Although, physicians are by no means expected to be experts at reviewing employment contracts, they should be able to review and understand the common terms and provisions on their own.
This week I worked with an attorney to answer a topic I get asked and approached on all the time. This is the second article of the 2-part series. The first can be found here.
A bad physician employment contract can affect not only work life, but home life, as well. Although, physicians are by no means expected to be experts at reviewing contracts, they should be able to review and understand the common terms and provisions on their own.
In the first part of this series, I covered terms of employment and termination; employment status; and restrictive covenants. Now, we’ll look at 2 more aspects of the employment contract.
4. Malpractice insurance and “tail coverage”
The consideration for malpractice insurance is:
• Who pays for the malpractice insurance
• The type: “occurrence” or “claims made” policy
• Policy limits (Coverage of $1 million per incident/$3 million in the aggregate is common. These numbers may depend on area of specialty and geographic location.)
There are 2 main types of professional malpractice insurance. One covers you when the act occurs—an “occurrence policy”—and the other must be in force when the act occurs and the claim is made—a “claims made policy.”
Tail insurance is a companion for a claims-made policy and is for the period of years that the statute of limitations would apply for a particular act of malpractice. Tail insurance needs to be in force if the physician ever discontinues malpractice insurance, usually when he or she leaves an employer, and the insurance through a new employer does not cover prior acts.
When considering a contract, physicians should know who will pay for tail coverage and make sure the agreement indicates this. Employers often pay for tail coverage, sometimes splitting the cost with the physician. However, if the employer does not pay for tail coverage, the physician may want to determine what the cost would be and get this cost addressed in the compensation portion of the contract.
5. Scope of employment and other related issues
Some other provisions that the physician may find in the contract may be:
• Employer responsibilities
These might include items such as providing office space, support staff, supplies, billing services, etc. Any expectations by the physician should be included in the agreement.
• Employee Responsibilities
Expected workload and patient volume is sometimes included in this section, but this is not frequent. A good contract will provide at least some detail about the physician’s typical schedule and duties and expectations about call duties.
If the physician is expecting special considerations such as part time work, a specific schedule or clinic, or certain parameters about call, it is important to spell this out in the agreement.
A contract that simply says the physician will “perform the usual duties of a physician” doesn’t give either party much information about the expectations of the other party. Some additional considerations:
• Is other outside employment permitted by the physician? If the physician anticipates “moonlighting,” it should be negotiated and included in the agreement. In one contract I reviewed, there was a “Loyalty” provision that said the physician was to work for the Corporation and may not engage in the practice of medicine except pursuant to this agreement. It went on to say that if the physician received any fees or income from professional services, such as speaking or publishing, they belonged to the Corporation. In addition, the physician needed to get prior approval for such activity from the Corporation, even though the Corporation would receive all fees.
• Who owns the physician’s research and writing: the employee or the employer?
• Are there any processes for dispute resolution such as arbitration? Who pays attorney fees, etc? Many non-compete clauses require the physician to pay the employer’s attorney fees. There usually is not a reciprocal provision if the physician has to enforce a contract provision.
Medical school teaches you how to be a good doctor, but not a good lawyer or businessperson. Get educated, then hire a good attorney who is familiar with physician needs and physician contracts to protect your rights and livelihood.
The Robert Kaufer Law Firm is not affiliated with North Star Resource Group, North Star Consultants, Inc., CRI Securities, LLC or Securian Financial Services, Inc.
Jon C. Ylinen is a Financial Advisor with North Star Resource Group and offers securities and investment advisory services through CRI Securities, LLC. and Securian Financial Services, Inc., Members FINRA/SIPC. CRI Securities, LLC. is affiliated with Securian Financial Services, Inc. and North Star Resource Group. North Star Resource Group is not affiliated with Securian Financial Services, Inc. but is independently owned and operated.
Please consult a financial professional for specific advice in relation to your individual circumstances. This should not be considered as tax, specific loan repayment for an individual or legal advice. This is not a recommendation of any strategy or product in particular.