Doctor Employment Lawyer Blog

By: Poonam Khatri

This time of year, many residents receive their first offers of employment as a physician. This is an exciting time; all those years of hard work are finally paying off. Many residents, however, make the mistake of focusing too heavily on their salary and ignore benefits, which can be just as valuable.

Some of the benefits provided by employers include a bonus, expense reimbursement, retirement plans, insurance, and paid time off. It is also important to review any restrictions imposed. A physician employment contract may place restrictions on you that can extend even after your employment ends. Here are some important things to think about when reviewing your employment contract.

If you are eligible for a bonus, it is important to look at its structure and evaluate the likelihood that you will receive the full amount. A bonus can be structured a number of different ways, it may be tied to the collections you personally generate, or it may be tied to practice group's performance.

If you are moving, reimbursement for your moving expenses is another fringe benefit to consider. Other reimbursable expenses may include professional society dues, attendance at conferences, and continuing education credits.

Your contract should make your schedule and duties relatively clear. Although your schedule may not be very detailed, a general description including your call schedule should be noted. If you have agreed to work at a specific location, make sure your employer cannot move you without your approval. The contract should also clearly define your paid time off, including vacation and sick time.

Although you are early in your career, it's never too early to start thinking about retirement. Many employment contracts will offer a 401(k) plan, a profit sharing plan, or a money purchase pension plan. It's important to understand and take advantage of these benefits, particularly if your employer offers a matching contribution.

Speaking of the future, it is also important to think about your future role with your employer. If you are joining a practice, will you be able to one day be a partner? When should you expect to make partner? What is the buy-in formula that is used? Will you be an equal voting partner? In some circumstances, it can be beneficial to have this information included in your contract.

Another issue, often overlooked, is potential restrictions the employer will place on you. Some contracts require that any income earned though professional activities, such as lectures or expert testimony, belong to the practice. This restriction may include moonlighting as well. Another important restriction is a non-compete agreement. Many employers will prohibit you from practicing within a certain radius of their facility for a number of years after you employment ends.

These benefits can add up to be very valuable and contribute to your quality of life. It's always a good idea to have your contract reviewed to make sure you are getting everything that you deserve.

Nearly every state in the U.S. has adopted a policy of employment "at-will," meaning either the employee or the employer can terminate the relationship at any time, for any reason. For most of us this means we can be fired at will, regardless of whether there is any cause for termination. Employment contracts usually override the "at-will policy" and offer a promise of employment. Sometime that means that your employment is guaranteed for a specific amount of time. However, as with everything in life, there are few true guarantees.

Assuming that your employment agreement does obligate the hospital or practice group to continue your employment for a specific periof of time, there are always exceptions. For example, you typically must maintain privileges at a specific hospital or hospital group. That seems like a straighforward obligation, but what if your employer decides to withhold assistance in maintaining privileges or stops paying your dues in a timely fashion?

More commonly we see doctors signing a one, three or even five year agreement that actually includes a provision that says the doctor may be terminated at any time, without notice, with or without cause. Essentially, the contract is in effect unless otherwise terminated. This means that, so long as the agreement is in place the employer will perform its obligations. This also means that, despite a one, three or even five year term, there is no guarantee of continued employment.

If you are moving your family across the country to take a job that you think will last at least five years, make sure your physician employment agreement says what you think it says.

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

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.

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.

This morning I attended the Crains Chicago Business Physicians Breakfast, where the panel primarily focused on the business of medicine and the impact of technology and the health care. Although the impact of these issues may not be easily discernable in a physician's employment agreement, they will directly impact your time and productivity.

New doctors should be especially concerned about the impact of technology on their employment because, although there are technologies that create efficiency, many new technologies are implemented in response to new bureaucratic requirements for documentation. This means you could be spending more time imputing data and less time caring for patients. And, if your compensation is based solely on your own (and not the practice group's) productivity, you could be losing the ability to earn a fair and decent salary.

Physician employment contracts are constantly evolving. The trend for compensation has moved towards productivity based pay and practice groups are adding greater and greater restrictions to their doctor employment agreements. Physicians need to be more critical of what promises are being made to support their professional development.

One issue confronting doctors' employment is the issue of where they work. Hospitals and practice groups continue to expand and increase their locations. This can affect a number of issues that a doctor may not consider when negotiating the terms of their employment, such as: (1) where is his/her office (does he/she even have an office?); (2) does the non-compete apply to thereafter added locations; and (3) what is the maximum distance the physician will have to travel to get to work?

On more than one occasion I have seen physicians accept employment with an employer that does not provide administrative office space or adds additional locations that are exceptionally far from the physicians' homes. Make sure you consider these issues before accepting an offer of employment.

You are finishing your residency (or fellowship), and you've just landed the job of your dreams. Congratulations! Now you're faced with a great challenge: Resisting the temptation to immediately sign your physician employment agreement.

Joining a practice group is an exciting time for both you and the practice group or hospital you are joining, but signing a physician employment contract without understanding your obligations and rights can cause you long term pain.

A well drafted employment agreement creates reasonable expectations between the employer and employee. When expectations are clear and understood on both sides, everyone wins, and future legal battles are avoided. A careful review of your employment agreement will provide you with a complete understanding of your prospective employer's proposed expectations in connection your new position within the group. It can also give you insight to the culture of the employer.

In reviewing our client's doctor employment contracts, we often see vagueness in employment duties. Many times, the employer expects the physician to perform administrative duties "as requested" by the employer. This means that your employer could potentially ask you to handle administrative matters about which you are unfamiliar. Such an expectation can easily interfere with the time you spend on your primary duties as a physician. When working full-time as a new doctor, time management can be a challenge. If your employer is expecting you to spend your time on items other than treating patients, you should be aware, and plan accordingly.

As a condition of physician employment, employers often expect doctors to maintain unrestricted medical staff privileges at multiple hospitals. Even though this may seem like a simple administrative task, obtaining and maintaining privileges at various locations can take a lot of time and require a great amount of paperwork. A missed deadline could mean a violation of your employment agreement and a negative mark on your employment history. To manage deadlines in obtaining privileges, we often suggest that our clients only be required to initially maintain unrestricted privileges at one hospital. Then, after the group has provided a reasonable amount of notice, it can require responsibility for maintenance of such privileges at any other hospital. Also, it is often helpful to have a point person on the administrative end. During negotiations with a practice group on behalf of our doctor clients, we typically request a term in the employment agreement which reflects that such administrative support will be provided in complying with requirements for medical staff privileges.

Lately we have been seeing private practice employment contracts that are dependent on hospital support. These are typically physician employment contracts in areas where there is a shortage of doctors practicing in that particular specialty. These can be great arrangements, but they can also be strait jackets for doctors that end up in a bad employment situation.

Physicians considering these types of employment situations should do their due diligence before accepting a position. Be sure that the practice's culture and processes meet your expectations. Research the reputation of the practice and speak with the physicians and support staff about how the practice operates.

Of course, this sort of due diligence should be performed regardless of the type of physician employment you are considering. But, the reason it is especially key in these situations is because you could up having to pay huge sums if you decide it's not working out. These employment agreements typically have a repayment schedule that is based on how much of the contract term is fulfilled. The sooner you want to terminate, the more it could cost you.

In these cases, it literally pays to know what you are getting into before you sign the employment contract.

No one likes to think of the end of a relationship when you are just getting started. But, in employment, an end is inevitable. Hopefully, it is after a long and prosperous career. Regardless, physicians need to understand how their employment contract can terminate.

Most physician employment agreements set forth events that trigger termination "with cause" and "without cause." "Cause" typically means a serious breach such as suspension or loss of license, conviction of a felony, drug or alcohol abuse, loss of malpractice insurance, loss of privileges, or other material breach. These are serious events that would obviously affect a doctor's professional reputation.

Because the term "cause" is typically understood to be in connection with a seriously bad act, a doctor negotiating his/her employment contract should be careful that the definition of cause in the contract is sufficiently clear.

Our office has seen at least one situation where a practice group tried to use a doctor's tardiness as a basis for "cause." Although we were able to stop the employer from going forward with the termination and keep the physician employed through the term of her physician employment agreement, she may have avoided the situation entirely had she had her contract properly reviewed from the start.

Being terminated "for cause" can follow you throughout your career. And if you don't understand what "cause" means, how can you avoid it?

So many doctors that come to our office tell us that their prospective employer told them that the Employment Agreement is standard and the terms are not negotiable. And, maybe that is true. However, there are a number of terms in doctor employment agreements that both parties would benefit from revising such as defining practice development and administrative responsibilities.

Furthermore, if the agreements are all the same and non-negotiable, can you see everyone else's agreement? Finally, the start of your employment is the best time to clarify details. I always remind our clients: "if you don't ask, the answer is already "No." So where is the risk in asking?"

Most physician employment contracts that we see contain at least some form of productivity based compensation, but when we ask clients whether their employer is going to provide practice development support they invariably ask "what's that?"

Practice development support means that your employer is going to make and investment in helping you develop your practice. Whether by sponsoring a lunch for referring physicians so that you can present information that will help them treat and refer patients, or offering access to a marketing professional/consultant, or referring a percentage of new patients to you, your employer can promote you in a way that builds your practice and credibility.

Even though this seems like a clear benefit for all parties, it is not atypical for each side to think the other side is handling this. Many hospitals and practice groups will slap a physician's name, picture and practice areas on their website and leave the rest to the doctor. But, most doctors are focused on patient care, research and continuing education, as they should be.

A doctor's employment agreement can ensure that both parties know exactly what their responsibilities will be in terms of practice development. We always request that the practice group or hospital identify some specific means of supporting practice building efforts, in every doctor's contract that we see.

The majority of doctor employment contracts that we see today offer some type of productivity based compensation. In addition to caring for patients, most physicians must also be marketers and business people.

Specialty practitioners in particular must cultivate professional relationships and become known to referral sources. Common sense would indicate that your relationships belong to you. However, if you are using your employer's time, equipment, letterhead, and supplies in developing those connections, the relationships belong to your employer.

I point this out because doctors, like most professionals, maintain all of their contacts in their office and on their work computer. If you are ever fired, and walked out the door, your contacts are left behind.

Of course, relationships really are personal. And, I am sure you can seek out your referral sources and reestablish the contact. However, it takes years to compile an address book. Then, in an instant, it's gone.

A best practice to put in place immediately is to keep a personal log of all your contacts at home. If you make this an ongoing practice, you will always have access to your address book, regardless of whether you can access your office.