For cause termination of physician employment
When reviewing a physician employment agreement, the following are topics to examine:
- Any determination that there was a breach of the agreement should be a reasonable determination made in good faith
- For cause termination of physician employment should be based upon a conviction of a crime (not a misdemeanor such as a minor traffic violation) rather than a charge that a crime has been committed
- For cause termination of physician employment should not be provided if medical privileges are temporarily suspended for administrative reasons such as untimely charting
For cause termination of physician employment is obviously a delicate issue. Employers have a legitimate desire to make sure they can terminate a physician’s employment agreement if the physician turns out to be a lousy physician, or if the physician is impossible for staff and other physicians to work with.
In legal jargon, the phrase “for cause” termination of physician employment means the other party breached the agreement. A party can terminate the agreement for cause if the other party didn’t do what it was supposed to do, or did something it wasn’t supposed to do. It’s important that the grounds of a for cause termination of physician employment are clear, unambiguous, and reasonable.
A physician employment agreement should provide reasonable protection to both the physician and the employer if either party fails to live up to the bargain. That’s the whole reason for having for cause termination of physician employment. However, too often for cause termination of physician employment is based on nebulous language that allows an employer to terminate “for cause” even though the physician has done nothing wrong.
Contractual grounds of “for cause” termination of physician employment
For cause termination of physician employment can sometimes be based upon an employer’s “determination” of a breach. I always try to require such determination to be a reasonable determination made in good faith.
Being charged or convicted of a crime is a common basis permitting for cause termination of physician employment. Although you can see the employer’s point of view in providing for cause termination of physician employment if a physician is accused of a crime (would you want to send your kid to a pediatrician who is accused of child abuse?), sometimes I am able to convince the employer that only an actual conviction will suffice as grounds of “for cause” termination of physician employment. In addition, this provision should only apply to crimes, not misdemeanors such as traffic violations.
Another common ground of for cause termination of physician employment is loss or suspension of medical staff privileges. Although that’s reasonable if you are tossed off the medical staff after a due process hearing, these provisions should provide that a temporary suspension for administrative reasons (such as untimely charting) is not grounds for a for cause termination of physician employment.
Other issues
The agreement should also provide reasonable flexibility for both parties to get out of the deal, even if the other party didn’t do anything wrong – or “without cause” termination of physician employment agreements. Of course parties can also use “without cause” (or “not for cause”) terminations, even though the other side didn’t do anything wrong.
To learn more about the critical issues to be aware of when negotiating a physician employment agreement, you can see my podcast of the four most common traps in physician employment agreements, my physician employment agreement checklist, or, for the most extensive discussion on the topic, my book on physician employment agreements. For specific information on topics you might be interested in, see my posts about physician productivity compensation, MGMA compensation analysis, medical record provisions in physician employment agreements, letters of intent in physician contracts, physician covenants not to compete, and call coverage requirements.
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.
