Why No Mandatory Retirement Age Exists for Physicians: Important Lessons for Employers

Does the law impose a mandatory retirement age for physicians? If not, may employers take it upon themselves to require physician-employees to retire at a particular age? And if mandatory retirement is not an option, what other options exist to remove underperforming, older physicians? An older physician whose skills, abilities, or competence may have worn away with time (or where there is simply the fear that has occurred) brings two central concerns into conflict: on the one hand, the paramount concern of public safety and professional competence, and on the other hand, fairly judging an employee’s ability to work not by age, but by merit and demonstrated skill. This conflict plays out in every work setting, but it can be particularly heightened in the field of medicine.

In some professional work settings, the conflict is resolved on the side of public safety and competence, with mandatory retirement ages set by law. In the profession of law, many jurisdictions in the United States impose mandatory retirement ages for judges. For example, Missouri’s Constitution requires state judges to retire at the age of 70; in Colorado, judges must retire at 72.¹ In the aviation industry, pilots cannot fly commercial airlines domestically once they turn age 65. Commercial pilots flying internationally must also abide by standards imposed by the International Civil Aviation Authority: a pilot who is 60 years or older may only serve as pilot-in-command if there is another pilot in the crew who is not older than 60.²

In at least one major way, these mandatory retirement ages are suspect: in analogous, or almost identical, settings, either no mandatory retirement age exists, or it is set much higher. If state court judges must retire at age 70, then surely United States Supreme Court Justices, who sit on the highest court in the land and decide legal issues of utmost national significance, must retire at age 70, too, correct? But the U.S. Constitution imposes no such requirement. Justice Oliver Wendell Homes, Jr. was 90 when he retired.³ Similarly, although commercial pilots may not be able to fly past a certain age, a federal appellate court has held that similar mandatory retirement ages may not pass muster for an airline manufacturer’s jet transport pilots.⁴

Physician-Employees are Protected from Age Discrimination

Lawmakers and professional regulators, perhaps implicitly recognizing the arbitrariness and unfairness in mandatory age retirements, have imposed no such requirements for physicians who are employees. To the contrary, physician-employees⁵ may enjoy significant federal and state protections from age discrimination, and health care employers who may be tempted to require physician-employees to retire based on age would be strongly advised against doing so.

Under the Age Discrimination in Employment Act (“ADEA”), it is unlawful for a qualifying employer⁶ to classify employees “in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.”⁷ Almost every state has an ADEA analog.⁸ These anti-discrimination laws recognize that chronological age is not an indicator of competency and should not be used to drive out older workers. As the U.S. Supreme Court has observed, “[t]hroughout the legislative history of the ADEA, one empirical fact is repeatedly emphasized: the process of psychological and physiological degeneration caused by aging varies with each individual.”⁹ As a result, “many older American workers perform at levels equal or superior to their younger colleagues.”¹⁰ Thus, the ADEA’s baseline assumption is that age itself should not drive employment decisions.

Although the ADEA contemplates certain exceptions to its general rule, allowing employers to establish a legitimate age-based criterion referred to as a bona fide occupational qualification (“BFOQ”), employers would be very hard pressed to justify an age-based BFOQ for physicians. A physician’s skill and competence cannot be reasonably measured by age, which is one legal requirement.¹¹ One article has reported that, while older surgeons were more likely to have poor outcomes in pancreatectomy, carotid endarterectomy or coronary artery bypass graft surgeries, there was no age effect for five other surgical procedures.¹² Further, there are numerous ways to test a physician’s skills and competence on an individual basis, making it even more difficult to justify a BFOQ under the law.¹³ Regardless, it does not appear that any court has upheld an age-based BFOQ for physicians.

To the extent an employer were to try to argue that public safety requires older physicians to retire, under regulations promulgated by the Equal Employment Opportunity Commission (EEOC), the employer will bear the burden to “prove that the challenged practice does indeed effectuate that goal and that there is no acceptable alternative which would better advance it or equally advance it with less discriminatory impact.”¹⁴ This is a very high burden.

In sum, age-based mandatory retirement plans for physician-employees are unlikely to be upheld in courts. The EEOC has obtained, and continues to obtain, settlements arising out of mandatory retirement policies, including large settlements against Johnson & Higgins for $28.1 million (forced retirement for employee/board members)¹⁵ and Sidley and Austin for $27.5 million (forced retirement for law partners).¹⁶ To date, Congress has not provided an exemption to the ADEA for physician-employees.

Contrasting Physician-Employees with Physician Owners or Independent Contractors

The picture may be decidedly more complex for physicians who are not classified as employees, but who are partners, members, or owners of physician practices, or who are classified as independent contractors. Just because a physician is a member, partner, or owner of a practice does not mean that anti-discrimination laws do not apply to that physician. Rather, courts generally examine six factors, such as the extent the practice supervises the physician and whether the physician can influence the practice, to determine whether the physician is actually an employer who does not enjoy the age discrimination protections described below, or whether the physician is an employee.¹⁷ In at least one case, a court concluded that a physician-shareholder was not an employee because, in part, she had an equal right to vote on matters, shared equally in the firm’s profits and liabilities, and participated in decisions to hire and fire employees.¹⁸ But courts will analyze the “substance of the relationship rather than the label affixed thereto,”¹⁹ and if a physician is more an employee than a bona fide partner, member, or owner, a physician may enjoy the same age-discrimination protections that apply to employees.

Similarly, as a general rule, physicians who are classified as independent contractors are not protected by age discrimination statutes.²⁰ But even if physicians agree to call themselves independent contractors, courts in Missouri, for example, will assess whether they actually fit the definition of an independent contractor, which is “one who contracts to perform work according to his own methods without being subject to the control of his employer except as to the result of his work,” and who “are typically hired to complete a specific task, use their own tools in completing their work, are paid a fixed sum on a by-the-job basis, and are not provided with benefits.”²¹ A physician who does not fit this bill may be an employee who cannot be discriminated against on the basis of age.

Thus, although physician partners, members, owners, or independent contractors may not possess age discrimination protections, physician practices must fully explore and assess their liability before requiring such physicians to retire based on their age, especially since laws vary from state to state, contracts impose different obligations, and circumstances must be evaluated individually. Even if a physician practice is dealing with a bona fide owner or independent contractor who is forced to retire, that physician may still try to challenge the practice’s actions in court based on age discrimination and other laws. As a result, physician practices considering imposing mandatory age retirements for owner or independent-contractor physicians must proceed cautiously and thoughtfully.

This is so not just for legal reasons, but for pragmatic and fairness reasons, too. Apart from any legal obstacles, there is a pressing need for older physicians to continue to practice medicine. The AMA and the American College of Surgeons have acknowledged that approximately 26% of physicians are over the age of 65, ²² and “one-third of all practicing surgeons are older than age 55.”²³ If physicians were subject to the same age requirements as commercial airline pilots, a quarter of the physician-workforce would vanish. Additionally, by 2025, the U.S. will have a shortfall of physicians from between 61,700 to 94,700.²⁴ Employers may not only face legal liability for imposing mandatory retirement, but they may be shooting themselves in the foot: by requiring skilled physicians to retire, employers may be depriving themselves of the individuals they need to perform work. And skilled physicians do not come cheap and are not quickly trained; jettisoning older, skilled physicians is a terrible waste, especially when society needs them and especially when they want to continue to work. In sum, a mandatory retirement age may not be fair to physicians and may not serve the best interests of physician practices.

Employers Should Work One-On-One with Physician-Employees to Improve Performance

If employers cannot mandate retirement for physician-employees, and if physician practices may not want (or may not be able to) require retirement for physician owners or independent contractors, what options exist to ensure that older physicians remain competent? How can employers strike the right balance between not discriminating against a physician on the basis of age while still ensuring patient safety?

Instead of imposing mandatory retirement, some employers may be tempted to impose mandatory skills testing or medical testing for employees of a certain age. This too would be ill-advised. In one federal case from New York, the plaintiff-employee was denied a promotion after he refused to submit to an EKG, which the employer required for candidates over the age of 40 seeking supervisory positions. The court held that the EKG requirement violated the ADEA, observing that although “medical testing” for “all those above a certain age is, perhaps, a practice less noxious under the ADEA than firing outright,” because a “facial age classification is still involved,” that classification has to be “justified as being reasonably necessary to the operations of the [employer’s] business in order to withstand scrutiny.”²⁵ Similarly, in another case, a court concluded that a law requiring all state employees over the age of 70 —regardless of position—to take and pass an annual physical examination violated the ADEA.²⁶ Although testing based on age is not permitted, if all employees in a particular position must be tested, then such testing may pass muster.

Since mandatory skills or competence testing based on age is not a viable solution for health care employers, to ensure patient safety and adherence to care standards, employers should scrupulously follow a quality assurance and improvement program. Further, employers should have procedures in place to conduct individualized medical inquiries of impaired physicians or physicians who are failing to meet the standard of care. For example, the Joint Commission’s Ongoing Professional Practice Evaluation and Focused Professional Practice Evaluation processes, which strive to provide objective and accurate assessments, allow employers to identify physicians who may not be meeting the standard of care.²⁷

But even here, employers must be careful: disability anti-discrimination laws prohibit employers from making disability-related inquiries or requiring a “medical examination”²⁸ from employees after employment has begun unless the inquiry or examination is job related and consistent with a business necessity.²⁹ The term “job-related and consistent with a business necessity” requires a reasonable belief based on objective evidence that an employee’s ability to perform the essential job functions will either (1) be impaired by a medical condition or (2) pose a direct threat due to a medical condition.³⁰ A direct threat determination must be based on an individualized assessment of the employee’s present ability to safely perform the essential functions of the job.³¹

All of this teaches a vital lesson for employers working with older physicians whose skills or abilities may have declined over time: employers must focus on performance—not age. Employers and physicians, who have an ethical duty to provide competent care,³² should concentrate not on age, which is an unreliable indicator of performance, but instead on the quality of care a physician provides to patients. In those circumstances where an older physician’s skills and competence are not meeting standards, employers should work with those physicians to determine what steps, if any, can be taken to ensure those standards are satisfied. In doing so, age should never be used as a proxy for performance or talked about as such. Generally, this is also a best practice for physician practices dealing with physician owners or independent contractors, even if such practices may not be bound by the same legal anti-discrimination requirements.

For the same reasons that lawmakers and regulators have declined to impose a mandatory retirement age for physicians, employers should work with older physicians one-on-one to identify and correct performance deficiencies that may jeopardize patient safety. If those deficiencies cannot be timely and satisfactorily corrected, then employers may need to modify, or even terminate, physicians’ employment. By focusing only on performance and communicating standards clearly and professionally, however, employers greatly improve their chances that their physician-employees will recognize that the time has come to make certain changes to their practice, or even to cease practicing. That momentous decision, however, is not one that employers can make for physician-employees based on their age. And even though that is a decision that physician practices may (subject to all the limitations described above) be able to make for physician partners, members, owners or independent contractors, the possible disruption, difficulty, and unfairness caused by mandatory retirement counsels against doing so.