The 3 biggest traps to watch out for in physician employment contracts

Learn the major pitfalls to navigate, how to protect yourself and how COVID is impacting contracts.

Since 1992, Dennis Hursh, JD, has been a physician’s contract attorney. In an upcoming American Osteopathic Information Association webinar, Hursh will discuss the biggest traps found in physician employment contracts, including commencing employment, restrictive covenants and malpractice insurance coverage.

Hursh’s webinar, which takes place on Nov. 17 at 7 p.m. CT, will also cover other concerns about physician employment contracts as well as ways doctors can protect themselves. A live Q&A session will follow. Webinar participants will receive a copy of Hursh’s book The Final Hurdle: A Physician’s Guide to Negotiating a Fair Employment Agreement. The webinar is $50 for AOA members, $80 for nonmembers and $30 for residents and offers 1.0 2A CME credit. The book is also available for standalone purchase from the AOA Store.

In this edited Q&A, Hursh goes over common contract pitfalls, COVID’s impact on contracts and more.

What are the three biggest traps that physicians should be looking out for their employment agreements?

One is—people never think about it—when do you start work? People sign these contracts and say, “I have a commencement date of Feb. 1, 2022,” and so as far as they’re concerned, they know when they’re going to start work. Of course, there’s this legal mumbo jumbo about being fully credentialed. I’ve seen a lot of people trapped by not being clear on when exactly they start and what needs to be accomplished before that date.

The other two are more when you leave. The first is malpractice insurance and, specifically, tail coverage. There are two kinds of malpractice insurance. Occurrence-based coverage covers you during and after the policy period, so you don’t have to worry about tail. Claims-made insurance, which is more common, only covers you while you hold the policy. So if your agreement terminates Dec. 31 and a claim is filed Jan. 1 of the next year, you don’t have insurance. To cover yourself, you have to buy what’s called “tail,” and that can be very expensive. That can be as much as three- or four-months’ salary. That’s something that frequently is not addressed in the contract.

Then, the third is a covenant not to compete. That’s simply an agreement that says after you leave employment, you won’t, and then fill in the blank. I’ve seen some that say you won’t practice medicine within 65 miles of our location. The provisions and the details of the covenant not to compete are really important.

Has anything regarding physician employment contracts changed due to COVID?

A little bit and not for the better. Frequently, there have been acts of God force majeure as a legal term. Things that say in case of floods, civil disturbance or war, the hospital can terminate the agreement. Now I’m seeing employees add “or pandemic,” and that’s kind of bad because it means that they can just terminate the agreement, sometimes immediately, which I think was maybe a little more reasonable in March of 2020 when the pandemic started and nobody knew what was happening.

But at this point, I don’t think an employer should be able to say, “Oh, it’s force majeure. There’s a pandemic. For that reason, we’re letting you go immediately with no severance, no nothing, we’re just using this force majeure clause.” I’ve seen that tied into the start date, which never used to happen.

What can you tell us about the legality of noncompete clauses?

Totally legal. Sometimes a court will strike some because they’re too broad.

What are some ways physicians can protect themselves?

Regarding the start date, I try to get a provision that says we’ll negotiate in good faith. It depends, of course, on the payer, but for instance, if a pediatrician isn’t credentialed through Medicare, that’s probably not a very big deal. But if a geriatrician isn’t, that is a big deal. On malpractice, a lot of times, you just have to ask, but a lot of times you can compromise. Maybe the employer won’t pay 100% of the tail, but I always ask for 1/3 of the tail for every year of service.

How long have you been a physician’s contract attorney and what first interested you in the field?

It’s been a little bit over 30 years and I kind of fell into it. To be honest, it wasn’t that I set out to be a physician’s contract attorney. First, I started doing some physician hospital organizations. I set up quite a lot of physician organizations across the state of Pennsylvania, and by doing that, I met a lot of physicians and I started hearing the same issues over and over again. That’s how I started representing physicians and sort of never looked back! I still feel I’m on the right side of this equation.

Related reading:

5 tips for landing your first job after residency

Physician employment: 6 steps to locking down your dream job

One comment

  1. Phillip Snider, DO

    Mr Hursh said he advised to ask for 1/3 of the tail be paid for by the employer for every year of service. Does that mean after 3 yr, the entire tail coverage will be paid for by the employer or, that 1/3 of the price will be covered for each year of the tail coverage period?

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