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5 steps for employed physicians to resolve contract disputes

Doctors can save themselves a lot of time, money and grief during contract disputes by following a series of steps to work out their issues.

By — Posted March 11, 2013

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When doctors believe hospitals or health systems have violated their employment contracts, they may consider suing right away, but health care legal professionals say it's best to take a more reasoned, long-term approach.

When disputes arise, the best course is to check emotions at the door, assess the situation and lay the groundwork for professional resolutions that don't involve suing or even formally bringing attorneys to the table. Depending on the problems and the responsiveness of hospital staff to doctors' concerns, solving disputes may take weeks or even months. If doctors sue, the process can take years and millions of dollars to resolve.

By following certain steps, doctors may be able to find resolutions to major disputes that all parties can agree upon while maintaining positive working relationships, experts said.

“Doctors' first thoughts should not be about litigation, because that hurts everybody,” said Michael Schaff, a New Jersey-based health care attorney and chair of the corporate and health care department at Wilentz, Goldman & Spitzer. “They should relax, think logically and try to see the other side. Most of the time, it's misunderstandings among parties, and they are battles that don't have to happen.”

Attorneys and experts recommend a five-step course for solving contract disputes:

Stay calm

The biggest mistake doctors make is that they express anger directly at their employers, Schaff said. Although doctors may have every right to be upset, it's best not to show it publicly to employers; otherwise, that becomes the focus instead of the employment contract.

Normally, doctors are referred to Schaff by other physicians after employment contract disputes arise. When these physicians call him, they are usually very upset, he said. As a result, some of these doctors have damaged personal relations, making it difficult to negotiate good outcomes.

Some have gone as far as throwing objects at work, starting rumors, publicly alleging violations of law or refusing to show up at meetings in retaliation for perceived wrongs, he said.

By calming down, physicians may be able to see the other side and recognize that hospitals are inclined to work it out with doctors because they are so integral to success. “Hospitals aren't in the business of suing their doctors,” Schaff said. “Why? Because that's where their patients come from.”

Review the contract

Schaff said physicians must review contracts carefully to make sure that what they are accusing the hospitals or health systems of is really covered. It's not uncommon for doctors to misread contracts, said Alice Gosfield, a Philadelphia-based health care attorney who heads the law firm Alice G. Gosfield & Associates.

A typical misunderstanding concerns contract terminations. Contracts may say physicians can terminate employment within 60 days of current employment terms. That means they can get out of it within 60 days of their renewal dates. Many doctors interpret that as they simply have to give 60 days' notice, Gosfield said.

Another common dispute that physicians misinterpret in contracts concerns noncompete clauses, said Ann Bittinger, a health care attorney at the Bittinger Law Firm in Jacksonville, Fla. For instance, if a physician's contract says he or she can't practice medicine within 12 miles of a hospital's boundaries after leaving, it might not pertain to just the main hospital building. It may include every small clinic associated with the main hospital.

In a similar problem, physicians may have assumed they would work within geographic distances from the main hospitals, but hospitals interpret that as anywhere the hospitals are affiliated. When this happens, doctors may find they are traveling a lot farther than they thought they agreed to in their contracts.

When physicians decide they are reading their contracts correctly and would like to proceed, they should find out whom to talk to face to face.

Talk it out

Schaff said physicians first must find out whom they are supposed to talk to about their concerns. Most hospitals have chains of command for disputes that doctors must follow, he said. Some contracts will spell this out, so physicians should refer back to their contracts.

In some cases, it might be their immediate supervisors or someone above that, such as department heads. Many times, supervisors aren't aware that problems are occurring for physicians, so talking it out may resolve disputes at this juncture, Schaff said.

Before physicians talk to supervisors, they should prepare outlines of what they want to say. Doctors could start with, “I don't fully understand this, so could you explain to me why I'm not correct?”

“The goal is not to escalate it until it needs to be escalated,” Schaff said.

Before talking to hospital officials, physicians should gather pertinent documentation and formulate game plans about how they would like the conversation to go, Bittinger said. If it applies, during the conversation, it may be useful to offer solutions in the form of contract amendments.

“A doctor could say, 'I can see that this is a problem, and you see it that way, too, so maybe a good way to resolve this is to red-line the employment agreement and prepare an amendment,' ” Bittinger said. “This is a nonthreatening way to present a solution.”

If there is no resolution after doctors talk to hospital executives, physicians should assess whether it's really worth it to escalate the dispute, Gosfield said.

Sometimes it's better to let it go after it's clear employers aren't going to move forward by addressing concerns, she said. “Doctors should ask themselves, 'Is this really worth it to me, and can I live with the situation as it is?' ” Gosfield said.

If they feel strongly that they want to move forward, it's time to put the dispute in writing.

Write letters

Although sending letters escalates the situation, it forces hospitals and health care officials to take physicians' concerns more seriously, legal experts said.

Schaff said that when writing letters, physicians could use phrases such as “I'd like to clarify my position,” or “Maybe this is a misunderstanding,” or “I want to make sure there's no miscommunication.” Doctors should resist the temptation to make allegations in letters that aren't based on facts and circumstances, he said. Physicians should ask lawyers to review any letter they send.

Another reason to bring in attorneys is to ensure that physicians are using correct legal terms and language, Gosfield said.

Many contracts will have sections that define the names and addresses of whom physicians should contact, so doctors should review their contracts again, she said. Bittinger said that if physicians are unsure about their letter-writing abilities, attorneys can write the letters for them, and the doctors can sign their names after reviewing the letters.

If the physicians' letters don't get traction, doctors may have their attorneys send breach-of-contract letters or cease-and-desist letters, Schaff said.

Consider a lawsuit

If physicians have gone through all the previous steps and have gotten no satisfaction, that's when it may be time to decide whether to take legal action.

Gosfield said physicians should think long and hard about heading in this direction, especially when going head to head with well-funded hospitals. “For doctors to be in court, it's a terrible thing,” Gosfield said. “You lose control.”

Very rarely does the process get this far, Schaff said. Good health care lawyers will do their best to keep doctors out of courts.

Before proceeding, physicians must consider all the ramifications, Schaff said. Some disputes take six months and cost about $10,000 to resolve, while others can take more than a decade and cost $10 million, he said.

When doctors file suits, it becomes public record. That can mean media coverage. The Internal Revenue Service, the Dept. of Health and Human Services Office of the Inspector General and various state regulating agencies may take action, depending on the allegations, he said.

“When it's public record, you don't know who is looking at it,” Schaff said. “It may create additional issues and ramifications that doctors hadn't even thought of.” But if the doctor feels he or she has no choice to proceed, at least by going through the previous steps, a paper trail has been developed that can be used as evidence, and doctors will have some idea how employers could respond to a lawsuit, attorneys said.

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Common disputes in employed physician contracts

Many times, contract disputes arise because of misunderstandings about what hospitals and health systems expect of physicians, legal experts say. A good contract will define a doctor's role and how he or she is to be paid. But some contracts are not well-written, leading to misunderstandings and miscommunications, which end up pitting physicians against their employers.

Here are some common contract disputes:

Productivity compensation. It used to be that physicians were paid base salaries, but now it's more commonly base plus bonus. Many disputes arise due to interpretations of relative value unit formulas.

Termination agreement. Some physicians misinterpret when they can terminate their contracts. Contracts may appear to say that doctors must give hospitals notice within a certain time frame. But depending on the way it's written, a contract might mean the doctor has to give notice within a certain time frame before the anniversary of the start of the employment contract.

Geographic coverage. Some contracts define the geographic areas physicians are required to work in, which are spelled out as specified distances from hospitals. But the contracts might not define the word “hospital.” It may mean any clinic associated with a hospital, so some doctors must travel greater distances than expected to get to their practices.

Noncompete clauses. This part of a contract allows a physician to practice medicine outside a certain distance from a hospital after he or she leaves. Some contracts don't allow doctors to practice medicine within a specified distance of any medical practice affiliated with a hospital. That may mean the geographic distance is far larger than physicians assumed when they signed their contracts.

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