Radiologists: beware of long-term replacements!

Article published with the kind authorization of the Journal de Droit de la Santé et de l'Assurance Maladie – JDSAM n°34 - 2022

Status of choice to compensate for the temporary absence of an impeded colleague, replacement is a legal tool that is simple to use, flexible in its operation, and traditionally well known to liberal doctors.

In medical imaging in particular, many self-employed radiologists manage their medical imaging center by having recourse to regular replacement doctors, sometimes faithful to the structure for many years. Some of these replacements hope to eventually be offered to join the professional association, others, on the contrary, choose this precarious status, which is not very restrictive, in order to maintain a certain freedom and independence in their professional practice. These replacement doctors are often colleagues who still have a foothold in the hospital and wish to “taste” private practice. They may also be medical students holding a replacement license.

This recurring practice of using substitute doctors in medical imaging has several undeniable advantages and a certain comfort for the reception structure.. Relying on quality replacements makes it possible, above all, to ensure the continuity of patient care, in a context of a great shortage of radiologists in France, and to retain this patient base. Obligatory passage before a possible association, the young substitute radiologist must "prove himself" and perhaps inclined to invest himself personally in the operation of the imaging center that he is targeting, without however being able to participate in its governance. . He has a place of choice to weave relationships of trust with possible corresponding doctors, without however representing a threat for the replaced doctor: the patient population remains legally that of the replaced doctor - in reality more that of the imaging center - the replacement doctor being, in principle, bound by a non-competition clause in the event of departure, unless there is a derogatory contractual agreement.

However, when the replacement becomes permanent and long-term, it is no longer in line with the legal and ethical framework. which applies to him. It can then represent a danger for the replaced doctor and/or the host structure, which weigh a legal risk of requalification of the replacement contract (1) as well as a risk of tax adjustment (2) linked to misuse of the replacement.

1 - The legal risk of requalification linked to regular long-term replacement

A strictly regulated legal status

Remember that the status of substitute doctor is strictly regulated by article R.4127-65 of the Public Health Code (article 65 of the Code of Medical Ethics) and by the recommendations of the National Council of the Order of Physicians (CNOM) applied by the Departmental Councils of the Order of Physicians.

Thus, the replacement must remain personal, ie the replacing doctor can only replace one doctor named by name. This means that the simultaneous replacement of several doctors is prohibited, including within the same private practice company (SEL), except in exceptional circumstances assessed by the Departmental Council of the Order of Doctors of the replaced doctor. When the replaced doctor practices in SEL, the replacement contract must be three-party and be signed by the replaced doctor, the replacing doctor and the practicing company.

The replacement must also be limited in time and correspond to the period when the replaced doctor is unavailable, insofar as article R 4127-89 of the Public Health Code prohibits a doctor from having his practice managed by a colleague. .

Finally, the replaced physician must cease all medical activity for the duration of the replacement contract. However, exceptions to this rule may be granted by the Departmental Council of the Order of Physicians, in the interest of the population when it finds a deficiency or an insufficiency in the supply of care.

The conclusion of a written replacement contract between the substitute doctor and the replaced doctor, required by article R. 4127-91 of the Public Health Code, is of particular importance in the event of disputes between the parties or with the FISC administration. It is indeed an element of intangible proof of the will of the parties.

This contract, a standard model of which appears on the CNOM website, should ideally, at a minimum, include the following provisions :

• the precise description of the human and material resources made available to the replacing doctor to enable him to carry out his activity with the patients of the replaced doctor;
• the duration of the replacement;
• the obligation of professional indemnity insurance for the substitute doctor;
• the obligation to use the care sheets of the replaced doctor: the replacing doctor will use the prescriptions, care sheets and pre-identified forms exclusively in the name of the replaced doctor, on which he must mention his personal identification followed by the mention " substitute " ;
• the methods of remuneration of the replacing doctor: in principle, it is the replaced doctor who collects the fees and retrocedes part of them to the replacing doctor, who cannot collect any fee in his own name. This retrocession can in practice take two different forms: it can correspond to a percentage of the total fees received or remaining to be received by the doctor replaced over the replacement period (recommended by the CNOM). It is also common, in medical imaging in particular, to remunerate a replacement on a flat-rate basis “on a sessional basis”;
•  reminder of the non-competition obligation following the replacement, provided for in Article R. 4127-86 of the Public Health Code;
• the obligation of prior conciliation in the event of a dispute between the substitute doctor and the replaced doctor, in accordance with article R.4127-56 of the Public Health Code;
•  the obligation of communication of the replacement contract to the Departmental Council of the Order of Physicians by the replaced doctor.

Unfortunately, in practice, this is wishful thinking and a good number of disputes relating to replacements arise in the absence of any written contract governing the relationship between the parties, or in the presence of contracts that are poorly drafted or do not transcribe only partially the reality of these relationships.

A legal status that is often misused

It is most often on the occasion of a sudden termination of a long-term replacement that a dispute arises. The replaced doctor, suddenly deprived of income, sometimes without respecting any notice, is then looking for legal levers to be compensated.

The analysis of the judicial case law on the subject shows that, depending on their actual conditions of practice, substitute doctors alternately try to have their replacement contracts requalified, when they have concluded one:

• or in a de facto company, which requires the replacing doctor to prove the existence of a contribution and the willingness of the replaced doctor to have him participate as a partner, on an equal footing, in the sharing of profits , any losses, as well as the proper financial and administrative functioning of the company;

• either under a freelance practice contract of indefinite duration or under a freelance collaboration contract provided that the substitute doctor has been paid directly by the patient;

• or under an employment contract, in the event that the replacing doctor practiced within the framework of an organized service, where he was subject to a relationship of subordination.

To rule on the relevance of such a request for requalification, the courts seek the existence of evidence demonstrating, in concreto, that the doctor "practised medicine within the framework of a status different from that of the substitute doctor" , whether it concerns the terms of his remuneration, his relationship of subordination, or even his participation in the profits and expenses of the company.

The Versailles Court of Appeal recently confirmed this again in a judgment of May 18, 2020^[1], rendered in the context of a request for requalification of a long-term regular replacement in medical imaging, confirmed by a judgment of the Court of Cassation of October 20, 2021^[2].

A radiologist, Dr A, had worked for eight and a half years in a medical imaging center in Ile-de-France, alongside several other radiologist colleagues, without any written contract specifying the framework of his intervention. , with the exception of two replacement contracts entered into for a period of 6 months with two of the latter. Nor had any written agreement been made between Dr A and the medical imaging centre. 

By letter dated May 22, 2013, the medical imaging center had asked the radiologists to inform their "replacement", Dr A, of the serious facts of which he was accused, and to put an end to it until the meeting of an Extraordinary Board of Directors to decide on its future in the centre. On June 25, 2013, during this Board meeting, the decision was voted to prohibit Dr A from accessing the center, taking effect on July 1, 2013. Dr A, contesting this decision, had requested a notice period of 6 months by letter dated June 26, 2013, which had been answered in the negative by a letter from the CEO of the center on June 28, 2013.

Dr A then seized the Departmental Council of the Hauts-de-Seine Order of Physicians with a request for conciliation on November 7, 2013, but this was unsuccessful, he had brought jointly and severally before the Court Judiciary of Nanterre, the medical imaging center and its radiologist colleagues, requesting in particular the requalification of its replacement contracts.

By judgment of February 22, 2018, the Nanterre Judicial Court rejected the request for the requalification of the replacement contracts binding Dr. A to his radiologist colleagues but ordered the latter jointly to pay him the sum of 30 euros as damages in compensation for the harm caused by the sudden termination of their contractual relationship. Dr. A appealed this decision.

In its judgment of May 18, 2020, the Versailles Court of Appeal confirmed the judgment of the Nanterre Judicial Court in that it had rejected Dr A's request for the reclassification of his replacement contracts, on the grounds in particular that :

• "the absence of information from the council of the order by the doctors replaced did not exclude the qualification of replacement contract and that the regulatory provisions, if they impose the drafting of a written contract and its communication to the authority ordinal, were not sanctioned by the nullity of the contract but by possible disciplinary sanctions. »
• "if the replacement's activity was by nature temporary, corresponding to the period of unavailability of the replaced doctor, the regular intervention of a doctor in place of the usual doctor, on ranges defined in a usual and short manner duration, did not exclude the principle of replacement, which only prohibits the doctor replaced from practicing at the same time in the same practice, observing that it was important that such replacements not result in the management of the practice by the replacing doctor , which was not the case here. (…)”
• “Dr. A practiced completely independently and not within the framework of an organized service, in which he would have had any relationship of subordination. Although Dr A claimed to have practiced within the framework of a verbal contract of indefinite duration for liberal exercise, there was no evidence to allow him to consider that he exercised within such a framework, with regard to the conditions of his remuneration, his remuneration being paid directly by the doctor calling on his services, at the rate of a percentage of his own fees, or on a flat-rate or per-act basis, thus excluding in principle the existence of such a contract which would suppose that it is paid directly by the patient. »
• "the conditions of exercise of his art were exclusive of the contract of liberal collaborator as defined by the law of August 2, 2005."
• “no contract of association had been agreed between the parties, which would suppose other conditions of remuneration on the one hand, and on the other hand the financial and administrative participation of Dr A in the proper functioning of their activity, which made default. »
• "that it could not be argued by Dr A that he was linked to the medical imaging center by a liberal exercise contract, whereas this company is a commercial company which does not practice medicine, does not collect no medical fees but royalties paid to it by the doctors using the equipment which it owns and which it makes available to them. »

The Court of Appeal of Versailles has, moreover, confirmed that "the absence of the obligation to give notice does not dispense with respecting a period of notice which takes into account the relationship which has been established over time between the parties, unless the causes of the break demonstrate that it was not possible to keep Dr A longer as a replacement". In this case, it ruled that the facts presented "did not exempt the doctors calling on Dr A from respecting a reasonable period of notice, in view of the years during which their relationship had existed and that this period had not been respected, at the origin of damage to Dr A.”, which it reduced to €15.000.

The position of the Court of Appeal of Versailles recalls that adopted by the Court of Appeal of Paris in a judgment of September 27, 2012^[3], having rejected a request for requalification of a replacement contract submitted by a dental surgeon who had worked alongside a colleague for seven years, a single replacement contract for a period of six months having however been concluded between them.

The rejection related to the request for reclassification of the replacement contract, on the one hand, as a company created in fact, considering that "the affectio societatis and the sharing of profits and losses were missing", on the other hand, as a contract liberal collaboration, on the grounds that the plaintiff surgeon "did not directly receive the fees of the patients he treated" and that she had not registered with the URSSAF during this period as an independent doctor.

On the other hand, the Paris Court of Appeal had also considered "that if the verbal contractual relationship had no defined term, allowing it to be terminated unilaterally at any time, it was up to the replaced doctor to respect a reasonable notice period taking into account of the length of the relationship”. In this case, the failure to comply with such a deadline, suddenly depriving the plaintiff of the usual income he derived from his replacement activity, had been aggravated by the vexatious nature of the sudden cancellation of his consultations with the patient, so that it was necessary to compensate him up to €35.000 for all causes of damage combined.

Reluctant to take the step of a reclassification as a de facto company or a freelance exercise contract of indefinite duration, some trial judges have however already admitted the requalification of replacement contracts into freelance collaboration or work contracts of indefinite duration.

With regard to reclassification as a freelance collaboration contract, taking into account the conditions under which substitute nurses exercised their activity (constant replacements, terms of their remuneration, etc.), the Grenoble Court of Appeal has, in two recent judgments as of December 11, 2018^[4] and May 3, 2022^[5], reclassified their contracts of replacements in contracts of liberal collaboration.

With regard to the requalification into an employment contract of indefinite duration, this is regularly accepted by the Social Chamber of the Court of Cassation. Judgment delivered on January 29, 2014^[6] is a great example. In this case, after noting that a substitute anesthetist "did not have the freedom to organize his interventions directly according to the constraints resulting from the organization of the clinic, but received instructions from the four doctors that she replaced, who imposed schedules on her and assigned her to such and such a session, that she did not have the possibility of building up her own clientele, that she had to fill in the administrative files of clients on behalf of the doctors replaced and that the alleged freedom to set the excess fees was linked to the choice of the holder's sector on whose behalf it was acting and which kept a significant part of the excesses, which established the existence of a subordination", the Paris Court of Appeal was able to deduce that this anesthetist had performed his duties under an employment contract.

Beyond the legal risk of requalification, regular long-term replacement may also expose the doctors replaced and their practice structure to a risk of tax adjustment on value added tax (VAT) by the tax authorities.

2 - The tax risk linked to regular long-term replacement

If the conclusion of a private collaboration contract can allow two doctors to exercise their activity simultaneously in the same premises, which is of certain interest in a situation of high activity, the use of a substitute doctor on an occasional basis is more advantageous for tax purposes since the fee paid to the doctor replaced by the substitute doctor is exempt from VAT. (see below)

Such is not the case with the fee paid to the owner of a practice by his collaborator under a freelance collaboration contract, which constitutes for the owner consideration for the provision of his fitted out professional premises and which must, as such, be subject to VAT^[7], subject to the basic deductible limits^[8].

This analysis is based on the very nature of the collaboration contract, which is "the act by which a practitioner makes available to a colleague the premises and equipment necessary for the exercise of the profession as well as, generally, the clientele who is attached, subject to a fee equal to a certain percentage of the fees collected by the employee. Under the terms of this contract, the assistant-collaborator exercises his art under his own responsibility and enjoys full professional independence. He bears his own stamp on the health insurance documents and himself provides cover for his professional liability. In view of the clauses of this type of contract, which does not call into question the liberal nature of the activity, the assistant-collaborator must be regarded as exercising his profession independently.^[9].

The question arises in slightly different terms in the context of a replacement contract.

Remember that in accordance with the terms of article 261, 4, 1° of the General Tax Code (CGI)^[10] personal care services, ie all services contributing to the establishment of medical diagnoses or the treatment of human illnesses, provided by medical or paramedical professionals, are exempt from VAT.

In a replacement contract, the fees paid by the patient are collected by the replaced doctor (or the practice structure), part of which must be retroceded to the replacing doctor in the form of a retrocession of fees. As soon as it remunerates a care service, this retrocession of fees falls within the scope of article 261, 4, 1° of the aforementioned CGI and is therefore exempt from VAT, regardless of whether this sum is not paid directly to the substitute by the patient, but by the replaced since "the terms of payment of these sums [...] do not modify, with regard to VAT, the nature of the service provided in return"^[11].

However, if the replaced doctor (or the practice structure) retrocedes to the replacing doctor part of the fees he has received, he always retains part of it to cover the operating costs of the structure or his practice. This sum is similar, as in a freelance collaboration contract, to a fee, the question of VAT submission being however more subtle than in a freelance collaboration contract.

Asked about this specific point in a tax ruling published on January 15, 2020^[12], the Tax Administration provided the following response:

"The 1° of 4 of article 261 of the CGI which transposes article 132, paragraph 1 under c) of directive 2006/112/EC relating to the common system of added value exempts from VAT without possibility of option, care services provided to individuals by members of the regulated medical and paramedical professions.

The Court of Justice of the European Union (CJEU) considers that this exemption is applicable when two conditions are met, namely that it concerns personal care services and that these are provided by persons with the professional qualifications required (CJUE 10 September 2002 case 141/00 “Ambulanter Pflegedienst Kügler GmbH”, ECLI:EU:C:2002:473; CJUE 27 April 2006; cases 443/04 and 444/04 “HA Solleveld and JE van den Hout-van Eijnsbergen", ECLI:EU:C:2006:257).

As a result, the sums paid by the replaced doctor to the substitute doctor at the end of the replacement contract are exempt from VAT when they remunerate treatment provided by a practitioner to a patient within the meaning of the provisions of 1° of 4 of article 261 of the CGI, as interpreted by European case law. The methods of payment of these sums (not by the patient himself but by the replaced to the substitute) do not modify, with regard to VAT, the nature of the service provided in return.

On the other hand, the fee collected by the replaced doctor in return for making his technical facilities and premises available to the replacing doctor, who does not pay for the provision of care to the person, is subject to VAT, unless the replacement involves an occasional character. »

This response caused some confusion about the VAT exemption which had hitherto still applied to the fee retained by the doctor being replaced, and this all the more so since the Tax Administration does not currently provide any precise definition of the concept. of "occasional replacement".

With this new doctrine, medical imaging centers are, for several years, in the "visor" of the Tax Administration, which multiplies VAT tax adjustments, in the presence of "non-occasional" replacements.

In practice, the tax administration, or the tax judge in the event of a dispute, assesses, on a case-by-case basis, the working conditions of replacement radiologists. The importance of the number of replacements, the systematic nature of the replacements, the amount of turnover achieved by the latter are all criteria that can justify submitting the fee to VAT.

Conversely, an Administrative Court of Appeal was able to judge that "replacements, linked to the occurrence of a specific event which was not repeated on a regular basis, took on an occasional nature" and that consequently, the doctor replaced could be exempt from VAT on the fees he had received^[13].

In the event of recovery, the existence of written replacement contracts, addressed to the Departmental Council of the Order of Physicians, can constitute a "weapon" to demonstrate the occasional nature of the replacements, assuming that they are, and to argue in in favor of an exemption from VAT on fees collected by the replaced doctor or the structure hosting the replacement.