New York Employment Lawyer Blog

The New York State Attorney General's Office recently settled a qui tam whistleblower case with Cayuga Medical Center ("Cayuga") for $3,576,056. The allegations charged Cayuga with violating the federal Stark Act and the state's False Claims Act by entering into illegal physician recruitment agreements with various medical practices.

In 2007, Dr. Daniel Jorgenson, a plastic surgeon with admitting privileges at Cayuga, filed this whistleblower lawsuit. Jorgenson alleged that Cayuga recruited physicians into the local area under a recruitment agreement and paid for expenses, which violated federal law. Cayuga then submitted claims for payment under Medicaid and Medicare, which were not in compliance with federal law.

Cayuga used to offer loans to new physicians to help them start their private practice and to recruit them into the Ithaca area. However, a regulatory change in 2004 made it so that these loans to the physicians joining an existing practice could no longer include any portion of that practice's overhead, unless new staff or space was added. All contracts entered into before 2004 had to be changed, as the regulation did not "grandfather" prior recruitment contracts. In 2007, Cayuga discovered that 4 recruitment contracts signed prior to 2004 had not been corrected due to oversight and reported this to the Office of the Inspector General. During the investigation, Dr. Jorgenson filed his whistleblower lawsuit alleging that 2 additional contracts were in violation of the Stark Act. Although Cayuga disagreed that these 2 contracts were in violation, it settled the matter to avoid the high cost of lengthy litigation.

Of the settlement amount, New York State will receive over $426,000 and $3.1 million will go the federal health care programs. As the whistleblower for reporting the fraud and for cooperating with the investigation, Dr. Jorgenson will receive 18% of the settlement which is $567,000.

The Stark Act makes it illegal for a doctor to refer patients to a hospital or other provider of health care with which it has a financial relationship. It also prohibits hospitals from billing Medicaid for a referral if that referral was in violation of the law. The Stark Act is one of the most important laws affecting the compensation relationship between hospitals and its employed physicians. What makes it difficult to accept is that it is a strict liability statute so that your intent does not matter. In other words, even if you didn't intend or mean to violate the law, you will still be held liable. There was no finding of fraud or abuse by Cayuga but just plain old administrative oversight which has now cost it millions.

If you are a physician or a health care provider, make sure you are in compliance with all state and federal laws regarding physician compensation. The Stark Act is easily implicated if you are using referrals with some type of financial compensation unless you fall under an exception. If you're in doubt, call our Physician Employment Agreement Attorneys at Villanueva & Sanchala at (800) 893-9645 to help review your system and policy of referrals to ensure that you are not violating any state or federal laws.

Continue reading "Health Care Providers: Watch out for Illegal Physician Employment Agreements" »

After careful consideration, negotiation, and expense, your practice hired a new physician who you thought was going to work out perfect. Your practice spent considerable time and resources getting him admitting privileges to your hospitals, introduced him or her to your network of physicians, and your practice may even have sent all its new patients to him or her. It turns out that after evaluating your new recruits performance, your practice realized that he or she is not the right fit. For whatever reason, his or her one year employment agreement ends this summer and you need to discuss termination.

Terminating a physician's employment contract can get as ugly as a divorce. As much time and effort as you may have spent, remember that your departing physician may also have made significant changes in his or her life when joining your practice. The departing physician may not be too happy having to search for new employment again. He or she may have started establishing roots in the community, purchased a home, and joined various organizations.

The employment contract is the best place to start. Refer back to the employment agreement and discuss what responsibilities each party must carry out to fulfill their contractual obligations. Most importantly, stay professional and keep it honest. Keep in mind that your patients' medical care has to come first. Also keep in mind your practice's reputation. A departing physician with an axe to grind can cause a lot of damage. Our attorneys can help you interpret the employment contract and make sure that its terms are complied with in a professional manner.

The non-solicitation provision in a physician employment agreement is one of the most important clauses which will impact the terminating physician's future practice. The non-solicitation provision is put in by the basically to stop the leaving physician from taking any patients with him or her to the new practice. It's purpose is to stop the physician form persuading, coercing, or influencing a patient to leave the current practice to obtain similar services from a competing practice.

A non-solicitation clause will not be enforced if it stops a doctor from soliciting any patient in any manner that he or she has seen in the practice. For example, it is solicitation where a physician knows that he is going to be leaving his current practice in 4 months and begins persuading every patient he sees in those last 4 months that he is leaving this practice because it doesn't have state of the art equipment but his new practice located at Z Town in 4 months will have everything there as well as much better treatment there. However, it is not solicitation if a departing physician places an advertisement in the local paper advertising his new practice or sends out a mailing to a certain town.

Our attorneys have helped many practices minimize conflict and ensure a smooth and professional transition when they have decided to terminate their physician employment contract within a year. If things have not worked out the way you anticipated with your recent physician hire, call our Physician Employment Agreement Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you discuss your options.

Continue reading "Terminating Your Employee's Physician Employment Contract: Beware of the Non-Solicitation Clause" »

Purchasing a medical practice is probably one of the most important decisions that you will make in your life. The type of practice, location, and size are just a few factors that will influence the growth and success of your practice. Unlike many other professions, you can't just change jobs after purchasing a medical practice. The medical practice you purchase will establish roots for you in that location, in the community and the hospitals that you send your patients to. Our firm has helped many doctors evaluate their options to negotiate the best possible medical practice to benefit their life and career.

Before you purchase or even begin to negotiate purchasing a medical practice, consider the following factors in your decision making process:

1) Type of Purchase. The purchase of a medical practice could take the form of stock purchase or an asset purchase. In a stock purchase, the purchaser is acquiring assets such as equipment, fixtures, accounts receivables as well as liabilities. It is important to note that liabilities include all accounts payables and any malpractice suits that may be ongoing against the practice. In most cases, a stock purchase occurs when a current employee of the practice, usually on a partnership track, becomes a full or part owner of the practice. He or she then also becomes liable for the practice's liabilities. For example, if you purchase into a practice where one of the partners has a high number of malpractice actions named against him or her and the practice, you may also be sharing any liability not covered by insurance. Additionally, if that partner has a higher than normal rate of malpractice insurance because he or she has been sued more often, your income will be affected if medical malpractice insurance is a shared expense. In such a case, you may want to negotiate that each physician pay for his or her own medical malpractice insurance separately.

In an asset purchase, the buyer steps in and takes over the practice. The purchaser normally acquires the remaining inventory and office supplies. The purchaser does not take on the liabilities or the accounts receivables. You should make sure to get the seller's patient list with telephone numbers and addresses. Since you are paying for the entire practice, make sure the telephone number, fax, and e-mail address stay the same. You should also have access to the website if there is one.

2) Purchase Price. The purchase price is the most difficult factor to determine. You must negotiate this price. In order to determine the purchase price, take the value of the assets that you're acquiring such as furniture, computers, equipment, supplies and add it to the goodwill. Goodwill is a difficult number to measure as it is based on how well the practice is doing, its location, reputation, and how long it has been in business. Also obtain the financial statements from the past five years to see how the practice is doing and whether it is growing.

3) Non-Compete Agreement. A non-compete agreement is crucial to ensure that the seller does not take back the practice that he or she just sold you. A well drafted non-compete clause should ensure that the seller does not open up a practice across the street from you or anywhere in your targeted geographic location. This is extremely important because if the seller opens up a practice nearby, you will most likely lose your patients.

Purchasing a medical practice is an extremely complicated business decision that will affect you, your career, and your family. If you are considering purchasing a private practice, call our Physician Employment attorneys at Villanueva & Sanchala at (800) 893-9645 to help you evaluate, negotiate and guide you in your purchase.

Continue reading "Negotiating the Purchase of a Medical Practice: Top 3 Things You Need to Know " »

FAQ: I am a physician practicing in a cardiology group. The local hospital recently approached our group to discuss buying our practice. What factors should we consider before deciding if we should join the hospital?

Our office is seeing a rising trend in physician employment agreements with hospitals. Given the various economic and regulatory factors, more and more hospitals are buying out physician practices and employing the physicians. This trend is important to note because it is effecting physician compensation in all areas. In the past, it was a given that you would be compensated more if you joined a private practice specialty group than a hospital or a health system. However, hospitals are now matching or exceeding private practice compensation. Our laws firm has helped many doctors review and negotiate their employment contracts with hospitals as well as private practices. Our attorneys can help you obtain the best possible agreement to fit your career goals.

A few examples of this rising trend were evidenced in a survey conducted by the Medical Group Management Association (MGMA) last year which showed the following:

• multi specialty groups offered a starting median salary of $300,000 in allergy/immunology and hematology-oncology whereas hospitals were offering $330,000

• family practice physicians were compensated $150,000 in private practices whereas family practice physicians employed by hospitals were being paid $162,000.

• the median starting salary of orthopedic surgeons in a private practice was $325,000 while hospitals were starting them at $425,000.

In fact, according to a report released this year by the Center for Studying Health System's Change (HSC), physician employment in hospitals has grown since 2007. The number of hospital employed physicians has grown by 30% while private practice physicians has decreased by 20%. In 2009, 65% of established doctors and 49% of new physicians worked in hospital owned practices. A study conducted by HSC showed that more hospitals are looking at physician employment as an alignment strategy and as a way to increase their profits.

This trend of physicians joining hospital owned practices is occurring due to several reasons. Given the uncertainty with the implementation and timing of the Health Care Reform Act, reimbursements rates have dropped in many areas and nobody knows where they will end up in the future. Many practices are also incurring increased overhead costs which have also been eating away at physician income. Many physicians today also do not want to work long hours nor do they want the administrative hassle of managing a practice. In fact, many physicians completing their residencies and fellowships have huge loans to pay off and want a fixed, steady income. To this end, many hospitals are offering loan assistance to these physicians in mostly every specialty for signing on with them.

If you or your groups are considering employment at a hospital, make sure you ask for a hospital physician employment agreement. Do not hesitate to let the hospital know that you need time for your attorney to review the contract. The hospital might tell you that other physicians have received the same contract and signed it. Even then, it is imperative that you have your own attorney review it looking out for your best interests. Although hospitals may offer attractive compensation packages, you also need to evaluate your future compensation. Make sure you know how your future compensation as well as how bonuses will be determined.

Your hospital physician employment agreement will probably contain a restrictive covenant not to compete. If you have been living and practicing in the area for years, make sure your attorney strikes out this clause. In the event your employment with the hospital does not work out, you should leave open the possibility of re-opening your private practice.

With new economic and regulatory factors affecting physician employment, it is crucial that you have a hospital physician employment agreement and that you evaluate it with the future in mind. If you are considering joining a hospital or a private practice, call our Physician Employment attorneys at Villanueva & Sanchala at (800) 893-9645 to help you evaluate and negotiate the best possible employment agreement for your needs.

Disclaimer: 

Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced employment law attorney in your state or jurisdiction.

Understanding the intricacies of a physician employment agreement can be a daunting task when you're fresh out of residency or fellowship and looking for your first real job or even when you are changing practices. Unlike many other professions, doctors and other medical professionals who join an established practice typically end up staying there for an extended employment term up to and including retirement. Thus, properly evaluating and negotiating your employment contract can affect how you will be paid and what your compensation will be based upon in subsequent years of your career. In addition, non-compensation issues such as defining and limiting the number of calls should be considered.

If you don't effectively negotiate your employment agreement and later realize that the job wasn't what you expected or you are terminated, your employment contract can play a major role in your next career steps. For example, the parameters of your non-compete clause will determine whether you are able to practice in the same geographic area. Before you sign or commit to a medical practice or hospital, you should consult with an experienced lawyer. Our employment lawyers have represented physicians practicing in various specialties including surgery, anesthesia, radiology, and obstetrics-gynecology with privileges at major New York and New Jersey Hospitals including Westchester Medical Center, Hackensack University Medical Center, Nyack Hospital, Mount Sinai Medical Center, New York University (NYU), New York Presbyterian Healthcare System, New York City Health and Hospitals Corporation, and VA Healthcare Systems. Below are some general considerations for doctors and medical professionals to consider:

1) Negotiate. Don't commit to a verbal offer without having your employment law attorney review the contract and negotiate better terms. Since you may be working with these people, you may feel uncomfortable asking for changes and negotiating better terms. Practices often try to discourage employees from seeking legal advice or counsel and say that the employment contract is non-negotiable but that is generally not the case and some terms usually can be negotiated.

Continue reading "New York and New Jersey Physician Employment Contracts: Top 10 Things for Doctors to Know Before Signing, Part I" »