Settlement agreements: A cautionary tale

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Counsel's column

photograph of Dale Atkinson
Dale Atkinson is a partner with the Illinois law firm that is counsel to ASWB.

When enforcing the practice act against persons alleged to have violated the law, regulatory boards are constrained by the authority delegated to them by the legislature. Social work boards are created and authorized via legislative enactment of statutes. As government entities, social work boards are fiduciaries and are afforded immunity protections to fulfill the intent of the practice act in the interest of the public. In the end, the actions taken by the board must be authorized by the legislation.

Social work boards/departments resolve a vast majority of complaints against licensees through a negotiated settlement agreement (sometimes referred to as a consent agreement) between the board and the respondent/licensee. Negotiated settlements are simply contracts between the licensee and board that set forth the parameters of a resolution to the matter. Because settlement agreements are negotiated in good faith and both parties are provided with opportunities to come to agreement on the terms and conditions, social work boards may have additional latitude to impose sanctions not specifically authorized via statute.

Social work boards are advised to seek legal counsel when determining charges, drafting settlement agreements, and ultimately imposing sanctions.

As a hypothetical example, if the law specifically limits the length of a suspension a board can impose on a respondent to three years, a negotiated settlement agreement entered into in good faith could call for a four-year suspension. Another example would be a board permanently revoking a respondent’s license in a jurisdiction where either such a remedy may not be permitted or the law is silent on the issue. Readers are cautioned to seek advice of legal counsel when drafting settlement agreements and when considering negotiating such extraordinary conditions. Likewise, social work boards are encouraged to engage counsel when negotiating and drafting these legal agreements.

Turning our attention to an illustrative judicial opinion, the Rhode Island Supreme Court recently ruled on an important issue related to settlement agreements. The matter involved a longtime licensed physician accused of boundary violations alleged to have occurred in his medical practice. The Rhode Island Department of Health, Board of Medical Licensure and Discipline (Board) received notice in early 2009 of alleged violations constituting unprofessional conduct. Rather than endure the administrative proceedings, the parties entered into an agreement whereby the physician waived his procedural and substantive due process rights to a hearing and agreed to cease practicing any branch of medicine and submit to a psychiatric evaluation with the results of such report sent directly to the Board. Thereafter, the Board would determine the appropriate sanction(s) after reviewing and considering the report.

The physician complied with the conditions, and the Board received the psychiatric report in September 2009. The report recommended that the physician not return to unrestricted practice and, when he did return, should be under supervision. The report further recommended that the physician complete an ethics course on boundaries. The report did not address the physician’s competence because that was outside the scope of the Board’s direction.

The physician affirmatively contacted the Board seeking guidance on his next steps. The Board did not answer. The physician completed the ethics course and was under the care of two psychiatrists. As noted by the court, “time passed.” Indeed, in June 2013, the physician contacted the Board again to discuss his future. He submitted a report from his treating psychiatrists that identified the three and a half years of treatment and the psychiatrists’ conclusions that they saw “no evidence of any characterological traits or patterns consistent with or evidencing a propensity or likelihood of … exhibiting boundary violations.”

The physician met with the CEO of the Board, who directed him to engage with a committee of the state medical society, a private trade organization. The physician again complied and was referred by the trade association committee to undergo a forensic psychiatric evaluation. This evaluation also concluded that the physician was “fit for duty to have his license returned unrestricted.” In December 2013, the Board formally issued its “unprofessional conduct” charges (as agreed upon in the 2009 settlement agreement) and negotiations again ensued regarding the physician’s licensure reinstatement.

Negotiations failed. In March 2017, the physician demanded a formal hearing before the licensing committee and submitted his petition for reinstatement. In September 2017, the licensing committee, as condition of reinstatement, voted to require the physician to attend the Center for Personalized Education for Physicians (CPEP) to establish his competence because he had not been practicing for so many years. The physician refused to enter the CPEP, and in October 2017 the licensing committee denied his petition for reinstatement. The physician appealed the decision to the Board.

The physician argued that the charges issued by the Board amounted to a single allegation of unprofessional conduct. No allegation or determination was made about his competence to practice. A formal hearing in December 2017 carried over to January 2018 and May 2018. In November 2018, the Board issued its final order with four findings of fact. The Board noted no findings of unprofessional conduct and held that the physician was required to complete the CPEP and satisfy all statutory requirements for licensure. The director of the department adopted the decision of the Board, and the physician appealed.

On appeal, the physician argued constitutional principles and emphasized that the decision was arbitrary and capricious based upon the length of time it took for the Board to determine the sanctions. The Board countered that the physician had not seen patients since 2009, a period in excess of nine years. The Superior Court expressed its concern over the “extensive licensure deprivation” created by the Board “where [the physician] was unable to understand and fulfill what [the Board] wanted ….” The court also noted that the Board determined no finding of unprofessional conduct. In short, the Superior Court reversed the decision of the Board and found in favor of the physician. The court reasoned that there was no need to remand the matter back to the Board because doing so would exacerbate the current situation by adding to the “nearly decade long saga.” The court also emphasized that the Board’s decision imposing competence-based criteria on the physician as a condition of reinstatement was not supported by competent evidence.

The Board appealed the matter to the Rhode Island Supreme Court arguing that the Superior Court erred by finding a lack of competent evidence, in that the parties (Board and physician) reserved in the settlement agreement the right of the Board to impose sanctions after the initial psychiatric report. The Supreme Court found that the Board was mistaken. The Supreme Court held that a finding of unprofessional conduct was a predicate for both the disciplinary action and the imposition of a competence determination as a condition of reinstatement. However, not only was there no finding of unprofessional conduct, but such was also not included in the settlement agreement. Thus, the Supreme Court affirmed the reversal by the Superior Court and upheld the physician’s position that he need not reestablish his competence as a basis for licensure reinstatement. Finally, the Supreme Court agreed that a remand back to the Board would be futile because the foundation for assessing the issue was not in place.

This case presents multiple interesting issues related to initial charges against a licensee, drafting of settlement agreements, delayed sanction determinations, the passage of time, judicial review, and reversal and remanding of administrative decisions. Further, in this case the physician agreed to cease practice rather than surrender his license. It is arguable that had he surrendered his license, establishing competence in seeking relicensure may have been relevant, depending on the wording of the statutes. The takeaway: Social work boards are advised to seek legal counsel when determining charges, drafting settlement agreements, and ultimately imposing sanctions.

Kyros v. Rhode Island Department of Health, 2021 R.I. LEXIS 88 (June 30, 2021).