MDNews - Central New York

A PHYSICIAN LEAVING a medical practice is often like a divorce — it can be amicable, but it can also be very adversarial. If emo- tions are running high and significant money is at stake, it's not always possible to have an amicable separation, but prop- erly structured practice agreements can ease some of the pain. This article will discuss some of the common — and not so common — techniques that can help both parties satisfy their needs without incurring onerous legal and accounting expenses in the process. CLEAR, UNAMBIGUOUS DOCUMENTATION The starting point, which may seem all too obvious, is to have agreements in place between the practice and the physician that are clear and unambiguous. That doesn't mean that the documents must be lengthy. Indeed, there is an important distinction between vagueness and ambiguity in con- tracts. It's better to have a short agreement that might contain some vagueness — perhaps because there are customs and standards that can fill in the gaps — than a long agreement that is ambiguous. An attorney must strive to strike a balance between attempting to cover every possible contingency and clearly addressing the issues that are mostly likely to arise. The reality is that many legal contracts are lengthy because of tradition, or because, to paraphrase an old saying, the attorney "didn't have the time to make it shorter." SOLICITING PATIENTS Physicians who are leaving a practice to join another group in the same ser- vice area will often attempt to get their patients to follow them after the departure (assuming there is no issue of a noncom- pete). Active solicitation of patients can significantly damage the practice, and therefore, the practice agreements should prohibit direct solicitation of patients and the physician copying any patient list. The American Medical Association Code of Medical Ethics — which are merely advisor y and do not have the force of law — state that the medica l practice should provide a notice to the patients advising of the physician's separation and furnishing the patient with future contact information for the physician. From the physician's perspective, the employment contract should require the practice to send future contact information to the physician's patients (best practice: attach a form of the written notice to the employment contract). Without this protec- tion, some groups will refuse to provide that information especially if the departure is on bad terms. DON'T FUND THE DEPARTING PHYSICIAN'S LITIGATION The physician who has an ownership inter- est in the practice will usually be entitled to payment for shares of stock and also severance or deferred compensation, which is often tied to the amount of accounts receivable existing on the date of departure. It is prudent to include a provision in the relevant practice documents requiring the departing physician to sign a general release as a condition to receiving those payments from the practice. Otherwise, the practice may pay the money to the physician only to have the physician use those funds to sue the practice if there is a disagreement over the amount to which the physician is entitled. If the requirement of a release is not in the original contract between the practice and the physician, it is unlikely that the physician will agree to sign a general release. As part of the general release, the practice should consider obtaining written representation from the departing physician that he has no knowledge of any illegal conduct within the practice. Such a representation might reduce the risk that a disgruntled physician will become a government whistle-blower, alleging billing improprieties or a violation of Stark or anti-kickback laws. MEDIATION AND ARBITRATION An extensive discussion of the pros and cons of alternate dispute resolution (ADR), such as mediation or arbitration, is beyond the scope of this article; however, ADR is almost always more efficient and cost- e-ective than litigation in the courts — and it's private. Moreover, the parties have great latitude in structuring the ADR process. For example, they can agree to limit the amount of pretrial discovery and require various deadlines to expedite resolution and reduce cost. UNCERTIFICATED SHARES New York law allows a professional corpora- tion to eliminate share certificates that prove ownership. Since certificates often get lost, and occasionally are held as ransom by a departing shareholder, maintaining ownership records as bookkeeping entries rather than paper certificates can avoid many hassles. Bruce E. Wood is a member at CCB Law, a boutique law firm focused on providing counsel to physicians and healthcare professionals. He can be reached at 315-477-6292 or bwood@ccblaw.com. ■ IS HARD TO DO BY BRUCE E. WOOD BREAKING UP 1 2 1 2❱❱❱❱❱ L E G A L E A S E

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