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recent article in Part B News examined the issues that arise for practices when a provider is hit with medical board sanctions, and how that can be anticipated and mitigated in physician contracts. Here with further thoughts on the subject is David N. Vozza of the healthcare practice group at the Norris McLaughlin law firm in New York City, who regularly defends health care professionals in such situations.
Is it common in physician employment/partnership contracts to stipulate sanctions, with or without encumbrances, as a cause for dismissal?
Vozza: Physicians and medical practices are well-advised to take special precautions when entering into employment and partnership agreements. While parties to these arrangements generally come into them on good terms and with the best of intentions, it is essential that the written agreements memorializing the same contain an adequate “exit strategy” if one party is not able to comply with its obligations. For example, what recourse does a medical practice have if an employed physician loses his medical license? Conversely, what remedy does an employee have if the medical practice is excluded by Medicare?
Most physician agreements contain “Termination for Cause” provisions whereby the respective parties are able to terminate an arrangement should certain adverse events, specified therein, occur. Examples of adverse events are loss or restriction of a medical license, exclusion or sanction by Medicare or conviction of a crime. It is important that healthcare counsel review and negotiate the terms of such provisions to include a thorough list. No healthcare practitioner or practice should enter into an agreement that does not contain such a provision.
What are the options for medical practices that employ or partner with providers if there is no such language in the contract? And how should the practice handle a situation in which a provider's sanction becomes known to concerned patients?
Without such a provision, parties may encounter great difficulty separating from “bad actors.” I can think of no bigger disaster than a medical practice having to continue paying a physician who, as a result of a licensing action, cannot treat certain patients. In such a scenario, parties may be forced to unilaterally terminate, an action that may lead to costly litigation. Juxtaposed against the damage to reputation should patients become aware or the increased costs of liability insurance, the risk of litigation may very well be worth it.
If their sanction affects a group's liability insurance burden, has the practice any option for recouping it from the provider?
It depends on the terms of the contract. Some contracts provide that the practice will only cover the premium for the professional liability insurance if it is within the reasonable amount for that particular professional, and the excess is the responsibility of the physician. Also, excessive professional liability premiums in some instances can trigger a termination provision, so the practice can discuss with the physician if they would cover the difference in lieu of termination.
And how should the practice handle a situation in which a provider's sanction becomes known to concerned patients?
This is a delicate situation because the practice does not want to disparage the disciplined physician. I would suggest that the practice works together with the physician to identify what information will be disclosed to patients and how. If the physician will continue to be part of the practice, it is in the best interest of both sides to listen to the patients’ concerns and ensure that those concerns are addressed.