7 Legal Issues to Consider before an Independent Contractor Departs

By Johnson, Lee J. | Medical Economics, February 25, 2013 | Go to article overview

7 Legal Issues to Consider before an Independent Contractor Departs


Johnson, Lee J., Medical Economics


Practice arrangements are changing, and it is becoming increasingly important to know how to handle independent contractor agreements. If you own or work in a practice that contracts with an independent contractor or you are an independent contractor, when it is time to terminate the arrangement, you must know who is responsible for informing patients so that continuity of care occurs and proper time exists to transfer patients to other doctors.

Because physician practice transitions can be contentious, plan ahead and delineate the specific course of action in advance of a doctor's possible departure. Consider obtaining legal assistance beforehand. Regardless, think about these points:

Liability. An overarching legal matter is the potential liability that a practice has to both patients and the independent contractor. Keep in mind patients can sue the practice for abandonment (If a patient does not have time to find another doctor and his or her condition deteriorates, the patient can claim abandonment, meaning that the doctor-patient relationship was terminated before treatment was completed.) The independent contractor could sue the practice for things such as breach of a written, verbal, or alleged independent contractor agreement; damage to his or her reputation; and the use of restrictive covenants.

Contract and contract terms. Before agreeing to any arrangement of employment or independent contracting, it's wise for both parties to have a written contract. Typical language: "This agreement may be terminated: A) Without cause by 30 (or 60 to 90) days' prior notice; or B) With cause, immediately upon breach of any term of this agreement by either of the parties." Only point B would be used for an independent contractor.

Look at the contract and follow its terms, especially the terms about termination, to the letter. Finances, reputation, and liability are at stake.

If a written contract does not exist, then follow the verbal contract. Try to remember what both parties said about termination.

If no written or verbal agreement exists, then the best thing to do is to sit down and try to amicably and professionally work out an exit strategy. A smooth transition is to everyone's benefit, and a longer period of time for transition will allow better organization.

Termination language. Usually, both the written and the verbal contract have fixed terms.

Employment contracts can be terminated "at will" or "for cause," the former meaning that the contract can be ended at any time by either party. Independent contractor arrangements, however, should not be at will.

The contract's "for cause" clause could include conditions such as unethical or disrespectful behavior, a crime, loss of license, third-party payer sanctions, or verbal or physiattacks of patients. Also include a under which the terminatparty must allow a certain period time for the agreement to be legally so that the parties can make arrangements.

If the independent contractor's is deemed belligerent or the practice should be very and try to make some rules until any notice period ended.

Transition of work. Determine in how the work will be transionce the contractor's upcomdeparture is known. Discuss tail because if a patient lawsuit later, both the practice and the doctor will be named, and will need to be fully covered. If independent contractor refuses to the practice will have to tail coverage.

As a courtesy if you practice in group, consider asking the existdoctors whether they would like clients and more billable hours. practice should try to obtain wishes in writing to be able to with a firm plan. If the other are not interested in adhours, it will take time to find doctor, especially factoring in potential need for staff privileges third-party payer participation.

'Ownership" of patients. A relevant is, who "owns" the patients, practice or the independent The most determinant issue here is whether the independent doctor brought the patient base with him or her or the clinic assigned the patients.

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