Doctor Employment Lawyer Blog

It sounds a bit ridiculous, but it could be true. It is not uncommon for physician employment agreements to include a clause that gives your employer the right to collect any and all income that you receive from outside activities. This includes speaking fees, expert witness fees and moonlighting activities.

You might think this sounds a bit unfair. I can assure you that your employer thinks your salary pays for all professional activities. The fact is that being a doctor is a unique profession in that your devotion to your employment can be critical to patient lives. It is not always unreasonable for a physician employer to want to ensure that your full working time and attention is devoted to your practice, hospital, and/or division. But, that doesn't mean that you should be denied the ability to earn extra income for work that you actually perform.

The key fact that all physicians should keep in mind is that your employer can only lay claim to your outside income if you sign an agreement that says they can. If you are negotiating a doctor employment contract with an employer that considers such a provision an absolute requirement, you have the choice as to whether you want to work for such an organization.

There are plenty of hospitals and practice groups out there that want you to build a name for yourself by speaking at conferences. And there are plenty of hospitals and practice groups that give you the freedom to make enough money to pay back loans and support your family through expert witness fees and/or moonlighting. It's better that you know and understand which type of employer you will be working for before you sign the employment agreement. And, if you're not sure, asking might be a good idea.

You are ready to move to a new hospital or practice group. You think you have a really great offer, but do you really? It is important to look beyond just compensation when assessing a physician employment agreement. Your current malpractice carrier may not cover you after you leave your current position. In most situations, supplemental insurance or "tail coverage" is needed to cover malpractice claims made after you leave employment.

In the past, malpractice coverage was usually "occurrence-based," which meant that as long as a you maintained coverage at the time of the alleged malpractice incident, you would be covered. However, with the rise of malpractice claims, "claims-made" policies have become more popular. Claims-made policies cover a physician for claims made during the period of time in which the insurance is maintained, and therefore must be continually maintained. However, when you change jobs, it can be extremely costly to obtain claims-made coverage with the new employer that would cover prior acts with the past employer. Thus, tail coverage would need to be purchased to protect you.

But, whose responsibility is it to foot the bill for tail coverage? Often times, this is negotiable. Occasionally, a hospital or practice group will pay for tail coverage complete. More commonly, you and your employer either share in the cost, or the employer may place certain conditions and terms under which it will pay for tail coverage. There are a number of unique and creative agreement possibilities.

It is important to assess your personal needs when agreeing to a doctor employment contract with regard to tail coverage. Properly negotiating your employment agreement will provide you with the financial certainty and flexibility necessary for you to be able to take advantage of attractive professional opportunities that may come your way.

written by Poonam Khatri

Before there is even a physician employment contract to review, doctors should investigate whether a hospital or practice group is truly going to be a good fit. Too many times we have seen physicians get into bad employment situations just because the pay was good. It does not take long for them to realize that no amount of compensation can justify staying in an uncomfortable working situation for the long term.

The following tips will help you conduct a little due diligence before accepting an offer of employment:

1. Culture. Speak with as many team members as possible. Don't just contact the physicians. Try to speak with the nurses, PTs, assistants and support staff. They will likely have a different perspective to share.

2. Reputation. Use the internet to find out what people are saying about the practice/group. Search each individual physician as well as the practice itself.

3. Volume. Ask the following questions: How many patients does the practice have? What is the breakdown of private pay versus public pay patients? How many patients does each doctor see per clinic? What were the previous year's total collections for the practice/group?

4. Vision. Ask about the practice/group's future plans. Are there plans for growth? What opportunities exist for you and what opportunities have your potential colleagues been able to conquer?

5. Attrition. How many employees have left the practice/group over the last 3 years? If a high number of people in any position have left, that might be an indication of how your potential colleagues interact with others.

Chicago area hospitals seem to be moving further and further away from imposing broad non-competes on physicians. And, the Illinois supreme court's December 1, 2011 ruling in Reliable Fire Equipment v. Arredondo, may reinforce that trend.

Reliable Fire Equipment overturned the Illinois appellate court ruling in Sunbelt Rentals, Inc. v. Ehlers, which eliminated consideration of whether an employer has a legitimate business interest in determining whether to enforce a restrictive covenant, and returned to Illinois' tradition of applying a three pronged rule of reasonableness test. The test asks the following: (a) is the restriction no greater than what is required to protect the legitimate business interest of the employer; (b) does the restriction impose undue hardship on the employee; and (c) is the restriction injurious to the public.

Although the court also held that a flexible "totality of the circumstances" approach must be used to determine whether an employer has a business interest deserving of restrictive covenant protection, the ruling confirms that employers need more than just reasonable restrictions to have an enforceable non-compete.

For doctors in Chicago, where patients might visit a number of different hospitals and/or practice groups for different conditions, it will be interesting to see what protectable interests are put forth. Although a physician practice group might be able to demonstrate a protectable interest in preventing a partner from competing, it seems that restricting a non-partner physician from securing new employment might be more difficult.

At the same time, the rule imposed by the court in Reliable Fire Equipment is flexible enough where almost anything can still happen in the area of noncompetes in Illinois. As we always tell clients, "it's not whether the employment agreement you are about to sign is enforceable that is important, but rather you want to sign an agreement that might costs tens or hundreds of thousands to litigate." Despite the Illinois supreme court's decision in Reliable Fire Equipment, the same rule applies. Think twice before you sign a non-compete.

CME reimbursement seems like it should be a simple, straightforward provision in Physician Employment Contracts. Strangely enough though, we regularly see issues related to a physician's use of time off for CME and/or reimbursements for the same.

Some practice groups limit the types of CME expenses that will be reimbursed. Another common issue is whether the time taken for CME should be deducted from a physician's vacation time.

CME is something that benefits both the employer and the physician. However, because it is also an opportunity for networking and professional development, many employers see CME as a benefit only to the physician. Therefore, they want to limit their responsibilities in connection with the same.

A doctor negotiating his/her employment agreement should be certain that he/she understands what will be reimbursed and how time off will be treated/calculated prior to accepting a position. Even these minor disputes can result in an uncomfortable working relationship and/or a protracted employment dispute.

Too many doctors trust that their so-called "standard agreement" addresses all of the issues promised during their negotiations. What they don't realize is that, most of the time, the physician with whom they are negotiating has no role in actually drafting the physician employment contract. The negotiations may very well be fair and thorough, but if the promises are not in writing, it is unlikely they will be enforceable.

This is primarily because nearly every physician employment agreement reviewed by my office contains what is generally known as an integration clause. An integration clause essentially says that all promises and obligations between the parties are addressed in the agreement; and, no oral statements or promises were relied upon when executing the agreement. In other words, if it is not in writing, it is not enforceable.

This becomes especially important when you relied upon oral promises about a certain call schedule, billing support or contract term that end up not being fulfilled. Even if your employer did not intend to misinform you, the written agreement will control.

There is nothing wrong with trusting the employer's word, while also asking them to confirm it in the written employment agreement. Things change. People leave. But the agreement will remain.

Most doctors we meet are so focused on patient care and medicine that they fail to protect their interests when signing their physician employment contracts. They proceed under the impression that, as long as they do well for their patients and build a successful practice, things will be fine with their employment. In most cases, that is an accurate assessment. However, sometimes doctors get into horrible employment situations and have almost no protections in their agreements. They get overloaded with administrative work; they are under paid because of a lack of adequate billing procedures; or they lack enough patients to build a practice because there is no marketing investment by the employer. Whatever the issue, sometimes good doctors get into bad employment situations.

You might think that a simple solution would be to resign and move on. And, sometimes that is the best and simplest solution. But, what about when you have signed a broad non-compete agreement or have committed to a community supported position that requires a substantial payout to terminate the contract? The costs of getting out of those contracts can be higher than the costs of suffering through the terms. But, no one should have to stay in a bad employment situation.

If you want out of a bad employment contract that seems to have no way out, you need to be a bit more creative about your departure. You need to analyze why the situation is so bad. Determine whether promises were made, but not kept. Identify who or what is making your employment dissatisfying. And, review your physician employment agreement. Does your employer have any obligations under the contract? Is your employer performing all of its obligations?

Find your leverage and create a plan of action. With contracts, there is almost always a way out. The key is finding the least expensive way out.

By: Poonam Khatri

Last week we started to address some of the physician employment contract issues that arise when you decide to partake in moonlighting activities. This week, we will address parts 3 and 4 of that discussion.

Part 3: Make sure you are covered.

Don't put your license or financial resources at risk to make a little extra money. Your employer may be paying for your malpractice insurance, but that insurance may only cover you for work done on behalf of your employer. If you plan to moonlight, first confirm that your moonlighting employer has appropriate professional liability coverage. If you have your own malpractice insurance, contact your insurer and disclose your plans. Failing to disclose your outside activities could result in a loss of coverage. In the alternative, supplemental malpractice insurance is also available to cover moonlighting.

Part 4: Special concerns for residents

On July 1, 2003, the Accreditation Council for Graduate Medical Education (ACGME) common duty hour standards went into effect for all accredited residency programs. These ACGME rules include the well-known requirement that a resident have a work week no longer than 80 hours, averaged over a four-week period.

The ACGME policy has a specific section devoted to moonlighting. The section on moonlighting notes that, "Because residency education is a full-time endeavor, the program director must ensure that moonlighting does not interfere with the ability of the resident to achieve the goals and objectives of the educational program."

Thus, as a resident your ability to moonlight will be limited and require approval from your program director. You may also be subject to periodic reviews in order to continue moonlighting.

In addition to these considerations, it is a good idea to execute a written contract with your moonlighting employer for both clinical and non-clinical activities. At a minimum, your moonlighting employment contract should address key terms of your employment and define your rights and responsibilities. This will help ensure that your moonlighting position provides you with enough flexibility in the event that your primary employment responsibilities change.

By: Poonam Khatri & Kristen Prinz

Moonlighting among physicians is growing in popularity. Often physicians, particularly residents and fellows, moonlight for extra income, especially those looking to pay off the massive debts from medical school. More experienced physicians also look to moonlighting for exposure to different practice areas, to keep their clinical skills sharp, or to improve their standing within the community.

Physicians looking to moonlight may choose from clinical or non-clinical opportunities. We have seen physicians obtain positions through billing companies, medical device providers, insurance companies, or on their own as expert witness consultants.

Moonlighting can be a great opportunity, but there are a number of important legal issues that a physician must consider before accepting a moonlighting position:

Part 1: Negotiate for moonlighting.

If you know you will need to moonlight to cover your expenses or, even if you just want to moonlight, negotiate this term on your way in. Most physician employment agreements do not allow moonlighting. Those that do, only allow it in certain limited circumstances.

Some employers have gone even further. They allow you to moonlight, but all income goes to the employer. Make sure you ask for exactly what you need: a way to make some extra money.

Ask questions before you agree to accept a position. Make sure you understand your obligations and the employer's requirements relating to moonlighting.

Part 2: If you didn't negotiate, read your agreement before seeking out any side work. Additional provisions may be at play.

Be sure to review your employment contract closely before accepting a moonlighting position. As explained above, many employers prohibit moonlighting altogether, claim ownership over income derived from moonlighting, or have an arduous process for getting moonlighting approval.

If your contract does allow moonlighting, other provisions in the agreement may put such income at risk. For example, a contract with the clause "While employed by Employer, any remuneration generated by Employee shall be solely that of Employer" can include not only income earned through outside sources, but also non-cash benefits. We assume you do not plan to work extra hours just so your employer can have some extra income. Make sure you are not defeating the purpose of moonlighting and read your employment agreement.

Non-compete clauses can also affect your ability to moonlight. Contracts will generally set out specific limitations of your non-compete, but they may not specify specialty practice restrictions. Don't be afraid to ask for clarification!

Your employer's policies and procedures for moonlighting approval can include anything from a simple written request, to a lengthy board approval process. However, failing to follow those policies can be considered a breach of your employment agreement. Abiding by the policies is the only way to protect your current employment while seeking approval for other opportunities.

To be continued.
PARTS 3 and 4, next week.

While you may think that the non-compete provision in your employment agreement is just a standard term that can be addressed when the time comes for you to move on, it is in fact a powerful tool to restrict you from practicing medicine in a specified geographic area.

Earlier this week it was reported on the Indianapolis Business Journal at IBJ.com that Indiana University (IU) Health Morgan Hospital has file suit against a primary care physician alleging that she signed a non-compete agreement with the hospital, and that she is now attempting to breach that agreement by moving her practice to Franciscan St. Francis Health. IU Health is seeking a preliminary injunction to stop the physician's move.

Even when a non-compete is unenforceable, being sued by a hospital with deep pockets is a strong deterrent to violation. Litigation can, and often does, take years. When accepting a new position, many physicians don't even contemplate the possibility that their employment agreement might interfere with future employment options.

Many of the physicians we work with do not believe that the employer who is hiring them might someday sue them for trying to leave. Before you sign a physician employment agreement, if the hospital or practice group tells you "we never enforce those provisions," ask them to put that in the agreement.

Last week on Becker's ASC Review website, Rob Kurtz published an article, 7 Predictions From ASC Physicians on the Future of Surgery Center Physician Ownership, presenting the perspective of seven Ambulatory Surgical Center physician owners on the issue of the hospital acquisition trend and whether owners believe they will maintain ownership five years from now.

Most of the physicians are adamant in their belief that they will maintain ownership and the trend will not affect them. In support of the argument, most of the physician owners do not identify reasons will not continue to gobble up private practices, but instead cite reasons why hospitals do not do as good of a job operating surgery centers. They cite quality of care and bureaucracy as downsides of hospital owned surgery centers.

One of the surgeons, Kenneth Pettine, MD, cites to a historical trend of hospitals viewing a private practice surgery center as a money maker, but fail to realize that the reason the center is making money is because the physicians are working 60-80 hours per week. Dr. Pettine believes that hospital employed surgeons would be less willing to maintain such a schedule when they have a guaranteed salary, an ability to work less hours or get more involved with committees.

Another physician, Joshua A. Siegal, MD, is the only physician that seems that surgery centers may have to partner with hospitals to "create growth and economies of scale." Dr. Siegal points out that "healthcare will be required to show efficacy in outcomes and value for its costs."

Regardless of the opinions, electronic medical records, delayed and reduced reimbursements, and regulations are all making it more and more difficult for physicians to sustain independent practice groups. And hospitals are gobbling them up. Physicians need to be prepared for all possibilities here.

If you are in the last year of your residency, you have every reason to celebrate. After years of studying, learning and making a modest income, it is finally time to improve your career significantly in terms of pay, benefits and specialization. You have worked hard to get here, and it is important to not lose sight of your career path and your goals. Stay the course and avoid common mistakes made by residents during and after their final year.

Even if you unsure as to whether you want to pursue a fellowship, apply early and ask questions. If you wait until the last year of your residency to apply for a fellowship, it may be too late. Try to apply as early as two years before your residency will come to a close and no later than 1.5 years before it ends. When you do apply in a timely fashion and are accepted for your fellowship, you may receive little information as to your expectations. Most residents are only fully informed about their pay. However, this is not enough information for you to know how many research projects you should complete or when and how much you will be on call. Have a list of questions prepared and use a bit of finesse to get them answered early on. If you have done your homework and have established expectations with the leaders of your program and then there is a change in leadership, be sure to have the conversation all over again to discover any new rules or expectations and reassess your options.

After your fellowship, don't jump into the first job offer right off the bat. Although it is tempting to get started immediately because you are excited to be finished with your residency and the money looks good, think carefully instead and ask probative questions. Make sure this is what you want. Also, take time to talk to your recruiter, if you have one. It won't cost you anything, and they may be able to help you compare options. If you already have contracts in hand to consider, you may want to take the next step and engage an attorney to help you negotiate and/or understand what you are about to sign. Apart from legal and professional considerations, think long and hard about how you want to shape your personal life. What is important to you? Likely, you will be signing a contract with a length of a year or more. One, two or three years is a long time to be stuck in an environment you don't like while missing out on precious time with your family and friends. Pay extra attention to what the local community is saying about your potential employer and closely scrutinize the schedule expectations and additional commitments that may be hidden in your contract. If you are going to be a partner, spend time with your future partners. Make sure you can trust them and that they are forthright and honest with you. Have people you trust meet them. Have frank conversations and make sure your goals, integrity and ethics are aligned.

Finally, after you have a stake in a practice that you've formed or entered into after much evaluation, you should be ready to run it and run it well. It is up to you to develop long-term strategies that will benefit you, your partners, your employees and the patients. It is important to run an efficient practice from a business standpoint while still allowing those who work there to maintain a certain quality of life. New physicians will be evaluating you as you interview them. Be ready to go beyond a simple salary explanation. Residents will likely evaluate practice opportunities with questions regarding incorporation, ownership shares, buy-in, benefits, malpractice insurance, daily census, technology, billing, marketing and profitability. Have these issues worked out ahead of time so that you make the cut and attract the best physician employees.

There are a number of great medical centers in Illinois, and the Chicago area in particular. And, ostensibly there is a lot of opportunity in Illinois for physicians. But, many doctors do not want to go into hospital employed practice. Some physicians look to get into private practice, where they can potentially move into an ownership role and have an impact on the business side of medicine.

While many hospitals will pay for continuing or tail coverage after a physician leaves employment, most private practices specifically place the responsibility for such coverage on the individual physician. For some practice areas, the expense for tail coverage can be staggering in Illinois. At the same time, just over the border in Indiana (not to mention other further states), malpractice coverage costs are significantly lower.

Physicians in Illinois who read their private practice employment agreements carefully may be able to negotiate tail coverage provisions, but many doctors focus primarily on the terms addressing compensation and non-competition. Some physicians are completely unaware of the potential long term costs of their employment arrangement.

The effect of high tail coverage costs has led many physicians with ties to Illinois to seek out of state employment. We are especially seeing this in high cost specialties such as obstetrics. And, it does not appear that effective insurance reform can be expected anytime soon. Because of this, it is crucial that doctors review and negotiate terms of tail coverage before accepting employment.

A physician who properly negotiates his/her contract before accepting employment, can often minimize the financial exposure of a move down the line. It's disheartening to know that you will have to pay large amounts of money to ever change employers, but it's just plain naive not to address the issue before starting employment.

Private practice can be extremely rewarding for doctors, but the practice of medicine is not a one-size-fits all profession and physicians have many choices today. Between hospital employment, flex positions, and locums tenens, new doctors can craft a medical career unlike those of the past.

For doctors who want to avoid the "business of medicine," hospital staff positions or temporary locum tenens positions may be a better option. You have the ability to negotiate a long term or short term physician employment contract, depending on your career and personal goals. Knowing your options is the first step to determining where you want to go with your career.

Regardless of which option works best for you, they each bring with them unique issues. In private practice you may be expected to build your own patient base and focu on practice development. In a hospital setting, you may be dealing with more bureaucracy. And most locum tenens positions require that you do a little of everything.

Earlier this month, the Illinois legislature passed a workers' compensation reform bill that slashed reimbursements to doctors who treat injured workers by 30%. Clearly, insurance companies will save big from the new law, but doctors are once again asked to do the same amount of work for less pay. In turn, practice revenues will be affected and, of course, so will doctor employment agreements.

I have repeatedly mentioned the trend towards tying physician employment compensation to receivables in this blog. A medical practice with

As a physician negotiating an employment contract, you need to be aware of the make-up of your potential employer's patients. Even if your compensation is not directly tied to receivables, collections determine the viability of a practice and the security of your employment. Due diligence is not just a practice for business owners. To establish a long term, successful career as a physician, you have to examine your employer's practice to the same degree you would examine your own.