Employment & Consulting Agreements

Employment law issues arise at all phases of the business lifecycle for a healthcare practice or business.

Types of Employment Law Advice in the Healthcare Sector

Our clients seek advice on employment issues when initially structuring their business, and during the life cycle of the business. For example, our start-up clients may need:

  • Consulting Agreement
  • Employment Application & Employment Agreement
  • Employee Handbook
  • Employee Policies & Procedures
  • Social Media Policy
  • Workforce Training (particularly where HIPAA is involved)

In addition, our clients frequently seek legal guidance on a variety of employment-related issues such as:

  • Advice on classification (independent contractor vs. employee)
  • Mitigating the risk of Wrongful Discharge (and related claims)
  • Hiring and Firing employees

Our healthcare legal team has expertise in employment related questions and advises the healthcare venture on ways to mitigate risks related to employment liability.  Especially in states such as California, which offer strong legal protection to employees, it is critical to get focused labor law advice when dealing with employee matters.

Typical Terms in Healthcare Employee 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.

Physician Hospital Agreements and Clinician Employment Agreements

In the health care industry, our legal services include drafting and negotiating agreements for healthcare businesses and professionals. This includes: physician recruitment agreements, physician employment agreements, non-compete agreements, exclusive provider agreements, and other types of contracts in the health care industry. We can also draft agreements involving delegation of services — for example, between an MD and a physician assistant (PA).

Healthcare entities and facilities require unique advice in the contract drafting arena as they are often subject to extensive regulation beyond rules applicable to most employers and businesses. Local law can also significantly affect contract drafting.

For example, in California, issues of non-competes involved in employment and in the sale of a business frequently generate litigation. Our business and health care law attorneys are skilled in understanding the litigation background behind various contractual clauses and in advising clients accordingly so as to protect their interests in advance.

We also have extensive experience with corporate founders, shareholders and operating agreements, buy-ins, compensation arrangements, practice sales and purchases.

By drawing on the combined talents and experience of our attorneys, our clients will be aware of nuances of contracts and will comply with the requirements of state and federal fraud and abuse laws and other statutory and regulatory challenges unique to health care professional entities.

Regulatory Issues in Healthcare Industry Employment

In the healthcare arena, ’employment’ questions frequently turn out to involve regulatory questions such as:

  • The extent to which the corporate practice of medicine doctrine governs the ability of non-physicians (e.g., a non-clinician owner of a medical spa) from contracting with physicians for medical services;
  • Fee-splitting concerns;
  • Whether contracts that are potentially tainted by regulatory issues might be invalidated on grounds of public policy.

In such cases, we help our clients navigate the regulatory quagmire by analyzing potential business structures and recommending solutions that aim to enhance legal compliance and reduce regulatory and liability risk.


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