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Departing Physicians-Averting Disputes

02.15.07 written by

Cathy A. Sloane, Esq.
Published in the July/August Issue of the
Canton/Akron MD News Magazine

Over time, new opportunities arise, professional relationships change, and business separations occur. Attorneys are frequently consulted near the severance of a business relationship with questions about a departing physician’s rights upon leaving a practice. Disputes can flare over the rights of a departing physician to solicit patients or to remove medical records from the practice. Disagreements of seemingly less importance, such as photocopying costs for patient records, may fuel hostilities.

The disputes typically surface when the employment contract, often signed many years before, is unclearly worded or lacks sufficient detail to quickly resolve the matter. Uncertainties can also erupt when the parties fail to think through the consequences of their contractual promises. Plainly, the best way to avert these hassles is to anticipate changes in business relationships and to negotiate smooth departure terms before signing the employment contract. Existing contracts that have become out-of-date by changes in law or individual circumstances should be reviewed with competent counsel to ensure a well-crafted, current agreement.

Here is a look at three issues that can breed contention: non-solicitation clauses, patient notifications and medical records.

Most employment contracts today include termination covenants not to solicit patients from the practice. Medical groups have legitimate business interests in safeguarding their patient lists and referral sources. The non-solicitation clause means that a departing physician cannot lure current patients to the new practice, especially when the physician leaves to compete locally with former colleagues.

Arguably, patient notifications by a departing physician have been interpreted as prohibited solicitation. In 2006, the Ohio State Medical Board resolved, in part, the issue of patient notification by adopting a rule, OAC §4731-27-01, which establishes requirements for terminating physician-patient relationships. The rule requires that a physician who is leaving a practice must advise the patients of their opportunity to transfer or receive their records no later than thirty days prior to the last date the physician will see patients at the practice. Clearly, the rule provides for continued patient access to medical records. The rule also reaffirms a physician’s duty to provide advance notice to patients when a physician leaves a practice, consistent with American Medical Association (AMA) Ethical Opinion 7.03.

Notably, the legislature has not imposed duties of patient notification upon group practices. A surprise to some departing physicians, medical groups have no “legal” obligation to help a physician set up practice elsewhere by telling patients how to find him or her. Denying this information, though, to patients who independently seek out the relocated physician for continued care is certainly not advisable as a business strategy or from an ethical posture. Medical groups should not interfere with a physician’s duty to notify patients or with the transfer of medical records upon patient request, according to AMA Ethical Opinion 7.03.

To avert possible disputes on these issues, the employment contract should address the following: (1) whether the responsibility for notifying patients will fall to the physician alone, the medical group, or both jointly; (2) the exact language of the patient notification, if distributed jointly; (3) who will bear the costs of notifying patients by mail; (4) what acts by the departing physician constitute prohibited solicitation of patients; (5) the persons who cannot be overtly solicited (i.e., persons who received medical services from the practice in the 36 months prior to the physician’s departure); (6) a reasonable time period for restricted solicitation; (7) who will bear the costs of photocopying records for office transfer; (8) and, that inquiring patients will be told the new address of their relocated physician.

Planning ahead, today, for tomorrow’s transitions is always a challenge. But, failing to deal with exit strategies early on may result in bitter separations later, as well as, lost opportunities to negotiate terms to your advantage. Key points for physicians and medical groups alike are to anticipate changes in business relationships and to structure departure terms with specificity in employment contracts.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.