TN 10 (08-11)
RS 02101.191 Doctors of Medicine
SSR 61-61 Physician Part-Time Services for Industrial Firm
1. Doctor of medicine
A doctor of medicine is someone whose work requires licensure pursuant to state statutes.
2. Regular and continuing work
Workers perform work on a regular and continuing basis when there is an agreement to perform work according to a schedule of definite and fixed service hours and the worker follows the schedule without substantial deviation.
3. Compliance with policies and procedures
Doctor’s methods, routines, and procedures are subject to supervision to comply with policies and procedures. Such supervision may be of varying degree and nature. For example, a medical director may supervise a doctor’s medical routines with detailed control, whereas a hospital administrator may supervise a doctor with less control. However, the doctor complies with policy and procedure when he or she must follow the employer's rules regarding:
general operating methods, including the requirement to treat assigned patients;
following priorities (both medically and administratively); and
maintaining standards regarding equipment, cleanliness, etc.
4. Rights and privileges
Rights and privileges include vacation and sick leave with pay, holiday pay, severance pay, pension and insurance plans, etc.
B. Introduction to doctors of medicine
The question whether a doctor of medicine renders services in an employment relationship is difficult to resolve. Where a doctor performs medical services for an industrial firm, in addition to a private practice, there may or may not be an employment relationship. In other cases, the circumstances under which a doctor enters into a work agreement with a hospital or medical group may raise a question as to the validity of an alleged employer-employee relationship.
Doctors of medicine engaged in their own practices were first covered under Social Security effective with taxable years ending on and after December 31, 1965. Many doctors have private practices exclusively. Some doctors do not have private practices, but devote their full time to performing medical services for others, such as government organizations, industrial employers, etc. In such instances, the doctors usually render the services in an employment relationship and the services are covered on the same basis as other employment.
C. Employee status of part-time services for industrial employers
Under certain circumstances, doctors who perform part-time services may be subject to control and supervision to the degree necessary to establish an employer-employee relationship. The doctor is an employee if:
the doctor integrates his or her services into the operating organization of the employer;
the doctor performs services of a substantial nature for the employer on a regular and continuing basis;
the doctor is subject to the employer’s supervision and control to the extent necessary to comply with its general policies and procedures; and
the doctor has the same rights and privileges that the employer generally extends to its employees.
D. Independent contractor status of part-time services for industrial employers
In addition to their private practices, many doctors of medicine enter into arrangements with industrial firms to examine and treat the firm's employees on a part-time basis. These doctors are independent contractors if:
the firm is interested in obtaining medical service rather than the personal service of the doctor, and an employment relationship is not contemplated under the terms of the agreement between the parties;
the doctor accepts the firm as an additional client in the doctor's private practice;
the doctor can leave the firm's premises during work hours if an emergency arises in his or her private practice;
the doctor can send a substitute to perform the services in his or her absence;
the doctor cannot terminate the relationship on short notice; and
the parties to the agreement did not contemplate direct supervision and control over the services.
E. Services for other doctors
There are situations in this category in which an employer-employee relationship clearly exists. For example, a doctor with a well-established practice will often engage the full-time services of an assistant. The assistant has just completed medical training, has no practice, and is interested in learning the techniques of the other doctor to benefit from the other doctor's experience and skill. In this type of situation, there is usually no doubt that the services of the assistant are supervised and controlled.
As indicated above, however, some situations require complete development to determine whether a valid employment relationship exists. This is true, for example, where the result may affect the application of the retirement test. Guidelines for developing facts in two common situations in which doctors perform services for other doctors are described in paragraphs F and H in this section.
F. When a former partner resigns and enters into an alleged employment contract with the partnership
In this type of case, there are two issues to resolve.
First, establish that the doctor is completely divorced from ownership and is in control over the business operation.
Second, it must be clear that, in the performance of service, the doctor is subject to direction and control.
To determine if the doctor has separated from ownership and control of the business consider the following:
1. Was there a written partnership agreement?
If so, did someone change the agreement to show the doctor's withdrawal from the partnership?
If there was an oral agreement, obtain the date and circumstances relating to the withdrawal.
2. Evidence of sale of partnership interest, e.g., in real estate, equipment, and goodwill
Obtain a copy of the sales contract.
Do the financial records of the partnership reflect the purchase of the doctor's interest?
Is there evidence to show actual payment of the purchase price?
Are the payments for the purchase of the doctor's interest and for the doctor's services allegedly as an employee clearly distinguished?
Does Schedule K of IRS Form 1065 (U.S. Return of Partnership Income) show that the doctor no longer receives a distributive share of partnership income?
Examine the doctor's tax returns to determine if the doctor reported his salary as wages for income tax purposes. Does the doctor have Form W-2 (Wage and Tax Statement) from the partnership?
If the state has a licensing law pertaining to the practice of medicine by partnerships, is the doctor aware of the change in membership?
Did anyone notify the public of the change in partnership members? Evidence may include removal of the doctor's name from the office directory, notice to the bank, and to suppliers that the doctor no longer can draw on or write checks against the partnership account, etc.
G. When additional development is necessary
Information furnished on Form SSA-7160 (Employment Relationship Questionnaire) is not sufficient to determine the existence of an employer-employee relationship exists. You must question the parties further to establish whether a legitimate employer-employee arrangement exists. Consider these factors:
the doctor must maintain regular office hours and be available for emergency calls;
the partnership assigns patients to the doctor;
the partnership handles the billing;
all fees belong to the partnership and the partnership determines those fees;
the doctor must comply with instructions and accept supervision in his or her work performance;
the doctor's pay appears to be reasonable in view of the change in the doctor's status. Obtain a full explanation when the doctor spends less time in the office as an employee compared to the hours when he or she was a partner, but the doctor's income remains about the same; and
either party may terminate the relationship at any time without liability.
H. Employment contract with former employee
The typical situation is one where a doctor who was in private practice alleges, at or near retirement, that he or she entered into an employment agreement with an associate, usually less experienced than the doctor, who was previously the doctor’s employee. An employer-employee relationship may exist in this type of case. However, apply the relevant development guidelines in G in this section, since it is unusual for a highly skilled and experienced person to submit to sufficient direction and control from such associate to constitute an employment relationship.
I. Services for a medical corporation
Beginning in the 1960's, states permitted doctors to form corporations to provide medical services. In most states, only those corporate employees who are licensed to practice medicine may provide medical advice or treatment.
Doctors may seek incorporation because of the considerable income tax advantages enjoyed by a corporation in setting up a pension fund for its employees. In this respect, a partnership or individual proprietorship is at a disadvantage since the cost of a pension fund set up by the partners or individual proprietors may not be deducted from the gross income of the enterprise as a business expense. However, in a corporation, the individual who is part owner (i.e., of the shares of the corporation) may at the same time be an employee. These corporations are usually called professional associations.