Exit etiquette: Whose patient is it, anyway?

When a physician leaves a group, a tension begins over whether that doctor's patients can follow to the new practice. Experts say each side can find ways to protect itself without putting patients in the middle.

By — Posted Oct. 17, 2005

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Just as the end of a marriage is stressful, the departure of a doctor creates a tremendous amount of dislocation in group practices. The situation can be even more contentious when the departing doctor sets up shop within the same market area as the group. Suddenly, doctors who had been cooperating in building the group practice find themselves in a competitive struggle to attract patients.

A major part of that competition centers on the departing doctor's patients -- the ones he or she acquired while at the group practice. The departing physician wants them -- and so does the group.

"There is definitely a lot of tension between the group's wish to maintain its patients and the departing doctor's wish to take as many patients with him or her as possible," says Daniel M. Bernick, an attorney with Health Care Law Associates in Plymouth Meeting, Pa.

One Midwestern pulmonologist has experience on both sides.

He left a group with which the employment contract, signed when the doctor was just starting out, included a "restrictive covenant," a clause that prohibited him from setting up a practice in the local geographical area. Feeling pressure to leave his group but not wanting to dislocate his family by moving out of town, the doctor ignored the agreement and set up a local practice. The group took legal action, and the sides settled out of court for an undisclosed amount of money.

A few years later, the pulmonologist was fighting a similar battle, but on the other side of the issue. A doctor who left the pulmonologist's group decided to ignore a noncompetition clause. Again, the situation had to be negotiated.

Despite his problems, the pulmonologist, who is not being identified because each of his settlements included agreements not to discuss their cases in public, has not soured on the types of contracts that bit him twice. But he warns, "The legal issues are much more complex than you'd expect."

On either side, he says, "You have to be very careful with contracts, and you have to know the law and your rights or you'll find yourself in serious trouble."

Advice for departing DOCTORS

Doctors who leave a group to practice in the same market area naturally want to bring as many of their patients with them as possible. Ideally for the doctor who is leaving, the group will contact the doctor's patients and ask if they want to see another doctor in the present group or follow their doctor, in which case the practice will send the patient records to the departing physician's office.

But very few groups will be so accommodating. In fact, says Steven M. Harris, a health care attorney with Harris Kessler & Goldstein in Chicago, "Many groups will do everything possible to prevent their patients from leaving them."

Harris, who writes the Contract Language column for American Medical News, says some even go so far as keeping patients in the dark until they arrive for a scheduled appointment, then telling them as they are led to the exam room that a new doctor has taken the place of the previous one.

This despite the fact that the AMA has historically come down on the side of informing patients when a physician leaves.

The AMA's ethical opinion on the subject, last updated by for the organization's Code of Medical Ethics in February 2002, is aimed at ensuring patients' access to their records. It specifies that when a physician leaves a group, the patients "should ... be notified of the physician's new address and offered the opportunity to have their medical records forwarded to the departing physician at his or her new practice." That opinion also is reflected in policy passed by the AMA House of Delegates.

AMA President J. Edward Hill, MD, understands that many groups do not like this opinion because it could affect their bottom lines. But, he said, "we have to place patient interests above self-interest." He points out that in almost all cases, continuity of care is best carried out if the doctor who has been caring for the patient maintains that relationship.

But that doesn't mean doctors planning to leave a group can assume the practice will play any role in helping patients find their way to the new office. So what can doctors do to increase the chances that patients will follow them?

Know ahead of time

One of the most important strategies comes before you join a group. Experts advise you should carefully read and consider the terms of the employment, partnership or termination agreement, which may include a nonsolicitation clause or restrictive covenant.

While doctors who want a job or partnership might feel compelled to accept these clauses, they should at least try to negotiate terms that are relatively less restrictive, lawyers say. For example, they should try to reduce the geographical area or time period specified in a restrictive covenant.

Some doctors sign a noncompetition clause figuring that it will not be enforceable. While state law and courts differ on the issue, in general, "In most states covenants have been and will be enforced if the agreements are tightly drafted," says Denise Cline, a partner with Smith Moore, a Southern regional legal firm that focuses on health care law, among other areas.

Even when doctors have signed nonsolicitation agreements, which are more easily enforceable than covenants, they don't have to keep the news of the move a state secret.

"It's not practical to try to prevent a doctor from telling patients he or she is leaving," says Bruce D. Armon of the health law department of Baltimore-based law firm Saul Ewing.

Volunteering information about the new location, and especially inviting patients to schedule the next appointment there, would generally be prohibited by the contract. But when patients initiate the conversation, doctors have every right to answer truthfully, experts say.

In fact, lawyers admit that it's very hard to prove doctors in violation of nonsolicitation clauses based on conversations held in the privacy of the exam room. The same holds true for occasional contacts with patients who have access to the departing physician's personal mail address or telephone number.

Nonsolicitation agreements do not prevent a doctor from advertising in local papers or any other venue not specifically targeted at former patients. But the agreement can prohibit the departing doctor from mentioning the old group's name in ads or promotional activities.

Even without a nonsolicitation agreement, doctors generally can't legally use patient lists owned by the practice to solicit patients through a mailing or other means. In support of this statement, Armon cites a 2002 case, Total Care Physicians v. O'Hara, in which a Delaware court ruled that a physician practice's billing records, which contained patient identities and addresses, are trade secrets owned by the group and protected under the Delaware version of the Uniform Trade Secrets Act. While the court case doesn't have a direct effect on similar conflicts in other states, most have some version of Delaware's trade secrets act.

Advice to GROUPS

Because patients usually can find out where a doctor has gone, the only truly effective way to prevent physicians from taking patients with them is a restrictive covenant, which prevents the doctor from practicing medicine within a specific geographical area during a specific time period. But such clauses are problematic.

Many lawyers who represent doctors resist such noncompete clauses. "If a doctor voluntarily or involuntarily leaves a group, he or she doesn't want to be forced to pack up his family and move to another city in order to practice medicine," says Steven M. Harris, a health care attorney with Harris Kessler & Goldstein in Chicago.

The AMA has policy that discourages restrictive covenants, and calls unethical any such agreements if they are "excessive" in terms of geographic scope or duration, or if they fail to make "reasonable accommodation" of a patient's choice of physician.

Even if the group is able to insert a restrictive covenant in an employment contract, its enforceability is always in doubt until tested.

Denise Cline, a partner with Smith Moore legal firm, says, "Courts are concerned about covenants if enforcing them means putting doctors out of work, or limiting patients' health care choices."

For example, courts might overrule a covenant if the specialty is in small supply in the area, or if the covenant covers an area larger than the practice's market.

"A five-mile radius would not be reasonable in Manhattan, while 10 miles might be very reasonable in rural Minnesota," says Bruce D. Armon of the health law department of Baltimore-based law firm Saul Ewing.

Because of the difficulties with restrictive covenants, many groups pin their hopes on nonsolicitation agreements.

There's no standard definition of solicitation, though, so Armon tries to spell out as many specifics as possible. For example, listed prohibitions might include naming the former group name in ads or speeches, contacting referring doctors, disparaging the group, taking away and using patient lists or records, and soliciting staff from the group.

One sticking point with nonsolicitation clauses arises when doctors with established solo practices join a group. Such experienced doctors are often the most reluctant to agree to a nonsolicitation agreement that could force them to lose their patient base. One solution, Harris says, is to keep track of the doctor's preexisting patients (through a prefix to a patient number, or color-coded folders) and allow solicitation to those patients only.

Dangerous time

Whether or not a nonsolicitation agreement was signed, the most perilous time for the group is when a doctor has given notice but is still working.

"It can be very destructive for the group to have a doctor on staff who is about to form a competing practice," says Daniel M. Bernick, an attorney with Health Care Law Associates in Plymouth Meeting, Pa.

Bernick suggests that, whenever possible, the group should place such doctors on paid administrative leave.

Because of the complexity of the issues, the best route for doctors and groups is to try as best as possible to develop fair and carefully crafted contracts.

Experts say neither side should try to ram down unduly onerous terms because a dissatisfied doctor or group is more likely to challenge the contract.

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A successful noncompete clause

State statutes and court rulings vary on the legality of restrictive covenants that prevent doctors not only from taking patients with them when they leave a practice, but also prevent them from setting up a new practice nearby. Here are some tips on what's most likely to stand up in court:

  • Covenants should be reasonable in time and territory. Ideally, the doctor should be able to continue to practice medicine without moving his or her residence. This is obviously more difficult in a less populated area than in a city. Also, the time period should be relatively short (three years maximum); sufficient to protect the practice while still allowing the physician to return to practice in the immediate area if desired.
  • Covenants should not limit access. If there is an area shortage of physicians or of physicians in the doctor's specialty, the covenant will be difficult to enforce.
  • Covenants should reflect A legitimate business interest. A group may be asked to prove it has a substantial number of patients throughout the specified area.

Source: AMNews reporting

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