Parting ways with a provider

September 21, 2018
Ericka L. Adler, JD
Ericka L. Adler, JD

Shareholder at Roetzel & Andress

Terminating a provider’s employment with a physician practice is a sensitive process that needs to be handled with care.

Physician practices are often unsure how to terminate a provider and what steps are needed to reduce their risk in the process. Below are some different situations and suggestions for handling employed-provider terminations at a physician practice:

Terminating someone without cause

  • Check the written employment or related agreement with the provider to be certain how much notice is required.

  • Confirm how notice is required to be made under the agreement, and be sure to satisfy those requirements. Emailing a notice to a provider when the agreement requires an in-person notice or certified mail will fail the notice requirement and may require additional notice be provided.

  • If a practice does not want to let the terminated provider work during the notice period, the practice should look in the agreement for guidance on how the provider is compensated during this time. In the event the agreement doesn’t specify, I recommend finding a fair compromise based on how the provider was previously paid. The goal should be to limit risk as well as practice liability. In the end, it often costs less to pay the provider more than to involve legal counsel.

  • Don’t share any reasons for the termination even if asked. The reason “without cause” is used is to avoid this very discussion.

 

Terminating someone with cause

  • Make sure the reason the practice is terminating the provider is actually in the provider’s agreement or is otherwise a clear breach of it.

  • The practice may be required under the agreement to provide a written notice of termination for cause and an opportunity for the provider to change behavior. If so, the practice must satisfy this requirement for the termination to be legitimate. Terminating without providing a required opportunity to cure can lead to liability, and legal fees, for the practice.

  • The practice should always consider whether it might be easier to use a “without cause” termination approach even if the practice believes there is cause. The expense associated with providing notice and paying a provider for the without cause notice period can often be less than the legal fees associated with a disputed “for cause” termination.

  • Document the “for cause” reasons that led to termination and any cure opportunity provided. In the event of a lawsuit related to the termination, it will be important that the practice can support its actions.

 

When to talk to counsel

Here are a few situations where it is advisable to consult with counsel.

  • Is the provider to be terminated within a protected group (i.e. age, race or sex)?

  • Has the provider been taking disability leave, family or medical leave, or is she pregnant or on maternity leave?

  • Has the provider complained about lack of compliance or violations of any state and/or federal laws? Has the provider filed a claim against the practice related to any law?

  • Has the provider made an accusation of mistreatment, harassment, or another similar claim? Has the practice investigated and followed through?

 

Process of separation

If the above conditions have been met, I often recommend the parties enter into a separation agreement. There are many positives to signing a separation agreement, including:

  • Having the parties clearly establish the date that (proper) notice was provided and date that the termination will be effective.

  • Clarifying rights to claim unemployment.

  • Confirming provisions of the provider’s agreement that will remain in place post-termination, such as noncompete provisions, non-disparagement provisions, or terms of confidentiality. The separation document can also confirm the provider’s rights to The Consolidated Omnibus Budget Reconciliation Act (COBRA), vesting, and similar language.

  • Specifying what the practice intends to pay the terminated provider for, including any remaining compensation, personal time off, bonus, or other amounts based on the agreement. The practice should also provide a schedule for such payments.

  • Releasing both parties from liability and other claims that either party may have against the other. This language should be reviewed by legal counsel to be certain all relevant laws that apply to the provider under state and federal laws are properly addressed. It’s also important to note that this kind of release typically requires some consideration from the practice to the provider. The practice may consider paying some additional compensation for the provider in exchange for executing the release.

Terminating a provider’s employment with a physician practice can be a very sensitive process and should be carefully handled. Properly written contracts that spell out the reasons and manner in which a provider can be terminated are a great place to start. It’s always a smart idea to discuss the termination process with counsel to be sure the practice is protected as much as possible.

Ericka L. Adler has practiced in the area of regulatory and transactional healthcare law for more than 20 years. She represents physicians and other healthcare providers across the country in their day-to-day legal needs, including contract negotiations, sale transactions, and complex joint ventures. She also works with providers on a wide variety of compliance issues such as Stark Law, Anti-Kickback Statute, and HIPAA. Ericka has been writing for Physicians Practice since 2011.