By Guest Contributor Leigh Ann O’Neill for Lauth O’Neill Physician Agency
This week on ThriveAP, we’re featuring the top reasons nurse practitioners and physician assistants would be wise to have a set of legal eyes look over an employment contract before signing on the dotted line. If you missed the opening post in our series, Top 10 Reasons NPs & PAs Should Seek Legal Review of Employment Agreements from our employment contract review expert, you can find it here.
To continue with the top 10 list, here are some additional reasons nurse practitioners must do due diligence before engaging in an employment contract.
When a nurse practitioner receives an employment offer, her eyes are bound to go straight to the compensation provision, paying little to no attention to the remaining terms. While the compensation offered is certainly important, there are additional provisions of any given contract that are even more likely to affect your day-to-day life and lifestyle.
For instance, employment agreements often dictate whether a provider will have on-call responsibilities, however, those responsibilities are often laid out in a very vague way. Such ambiguous terms often put nurse practitioners and physician assistants in a position of agreeing to responsibilities that are completely open-ended and undefined – basically an “agree now to what we may or may not dictate later” sort of situation. Not good. Employment agreements similarly often dictate that a provider will be responsible for certain administrative duties, with the extent of these duties being undefined. Agreeing to such responsibilities without an understanding of what they entail can have serious effects on your practice and quality of life.
Aside from contract provisions relating to aspects that are analogous to medical practice, there are many that influence your life in more direct and significant ways. Practice locations, for example, are often undefined and may require a provider to serve any and all existing and future locations. You may assume that this is standard, but consider the potential repercussions. If a new practice location is opened an hour drive away from your home and you are subject to serve it, your daily life could be greatly impacted. Consider also if a contract requires your residency within a particular county, zip code or mile radius of a practice. Such fine print is often overlooked and can have enormous effects on your life and the life of your family.
5. Legal Provisions That Have Far-Reaching Effects.
Employment agreements are full of legal verbiage and phrases, which should come as no surprise because they are legally-binding documents written by lawyers. Aside from the general organization of a contract and its components that are required to make it an enforceable contract, the actual content and provisions that directly dictate your life and career can be overwhelming.
Perhaps the most significant of these legal provisions is the Restrictive Covenant. Restrictive covenants, otherwise known as “Covenants Not to Compete”, are found in nearly every single physician and advanced practice provider employment agreement that we review. The purpose of restrictive covenants is to limit a provider’s ability to practice medicine for a specified duration of time and in a particular geographic region following the term of employment outlined in the agreement. In other words, the employer is saying: When you’re done working for us, we don’t want you to work in X region for X amount of time. Kind of crazy, right?
Restrictive covenants are even more daunting in that they are almost always enforceable by means of injunctive relief. An agreement’s restrictive covenant provision will usually provide the employer with the right to injunctive relief in the event of the provider’s violation (or even threatened violation) of the restrictive covenant. An injunction is a remedy used in civil suits whereby a specified behavior is prohibited. Therefore, when injunctive relief is used to enforce a restrictive covenant, the employer will seek a court order prohibiting the provider from practicing medicine. The effects of this can obviously be dire, given that you can literally and legally be prevented from working.
While some sort of restrictive covenant is found in almost every employment agreement, whether or not the covenant is enforceable is another question. The enforceability of restrictive covenants is based on state-specific law and only an attorney licensed in a given state can speak to whether or not the restriction is reasonable and enforceable. Some states are more “employee-friendly” and have very strict limits as to how an employer can limit individuals’ right to work. The only way to get a clear understanding of what a restrictive covenant means and how it will apply to your life and work is to have it reviewed and analyzed by counsel. Additionally, attorneys experienced in physician and advanced practice provider employment matters are familiar with negotiating these provisions, and can offer various approaches in order to satisfy the needs of the employer while simultaneously making it more favorable to the provider.
Employment agreements also often include other provisions and restrictions that, once identified and analyzed, are really not fair to employees at all. Sometimes these provisions are sort of snuck in among other terms and therefore providers sign the agreement without even realizing what they’ve agreed to. An example is a contract term that irrevocably assigns to the employer all right, title and interest in inventions, discoveries, patents and ideas that the employee develops. In other words, if the employee develops any potentially money-making ideas while working for the employer, the employer will be entitled to that money and the employee will have no rights to it at all. Sometimes these provisions even extend beyond the term of employment, so that if the employee develops anything in the year or two following the contract term, those rights will still be assigned to the employer. Additionally, we have also seen such provisions attach to inventions and patents that an employee completed before even working for the employer. These types of provisions are clearly worrisome, and the cause for concern is two-fold: first, employees often do not realize what they are agreeing to when they sign an employment agreement containing a provision like this, and; second, employers position themselves to unfairly and unjustifiably benefit from an employee’s hard work that had nothing to do with the employer.
6. Potential Liability for Events Out of Your Control.
Employment contracts often contain provisions that put employees on the hook for potential liability arising from various events and circumstances that are out of the employee’s control. Conversely, employment contracts often exclude language that would indemnify employees from particular sources of liability. As attorney-agents working on behalf of physicians, nurse practitioners and physician assistants, our job is to identify those potential sources of liability and amend the applicable contract language so that our clients are not held accountable for issues or circumstances that are outside of their control.
One potential source of liability that we regularly work to avoid is damages arising out of coding, billing and collection practices. When a provider works for an employer, whether it is a hospital or private practice, the responsibility to bill and collect for the provider’s services is almost always placed on the employer. This work is typically done by billing staff who use provider numbers to enter the information and then bill and collect for the services. In the event that the billing staff makes an error while using a physician or advanced practice provider’s provider number, the provider may be held accountable, despite the fact that it was actually the billing staff that made the error.
Another area that we often see providers placed in unfair positions is with regard to termination provisions. Most employment agreements contain both “without-cause” termination provisions and “for-cause” termination provisions. Generally, the for-cause provisions indicate that the employee can be immediately terminated if she commits certain acts of wrongdoing, such as being convicted of a crime or losing her license to practice medicine. However, employers sometimes try to include for-cause termination provisions that are completely out of the employee’s control. One example is a provision that reads: Employer shall have the right to immediately terminate the Agreement, without prior notice, in the event of the bankruptcy, receivership, dissolution or merger of the Practice. Provisions like this are troublesome, as it does not seem fair or reasonable to terminate an employee immediately and “for-cause” based on the employer’s insolvency or change in business organization.
The final reasons you should have an attorney review your employment agreement coming soon to the ThriveAP blog!
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