Suit By 23 Tenured Faculty Members Against USC Illustrates Changes In Biomedical Research Culture

Sidebar: "The Financing of Medical Schools" - For Further Information A DEMOTION? The plaintiffs’ attorney, Jeffrey Kramer, notes that the reduction in their contract term was not accompanied by a reduction in their duties. Twenty-three tenured members of the basic science faculty at the University of Southern California (USC) School of Medicine have sued the Los Angeles-based university for $54 million, alleging that USC has breached their contracts and is violating established princip

Feb 3, 1997
Robert Finn

Sidebar: "The Financing of Medical Schools" - For Further Information

A DEMOTION? The plaintiffs’ attorney, Jeffrey Kramer, notes that the reduction in their contract term was not accompanied by a reduction in their duties.
Twenty-three tenured members of the basic science faculty at the University of Southern California (USC) School of Medicine have sued the Los Angeles-based university for $54 million, alleging that USC has breached their contracts and is violating established principles of academic tenure and academic freedom. Although the case is symptomatic of fiscal problems facing medical schools nationwide, it's unclear whether other schools will follow USC's lead. According to a November 1996 report from the Association of American Medical Colleges (AAMC) entitled "The Financing of Medical Schools," increased competition from managed care is rendering the funding for medical education uncertain, and will "undoubtedly require changes in institutional culture and organization."

In June 1995, the USC administration, citing financial difficulties at the medical school, switched all 108 members of the basic science faculty from 12-month appointments to nine-month appointments, reducing their salaries by 25 percent. Members of the basic science faculty teach preclinical courses such as anatomy, biochemistry, and endocrinology to medical students. The basic science faculty is distinct from the clinical faculty, whose 12-month appointments will remain unaffected by the new policy.

MEGATRENDS: AAMC’s David Blake says "what’s at stake is the health of the biomedical research enterprise."
"In other schools, like arts and science schools, nine-month appointments are the rule, not the exception," notes David A. Blake, senior vice president for research of the Washington, D.C.-based AAMC. Indeed, faculty members at USC's other schools have long been on academic-year contracts.

"The economic megatrends running through the world, one of which is the managed-care phenomenon, totally change the way we pay for health care and are causing an unbalancing of the equilibrium for financing medical schools," explains Blake. "There have to be new ways of supporting the institutional costs of research. . . . What's at stake is the health of the biomedical research enterprise."

In his letter announcing the change, Stephen J. Ryan, dean of the medical school, stated that affected faculty members could use income from grants and contracts to supplement their salaries beyond the nine-month term. And in a June 27, 1996, letter, interim dean Joseph P. Van Der Meulen announced that those who were unable to find these additional funds would have their salaries supplemented for two years, "in recognition of the fact that there was little time to plan for the transition to a reduced schedule and compensation, with the result being that some faculty may have been caught short."

But this evidently did not mollify the plaintiffs. After failing to gain satisfaction through an internal grievance procedure, they filed a lawsuit on November 14 in the Superior Court of the State of California for the County of Los Angeles. The suit initially included 17 complainants and was amended on January 3 to include six additional complainants. The plaintiffs' central allegation is that USC breached their contracts by unilaterally changing their employment terms, which are specified in USC's faculty handbook as being 12 months in duration, renewable annually.

The plaintiffs further allege that in a December 1996 faculty meeting, Ryan unveiled a proposed restructuring plan that would eventually guarantee professors only 20 percent of their reduced salaries, with the remainder to be made up from grants and by compensation for tasks to be set periodically by the administration. USC officials would neither confirm nor deny this allegation, and through a spokesperson Ryan declined to make himself available for an interview or to respond to written questions on the restructuring plan.

Reactions to the lawsuit have been swift and emphatic. The USC administration released a statement for reporters on November 19 describing the lawsuit as "frivolous and irresponsible." The statement quotes USC provost Lloyd Armstrong as saying, "This small group of faculty claims the university has no right to require them to do their fair share in meeting the challenges facing the medical school-only the obligation to pay them." Armstrong is also quoted as saying, "What is particularly disturbing about the tactic represented by this lawsuit is that it attempts to derail an orderly process to solve our problems responsibly." But in an open letter directed to the editors of two USC publications, 48 members of the School of Medicine faculty (some of whom are among the plaintiffs) responded to the statement by writing, "It is deceitful to assert that the basic science faculty are not doing their share."

The letter goes on to say, "The restructuring process has been orderly in the sense that all authoritarian, dictatorial processes are orderly. The manner in which the faculty have been treated reveals the administration's contempt for the principle of collegial governance, its insistence that the faculty fall into line behind a strong-willed leader, and its intent to destroy procedures and institutions which have heretofore protected the pursuit of knowledge and the cultivation of society's finest young minds." On advice of their attorneys, the plaintiffs in this case declined to speak directly to The Scientist.

Henry Slucki, a senior research associate at the USC School of Medicine, describes USC's decision to change the contract terms of the basic science faculty as "very unfortunate." Slucki is a member of the clinical faculty, so he is not personally affected by the new policy. But as president of the USC chapter of the American Association of University Professors (AAUP), he supports the plaintiffs. "While some faculty members can certainly supplement a nine-month salary with a three-month summer stipend from a grant, that is not by any means the bulk of the faculty," since grant money is often difficult to come by in this time of increasingly uncertain funding for science.

"I'm not saying that the policies that existed are necessarily the best and should remain that way," continues Slucki. "I'm saying that there is a process for altering policies, and that must involve the faculty at all levels. The issues that once were ones of collegiality and shared decision-making in the governance of the school have been pushed aside or made unilaterally by either the dean or some high-level administrator."

Jeffrey W. Kramer, a lawyer at the Los Angeles-based firm Troy and Gould, which is representing the plaintiffs, argues that the reduction to a nine-month contract term amounts to a demotion, and was not accompanied by any reduction in the duties professors are expected to perform. "For example, if they truly were expected to work for nine months, many of these professors would have been off work before they even gave the finals in their classes. It doesn't even work out mathematically because they previously had 12-month contracts, which allowed them one month of vacation, and they went to nine-month contracts with no vacation."

And there are considerations beyond time spent in the classroom, Slucki notes. "At the medical school, faculty committees continue to meet throughout the summer. If a committee is going to meet, if you're going to supervise a doctoral student, if you're going to continue with your research activities, . . . then basically you're doing year-round work and you're only getting paid for the academic year."

REASONABLE ADJUSTMENTS: Law professor Matthew Finkin notes that "an institution is not locked into all of its policies."
Beyond the heated words and expressions of outrage on both sides is a legal case that will likely rest on the intricacies of contract law, according to Matthew Finkin, Albert J. Harno Professor of Law at the University of Illinois, Urbana-Champaign, and author of the book The Case for Tenure (Ithaca, N.Y., ILR Press, 1996). "Obviously, an institution is not locked into all of its policies governing terms and conditions of employment that are in effect at the time a tenured professor gets tenured," he says. "Institutions have to adjust their policies in light of shifting economic and financial considerations. The courts have said that institutions can make reasonable and responsible adjustments so long as those adjustments are not intrinsically inconsistent with the tenure commitment itself."

For Further Information and copies of "The Financing of Medical Schools" contact:
Association of American Medical Colleges
Division of Institutional Planning Development
2450 N St., N.W.
Washington, D.C. 20037
Phone: (202) 828-0475
Fax: (202) 828-1125
For example, he explains, it would be unreasonable for a faculty member to claim that his tenure rights had been violated if the administration changed his reserved parking space, even if there had been a section about parking in the faculty handbook.

An institution is permitted to make unilateral changes in tenure in response to a demonstrated state of financial exigency, according to standard rules of tenure adopted by AAUP. The County of Los Angeles contracts with USC to provide medical services at Los Angeles County + USC Medical Center, but a continuing financial crisis has forced the county to slash its $85 million contract with USC by about 25 percent over the last two years.

In a second statement to reporters, issued January 7, the USC administration contends that, "Regrettably, the [School of Medicine] has experienced a continuing structural deficit of over $6 million for at least the past several years, which is only partially defrayed by tuition dollars. While the USC Trustees have covered this deficit in past years, sound business practice does not permit them to do so."

But this does not constitute a financial exigency for the institution as a whole, argues Kramer. "These professors do not have contracts with the medical school. They're hired by the University of Southern California. The University of Southern California, according to its 1996 financial statement, is in the black again this year as it has been for the last 85 years in a row. They had annual revenues of approximately $1.23 billion."

"'Financial exigency' has been understood by the profession since the phrase was drafted in the '30s . . . as a condition of the institution [as a whole]," notes Finkin. "If you begin to say, 'No, it's the school,' well then, why not the department? And if it's the department, well then, why not a particular offering?" Universities could then cite financial exigency in firing a tenured professor whose classes failed to attract enough students.

'UNFORTUNATE': Henry Slucki, president of USC’s AAUP chapter, says that policy changes "must involve the faculty at all levels."
The faculty remains skeptical about claims of financial hardship. "The numbers we are being given, to use a scientific term, are not empirical," Slucki contends. "We have to take them as assumptions." However, he expresses doubt about the school's money problems. "When the president of the university and the dean of the medical school send out press releases and have reports published that show that we're doing very well with our fund raising, . . . then things can't be all that bad."

The School of Medicine's proposed restructuring plan, in which faculty base salaries would be reduced to 20 percent of current levels with the rest to be made up by grants and other means, is also drawing a good deal of fire. Plans like this are becoming increasingly common in what Jordan E. Kurland, associate general secretary of the Washington, D.C.-based AAUP, describes as an anti-tenure wave now sweeping academia (R. Finn, The Scientist, Nov. 11, 1996, page 1).

"Tenure becomes meaningless if it's below what anyone could view as a living wage," comments Kurland. (USC was placed under AAUP censure in 1996 for an unrelated case involving the university's denial of tenure to an assistant professor in the department of sociology.)

Kurland adds that AAUP would insist that a faculty member who is performing satisfactorily should not be impoverished just because he or she "has not done the kind of work, or is not the kind of salesman, that attracts outside funding. . . . Giving rewards on the basis of grantsmanship rather than scholarship or scientific ability has been a matter of concern for us ever since there started to be grants in significant numbers."

Despite the rhetorical heat surrounding the lawsuit, it could drag on for two years or more before being resolved, failing an out-of-court settlement. Meanwhile each side is positioning itself for battle. USC's lawyers, for example, have submitted a 60-page list of documents they're insisting that the plaintiffs provide. According to Kramer, USC has demanded, among other things, birth certificates, tax returns, and documents relating to the personal recreational activities of each of the plaintiffs. "It's extraordinarily broad," replies Kramer. "We think it's calculated to create an actual burden on the plaintiffs." USC did not respond to a written request for comment on this matter.

As to whether the plaintiffs ultimately have a winnable case, Finkin comments, "The devil is in the details. As a general principle, a unilateral change in certain critical policies that go to the core of the tenure commitment would violate tenure. [However,] tenure does not prohibit an institution from making reasonable and responsible changes that do not have that effect. . . . Economic conditions do change, and it's possible to demonstrate in court that this is a reasonable and measured response to an evolving situation."

Robert Finn, a freelance science writer based in Long Beach, Calif., is online at