‘Without Cause’ Termination in Physician Employment Agreements

By Dennis Hursh | Physician Contracts

Jul 14
contracts

The reason for ‘without cause’ termination provisions in physician employment agreements

Ideally, the practice of medicine will be a collegial pursuit.  Few would argue that a physician’s employer should be able to terminate the physician if he or she just isn’t a “fit” with the rest of the physicians.  By the same token, physicians obviously want some flexibility to leave the employer if the physician gets a better opportunity, or if the physician simply isn’t happy with the position.  For that reason, unless the physician is in the United States on a J-1 visa, the physician employment agreement should have a “without cause” termination provision.

A “without cause” termination provision in a physician’s employment agreement allows the physician or the employer to terminate employment even though the other party has done nothing wrong.  As you can see, “without cause” termination provisions are a dual-edged sword.  They give the physician the right to leave for no reason, but they also give the employer the right to give the physician the boot for no reason.  Generally, only two major aspects of this provision require the attention of the physician:

  1. The amount of notice
  2. And if both parties are entitled to the same notice period.

A reasonable notice period for without cause termination of physician employment agreements

The notice period (i.e., the time between when the other party is notified of the termination without cause and the date that the termination becomes effective) should give the physician adequate time to seek suitable replacement employment.  Although a 90-day notice is very common, I usually try to obtain a 120-day notice when I negotiate physician-employment agreements.  That gives the physician a much better chance of locking in a new job without a significant break in income, if the employer terminates the physician’s employment.

Fairness of the notice period for without cause termination of physician employment agreements

It should go without saying that the physician and the employer should both be given the same notice period.  Unfortunately, in my years as a physician-contract attorney, I have frequently seen provisions where the employer can terminate without cause with a 30-day notice, but the physician has to give a 180-day notice to terminate without cause.  When you see one-sided provisions like that, you have to question whether a physician really wants to work for that employer.

Uses of without cause termination provisions in physician contract negotiation

Without-cause termination provisions are sometimes used by an experienced physician-contract attorney to end physician-employment relationships, even though the physician really does believe the other side has breached the physician’s employment agreement.  I have sent demand letters to employers, setting forth the physician’s claim that the employer has committed one or more breaches.  My years of experience as a Pennsylvania physicians’ lawyer tells me the employer is likely to dispute our claims of a breach.  In addition, the physician-employment agreement may contain a “cure period,” during which the employer can fix the breach.  Therefore, since my client is usually fed up with the place by then, I frequently also give notice at the same time of termination without cause.  That way, the physician can be sure of a certain termination date of the physician’s-employment agreement.

 

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About the Author

I am a healthcare attorney with over 34 years of experience, focusing on physician contracts, regulatory compliance and sales of medical practices.

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