Firing a Physician: 3 Issues to Consider Before Termination

July 9, 2014

If you decide to terminate a physician or other provider at your practice, here are three key things to keep in mind to help your remaining staff and patients.

Terminating a provider from your practice is never easy. There are a multitude of reasons, however, why it may be necessary. When making a decision to terminate a physician or other professional provider, there are three key things to keep in mind:

1. What does your written contract require? Although many states are "at-will" states where you do not need a reason to terminate someone and no amount of notice is required, if you have a written contract, you must follow it. Most provider contracts require notice to terminate "without cause" which typically ranges from 30 days to 120 days in length. Many practices will opt to use a "without cause" approach to limit the likelihood of a wrongful termination lawsuit and to try to keep the relationship as amicable as possible; however, termination without cause often cannot work if the physician is difficult or poses a threat to the practice once notice has been provided.

A practice's agreements should allow for immediate termination of a physician once notice of termination without cause has been provided. Such a provision may require payment of compensation and/or benefits during the notice period. Practices need to remember that failure to follow this payment obligation will result in a breach of the contract by the practice. It's also advisable, before telling the provider not to work during the notice period, to make sure the practice can actually afford to pay the provider without the income the provider generates. Finally, if a provider is paid based on productivity, the contract should include language that states how the provider is to be paid during a notice period. Without this detail in the contract, the parties are very likely to get into a legal dispute.

2. When a provider has done something wrong, a contract may allow for termination of an employment agreement immediately. While termination due to loss of a license or conviction of a crime are easier to address, practices often struggle with situations involving unprofessional conduct, actions that impact a practice's reputation, or failure to complete medical records in a timely manner. Not only must the violation rise to a level of a breach to be able to terminate for cause, but if your contract allows for an opportunity to cure a breach, failure to provide such opportunity will cause the practice to be in violation of the agreement. Make sure your contracts allow the practice to decide which breaches are reasonably curable, and be wary of contracts that allow unlimited opportunities to cure every breach. This can lead to a "breach and cure" cycle that makes it impossible to terminate a provider.

It's challenging to think of all the possible ways in which a provider might breach an agreement. While broad termination provisions can be unfair to a physician, a practice often will need to use some subjective provisions to terminate a difficult physician. To craft the best possible provisions, talk with experienced counsel about situations that your practice may have experienced in the past or that counsel has seen with other practice clients. Be sure to also update your grounds for termination from time to time to match the changing healthcare environment. For example, fraudulent billing and failure to timely complete medical records are common grounds for terminations that might not have been included in provider contracts just a few years ago.

3. Physicians who have been terminated are often very angry. You can be sure you will hear threats of legal action and complaints that the terminated provider is being forced to "abandon" patients. Practices can rest assured that when there are multiple providers in a practice and arrangements are made to let patients know they can receive the care they need, there is little risk of abandonment. Informing patients who ask how to reach a departed provider and arranging for expedient and cooperative record transfer go a long way to minimizing risk on the part of the practice. Of course, angry physicians may still find other legal arguments to make.

Practices that have properly drafted contracts can easily minimize disputes that arise upon termination of a provider. The best advice: Plan for termination of a provider before the employment contract is even signed.