Legal Report Your contract has been terminated or was not renewed – now what? ouples rarely think about divorce provisions do not permit an employer on their wedding day. When you to terminate for prohibited reasons C William H. signed your employment contract, such as age, gender, race or disability termination of your employment may Maruca, discrimination or certain whistleblowing have been the furthest thing from your Esq. activities, but evidence of such improp- mind. But things change, and when er intent would be needed to challenge you find out your employer is letting such terminations. you go, you’ll need to pull that contract as an “employee at will,” which means The situation for teaching physi- out of the bottom drawer and review either party may terminate at any time cians may be a little more complicated, it carefully with your attorney to make without cause or advance notice. If because they usually have an employ- sure your rights are protected and you your contract does not automatical- ment relationship with a practice plan don’t inadvertently violate any prohibi- ly renew, and the expiration date is entity under a written contract and a tions. approaching, you may want to discuss faculty appointment which may only be renewal with your employer before time described in a letter. Faculty appoint- Term, termination and renewal runs out. ments may not be terminable as easily Generally, employment contracts All contracts will specify when either as practice plan employment, and the are effective for a defined time period, party may terminate the employment medical school bylaws may provide one to three years being the most com- relationship, and usually list reasons additional due process rights, so be mon. Some contracts will automatically that would permit an employer to sure to review them. renew for additional terms unless either terminate “for cause,” such as material Once a termination or nonrenewal party gives written notice by a fixed breach, loss or suspension of license, notice has been issued, an employ- number of days before the term expires loss of staff privileges, conviction of er may prefer to pay the departing – 90 days is typical. If you’ve received a crime, etc. You may have certain physician his or her salary for the a notice of nonrenewal, check this term “due process” rights if you are being notice period in lieu of requiring them and count the days on the calendar. terminated for cause. The employer to continue to work. Some contracts Also see if the time is counted from the may be required to give you written expressly address this approach, but date of the notice or the date of your notice specifying the breach or other even if the contract is silent, an em- receipt of the notice. If the employer cause and to give you an opportunity to ployer is generally permitted to pay the has missed the deadline, your contract cure within a stated time period. Other physician not to work. The employer may have renewed for another term. contracts permit immediate termination may have concerns that a terminated Alternatively, a contract may be for cause without notice, so the con- employee may disparage the employer written without automatic renewal tractual language is critical. to coworkers or patients or attempt provisions, which generally means the Many contracts also permit either to divert patients or employees to a contract expires at the end of the term, party to terminate upon a certain competitor during the remaining time unless the parties have agreed to ex- number of days’ written notice without on the job. tend it. That doesn’t always mean your cause, either during a term or at the If you are concerned that a termina- employment will terminate, and some end of the term. This type of termina- tion would negatively impact future job employers retain physicians without tion also may limit whether a restrictive prospects, you may want to propose a contracts after such expiration. In that covenant will apply, depending on resignation in lieu of termination. It is case, you may become what is known contract language. “Without cause” not clear that a resignation would be

274 Bulletin / July 2016 Legal Report

considered more favorably by future contracts even require you to forfeit health issues that could hinder replac- potential employers, but if you consider bonus payments if you do not complete ing such policies. resigning, be aware that you will not the term. If you were a shareholder in a If your employer sponsored a qualify for unemployment compensa- private group, your employer generally qualified retirement plan, you should tion unless you can show the resigna- will be required to repurchase your find out when you will be entitled to a tion was a “constructive termination” stock based on a formula set forth in distribution and arrange for a rollover to due to factors beyond your control the corporation’s agreements. Share- an IRA or subsequent qualified plan to such as a hostile work environment. holders also may be entitled to sever- continue to defer taxation. Your malpractice coverage should Final compensation ance pay or salary continuation upon termination. be a priority. If you have “occur- and benefits If you get your health insurance cov- rence-based” coverage through your If your compensation includes a erage from your employer, you should employer, it will continue to cover you productivity bonus or similar formula, find out when that coverage will end for any claims relating to care you you will want to carefully review the and whether you have the option to provided during your employment, but data used to calculate these payments. continue the coverage under COBRA. if you had “claims-made” coverage, Your bonus may be based on fees You also may be permitted to purchase you will need an extended reporting received after your final day of service, life insurance policies that your em- endorsement, commonly called a tail and you will want to make sure you get ployer maintains on your life, which policy. Your contract may spell out credit for all of your collections. Some may be to your benefit if you have any Continued on Page 276

Responding Fox Rothschild’s Health Law Practice reflects an intimate knowledge of the special needs, circumstances to an and sensitivities of physicians in the constantly changing world of health care. With significant Industry in experience and a comprehensive, proactive approach to issues, we successfully meet the challenges faced Transition by health care providers in this competitive, highly regulated environment.

After all, we’re not your ordinary health care attorneys.

Seth I. Corbin Edward J. Kabala William H. Maruca William L. Stang Michael G. Wiethorn 412.394.5530 412.394.5599 412.394.5575 412.394.5522 412.394.5537 [email protected] [email protected] [email protected] [email protected] [email protected]

BNY Mellon Center | 500 Grant Street, Suite 2500 | Pittsburgh, PA 15219 | 412.391.1334 | www.foxrothschild.com

Visit our HIPAA Blog: hipaahealthlaw.foxrothschild.com and our Physician Law Blog: physicianlaw.foxrothschild.com

Bulletin / July 2016 275 Legal Report

From Page 275 your noncompete sometime after you employer will agree to a joint letter to whether you or your employer must started work with your current employ- patients informing them of your de- parture, how to reach you and how to pay for that coverage. Don’t let this er, or if it covers an excessive territory or time period, there may be ways to authorize transfer of their records. issue fall through the cracks, because challenge it, but you should consult an A separation agreement setting forth failure to maintain tail coverage could experienced attorney first. You also all terms of the physician’s departure expose your personal assets and jeop- may be able to negotiate a buyout of may be beneficial to both parties to ardize your license. your noncompete, and maybe even avoid future misunderstandings or Restrictive covenants, patient have your new employer help pay it if disputes. Such agreements usually in- records and solicitation they want to hire you badly enough. volve mutual releases, and you should Be careful about telling patients confer with your attorneys before Now that you’ve received your pink where you are going while you are signing away any rights. slip, how, when and where can you still working for your current employer, Losing a job is a tough blow for suc- search for a new position? First, care- unless your employer has agreed to cessful, accomplished professionals, fully review the restrictive covenant in allow this. Handing out new business but it may turn out to be the first step to your current contract. In some cases, cards during the notice period is likely a fresh start and better working envi- the restrictions only apply if you are to violate your contract’s prohibition on ronment. Transitioning your profession- terminated for cause or if you resign patient solicitation. Don’t print out or al practice can be stressful, risky and without cause. There are some con- download a list of your patients with- complicated. The best way to protect tracts, particularly with health systems, out consulting your lawyer. That data yourself from liability and ensure a that apply a strict noncompete in the belongs to your employer and may be smooth process is to seek advice from restricted territory if you quit or are considered a trade secret. The Penn- experienced legal counsel. terminated for cause, but a “soft cov- sylvania Uniform Trade Secrets Act enant” that only prohibits employment permits a business to seek injunctive Mr. Maruca is a health care partner or financial relationships with hospitals relief, damages and attorneys’ fees as with the Pittsburgh office of the national or health systems and allows you to a result of misappropriation of trade law firm of Fox Rothschild LLP. He can return to private practice if you are secrets by theft, espionage or other be reached at wmaruca@foxrothschild. terminated without cause. If you signed improper means. Instead, see if your com or (412) 394-5575. Moving? Be sure to let us know .... We can update our system to better serve you! When your patients call, we will know where to send them. Call (412) 321-5030 to update your information.

276 Bulletin / July 2016