Physicians entering into employment with a private medical practice, non-profit hospital, or for-profit hospital, are often required by these employers to sign a written employment agreement or employment contract that outlines the conditions of their business relationship. One area of particular importance is the specific details of the physician’s rights upon termination of employment with that employer. Unlike many other employees entering into employment, physicians are often required to accept restriction covenants or non-competition agreements that can significantly restrict their future freedom to practice medicine in the city or area in which they live and/or at the practice, hospital, or institution that they choose.
There are three major types of non-compete clauses which a physician may encounter. The first is a restrictive covenant which bars a physician from taking a new job either with a specific, named, medical practice or hospital which competes with the current employer, or one which is located within a specified geographical area, such as within 10 miles of the current employer. These distance requirements must be reasonable, to avoid unfairly restricting the physician’s right to practice his/her career. They also usually specify how long they will last, such as two years from the date of termination of employment, and this length of time must also be reasonable and fair.
A second type of restrictive covenant is a non-solicitation clause that limits the terminated physician from soliciting the employer’s patients or employees. Most problems arise in this area when exactly what is meant by the term “solicitation” is not clearly defined by the written employment contract. These stipulations must be reasonable as well, or they risk not being enforceable. The physician must also sign the clause at the time that the employment agreement is signed, or following a promotion or change in duties.
A third type of restrictive covenant is called the “anti-disparagement” clause. This clause restricts the terminated physician from saying negative things about the former employer after they leave the practice. Again, the term “disparage” is broad and can leave ample room for interpretation in any legal disputes that may occur. A physician can protect himself/herself from uncertainty by making sure that the terms of the disparagement clause are narrow and carefully defined and limited. No clause can prohibit an ex-employee from publicly revealing corrupt or unsafe practices, including Medicare fraud, insurance fraud, or violations of OSHA standards.
Many factors are considered in disputes involving non-compete clauses. The employer/employee relationship is closely examined in an attempt to ensure a reasonable settlement for both parties. Items such as the cause of the physician’s termination, the effect the decisions will have on both the employer’s business and the employee’s future earnings, and the size of the practice or institution and its client base, are all factors that affect a decision whether or not a court will enforce these contract terms.
Even an unintentional violation of these terms could lead to significant financial penalties for a physician.
Since most problems with restrictive covenants occur in the enforcement of the agreement, both the physician and employer should define their terms clearly and with careful consideration so that both parties have the same expectations. A competent and experienced health care lawyer can ensure that these rights are protected when drawing up a physician employment contract.
Philadelphia Health Care Lawyers of Michelman & Bricker, PC Negotiate Enforceable Physician Employment Contracts
Whether you are a physician or other healthcare professional entering into an employment agreement with an employer, it is imperative that the stipulations of your physician employment contract be spelled out to ensure enforceability. Failure to do so can have a significant impact on the potential of your future earnings. Philadelphia health care lawyers at Michelman & Bricker, P.C. have a proven track record of representing professionals in all of their legal needs.
Call 215-557-9440 or complete an online contact form to schedule a consultation today with our New Jersey Health Care Law Attorneys. Our offices are conveniently located in Cherry Hill, New Jersey, Philadelphia, Pennsylvania and Longmeadow, Massachusetts allowing us to serve clients in Harrisburg, Philadelphia, Cherry Hill and throughout Camden County.