The opinion of the court was delivered by: Garibaldi, J.
On appeal from the Superior Court, Law Division, Middlesex County.
The basic issue in this case, as in Lowe v. Zarghami, ____ N.J. ____ (1999), also decided today, is whether a clinical professor employed by the University of Medicine and Dentistry of New Jersey ("UMDNJ"), who practices medicine in a UMDNJ affiliated private hospital, is a public employee entitled to notice under the Tort Claims Act, N.J.S.A. 59:1-1 to 14.4 ("TCA"). We again conclude that UMDNJ faculty physicians practicing in affiliated private hospitals are public employees for the purposes of the Tort Claims Act.
A. The Medical Malpractice Claim
Thomas Eagan was a member of HIP-Somerset, a health maintenance organization. In August, 1994, he visited his primary care physician from HIP complaining of a sore throat and fever. The doctor discovered a possible goiter. After some diagnostic testing, Eagan's physician referred him to Dr. Andrew H. Boyarsky and Dr. James Mackenzie. After examinations by both doctors in September, Eagan agreed to undergo a thyroidectomy and a mediastinoscopy. The surgeries were performed on October 25, 1994 at Robert Wood Johnson University Hospital. The doctors were assisted by two medical residents, Dr. Lisa Benton and Dr. Joseph Heether.
After the surgeries, Eagan was able to speak only in a whisper. He also complained of a sore throat. Dr. Boyarskyarski's report on the surgery documents an intraoperative injury in which Eagan's right recurrent laryngeal nerve "may have been severed."Eagan saw Dr. Boyarsky for two postoperative office visits. Both visits were conducted at the HIP treatment facility. During both visits, Eagan complained of hoarseness. Eagan was examined by two specialists and a neurologist in late November and early December 1994. All three doctors diagnosed Eagan as suffering from bilateral vocal cord paralysis. The doctors concluded that both recurrent laryngeal nerves were severed during Eagan's surgeries.
B. Defendants' Employment with UMDNJ
Drs. Boyarsky and Mackenzie are clinical professors who are employed by UMDNJ, a public entity entitled to the protection of TCA. Each received a letter of appointment from UMDNJ. Those letters of appointment do not specify the terms and conditions of employment, but do incorporate the terms and conditions of the negotiated agreement between a union bargaining unit and UMDNJ. All full-time faculty members have a recognized bargaining agent in the American Association of University Professors, which negotiates on their behalf for benefits, holidays, merit pay procedures, grievances under the collective bargaining agreement and termination for cause procedures.
Defendants performed plaintiff's surgery at Robert Wood Johnson University Hospital ("RWJUH"). RWJUM had an affiliation agreement with UMDNJ similar to the one described in Lowe, supra, ___ N.J. at ___ (slip op. at 4-5). Although a private hospital, RWJUM is a teaching hospital for UMDNJ. Pursuant to the agreement, defendants became members of RWJUH's medical staff in accordance with that hospital's rules and regulations. The bylaws of the hospital and the medical staff as well as the policies set forth by RWJUH's Board of Directors govern the hospital's operation. UMDNJ is entitled to twenty-five percent representation on the governing board of RWJUH.
UMDNJ also controls RWJUH's Professional Affairs Committee that oversees "medical staff membership and privileges, quality assurance, medical staff by-laws and regulations, and the performance of medical staff in fulfilling its obligations to RWJUH." The Chief Administrative Officer of the hospital is an employee of the medical school. The respective Chiefs of Clinical Services at the hospital are chairs of the parallel departments at UMDNJ-Robert Wood Johnson Medical School (RWJMS). At the time of this suit, Dr. Boyarsky was the Chief of Surgery at RWJUH and was also the Chairman of the Department of Surgery at the medical school.
Plaintiff was referred to defendants by his primary care physician from HIP. An affiliation agreement between UMDNJ-RWJMS and the Central New Jersey Medical Group allows HIP Health Plan of New Jersey to refer patients to UMDNJ-RWJMS doctors. Under an "Independent Contractor Agreement," UMDNJ-RWJMS agreed to provide services to HIP. Section 7.1 of the Agreement provides that UMDNJ-RWJMS physicians and other employees "shall . . . be covered for professional and general liability by the UMDNJ Professional and General Liability Program of Self Insurance," and that "[s]aid coverage is governed by the terms and provisions of the State of New Jersey Tort Claims Act, N.J.S.A. 59:1-1 et seq." Defendants do not carry malpractice insurance; they rely on UMDNJ's self-insurance.
Defendants' sole employment is with UMDNJ. Defendants receive their salary from UMDNJ, and all of the usual employer deductions and withholdings are taken from their pay. UMDNJ-RWJMS faculty are governed by a Medical Service and Research Plan, amended June 10, 1991. Under that plan, each member is required to "sign a contract governing the collection and distribution of income derived from professional services." The contract authorizes UMDNJ to bill and collect all fees from patient services and then redistribute the income from the Clinical Practice Account.
Under the overall salary structure at UMDNJ, UMDNJ retains ultimate control over the compensation received by its clinical professors. UMDNJ physicians are not allowed to issue their own bills; they must allow the University to bill patients. The physicians' salaries include state-funded compensation for teaching, plus a certain percentage derived from services to patients. However, the pay received by physicians is distributed from the patient billing fund only after a number of deductions that support UMDNJ programs, a discretionary fund, and benefits such as malpractice insurance. Although plaintiff emphasizes that participants in the faculty practice plan may set their own fees, all salaries of UMDNJ practicing physicians are subject to a salary cap. All physicians must also negotiate with the heads of ...