UNDERSTANDING PHYSICIAN ASSISTANT EMPLOYMENT CONTRACTS
 
    
  

By: Thomas M. Gallo, P.A., J.D.
 
Unfortunately, yet understandably, most physician assistants are reluctant to read all of the provisions in their employment contracts in the belief that it is a “take it or leave it” situation. However, physician assistants often do not realize that while there are provisions in such contracts that are standard in the industry, there are many issues which can be negotiated. Those physician assistants who simply execute the document without an understanding of the issues contained therein (and their potential impact) often find themselves at odds with their employers, actually unemployed, or in increasing numbers – in a court of law. This article is intended to help physician assistants avoid any such eventuality.

Compensation: Most physician assistants do not realize that they cannot negotiate and increase their total compensation through a productivity incentive provision. Employers can readily appreciate the inherent profitability of collecting several times the amount of money paid to their employee and are, therefore, more than willing to share a percentage of the revenue “collected” for those services rendered by the employee. This, due to prohibitions against fee splitting, is not permissible. Higher base salaries, enhanced benefits, and holiday and year-end bonuses are some of the alternative ways of compensating and motivating a physician assistant as an employee.

Quality of Life Issues: To many, this aspect of the contract is more important than any compensation provision. Physician assistants should weigh heavily such elements as:

• What is the call policy of the practice? Often, physician assistants find themselves working far more hours than are set forth in their agreement. For example, an agreement may provide that the employee is responsible for “call”; however, does the agreement provide that “call” will be on an equal rotating basis, or state what will happen if one of the providers leaves the practice? Is “call” simply via telephone or will you be required to travel to the office, hospital or somewhere else?
 
• Does the practice have multiple locations? Will you have to travel and how often? If there are multiple locations and traveling is required, physician assistants can often negotiate a monthly expense account (e.g., $500.00 per month for auto expenses, insurance, gas, tolls, etc.).
 
•  How long have the employees been at the practice? What are the partners like? What are their billing procedures? Do the partners have any Office of Professional Medical Conduct or malpractice history?

Duties & Responsibility: Ask your potential employer to allow you to shadow one of the physicians, and ideally another physician assistant, for a day. This will give you an idea of what a typical day might be like and help you understand what will be expected of you.

Malpractice Insurance: Physician Assistants should be aware that there are two types of malpractice insurance, “Occurrence” or “Claims Made.” While Occurrence is the preferred form of coverage, it is also the most expensive in that it covers the physician assistants for services rendered during and after the term of The Employment Contract.
 
On the other hand, Claims Made insurance only provides coverage during the term of employment. The moment the agreement is terminated, no matter the reason for the termination, the physician assistant is no longer covered for any of the professional services rendered during the term of the agreement. Therefore, the physician assistant is obligated to purchase additional insurance known as “Tail Coverage”. Tail Coverage is expensive; however, the one-time fee can be paid over time and in most physician assistant employment contracts, negotiations can result in the cost being shared equally with the employer.

Termination: There are normally two types of termination sections within an Employment Agreement - termination without cause and termination with cause.

• Termination Without Cause: Pursuant to New York law, a termination without cause provision relegates a physician assistant to “at will employee” status. Unfortunately, an “at will physician assistant-employee” can be terminated at any time for no reason at all. Such physician assistants have absolutely no recourse, unless the termination is predicated upon illegality (e.g., age, race or gender discrimination).   
 
• Termination With Cause: Every employed physician assistant should be careful of this “catchall provision” that allows the employer to terminate the physician assistant if, in the employer’s sole discretion, it is determined that the physician assistant is detrimental to the practice. Such provisions are too subjective and the consequences are too great in that termination under this provision is immediate, and no notice period is required. As a result, such provisions must be removed or an opportunity to cure must be added.

Restrictive Covenants: The restrictive covenant is one of the most litigated issues in the history of employment agreements. The courts in New York, as in most states, do not like to prohibit medical providers from offering medical services to patients simply because there is a written employment agreement containing a restriction on the employee’s ability to compete with his or her former employer. New York courts will often be flexible and inventive in finding ways to find the restrictive covenants not binding. However, the courts have held that if the restrictive covenant is deemed to be reasonable, the non-compete provision will be enforced.  
 
A restrictive covenant, generally, has two key elements – Geographic area and time frame. When faced with a restrictive covenant, a physician must consider where they would seek to work, in the (likely) event that they will leave the practice. If the location is within the restricted area, then the restricted area should be negotiated to a smaller region that does not include the future location.  
 
In conclusion, a good contract should be reasonable for both sides. Armed with a fair contract, both parties are on their way to a mutually rewarding and successful future.
 
  

Kern Augustine, P.C., Attorneys to Health Professionals,www.DrLaw.com, is solely devoted to the representation of physicians and other health care professionals. The author of this article may be contacted at 1‐800‐445‐0954 or via email at info@DrLaw.com.