‘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 40 years of experience, focusing on physician employment contracts. My book, The Final Hurdle, a Physician's Guide to Negotiating a Fair Employment Agreement, is available on Amazon.

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(6) comments

William December 31, 2018

A friend of mine who is a psychiatrist was working at a hospital for over 10 years and he was called into the office and let go unexpectedly. I felt terrible for him because he just didn’t understand why the hospital would do this without any cause. Generally speaking could you tell me why hospitals do this? My friend is from India and has practice in the United States for over 40 years.

Reply
    Dennis Hursh December 31, 2018

    There are many reasons for without cause termination. With hospitals, it is often just an economic decision. If they are “losing money” on a given practice (after charging it with the hospital’s massive overhead), they will frequently pull out. Sometimes it is political – the physician complained about patient care, so rather than fixing the issue they terminate the physician. It is possible that they the hospital because concerned about the quality of care solely because of the age of the physician. A rational approach to this concern would be to simply monitor the physician, or require testing – but I have seen institutions that judge you guilty of poor quality of care based upon the number of candles on your birthday cake. It truly is impossible to tell the motivation in this case. The curse of without cause termination is that the hospital doesn’t need to have any reason, let alone a good reason, to terminate a physician without cause.

    Reply
Julie Anne LaMotte January 19, 2019

As a Rnfa my friend\ortho doctor was fired without cause Monday 14,2019 he was the cash cow of kings daughters health in Madison Indiana with all great reviews and chart reviews. hospital called him at home and fired him without a reason. Still no explanation given. The small community is protesting against hospital and patients are boycotting facility. My question is does the hospital have to say why? My doctor is trying to see what he’s fighting against or so do you know will a hospital reverse their decision as his friend we keep reviewing every process we did to see if we made a mistake. The bad thing about the sequence of events our doctor recruited a physician that he trained in residency who signed on and week later our doctor was fired without any dialogue.

Reply
    Dennis Hursh January 20, 2019

    That is a maddening situation. Without seeing the actual agreement I can’t be certain, but most physician employment agreements do have a “without cause” termination provision. As the name implies, either party can terminate without having to give a cause for the termination.

    Reply
Jodi Rook May 6, 2019

I just started a new job as a PA-C. I have found it to be very physically challenging I have anorexia due to scar tissue, not an eating disorder. I am 105lbs and have found the job involves taking equipment with me from site to site which is heavy. I am covered in bruises and might have to use on-street parking and walk blocks to miles before I am at the location. I fainted last Sunday and I am worried I can’t physically do the job.

I have only been sick like this one other time and my boss at that time told me I could not quit and I worked until I collapsed at work at was taken away by ambulance. I told my new boss this and his response was ” the case is not that heavy”. He wants to be to stay with the 120 days out clause. I can’t do it. It is not a choice it’s a physical limitation.

I have another MD who wants me and its a job that I can take at my own pace one location and if I dont feel good I can sit down.
How can I get out of this 120-day outclause before I end up with an Ambulance bill I can’t afford.
Thank you

Reply
    Dennis Hursh May 8, 2019

    That is so discouraging! Have you given the notice yet? I think that’s the first step. Then, see if the practice would agree to letting you go once they have a replacement.

    If there is any way you can hang in there, I’d try to do it. The issues aren’t quite the same for you, but look at this post about not giving the required notice under a physician employment agreement.

    The bottom line is that every day you can stay after you gives notice cuts down the potential damages of the practice, and reduces the odds that they will sue you.

    Good luck – I hope this helps!

    Reply
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