Health Law Alert by Lamb McErlane attorneys: Vasilios J. Kalogredis, Esq. and Sonal Parekh, Esq.

A San Diego-based medical group, Scripps Clinic Medical Group (“SCMG”) has agreed to settle a federal investigation by paying close to $7 million to a class of physicians impacted by their employer’s policy requiring them to quit at age 75.

In its investigation, the Equal Employment Opportunity Commission (“EEOC”) found “reasonable cause” that SCMG violated the federal Age Discrimination in Employment Act of 1967 (“ADEA”) and the Americans with Disabilities Act (“ADA”). Subject to certain exceptions for public safety reasons, the ADEA states that employers may not “fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of such individual’s age.”

California law provides for a similar provision banning age discrimination, but explicitly allows for a professional medical corporation’s bylaws or articles to have compulsory retirement clauses that require a physician employee to retire upon turning 70 years old. Despite having this state law in place, the EEOC expressed that such a provision is impermissible under federal law and is therefore preempted by the ADEA.

In its settlement, SCMG has agreed, without admitting liability, to:

1. pay $6,875,000 to the class of physicians impacted by SCMG’s policy;
2. require division and department heads, executive leadership, and HR employees to be trained regarding the ADEA and ADA;

• tell employees that the policy has been rescinded; and

1. clarify and inform employees that the company does not have a policy in which age is considered in making employment decisions, including those related to termination, retirement, and terms and conditions of employment.

With over 120,000 licensed physicians at an age of 70 years or older in the United States in 2020, this settlement represents a huge win for physicians who wish to continue working regardless of age.[1]

Healthcare entities should be mindful of the ADEA and ADA when implementing policies that consider the age or disabilities of its employees. If you have any questions regarding whether your company’s policy is compliant with the ADEA and/or ADA, please feel free to contact Bill Kalogredis, Esq. or Sonal Parekh, Esq.

[1] Aaron Young, PhD, et al., FSMB Census of Licensed Physicians in the United States, 2020, 107 JMR 57 (2021).

_________________________________________________________

Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, and other healthcare professionals and their businesses as to contractual, regulatory and transactional matters for over 45 years. He is Chairman of Lamb McErlane PC’s Health Law Department. Bill can be reached by email at bkalogredis@lambmcerlane.com or by phone at 610-701-4402.

Sonal Parekh, Esq., is an associate at Lamb McErlane PC who focuses on healthcare transactional matters and a broad range of healthcare regulatory-related issues on behalf of healthcare systems, physicians, dentists, and other healthcare providers, and is a pharmacist by education and training. Sonal can be reached by email at sparekh@lambmcerlane.com or by phone at 610-701-4416.

*This alert is for educational purposes only and is not intended to be legal advice. Should you require legal advice on this topic or have any questions or concerns, please contact Vasilios J. (Bill) Kalogredis, Esq. or Sonal Parekh, Esq.