Employment & Consulting Agreements

While employment agreements are familiar to employer lawyers, the employment contract for a healthcare provider does have some legal twists and turns. For example, the employee in such case is offering professional services (such as, for example, medical or nursing services) and thus is subject to the regulatory requirements of their respective profession and governing body (such as the medical board).

The employee may be required, for instance, to maintain current licensure with the relevant licensing board; to be current on continuing education requirements; to be appropriately credentialed by the respective professional body; and otherwise to be in good standing in their profession. The employee may be required to keep the employer informed of any loss of hospital or other medical privileges, for instance. For example, this is a typical provision regarding Notification of Adverse Professional Action:

During the term of this Agreement, Physician shall notify Employer immediately, or as soon as is possible, in the event that Physician receives notice of any of the following:

1. Physician’s license to practice medicine in any jurisdiction is suspended, revoked, or otherwise restricted, or any such action is pending;
2. A complaint or report concerning Physician’s competence or conduct is made to any state medical or professional licensing agency, including without limitation, the Medical Board of Colorado;
3. Physician’s privileges at any hospital, health care facility or under any health plan are denied, suspended, restricted, terminated, not renewed or voluntarily relinquished;
4. A legal action is commenced against Physician, including but not limited to a filed and served malpractice suit or arbitration action;
5. Physician’s DEA certificate, if any, is being, or has been suspended, revoked or not renewed;
6. Physician is convicted of a crime (excluding minor traffic violations); or
7. There is a material change in any of the information which Physician has supplied to Employer concerning Physician’s professional qualifications or credentials.

As well there may be specialized provisions with respect to billing.  The employment agreement should clarify who is responsible for billing and coding, who accepts payment from the patient, whether the physician is responsible to turn remuneration over to the medical group or other employer, and so on.
The physician employee may be required by the employment agreement to join in any agreements with third-party, commercial insurers where the employer has signed a participation agreement.

With our physician clients, often the employer has inserted a non-compete clause, that well may be enforceable—depending on the state in question—and can be successfully challenged.  It is better for the physician to negotiate this clause at the outset of the bargaining, than to sign the agreement, live with the non-compete, and try to challenge it later, when the parties are in a litigation posture.

From the employer perspective, confidentiality and trade secret is particularly important.  For example, there are business interests as well as professional ethical requirements related to:

• Who owns the medical records
• Who must inform the patient, with what notification, when the physician leaves the practice or business
• What are each party’s compliance obligations with respect to privacy and security (including HIPAA)

And, the parties will make an agreement regarding intellectual property—for example, the employer will want to treat the employee’s work product as a “work for hire” that is solely owned by the employer.

The healthcare employer and employee also will have to agree on which one of them pays for the healthcare professional’s malpractice liability coverage, and on what will be the per claim and aggregate limit of this coverage. Other typical terms include indemnification, termination, and dispute resolution.