How Do You Terminate a Physician Contract Without Cause? | Without Cause Termination

How do you terminate a physician’s contract without-cause? In any physician contract, you can terminate a contract in different ways. It can be through mutual agreement. It can be the contract ends if no one wants to renew it, and it can also be for-cause. There will be a giant list of things. The employer can fire the physician for-cause if you lose your license, DEA registration, are uninsurable, have a felony, or are on the OIG list. Those are all obvious things. If you can’t practice medicine, you can’t work for the employer so that they can terminate it for a cause. The physician should also be able to terminate the agreement for-cause. 

Without Cause Termination by Physicians

So, if the owner or practice is not holding up their end of the bargain, there should be something in there that allows the physician to give notice that the employer’s in breach. Usually, there would be a cure period where either party would have a certain period. Usually, 30 days, sometimes less, to fix whatever the problem is.   It allows whoever is breaching the contract time to cure the breach. And then lastly, the other way to terminate an agreement, which we’re focusing on today, is without-cause termination. 

The without-cause is extremely important for several reasons. But on a basic level, without-cause termination allows either party to terminate the agreement with a certain amount of notice to the other. The industry standard would be about 60 or 90 days. Sometimes it’s as low as 30 and can be as high as 180, but 60 or 90 days is the norm in most physician contracts.

Terminate Medical Agreements

Once the physician gives notice that they want to terminate the contract without-cause, and let’s say they have a 60-day notice requirement, they’ll have to work out those 60 days. And then, after the 60 days are over, they can leave. There should be language that states if the physician gives notice and the employer doesn’t want them to work anymore. The employer can say, I don’t want you to work 60 days. I want you to go home. However, the employer would still have to pay the physician for those 60 days.

Physician Employment Contract

The reason without-cause termination is essential is that no job is perfect. It’s also difficult to gauge through the interview process and going out, meeting the people, and seeing the offices. The physician can get a feel of whether there will be an excellent cultural fit, but sometimes it’s a facade. The physician thinks it will be a great match, and you get there, and it’s not. If there wasn’t without-cause termination and you just had to work out the initial term: one year, two years, three years, you’re stuck for that amount of time if it’s not in there and they’re not breaching the contract. So, without-cause termination kind of gives flexibility if the situation is not working out and goes on both sides. Sometimes an employer brings a physician who is not a good fit and wants to eliminate the physician.

Some considerations if the physician is going to terminate the agreement without-cause. First, usually, if you’re with a small physician-owned group and you terminate the employment agreement without-cause, that physician will be responsible for paying for tail insurance. If you’re an employee of a big hospital or health network, you seldom have to pay for tail insurance. Are there any repayment obligations for the signing bonus relocation assistance? Usually, if you leave within the first term, you’ll have to repay some fraction. What happens to the compensation after the agreement is terminated? Suppose a physician is on a pure net-collections-based agreement. The agreement states no more compensation goes to the physician when the contract terminates.

Employer Practice Agreement Issues

You just lost out on 60 to 90 days of collections. The physician needs to make certain that there’s some kind of window. If they’re on net-collections after the contract terminates, they can continue to get the revenue they generated. Also, if you terminate the agreement without-cause, the restrictive covenants will apply. So restrictive competitions are things you can’t do after the contract ends. For instance, a non-solicitation agreement, non-compete, and non-disparagement will all apply. If they’re in the contract and you’re in the state, that doesn’t prohibit them if you terminate the agreement without-cause.

Another thing to think about is how to notify the employer correctly. Unfortunately, I see this every time where a physician gives notice. Still, it wasn’t an effective notice. That means there’ll be a section in the contract that says, this is how you give us proper notice.

In that case, you must follow the notice provision in the contracts. For instance, it may have to be either certified mail or hand delivery. They rarely would accept an email, but in some cases, they may really look at the notification section. It’ll have to be in writing and sent correctly. If handled correctly, there won’t be any issues if that happens. However, I have had a couple of cases where a physician didn’t give effective notice, and the employer was mad because the physician was leaving. They just sit on it for a month. And then finally came back to the physician and said, hey, you realize you didn’t give effectively. Now you owe us another 60 days, which completely screws up whatever new job they have lined up.

Physician Contract Review Attorney

If you have a contract that does not have without-cause termination, the only exception would be if you’re a J-1. Some states prohibit having without-cause termination during the three-year term) and it just states that you have to finish the term, which is an enormous red flag! It would help if you either had that looked at or moved on to a new job with proper termination.

What should be in the termination letter? When a physician decides to leave a position, I find that many physicians feel like the termination letter would be a good place to air their grievances. These are 

why I’m leaving all the things that have happened to me that I don’t appreciate. These are the things that led to me deciding to terminate the agreement. The termination letter is not the place to do that. Suppose a physician believes that the employer is not following through on the terms of a contract. In that case, they should inform them in writing that the employer is in breach. Generally, most contracts will have a cure period, which will give the party a certain amount of time to fix whatever the problems are.

Other Blogs of Interest

• Can a Physician be an Independent Contractor?
• What is the Best Without Cause Termination Length in a Physician Contract? Dismissal
• What Should be in a Physician Contract Termination Letter? | Contracts

What Should Be in a Physician Contract Termination Letter?

What should be in the termination letter? When a physician decides to leave a position, I find that many physicians feel like the termination letter would be a good place to air their grievances. These are why I’m leaving all the things that have happened to me that I don’t appreciate. These are the things that led to me deciding to terminate the agreement. The termination letter is not the place to do that. Suppose a physician believes that the employer is not following through on the terms of a contract. In that case, they should inform them in writing that the employer is in breach. Generally, most contracts will have a cure period, giving the party time to fix the problems.

Medical Agreement Termination

So that would be the appropriate place to air the grievances. In the termination letter, there should only be two things. If the person terminates the agreement, it will likely be without-cause. That means nothing has happened that can give either party the ability to terminate the agreement immediately. Nearly every physician contract has without-cause termination. And that means either party can terminate the agreement with a certain amount of notice to the other party. 60, 90 days is the industry standard. Sometimes it can be as low as 30 and as high as 180, but 60 or 90 is the normal amount. The physician in the termination letter should cite the contract’s specific section. 

I am giving you 90 days’ notice. My last date of employment should be on this date. And then, the physician must ensure that the termination letter follows what would be called a notices section. So, in any physician contract, there should be a notice section. That states how the physician can give effective notice, meaning who and how you properly send some notice. And in that section, it will state that these are the ways that you can give proper notice. It could be certified mail, hand delivery, email, or fax. Most places do not allow emails or faxes. It’s either some registered certified letter through the post office. Almost all of them accept hand delivery in some way. Then, they will list where and to whom the termination letter needs to be sent.

Physician Employment Contract Letter to Terminate

If it’s a small physician-owned practice, then it will likely be the owner of the practice. And then, the address would be the address of the practice. Suppose it’s a large corporation, hospital, health network, or something. In that case, you’ll likely have to send a copy to the CEO or COO, whoever their general counsel is. I’ve had a couple of situations where I’ve had someone contact me after the fact that they failed to give proper notice. They either told their boss or sent an email and the employer sat on it for 30 days. They didn’t say anything to the physician. And then, they returned to them 30 days later and said, Dr. Smith, you did not give us proper notice. Therefore you owe us another 60, 90 days after you give us proper notice.

Physician Contract Review for Agreements

They did that because they were mad at the physician. They knew it would likely screw his next job opportunity and the start date. So, the physician must ensure that they’re following: one, what’s in the without-cause termination section. And what’s in the notices section of the contract? To summarize, the termination letter is not a place to list all of the physician’s problems. You thank them for your time. You tell them the termination section you rely on to terminate the contract. Then you’ll send it to the place listed in the notices section. And that’s it. There’s absolutely no value in putting anything more than that.

What Is Without Cause Termination in a Physician Contract? | Physician Termination Agreement

What is without-cause termination in a physician contract? Essentially, it allows either party to terminate the contract agreement at any time. For any reason, with a certain amount of notice to the other party. Without-cause termination is essential because if a physician enters a job, everyone expects a position to be great, right? You don’t take a job hoping you want to leave immediately, but things change, or it certainly can be different once you start. 

Let’s say a physician takes a job. After a few months, it’s clear that it’s not a good cultural fit, or maybe they’re on productivity compensation. Whatever the reason, they’ve decided. I do not want to stay here. And so, without-cause termination will allow that physician to give notice, work out a period, and then move on. 

Average Length of Termination Without Cause Notice

The average length, or at least the standard for most without-cause termination notice periods, is somewhere between 60 to 90 days. Anything higher than 90 days causes a couple of problems. Anytime somebody gives notice, the dynamics will change between the physician and the other physicians or the organization itself. You’re no longer in the long-term plans. Sometimes, there can be insufficient blood as well. And so a shorter period to have to work out whatever is advantageous. It’s just better. If you had a 180-day notice, you’re there for six months dealing with a potentially awkward environment.

Another thing to consider is the longer the lead time, the harder it is to find a new job. If you’re coming out of training, everyone comes out at the same time. So, all employers understand this. And there’s a rhythm to when they offer jobs and start onboarding and all that type. If you’re out, you’ve been out for a while. And then you decide to switch, it can be at any time, but most people don’t post for jobs six months in advance. They will say, we have a need now. If you have a six-month notice requirement for your job, you may lose out on job opportunities because they need someone much faster than six months. 

And so, they’re going to find somebody and leave you in the dust. 

Two main reasons: don’t put yourself in a toxic environment for an extended period, and then two, help shorten it down so that you can find a new job more efficiently. In the physician contract, it’s going to state how much notice you must give. 

How Much Notice Time Do You Need to Terminate an Agreement?

And let’s say it’s 60 days. This example will also state that it must be in writing. So, you need to find in the physician contract that it’ll be under the termination section. And it will say without-cause termination, for no good reason, or something like that. And then it’ll just state that either party can terminate the contract agreement with a certain amount of notice to the other, as I said before, in 60 days.

There’s another section in your physician contract called either notice or notice. And it will state exactly how you can provide notice to the employer. It’ll say whether it needs to be certified mail or hand delivery. Most physician contracts don’t have email. Indeed, there’s no verbal acknowledgment, no fax. If you were to tell your boss, hey, I’m leaving in 90 days, but not give them a written letter that states you’re going. As a result, they could potentially force you to work for another 60 days until you give them adequate notice. So, those two sections. 

Look into the without-cause termination section to see how long or how much notice you must give. And then, look in the notices section and ensure that you can provide adequate notice. I’ve had a couple of times where physicians have called me after the fact and said I emailed my boss. It was 60 days’ notice; they waited 45 days and then came back and told me I didn’t provide them effective notice. And now, they’re saying I must give them another 60 days. Well, it’s vindictive on the part of the employer. They were mad and did that just to kind of screw with the physician. 

What Happens if a Physician Do Not Give Effective Notice

But if you don’t give adequate notice, it doesn’t count. Ensure you’re both offering the right message and following the notice section. Now, what happens if you decide to leave a job and don’t give the proper amount of notice? Well, many physician contracts will have penalties associated with that. For instance, a common way of doing it would be to penalize the physician. They didn’t give enough notice of whatever their average daily rate was for every day. If it was 60 days and they only gave 30 days, they’d owe 30 days of their average pay to the employer. Average pay could be a significant amount of money.

You want to ensure that you give as much notice as required in that without-cause section. Therefore, you can’t be penalized. Employers could come after you for recruitment costs, locums to cover your shifts, or if you’re an outpatient or something like that. It’d be rare for them to do that. However, you are opening yourself up to liability if you fail to give them the specified amount of notice in your physician contract.

What Is an At-Will Physician Contract? | Without Cause Termination

What is an at-will employment contract for a physician? At-will employment generally means that either party can terminate the agreement at any time, without notice. Most people think of it as an at-will employment arrangement like most nurses, and I’ll use healthcare as an example. So, techs, nurses, and administrative staff are not on employment agreements. They’ll just become an employee. And then, at any point, if the employer doesn’t want to employ them anymore, they terminate and let them go. And there’s nothing the employee can do about it. An employee could potentially have a claim for wrongful termination, retaliation, or something like that.

Provide Notice Even If It’s an At-Will Contract

But for the most part, at-will means you can eliminate them at your will. Most physician contracts are considered at-will as well with the caveat. In almost any physician contract, there will be a notice requirement, and it’s done for a couple of reasons. For the most part, there will be what’s called without-cause termination in an agreement. It will state that at any point, either party can give the other a certain amount of notice. And terminate the agreement for any reason. And so, that would be the at-will part of it. It’s an at-will but with the short notice required. For most contracts, it’s usually 60 to 90 days. 

Sample Scenarios

Let’s have a scenario where physicians are unhappy. They got a better opportunity, and they want to leave. They must provide a written notice to the employer. It might say, per the agreement, I’m giving you 60 days’ notice that I intend to terminate the contract. My last date of employment will be this, and that’s it. Now, there can be some things attached to terminating a contract that every physician needs to consider. The whole reason behind putting at least some notice. One, so the employer can attempt to find a replacement for the physician. Two, if the employer terminates the physician without-cause. There, that physician will still get paid for whatever that notice period. That is even if the employer doesn’t want the physician working with them anymore. 

Continuity of care is also something that a physician needs to think about. Let’s say a physician is in psychiatry, and they have a very vulnerable patient population in the hospital. Then medications are involved with every patient. Suppose the employer fires the physician without a replacement or plan to transition the patient to a new provider. Or to provide bridge scripts or any of that, that’s a patient care problem. So, having that little notice period allows the physician and the employer to put steps in place to ensure at least a continuity of care plan to transition patients. Either to a new provider that already employed the employer. Or ship them out to another physician. 

Still, Consider The Repercussions

Some of the things that a physician needs to think about. Even if you terminate the contract without-cause, even if you’re at will, you say, I’m not interested in being here anymore. There are still some things that can follow you. The non-compete, the non-solicit, will follow you, whether you’re terminated or terminate the contract without-cause. Many contracts will state that if the employer terminates the physician without-cause, the restrictive covenants won’t apply. 

Restrictive covenants are non-compete and non-solicit. That’s one thing you want to get added if it’s not in your contract. Another thing to think about could be repayment and obligations for bonuses. Most contracts will state that suppose the physician receives a signing bonus, relocation assistance, or maybe student loan assistance. And they don’t stay for the initial term, which could be two to three years. They’d have to pay back some prorated amount of the bonuses.

And then insurance. The physician may have to pay tail insurance if it’s a claims-made policy. There are many things to think about when a physician terminates a contract. And just because it’s an at-will doesn’t mean there won’t be some negative percussions after the contract terminates. It would help if you always thought about the without-cause termination. How much will I have to pay back in bonuses? What restrictive covenants will follow me, and do I have to pay for insurance?