PEARLS AND
PITFALLS IN FINDING A MEDICAL GROUP: AN ATTORNEY’S PERSPECTIVE
By
Smeeta S. Rishi
Attorneys in the health care sector frequently serve as counselors to their
clients on business matters as well as legal matters. As a lawyer practicing
in the health care sector of the Bay Area for over 10 years, I am frequently
asked for my perspective on who a graduating fellow should seek employment
with, whether proposed terms in an employment situation are reasonable as
well as for legal advice in documenting the employment relationship.
An
employment agreement serves as a written record of the employer and
employee’s agreement in regard to the terms of employment and also contains
terms describing expectations that an employer will have regarding the
relationship which are frequently not discussed in interviews. Most
employment agreements cover the following topics:
1.
Compensation, including salary, bonus arrangements, employee benefits,
reimbursed expenses (such as relocation expenses, pagers, hospitals staff
dues and continuing medical education). This provision should reflect any
and all representations made to the physician by the employer during verbal
discussions.
2.
Services, including specific modalities if that was a part of the
negotiations, nighthawk call, if applicable, and other call
responsibilities. Frequently, especially in larger groups, the agreement
will state that call is shared on an equally proportionate basis with other
physician employees.
3.
Professional liability insurance. Specifically, the employment agreement
should state that the employer will provide professional liability coverage
and its limits during employment and also state who is responsible for the
cost of tail coverage upon termination of the employee’s employment.
4.
Time off – vacation, conference attendance, sick leave and disability leave,
and the compensation to be received, if any, during this period.
5.
Maternity leave issues - most states, like California, prohibit
discriminating against a woman for leave related to pregnancy and
childbirth. Accordingly, if the employer does not have a maternity policy,
disability leave provisions will govern during the period a woman cannot
provide services due to disability connected with pregnancy or childbirth.
Disability provisions do not cover time off to take care of a new baby upon
the termination of the disability leave. Federal law (applicable only to
employers with more than 50 employees) also provides for childcare leave
related to a new baby. Most states, including California, do not have
similar statutes. Maternity policies have been rare but are slowly becoming
more common as more women join the private practice of medicine.
6.
Years to partnership. Employment agreements will not guarantee that the
employee will become a partner but should state at what point the employee
will be considered for shareholder status. The agreement also most likely
will not state the buy in amount but should state the formula by which the
buy in amount is determined as well as the buy in period. Some medical
groups own little or no physical assets and are primarily hospital based.
These groups will probably not have a large value related to physical assets
but may have a significant accounts receivable buy in. Other medical groups
may own, in their professional practice or though affiliated entities, a
host of physical assets and this will have an obvious effect on the buy in
amount.
7.
Covenants not to compete. Employment agreements almost always state that the
employee may not engage in competing activities while employed by the group.
Some state that the employee may not compete for a specified period in a
specified geographic area after the termination of employment. California is
in a minority of states that only enforces such post termination covenants
not to compete against departing shareholders who are bought out of the
practice. It is very important to know the law of the state of employment
regarding the enforceability of the covenant in that state.
8.
Termination. Most employers reserve the right to terminate without cause.
Employers generally rely on this provision instead of having to build a case
and documenting it for termination with cause. Notice periods and severance,
if any, are important in this case. Also, especially in the rare
circumstances where there is no “no cause” termination, the causes for
termination of employment should be specific and give the employee the
ability to cure the cause to the extent possible.
I am
also frequently asked if employers are willing to negotiate their employment
agreements. Most small employers, especially at this time when physicians
are in demand, will negotiate. Some larger employers will negotiate as well.
But the institutional physician groups generally will not because they have
standardized documents.
Physicians should consult with a lawyer skilled at reviewing employment
agreements specifically for physicians. If the physician is unable to obtain
information on specific attorneys who have experience working with
physicians, he or she should contact the state or local medical society for
a list of lawyers they refer physicians to for employment contract review.
