Lately I have seen several physicians who want to terminate their employment before the term of their employment agreement ends where their agreement does not have a “without cause” termination provision. Terminating physician employment outside of contractual provisions (i.e., where there is no contractual right to terminate) can lead to tricky negotiations.
Physicians who want to leave but have long-term contracts
There are many reasons for terminating physician employment outside of contractual provisions. Physician burnout is off the charts right now, and it is expected to rise. Many employers are treating the loss of physicians as another excuse to push the remaining physicians even harder. Sometimes a physician is relatively content in their employment situation, but personal issues (such as sickness in the family that the physician or the physician’s spouse needs to leave the area to attend to) call them away. And, of course, sometimes the physician is recruited with a better deal.
The right to without cause termination in physician employment contracts is extremely common, but, unfortunately is not universal in all agreements. I have represented dozens of physicians who wanted to leave, but were stuck in physician employment contracts that did not give them an explicit right to leave. Until relatively recently these physicians were able to leave on relatively good terms, even if they were leaving outside of contractual provisions that would specifically authorize them to terminate the agreement without cause.
I have traditionally counseled my clients that “nobody wants a physician who doesn’t want to be there.” Historically, terminating physician employment outside of contractual provisions has generally been free of extensive antagonism from the employer. Recently, however, I have been involved in several negotiations where the employer was downright nasty.
The New Normal in Terminating Physician Employment Outside of Contractual Provisions
I truly hope that recent experiences are outliers, but the fact that I have run into intense opposition from the employers on several consecutive negotiations recently has me worried that the worsening physician shortage is leading employers to fight to retain physicians who no longer want to work there.
I have had recent negotiations where the current employer (upon learning where the physician intended to move) sent a threatening letter to the prospective new employer indicating that the current employer viewed the physician recruitment as interference with its contractual relations. Intentional interference with contractual relations gives rise to a legal action in most states. Although I have seen this threat used in connection with physician covenants not to compete, I have never seen this threat used in the context of physician recruiting before. Seeing this health system in action caused me to once again ponder – are hospitals evil?
Another recent negotiation involved a claim for outrageous damages from the current employer. I term the damages outrageous because, although the physician gave notice of an intent to leave nearly six months in the future, the employer wanted to be paid the cost of a locum tenens agency through the end of the contract term. As I discussed in another blog post on not giving the notice required under a physician employment agreement could cost the employer some money. However, in this case the employer assumed that it would not be able to replace the physician for years. (It also “forgot” that what it would pay the locum tenens agency would be significantly offset by the compensation and benefits it would not be paying the departing physician).
What should a physician do in terminating physician employment outside of contractual provisions?
The recent spate of handballing notwithstanding, I still believe that a rational employer should not want a physician who doesn’t want to be there.
I continue to recommend that the physician give notice of a resignation using the notice procedure in the physician employment agreement (i.e., if required send a certified letter to the address or addresses listed under the “notice” provision in your employment agreement). Give as much notice as practicable, remembering that the more notice you give, the less damages the employer can legitimately claim.
Hopefully it goes without saying that your new physician employment agreement should provide termination without cause provisions. If you opted to sign an agreement without a competent physician contract review last time, don’t make that mistake again!
If you have an agreement you would like us to review, you can start your review here. We can also provide a free consultation to talk about how we can help.
