Telemedicine Agreements: How to Spot That Hidden Penalty Clause
In the last video, we were talking about Dr. Bob who got a two-million-dollar contract with a hospital to provide telemedicine services. Unfortunately, Dr. Bob didn’t get the last bit of legal advice he needed. He skimped on the small retainer and found the hospital later exacting a million-dollar penalty.
How did this all play out, and what can we learn from this unfortunate scenario?
I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. Since 1999, we’ve had the honor of representing hundreds and hundreds, possibly thousands of healthcare clients on healthcare and FDA legal issues. I spent five years on faculty at Harvard Medical School and Harvard School of Public Health, developing legal programs to govern integrative medicine, and I’m a big fan of multidisciplinary approaches to healthcare, and healthcare innovation.
Dr. Bob called when he was going through all this and asked: How could we let him sign Appendix Z?
Well, first of all, we can advise our clients not to agree to certain provisions, but if they insist on agreeing and taking certain risks and doing so anyway, that’s their business judgment.
More important, because that’s not what happened here, is that we did not have Appendix Z anywhere in our files. Our files only went up to Appendix Q. And so we asked Dr. Bob to email Appendix R, S, T, U, V, W, X, Y and Z, which Dr. Bob had never sent to us, during his many months away. So this has been an appendix that we didn’t even know existed, even though we’d asked our own client for the complete file.
It turns out that the hospital had snuck in this Appendix Z into the client’s agreement at the 11th hour, and Dr. Bob, keen to strike the deal, not wanting to spend any more money in legal representation, just signed it away. So, what happened was he saved about $1,000 on legal fees but he incurred a $1,000,000 liability, and what he actually did was have his ex-wife who promised that her brother, a lawyer, would do so for free.
So now Dr. Bob owed a lot of money, and he was in a quandary. What to do?
Rudyard Kipling, author of The Jungle Book, wrote these lines:
“NOW this is the law of the jungle, as old and as true as the sky,
And the wolf that shall keep it may prosper, but the wolf that shall break it must die.
As the creeper that girdles the tree trunk, the law runneth forward and back;
For the strength of the pack is the wolf, and the strength of the wolf is the pack.”
So in this case, the wolf pack was the hospital, and unfortunately this is a really bad deal. You got to watch for the law of the jungle. The law of the jungle is the one you mustn’t bungle. Here, the hospital took advantage and the client didn’t bother to get the advice and a lot of stuff happened in the interim and the price was paid.
So that’s why we say: “Don’t roll the dice, get legal advice”
The wolf that wants to protect its pack will look to legal advice and a solid contract.
Anyway, thanks for watching and we look forward to speaking with you soon. And remember, have your contracts reviewed. Don’t sign until the review is complete. If you don’t, there can be consequences. Get a legal review, we look forward to talking with you soon.
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