Seven Basics

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SEVENBASICS IN THE WORLD

OF CONTRACTS

Charles J. Assini, Jr., Esq.NYSSA Legal Counsel and Legislative Representative

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Each contract you enter into establishes rights and obligations which are binding on you and which you are presumed to understand.

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ONEPrivate Group Practice

Three Categories of Contracts

When you become associated with a private group practice, you will be assuming contractual obligations

based upon three general categories of contracts.

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Private Group Practice

Three Categories of Contracts

A. Internal Group Agreements

B. “Group” Agreements

C. Physician Agreements

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A. Internal Group Agreements

Contracts between the private group and the private

individual physician members.

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A. Internal Group Agreements

1. Employment

2. Shareholders or Operating

3. Stock Purchase

4. Deferred Compensation

5. Pension and Profit Sharing Plans

6. Medicare Anti-Fraud and Abuse Compliance

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B. “Group” Agreements

Contracts between the group and third parties.

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B. “Group” Agreements

1. Exclusive Service (with Hospital)–See Appendix A-Hospital Contracts, Four Years Later by Karin Bierstein in the Legal Primer

2. Billing Services

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C. Physician Agreements

Contracts between individual physician members of the group and third parties.

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C. Physician Agreements

1. Medical Malpractice Insurance

2. Hospital Medical Bylaws

3. Third Party Payor Agreements

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TWODue Diligence andEquity Ownership

Become familiar with the entity you are considering joining and appreciate the advantages of equity or

ownership status.

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Due Diligence andEquity Ownership

A. Conduct A Due Diligence ReviewB. Advantage of Equity Or Ownership

StatusC. Annual Assessment-Equity TrackD. Ownership EquityE. “Non-Partnership” Contracts

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A. Conduct A Due DiligenceReview

See Appendix B-“Checklist for Evaluating a Group Practice

Opportunity” in the Legal Primer

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B. Advantages of Equity or Ownership Status

1. Job Security

2. Share in Profits of the Group: The Group’s Accounts Receivable

3. Participation in Management

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C. Annual Assessment – Equity Track

Consider requesting that the group incorporate the

following into your contract.

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C. Annual Assessment – Equity Track

1. The group agrees to discuss with you annually, at the same time that your compensation is reviewed, your performance as well as the group’s opinion regarding your eligibility for an offer to become a shareholder.

2. Also see Appendix C-“Performance Evaluations” by Karin Bierstein, J.D. in the Legal Primer

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D. Ownership Equity

See sample clauses under “Acquisition of Stock” in the

Legal Primer.

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D. Ownership Equity

1. Terms of the Buy-in.

2. Bonafide Equal Equity Owner?

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E. “Non-Partnership” Contracts

1. Stated Salary.2. Duties: No “on-call” or

“weekend.”3. Days, Hours, Holidays: Defined.4. Locations: To render services.

continued …

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E. “Non-Partnership” Contracts

5. Disabilities and Pregnancies: NYS Law considers pregnancy a “disability” with same benefits.

6. Conversion to Partnership Track: See sample clauses under “Conversion to Partnership Track” in the Legal Primer.

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THREEEssential Terms of

Employment Agreements

Know the essential terms of the Employment Agreement (see “Essential Terms of the

Employment Contract” in the Legal Primer for sample

provisions).

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Essential Terms ofEmployment Agreements

A. Term and TerminationB. Salary and BenefitsC. Terms and ConditionsD. Duties and ResponsibilitiesE. Vacation

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A. Term and Termination

“At will” v. “for cause.”

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B. Salary and Benefits

1. Physician Compensation and Production Survey (see Appendix D -“Physician Compensation and Production Survey” in the Legal Primer).

2. Fixed Salary v. Productivity Compensation Formula (see “Productivity Compensation Formula” in the Legal Primer).

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C. Terms and Conditions

1. Outside Practice Restrictions.2. Incorporate by Reference the

Policies and Procedures of the Group (see “Duties and Responsibilities” in the Legal Primer).

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D. Duties & Responsibilities

1. CRNA Supervision.

2. Pain “Specialty”: Standard contract is inadequate for integrating a pain practice into a general anesthesiology practice.

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FOURProfessional Malpractice

Insurance

Appreciate the importance of professional malpractice

insurance coverage.

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Professional MalpracticeInsurance

A. Defense and Indemnity ProtectionB. Name of the CompanyC. Name of InsuredD. Limits of LiabilityE. Defense Only CoverageF. Claims Made v. OccurrenceG. Medical Liability Mutual Insurance

Company (“MLMIC”) Rates

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A. Defense and Indemnity Protection

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B. Name of the Company

Is it financially stable?

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C. Name of Insured

You or the group?

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D. Limits of Liability

$1,300,000 per occurrence, $3,900,00 per aggregate, and

excess layer. Malpractice awards have increased from an average of $1.7 million in 1994 to $6 million in 1999.

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E. Defense Only Coverage

$25,000 standard and up to $100,000 for additional premium (Administrative Reviews, Fraud

and Abuse, OPMC).

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F. Claims Made v. Occurrence

See Appendix C-Chart of “Medical Malpractice Insurance:

Claims Made v. Occurrence Coverage” in the Legal Primer.

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FIVEProblematic Clauses

Problematic clauses contained in the Employment Agreement.

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Problematic Clauses

A. Indemnification

B. Billing and Assessment of Billing Audit Costs

C. Covenant Against Competition

D. Waiver of Rights

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A. Indemnification

See “Corporate Liability” under “Professional Corporation” in

the Legal Primer.

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B. Billing & Assessment of Billing Audit Costs

Employers will take the position that it is essential that you provide

medical records that are accurate, complete, and submitted in a timely

fashion. Understand billing requirements and your liability. (See “Assessment of Billing Audit Costs” in

the Legal Primer.)

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C. Covenant Against Competition

See “Non-competition Clause or Restrictive Covenant” in

the Legal Primer.

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D. Waiver of Rights

See “Peer Review and Due Process Rights Waiver” in the Legal Primer.

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SIXOther Practice Options

See “Other Practice Options” in the Legal Primer.

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Other Practice Options

A. Academic

B. Office Based

C. Solo or Small Group Practice

D. Pain Practice

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A. Academic

1. Bylaws

2. Patent Policy

3. Intellectual Property, Copyrights, Royalties Policy

4. Outside Employment Policycontinued …

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A. Academic

5. Financial Disclosure and Conflict of Interest Policy

6. Code of Ethics and General Conduct Policy

7. Guidelines on the Conduct of Research

continued …

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A. Academic

8. Current and AAUP Bargaining Unit Agreement

9. Policy on HIV, HBV, and HVC

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B. Office Based

What practice regulations and/or guidelines are in effect in the jurisdiction you provide office-based anesthesia? For

New York State’s Clinical Guidelines, see:

www.health.state.ny.us/nysdoh/obs/obs.htm

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C. Solo or Small Group Practice

1. Exclusive Contract: Can you secure one? Can you satisfy coverage requirements?

2. CRNAs: Are surgeons willing to supervise?

continued …

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C. Solo or Small Group Practice

3. Financial Stipend: Is there one paid by the Hospital?

4. Early Termination: Penalty?continued …

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C. Solo or Small Group Practice

5. CMS Rule: Impact of rule allowing Governors to permit CRNAs to administer anesthesia without direct personal supervision of a physician.

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D. Pain Practice

1. Unique Legal and Practice Management Issues and Contract Clauses

2. Hospital Privileges?3. Anti-Kickback and Hospital

Space

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SEVENNegotiating Your Contract

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Negotiating Your Contract

A. Pre-Contract Due Diligence

B. The Agreement You Execute Is A Legal And Binding Contract

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A. Pre-Contract Due Diligence

Please note that the group will extensively analyze your

background prior to extending an offer to you. You are

encouraged to do the same with respect to the group.

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A. Pre-Contract Due Diligence

1. Evaluate a Group Practice: (see Appendix B “Checklist for Evaluating a Group Practice Opportunity” in the Legal Primer).

continued …

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A. Pre-Contract Due Diligence

2. Relationship with Hospital Administration?

3. Active in Medical Staff Affairs?

4. Relationship with Surgeons?continued …

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A. Pre-Contract Due Diligence

5. Able to Cope with the Changing Health Care Market Place?

6. Group Effectively Managed?7. Medicare or Corporate

Compliance Plan?continued …

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A. Pre-Contract Due Diligence

8. Adherence to ASA Ethical Standards: Non-exploitation of young physicians (see Appendix G “Editor’s Notes” from CSA Bulletin in the Legal Primer).

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B. Agreement is Legally Binding Contract

1. You Must Take Responsibility For Your Employment Decision: Do NOT execute a one-sided employment contract in the hopes that the group will disregard their contractual rights.

continued …

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B. Agreement is Legally Binding Contract

2. You are Presumed to Know What You Are Doing

3. Terms Not Included in the Contract May Be As Important As Those in Contract

continued …

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B. Agreement is Legally Binding Contract

4. Should You Use An Attorney?