UNIQUE ASPECTS OF EMPLOYMENT AGREEMENTS FOR PHYSICIANS
(CON'T)
By
Smeeta Rishi
The following is an example of a
combined confidential information and nonsolicitation provision:
Patient Information.
Employee acknowledges that during the course of employment, Employee shall
render services to various patients of Employer and that (a) Employee shall
have the opportunity to and will become personally acquainted with those
patients, will establish a confidential physician-patient relationship and a
personal and professional rapport with those patients; (b) various of those
patients may come to regard Employee as their personal physician and will
repose faith and confidence in Employee and develop loyalty towards Employee
as their personal physician; and (c) Employee shall have access to and
become acquainted with (i) Employer's patient list; (ii) the names,
addresses and telephone numbers of Employer's past and present patients;
(iii) Employer's patients' charts and files; (iv) the medical history of
such patients; (v) the present and future needs and requirements of
Employer's patients' professional services; (vi) the preferences, dislikes
and likes of certain of Employer's patients concerning professional care;
and (vii) the payment histories and medical insurance coverage of Employer's
patients, all of which is hereinafter referred to as "confidential patient
information."
Referral Information.
Employee acknowledges that during the course of employment, (a) Employee
shall be assigned patients referred by physicians in the community; (b)
Employee shall have the opportunity and will become personally acquainted
with the referring physicians; (c) Employee shall have the opportunity to
and will establish a confidential professional relationship and personal
professional rapport with one or more of the referring physicians; (d)
various of the referring physicians will come to repose faith and confidence
in Employee's professional abilities; and (e) Employee shall have access to
and become acquainted with (i) Employer's list of referring physicians; (ii)
the names, addresses and telephone numbers of Employer's past and present
referring physicians; (iii) the present and future needs and requirements of
Employer's referring physicians; and (iv) the preferences, likes and
dislikes of Employer's referring physicians concerning professional services
provided by Employer, all of which is hereinafter referred to as
"confidential referral information."
Administrative Information.
Employee acknowledges that during the course of employment, Employee shall
become familiar with Employers business plans, marketing strategies,
financial information, third party payor contracts, protocols, pricing
information, and other similar and various forms and documents which
Employer has developed for use in the conduct of its medical practice and
management of its offices, all of which are hereinafter referred to as the
"confidential administrative information."
Confidential Information.
The confidential patient information, confidential referral information and
confidential administrative information are hereinafter sometimes referred
to collectively as the "Confidential Information." Employee acknowledges
that (i) Employer's patient and referral patronage exists as a result of
recognition of Employer's name and reputation in the community as competent
medical practitioners; (ii) such name recognition and reputation developed
after years of Employer's and its shareholders' efforts; (iii) the creation
of the patient and referral patronage and the confidential administrative
information required Employer to invest substantial time, money and effort
over a period of years; (iv) that all of the Confidential Information is
owned by Employer and regularly used in the operation of its business; and
(v) that the Confidential Information is a valuable asset and comprises a
substantial portion of Employer's goodwill.
Employee further acknowledges that the
Confidential Information is not readily accessible to other health care
providers, that it would be difficult, if not impossible, for any person
outside of Employer's organization to identify Employer's patients or
referring physicians or to replicate its confidential administrative
information without access to such information; that Employer's patients and
referring physicians do not ordinarily patronize more than one service
provider for the professional services rendered by Employer; and Employer
enjoys an established relationship with its patients and referring
physicians which normally continues uninterrupted.
Based on the foregoing Section, Employee
acknowledges and hereby agrees that the Confidential Information constitutes
confidential business information and a trade secret of Employer and agrees
that Employee shall not disclose any of the Confidential Information,
directly or indirectly, or use it in any way during the term of this
Agreement, except as may be required in the course of performing Employee's
obligations hereunder, or at any other time thereafter. Employee further
agrees to refrain from soliciting or attempting to solicit, whether for
Employee's own account or on behalf of any other person or entity, any
patient or referring physician whose name appears among the Confidential
Information for the provision of services which are the same or similar to
the professional services rendered by Employer.
The parties agree that damages are an
inadequate remedy for, and Employer would be irreparably damaged by, any
breach of this Section. Accordingly, the parties agree that Employer shall
be entitled to equitable relief in the form of a preliminary or permanent
injunction upon any breach of the provisions of this Section. The remedy
provided for in this paragraph is not intended to be exclusive and shall be
in addition to all of the remedies available under law or in equity.
VII. Dispute Resolution
Arbitration has become the preferred way
to resolve disputes between employers and employees. Arbitration is
contractual; accordingly, the contract must contain an arbitration provision
in order to require the parties to arbitrate rather than try issues in a
court of law. Arbitration has gained favor for several reasons including
conclusion of the matter in a much smaller time frame and, in most cases,
less expensively, that adjudicating the dispute in the court system. From
an employer’s perspective, another major advantage for choosing arbitration
to resolve an employment dispute is the elimination of the uncertainty of a
jury trial.
An arbitration provision should specify
each of the following:
a. The service that will conduct
the arbitration. Many commercial services are available. The American
Arbitration Association has a specific set of rules for adjudicating
employment matters. The American Health Lawyers Association also as an
arbitration service.
b. Allocation of the costs of
arbitration. Employment agreements favoring employers generally do not
provide for the prevailing party being entitled to reimbursement of its
costs and attorney fees. Employment agreements favoring employees do
generally contain such a provision as it is generally more likely that the
employee will bring an action. The California Supreme Court recently held
that pre-dispute arbitration agreements may be enforceable if (1) they
contain no limitations on damages recoveries; (2) they allow for adequate
discovery; (3) the arbitrator issues a written decision, which then is
subject to limited judicial review; (4) the employee is not required to pay
for the arbitration costs; and (5) the arbitration obligation is mutual.
Courts have held that the employer must pay the forum costs of arbitration.
As a result of this case, consideration should be given to the arbitration
provision requiring an employer to pay for the forum costs of the
arbitration with the respective parties paying all other costs they incur
relating to the arbitration. This is particularly true for employment
agreements governed under the laws of the State of California.
c. The arbitration provision
should cover all claims arising under federal and state law as well as
contractual claims. For example, the provision should specifically include
claims arising under Title VII, the Americans with Disabilities Act, the Age
Discrimination In Employment Act and their state counterparts. The
arbitration provision should recognize that claims arising under certain
statues may provide for the employee to recover attorney fees if he or she
prevails.
The following is an example of an
arbitration provision:
Subject to the parties’ right to apply for injunctive relief as set forth
above in Section [__], any controversy or claim arising out of or related
to, the employment relationship between the parties as well as this
Agreement, or the breach thereof, shall be settled and decided by one
arbitrator pursuant to arbitration conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association
("Rules"), as then in effect, unless the parties hereto mutually agree
otherwise in writing. Any such arbitration shall be held and conducted in
[______], in accordance with the provisions set forth in said Rules. The
award rendered by the arbitrator shall be final, and judgment may be entered
upon it in accordance with applicable law in any court having jurisdiction
thereof. The demand for arbitration shall be made within a reasonable time
after the claim, dispute or other matter in question has arisen. In no
event shall the demand for arbitration be made after the date when
institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statute of
limitations.
Employee understands that this arbitration
agreement covers any claims that Employee might bring under Title VII, the
Americans with Disabilities Act, the Age Discrimination In Employment Act,
and the [California Fair Employment and Housing Act]. However, claims under
applicable workers’ compensation laws or the National Labor Relations Act
shall not be subject to arbitration.
If any party prevails on a statutory claim
which affords the prevailing party attorneys’ fees, then the arbitrator may
award reasonable attorneys’ fees and costs to the prevailing party.
Employee understands and agrees that this arbitration agreement contains a
full and complete statement of any agreements and understandings regarding
resolution of disputes between Employer and Employee, and supersedes all
previous agreements, whether written or oral, express or implied, relating
to the resolution of disputes between Employer and Employee. Employee
further understands that this arbitration agreement cannot be modified
except in a written document signed by both the Employee and the an
authorized officer of Employer and authorized by the Board.
Employee understands and agrees that this agreement to arbitrate constitutes
a waiver of Employee’s right to a trial by jury of any matters subject to
arbitration under this Agreement.
VIII. Amendment to Agreement
Employment agreements generally state
that they may be amended only with the consent of both parties. If the
employer has more than a few employees in the same class and particularly in
the shareholder class, the amendment provision should also state that the
employer has the right to unilaterally amend the employment agreement with a
super-majority vote of the shareholders (such as 75% of the shareholders),
provided that (i) the amendment is equally applicable to all employees of
the same class, (ii) it does not affect rights which may have already
accrued and (iii) the employer provides written notice to the shareholder of
the amendment. Without such a provision, the employer would need to have
unanimous approval to modify the employment agreements of the same class of
employees. As the health care industry changes, the need for flexibility
becomes more critical.
IX. Medical Records
The employment agreement should clearly
state that the medical records relating to patients seen by the employee
during the scope of employment shall remain in the custody and control of
the employer upon the employee’s termination of employment. The provision
should further state that the employee shall not be entitled to copy or keep
any portions of the records upon or after the termination of employment.
This provision may further state that the employer will grant the employee
access to a particular medical records if the patient brings a malpractice
action against the employee. Most state laws relating to medical records
require the employer to provide a copy of the record to another physician,
including the departed employee, if a patient requests so in writing.
Employers should be advised of their obligations to provide such records
upon receipt of a patient request, notwithstanding anything to the contrary
set forth in the employment agreement.
Page
1 |
2
