq. This trustee is also a physician who has an unwritten contract with the board of trustees of the health facility, under which the board of trustees pays the trustee to provide medical care to persons needing admission to the health facility who are without any other physician for admittance. The trustee is paid the same rate as several other physicians who perform this service and was paid in excess of $125,000 for this service in 1995. The trustee also conducts a private medical practice apart from his services on behalf of the health facility.

Chapter 2 of the Municipal Health Facilities Corporations Act allows certain county boards of commissioners to incorporate health care facilities. Under section 301 of that statute, the board of trustees of a county health care facility may exercise all the powers conferred on the health care facility corporation by statute. Section 302(d) of the same statute allows each corporation to adopt bylaws establishing among other things:

Procedures for appointment, removal, and discipline of medical staff or other direct providers of health care and for delineation of their clinical privileges, together with provisions for the organization of such staff for the purpose of reviewing and improving the health services provided, and for administrative and other purposes. [Emphasis added.]

Section 303(a), (b), (c), (d) and (e) demonstrate the authority of the board of trustees of a community health facility corporation over its physicians as follows:

Without limiting the powers described in section 301 and elsewhere in this act, each board of trustees and subsidiary board, in furtherance of its purposes and consistent with the provisions of its articles of incorporation, but subject to applicable licensing and other regulatory requirements, may do any or all of the following:

(a) Establish, modify, discontinue, operate, and manage health services, ....

(b) Select physicians and such other direct providers of health care as it may determine for membership on its medical staff, delineate the clinical privileges of direct providers of health care within its health care facilities, and provide for the termination, suspension, or restriction of medical staff membership and clinical privileges .... [Emphasis added.]

(c) Provide for the organization of physicians and such other direct providers of health care as it may determine into a medical staff and establish additional procedures for review of the professional practices in its health care facilities ....

(d) Establish reasonable rules and regulations for the provision of health services in its health care facilities, ....

(e) Employ ... employees as may be required to carry out its purposes; establish policies with respect to the duties, qualifications, compensation, benefits, and other terms of employment of its employees .... [Emphasis added.]

Section 209(3) of the Municipal Health Facilities Corporations Act allows up to 1/3 of the trustees serving on a facility's board to be direct providers of health care. This section does not, however, authorize trustees who are also health care providers to contract to perform services for the facility. It does not create an exception to the prohibition on holding incompatible public positions that is considered infra.

Next, we turn to the incompatible public offices act, 1978 PA 566. Under section 2 of that act, "a public officer or public employee shall not hold 2 or more incompatible offices at the same time." Section 1(b) of the incompatible public offices act defines "incompatible offices" as follows:

"Incompatible offices" means public offices held by a public official which, when the official is performing the duties of any of the public offices held by the official, results in any of the following with respect to those offices held:

(i) The subordination of 1 public office to another.

(ii) The supervision of 1 public office by another.

(iii) A breach of duty of public office.

In order to fall within the scope of the incompatible public offices act, a person must hold two or more public offices or positions. Thus, whether the incompatible public offices act applies here depends on whether the physician is a public employee of the health care facility corporation, or a private independent contractor with such a high degree of independence that the physician is not considered an employee of the health care facility for purposes of the incompatible public offices act. See, OAG, 1991-1992, No 6717, p 139 (April 7, 1992), which concluded that attorneys working for a city and a board of education of a school district were public employees for purposes of the incompatible public offices act.

In determining whether a person is an employee, in situations other than where the vicarious liability of the employer is alleged, our courts use the economic reality test. That test was discussed and explained in Chilingirian v Fraser, 194 Mich App 65, 69-70; 486 NW2d 347 (1992), as follows:

The "control test" has been limited to those situations where respondeat superior has been alleged and the vicarious liability of a master is involved. The control test has been abandoned as the exclusive criterion by which the existence of an employee-employer relationship, for the purpose of remedial social legislation, is determined. Because vicarious liability of a master is not alleged herein, we find the control test to be inappropriate. The test to be employed is one of "economic reality."

The economic reality test looks to the totality of the circumstances surrounding the work performed. Relevant factors to consider under the test include: (1) control of a worker's duties; (2) payment of wages; (3) right to hire, fire, and discipline; and (4) performance of the duties as an integral part of the employer's business toward the accomplishment of a common goal. All the factors are viewed as a whole and no single factor is controlling. [Citations omitted.]

Based on the information provided in your opinion request and the provisions of the Municipal Health Facilities Corporations Act quoted above, it is beyond dispute that the board of trustees of the county health facility has the authority to hire, fire, discipline and pay its physicians who perform duties that are an integral part of the business of the health facility. This broad authority includes the power to determine the clinical privileges of its physicians. Applying the economic reality test, it is clear that the physician is an employee of the board of trustees of the health facility corporation.

As your letter indicates, the trustee-physician is paid by the board of trustees to provide treatment at the county health facility to patients without a personal physician to seek their admittance to the health facility. Thus, the physician is not an independent contractor who "merely uses the hospital's facilities to render treatment to his patients." (Emphasis added.) Grewe v Mount Clemens General Hospital, 404 Mich 240, 250; 273 NW2d 429 (1978). Here, there is no preexisting patient-physician relationship and the physician is paid by the hospital rather than by the patient.

OAG, 1991-1992, No 6728, p 172 (August 26, 1992), concluded that, under the incompatible public offices act, the position of member of a board of education and a nursery school worker at a nursery school operated by the board of education were incompatible. Although the employees of the nursery school were "paid by the school district as independent contractors for tax purposes," the board of education had "the authority to hire, fire, supervise, discipline and establish the salary and duties of the nursery school employees." This supervisory authority of the board of education over its nursery school workers resulted in an incompatibility of public positions under section 1(b)(ii) of the incompatible public offices act. Similar supervisory authority exists here in terms of the relationship between the board of trustees of the county health facility corporation and the physicians it employs. The conclusion is compelled that for purposes of the incompatible public offices act, the physician in question is an employee of the board of trustees of the county health facility corporation.

Section 2 of the incompatible public offices act, 1978 PA 566, prohibits a person from holding two or more incompatible public positions at the same time. If a person simultaneously holds two incompatible public positions, that person must vacate one of the two public positions. Contesti v Attorney General, 164 Mich App 271, 281; 416 NW2d 410 (1987), lv den 430 Mich 893 (1988); Wayne County Prosecutor v Kinney, 184 Mich App 681, 684-685; 458 NW2d 674, lv den 436 Mich 887 (1990).

It is my opinion, therefore, in answer to your first question, that the public positions of member of a board of trustees of a county health facility corporation and physician employed by the board of trustees at the county health facility are incompatible under section 1(b)(ii) of the incompatible public offices act, 1978 PA 566, and may not be held simultaneously by the same person.

You next ask whether 1968 PA 317, MCL 15.321 et seq; MSA 4.1700(51) et seq, the statute governing contracts of public servants with the public entities they serve, prohibits a trustee from contracting with the board of trustees of the health facility corporation he serves to provide medical services to persons in the county health facility. In light of the answer to your first question, there is no need to address your second question.

Frank J. Kelley

Attorney General