Physician contract horror stories

As a physicians’ attorney who focuses his practice on physician contract review, I have seen some truly horrendous results after physicians have signed agreements they did not understand. Here are just a few of the “war stories” I have experienced.

24/7 call “for a few years”

One physician employment agreement I reviewed had several points that I felt should be clarified. The employer’s attorney accommodated most of my requests for clarification in the second draft. However, the provision that the physician would be assigned call “at the discretion of the practice” remained unchanged in the second draft.

I had asked for a specific limitation on call, but in speaking to the attorney, I stated that my client was willing to compromise and agree to an equitable distribution of call coverage. The attorney refused to make this change. He explained to me that his client, as a solo practitioner, had been performing call 24/7 for the past several years. The intention was that my client, therefore, would also perform 24/7 call “for a few years.” The attorney was concerned that this allocation of call was (as he put it) arguably not equitable.

Needless to say, negotiations continued. Eventually, the owner agreed to share call with the new physician. We were able to convince him that he would never get a physician to work for him with those call requirements. I wonder how long my client would have lasted at that position if she were required to do 24/7 call for months on end?

Any attorney will tell you that an ambiguity is rarely a good thing.

The restrictive covenant goes for miles and miles and miles and miles and miles.

I once represented a physician negotiating an employment agreement with a hospital. This physician was a senior specialist who was very active in the state medical society. As such, he would probably obtain referrals much more quickly than another physician starting in that position.

The hospital we were negotiating with was 63 miles away from his current employer. He had a 65-mile restrictive covenant in his existing agreement. I disclosed this fact early on to the potential employer’s general counsel. We spent a good deal of time on the phone discussing that restrictive covenant. We both agreed that it would not be wise for the prior employer to go to court to enforce the covenant under these conditions. Both the hospital’s counsel and I agreed that a court would almost certainly not uphold that restrictive covenant. Moreover, if the physician’s present employer took it to court and lost, all of its restrictive covenants with all of its physicians would be in question.

However, a few days after my discussion with the hospital’s counsel, I received a call from that attorney. It was a courtesy call to inform me that the hospital would not be hiring my client. When I asked why, the hospital’s counsel was very blunt. The hospital was not interested in going to court, even if it had a superb chance of winning. They were going to offer the position to another physician who “did not have a lawsuit attached.”

My client had executed the agreement with his prior employer under the assumption that the restrictive covenant was unenforceable. Although he was probably correct, he failed to consider that the market often enforces restrictive covenants that a court never would.

Who pays for tail coverage?

I represented another physician who was still smarting from the effect of a clause that had appeared innocuous to her in the employment agreement with the practice she had just left. She explained to me that her prior employment agreement provided that the practice would pay for malpractice insurance “during the term of this agreement.” On her last day of work, the practice manager approached her and informed her that it was her responsibility to purchase tail coverage. Luckily, she and her husband had been saving up money as a down payment for a new house. Unluckily, most of that money was spent purchasing tail coverage.

Sometimes an experienced attorney can spot issues that a legally inexperienced physician would not.

The moral of all these stories? What you don’t know can hurt you. I am obviously biased as somebody whose career is dedicated to reviewing physician employment agreements. Still, I think a physician should have an attorney well-versed in physician employment agreements review any employment agreement before signing on the dotted line.

Dennis Hursh is a physician contract lawyer. He blogs at Physicians Contracts Blog.

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