Scot Sauder, Esq. Senior Associate University Counsel Lead - - PowerPoint PPT Presentation

Scot Sauder, Esq. Senior Associate University Counsel Lead Attorney, Health Law Group Office of University Counsel, University of New Mexico March 22, 2011

 Memorializes the parties’ agreements

• Doesn’t leave the terms to the parties’ respective

recollections

 Extends the Statute of Limitations  In the case of a governmental entity, enables

the non-governmental entity to enforce the agreement

 Required if you want to fall within the Anti-

Kickback “safe harbors” and is required to get into an exception under the Stark laws and regulations

 Must have –

• an offer,
• an acceptance of that offer,
• consideration passing between the parties

 Each party must have some obligation to do something for the other party (i.e., pay money, do some act, no do some act)

 In other words, must have a “meeting of the

minds”

 Who are the parties to the contract?

• Does the person or company with which you may contract

have the capacity to contract with you?

• If you are dealing with a company (i.e., a professional

corporation or a professional association), does the person signing the contract have the authority to bind the company to the terms of the contract?

 Does the person need Board of Director approval? Approval of partners in a partnership? Approval of the members of LLC?

 What is the term of the contract?

• When does the term begin?
• When does the term end?
• Can the contract be terminated during the term?

 If so, how and on what grounds? With cause? Without cause?

• Is the contract an “evergreen” contract?

 What are the terms of compensation or other

consideration to you?

• If an employment contract, does the agreement cover

terms under which incentive compensation will be paid, employee benefits such as health, retirement, and other benefits

• Is it absolutely clear?

 When payment is to be made?  How payment is to be made?  Do you have to invoice or do something else to get paid?

 Does the agreement condition your employment

• n anything?
• Obtaining membership on a particular medical staff and

clinical privileges at a particular hospital?

• Obtaining and maintaining licensure, Board certification?

 The “miscellaneous” provisions in a contract are

• ften overlooked . . . at your peril!
• Integration clause – keeps oral testimony out about

understandings you may have had with the other party prior to signing the contract

• Choice of law – decides what state’s laws apply . . . not

all are the same

• Where notice is to be sent if something has to happen

under the contract

• Governmental-type provisions

 If a hospital contract, the no inducement to refer language can save the contract and services performed under it from attack for health care fraud and abuse purposes  Records availability provisions impose obligations on you  Eligibility to participate in governmental programs impose

• bligations on you

 Non-solicitation provisions –

• Keeps you from soliciting employees or patients of the practice
• Must be time limited
• May have liquidated damages consequences
• Try to negotiate down the time period covered and the amount of

potential damages

 Non-competition Agreements

• In right to work states, these are frowned upon by the courts
• They are enforceable in New Mexico, if the reasonable in

geographic scope and length of the prohibition

 The geographic scope needs to reasonably tailored to protect the economic interest of the employer  The time limit of the prohibition must also be reasonably tailored to protect the economic interest of the employer  Should have a buyout provision



Income guaranty arrangements

• Hospital guarantees a certain level of income to the physician for a period of time to

enable the physician to develop his or her practice

• Amount of income guaranty must be based upon actual additional incremental

incurred in recruiting and employing the doctor

 Cannot compensate for non-incremental additional expenses such as unused exam rooms or square footage allocations  For rural hospitals and health professional shortage areas, the per capita amount of aggregate practice overhead (not to exceed 20% of the practice’s overhead) can be included if it is replace a physician who retired, relocated, or died within the previous 12 months

• Amount of income guaranty must not be based on or related to the volume or value
• f referrals to the hospital
• Contract must be for a term of not less than 1 year



Payment of relocation expenses

• Hospital pays for the cost of relocating a physician to the locale of the hospital
• Payment amount must be based on the cost of relocation
• The physician must actually relocate from an area outside the hospital’s geographic

area to within the hospital’s geographic area

 Lowest number of contiguous zip codes where the hospital draws 75% of its patients  There is an alternative, more expansive definition to enable rural hospitals to more effectively recruit physicians

 Federal law (Stark) now allows –

• Reasonable non-compete provisions
• Restrictions on moonlighting
• Non-solicitation provisions (see above)
• Requirements that the physician treat both Medicaid and

indigent patients

• Requirements that the physician not use confidential

information about the practice he or she is leaving

• Provisions requiring repayment of practice’s losses (from

your practice) that are not made up for by hospital recruitment payments

• Reasonable liquidated damages if the physician leaves

the practice and remains in the community

Any questions?