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Term/Termination
Physicians are often told by prospective employers that they are
being offered a multi-year contract. Yet, the contracts often allow
the parties to terminate for any reason (i.e., without cause) at any
time on relatively short notice (e.g., 60 days). The contracts also
typically include "for cause" termination provisions (typically for
a physician's egregious conduct, loss of licensure, etc.) allowing an
employer to immediately terminate. These provisions are often
based on subjective factors and drafted too broadly.
When assessing the impact of termination provisions, physicians should ascertain what the fall-out will be under "without
cause" and "for cause" circumstances. That is, whether (or under
what circumstances of termination) the physician will be liable
for tail coverage (as discussed above), will have to repay a sign-on
bonus, moving expenses, loan amounts or other items, or will lose
a productivity or quality bonus or other compensation. Physicians
should try to limit such losses and repayments as much as possible.
Negotiation Tip: Ascertain if it makes sense to seek a "no cut"
deal where neither party has the right to terminate the contract
"without cause" for 1 or 2 years; this will usually limit the possibility the physician will have to repay certain items. Also, if a
significant obligation (such as tail purchase) is triggered by a "for
cause" termination, try to negotiate objective, narrow "for cause"
provisions so that an employer cannot use a "for cause" reason as a
basis for getting out from under an obligation it would otherwise
have. Physicians should also seek to reduce repayment obligations
by negotiating burn-offs that gradually reduce repayment amounts
over the course of one or two employment years.

Non-Compete Clauses
Non-compete clauses typically limit physicians from practicing within certain geographic areas (usually based on mileage as
a radius around a location or multiple locations) for a period of
time after contract termination. Most states uphold non-compete
restrictions that legitimately protect an employer from unfair competition and that are reasonable in geographic area and time. Time
restrictions of one to two years are usually upheld as reasonable;
reasonableness of mileage restrictions usually depends on whether
the employer is in an urban, suburban or rural area (e.g., a 10-mile
non-compete may be reasonable in a suburban locale, but unreasonable in the heart of a city).
Physicians should carefully analyze non-compete restrictions
and ascertain all locations from which a mileage restriction applies.
Helpful tools (e.g., freemaptools.com or tjpeiffer.com/crowflies.
html) can facilitate examination of the anticipated restricted area.
If a restricted area is extensive and applies to several of an employer's sites/locations, the physician should ascertain if he/she will
have to relocate upon termination of employment.

damages which can be a multiple of the physician's annual compensation. Physicians should not sign a non-compete with which
they do not intend to comply.
Negotiation Tip: Seek to limit the non-compete to locations
where the physician renders services for the employer. This may
entail a further limitation if the physician covers multiple locations. In such cases, seek to limit the restriction to the location
where the physician principally renders services (or other apt
description). If there are realistic future employment opportunities
for the physician within certain areas, try to reduce the mileage or
negotiate zip-code or institution carve-outs where the physician
might seek employment after termination.

Summary
Physician employment contracts are sophisticated instruments
with potential for significant adverse impact on physicians. They
should be carefully analyzed and negotiated to limit physicians'
exposure to financial loss and other liability.
Karen Davidson, Esq., is
the managing member, Law
Offices of Karen E. Davidson, LLC, and a veteran
health care attorney in Bala
Cynwyd, Pennsylvania,
with more than 25 years
of experience serving the
legal needs of her physician clients in business matters.
She is a graduate of the Temple University James E.
Beasley School of Law, licensed to practice law in the
Commonwealth of Pennsylvania, State of Maine, and
District of Columbia (inactive), and a member of the bar
associations in those jurisdictions. She is also a member
of the American Health Lawyers Association, Health Care
Compliance Association, and the Board of Directors of
the Southeastern Pennsylvania Area Health Education
Center. Karen regularly speaks to professional groups
offering practical insight into legal issues affecting
physicians and medical practices. She can be reached
by telephone at 610.940.4041 or via e-mail at karend@
kdavidsonlaw.com.

Physicians need to understand the extent of the non-compete
restriction and his/her liability for violations. Contracts often
contain remedies for non-compete violations including liquidated

WINTER 2018 | CHESTER COUNT Y Medicine 25

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