Contracts are a necessary part of business transactions; they delineate the liabilities of the parties involved, as well as protect their legal rights. In the case of a physician employed (or soon to be employed) by a hospital or medical group, it is crucial to insist on a written contract. For physicians who are just starting their careers or for those who plan to work for a company with which he or she has a personal connection, it may seem like a hassle or even an embarrassment to insist on a written contract.
However, without a written contract, an employer can change an employee's salary or choose not to extend his or her employment despite past promises to the contrary. Instances such as these can significantly impact a physician's family, lifestyle, and future. Before engaging in contract negotiations with an employer, it is beneficial for a physician to consult an attorney. An experienced attorney will act as an advocate for a physician's rights and may assist in negotiating a more favorable contract.
Before signing a contract, a physician should be familiar with the standard contract terms and the implications of each. Below are some common things to look for when negotiating a contract:
- Employers may make promises during contract negotiations that are not spelled out in clear terms in the contract. It is crucial to make sure all verbal guarantees are in writing. For example, an employer might promise five weeks of paid vacation annually, but the contract only says "five weeks vacation." It neglects to specify whether the vacation is paid. If the contract does not say exactly what was agreed upon during negotiations, one of the parties may not get the contract they thought they were getting.
- Non-compete clauses are included in contracts to protect the employer if the physician's employment is terminated. Typically, non-complete clauses will specify that if a physician's employment ends, the physician agrees not to practice medicine within a certain radius of the employer for a certain number of years after the termination of the contract. One way to limit the terms of a non-compete clause is to limit the radius or number of years through negotiation.
- Some non-compete clauses will also include a liquidated damages clause . Employers estimate the cost of a physician breaching his or her contract and require the physician to pay this amount-the liquidated damages. This amount can be substantial. Attorneys can find solutions to the high-costs of such clauses, should a physician breach his or her contract, such as asking the new employer to pay for the liquidated damages.
- Most contracts require 30 to 90 days of notice before a physician can leave his or her position. Several factors determine whether a physician should negotiate a shorter or longer period of notice, such as an area's job market.
- Indemnification clauses prevent one party (likely the employer) from being sued by another party (likely the physician) for violating government billing regulations. Such clauses are in place to protect employers and can potentially have dangerous repercussions for physicians. A physician bound to a contract with such a clause may face prosecution by the government for the fraudulent billing actions of a hospital. An attorney can persuade an employer to modify or remove such a clause.
- An employer may include the supervision of non-physicians in a physician's contract. Before signing a contract containing such a clause, the physician should fully understand his or her supervisory role and how, under such a clause, the physician could be responsible for the actions of a nurse or ER technician, should something go wrong.
- Malpractice insurance is another important component of a physician's contract. It is crucial that a physician asks about the coverage limits before signing a contract. Physicians should be aware of the differences between occurrence-based insurance and claims-made insurance, know what kind the contract specifies, and whether it includes "tail coverage."
The aforementioned information is not intended to serve as legal advice; merely to alert physicians to the potentially complex nature of their contracts.
The attorneys at Harrison Alo, Attorneys at Law, have extensive experience representing physicians in contract negotiations. If you are a physician who is planning to take a new position or renegotiate your present position, the attorneys at Harrison Alo are available to answer your questions and address your concerns.