Remedies for Breach of a Physician Contract | Breaches of Contract

What are the remedies for breach of a physician’s contract? Let’s kind of break it down into simple terms. First, what is a breach of contract? Well, the entire point of an employment contract is to delineate the responsibilities of both parties. How long does the contract last, or how it’s terminated? How do they get paid, and what are the restrictive covenants? There are plenty of things that both sides must provide to the other. If one of the parties is not following the contract, how is that fixed in this case? What I’m saying is, how is that remedied? 

For-Cause Termination

Let’s talk about the termination of any physician contract. Well, one, you can terminate the contract for-cause.

It means that if there’s a breach of contract, either party can usually terminate it with a certain amount of notice. We’ll get into the details of that, or there’s also without-cause termination, meaning either party can terminate the legal agreement with a certain amount of notice to the other and for any reason. Usually, it’s 60 to 90 days in most physician contracts. 

Give an Adequate Notice

Let’s say a physician is unhappy at a job. All they have to do with without-cause termination is get the employer’s notice, okay, I’m giving you 60 days’ notice, and I plan to leave. It gives you enough time to work on continuity of care, move my patients to someone else, and maybe hire another provider. That’s one way of terminating the legal agreement. Now, for-cause, as I said before, is if there’s a breach of contract.

Breaches that Do Not Have Remedies

In any contract, there’s also going to be a long list of things for which the employer can fire the physician. And these are things that can and are unfixable: 

• Physician loses their medical license
• DEA registration
• Maybe they’re uninsurable due to several malpractice settlements
• I can’t get licensed or credentialed with any of the insurance companies 
• Excluded from Medicare or Medicaid
• CMS is on the office of the inspector general’s exclusion list. 

Those things happen that, for the most part, can’t get remedied or at least not remedied quickly. That would give the employer justification to fire the physician immediately. 

Contract Breach that Can Get Fixed

Now, things that can get addressed, usually, there’s also language about:

• The physician needs to follow the policies and procedures of the employer
• There’s a code of conduct 
• Must get along with the other employees of practice or the hospital.

Cure Period

And in a case where one party thinks the other parties are in breach but can get fixed, that’s called a cure period. Every contract should contain language about how a party can cure any violation. And what that means is, for the most part, it’s usually 15 to 30 days. 

Let’s say a physician isn’t getting paid on time or not receiving the bonus in the contract. The physician can give the employer written notice. They can say, look, this is what the contract states. You’re not following through, not paying me on time or enough. You are in breach of contract. And let’s say it’s a 15-day cure period. You have 15 days to cure this breach. If not, I can terminate the contract immediately. 

So, on the employer’s side, if it’s true that they’re not paying in time or they’re not calculating it correctly. The way that they can remedy the breach is to fix whatever the problem is. Pay their obligation to the physician. And in that case, they have healed the breach. The physician can no longer terminate the contract for-cause because whatever the problem was is fixed. And then again, they can only terminate the contract without-cause. 

Physician Commits a Breach

Using the example before, let’s say a physician is not following policy. The employer can then give the physician notice. Maybe it’s an excessive delay, or the contract states that the physician will work one weekend a month. They’re refusing to work on the weekend or something like that. Then, the same thing would happen. The employer would send the physician notice. They’re in breach of contract, and the physician would then have a period to fix the breach.

 And let’s say the weekend example, they start working on the weekends, and then the employer can’t fire them for-cause anymore. They’d have to terminate the contract without-cause. It’s rare, honestly, for it gets to the point where one side would give the other side notice that they’re in breach of contract. And if this does happen, 95% of the time is due to some payment issue.

At least on the physician side, they’re not getting paid on time and not receiving the correct bonus. Suppose it’s a breach that the employer can remedy, a physician’s behavioral issue or productivity issue. That means the physician refuses to see the expected number of patients. They do not see the encounters. They’re refusing to speed up in any safe manner. I’d say that’s the typical reason an employer would decide to terminate a contract for-cause. And those are things that a physician can easily remedy. They fix whatever the issue is. Suppose there is a dispute over if someone is or is not in breach of contract. There’ll also be language in the contract stating how a dispute gets resolved.

Arbitration

More and more arbitration clauses are the standard. Suppose some dispute just couldn’t get fixed. Then, the parties would be required to go to arbitration. Arbitration is where an attorney, usually a retired judge, would hear both sides of the case. There’s limited discovery, and both sides would plead their case to the judge or attorney. And then, that person would render a binding decision. The benefit of arbitration is it’s generally cheaper and faster than litigation. Litigation is where you would sue someone in court. 

Now, that would happen if there was no arbitration clause in the contract. There usually would be venue provision, meaning, if there is a dispute, this is where the lawsuit has to start. It is generally in the country where the physician is working. Then you would have to hire an attorney who would file a lawsuit against the employer to enforce whatever the issue was. Anyway, hopefully, that was helpful. That was kind of how to remedy a breach of contract.

Other Blogs of Interest

• What Happens if you are Fired as a Physician? | Doctors
• Can I Quit my Job if I Signed a Contract? | Career & Contract Termination
• Breach of Employment Contract Examples | Employment Agreement

What Is Considered Breach of a Physician Contract? | Physician Contracts

What are some reasons behind the breach of contract for a physician employment agreement? What are the things that an employer could terminate a physician? And then alternatively, what are some things the physician could terminate the contract? 

How a Physician’s Contract Can Be Terminated?

First, let’s go through how an employer terminates a contract, and then we’ll go through the specifics. Rather, any agreement will usually be for a fixed term. Let’s say it was a two-year contract. If both parties decide not to renew the contract, the contract will terminate at the end of the two-year term. That’s one way a contract could end due to mutual agreement. Both parties decide it’s not working out, and we’re not going to wait till the end of the term. They will terminate the contract. Now, they can also terminate the contract without-cause. 

Any physician’s contract will have language that says either party can terminate the agreement for any reason, with a certain amount of notice to the other party. In most cases, it’s usually either 60 or 90 days. And then finally, you can terminate the contract for-cause due to a breach of contract. And in this case, the employer will list a whole bunch of things they can terminate the contract for if the physician breaches the legal agreement in some way. There’s no language about how a physician can terminate the contract if the employer is in breach.

What Are Some Normal Reasons an Employer Could Terminate A Physician Contract?

First, let’s go through some usual reasons the employer could terminate the medical contract. If the physician loses their license, let’s say the medical board and their state decide they’re going to revoke the physician’s license. The contract will terminate. They can no longer practice medicine. It takes away their DEA registration, and almost every setting would not allow them to do their job effectively. Excluded from billing and included on the inspector general’s office’s ban list. CMS has a list that basically if a provider does certain things negatively. They can be on this list, which would exclude them from being able to bill under Medicare and Medicaid. 

And that would, for the most part, make it impossible for the physician to practice. Most contracts state if the physician received a felony, usually convicted of a felony, that would be grounds for legal agreement termination. The physician is uninsurable. Maybe they have many malpractice claims or settlements. And then, no insurance company is willing to offer them malpractice insurance. In that scenario, employers just aren’t keeping the physician around ordinary things. There’s usually some moral clause that says the physician will present good character and get along with others. And then usually, there’s something at the end that says for other good causes or other good reasons, which is very broad, and they can kind of shoe horn that.

What Is a Physician Contract Cure Period?

Suppose the physician is in breach and there is some way to fix it. In that case, there’s usually language in the medical contract called a cure period. They’ll generally say, if one party is in breach of contract, the other party gives them a notice. They say, hey, you’re breaching the contract. And then there’s a period to fix the breach—usually between 15 to 30 days. Now, suppose you’re a physician and have your license revoked. In that case, you’re on the OIG list. They will take away your DEA registration. The employer will immediately terminate these things that are unfixable in 15 to 30 days. Now, some things are fixable. One is what I talked about before with the morals clause. So, they say, you’re not getting along with others and not presenting good character.

Legal Mistakes Physicians Make

Here are the things you can do to fix these. The physician can then attempt to fix them within that period. And then, the employer would then have no ability to terminate them for-cause. As I said, the physician can permanently receive termination without-cause in a certain amount of notice. Maybe the employer doesn’t have the grounds to end the physician for-cause after they’ve fixed a breach. However, they could still give them notice and give them out after that period. There is also usually language in the termination clause that if an employer offers, let’s say, a 60-day without-cause notice. The employer provides the physician 60 days, but they say, we don’t want you here anymore. Even though we must give you this notice, don’t come to work tomorrow.

The employer would still have to pay the physician for those 60 days because it was a termination without-cause. Still, they don’t have to provide the physician the entire period to work there. 

Ways a Physician Can Assert an Employer is in Breach of Contract

On the physician side, usually, they can assert that the employers in breach of contract are, if they’re not getting paid in time, maybe they have some bonus. It’s not being calculated correctly or paid out on the contract’s time. Perhaps the physician is not being adequately supported via staffing. They don’t have the proper MAs, an office manager, or front office staff to work efficiently. Maybe they’re being asked to do things they believe are unethical or illegal. 

In that scenario, I always suggest you must let the employer know that they’re in breach of the contract in writing so that you establish a record of what’s going on. Many times, I’ll talk to physicians who feel like they’ve agreed in some way. The employer is not providing them with a safe atmosphere, or they’re not following through on things written into the medical contract. And my first question is, have you given them written notice? Most of the time, it’s no. I’ve talked to them and spoken with the med director and my boss, but nothing’s happened. Well, you need to establish a record. 

And in that case, you must provide them a written notice that they’re in breach of the contract. Most of the time, it’s unlikely that an employment relationship would end with a kind of for-cause termination due to a breach. Most of the time, in that case, the parties will agree to move on, or they’ll give them, as I said before, the without-cause notice. And then tell them to go home anyway, pay it out, and move on. Hopefully, that was helpful. I went through some examples of breach of contract for a physician employment agreement and then how each party can terminate the contract.

Consequences of Breaking an Employment Contract | Breaching Contracts

What are the consequences of breaking an employment contract? The first issue is breaking a contract. Some think just exercising their right to terminate the agreement breaks the contract. I don’t think of it that way. You don’t give proper notice when I think of breaking a contract. You leave the job without following the terms of the legal agreement. In that scenario, what are the potential consequences? Let’s say professionals at a job are not working out for whatever reason. In almost any employment contract, there will be a section discussing how to terminate the contract. And then, within that section, there’ll be what’s called without-cause termination. Without-cause termination means either party can terminate the legal agreement at any time with a certain amount of notice to the other party, generally between 30 to 90 days.

Breach of Notice Period Agreement Might Cause Legal Damages

Let’s say the professional walks in on Monday and says, I’m leaving tomorrow. Still, they had a 60-day without-cause termination notice requirement. Well, if that does happen, the employer could then potentially go after. When I say go after, I mean legally go after them, sue them for breach of contract. And when you sue somebody for breach of contract, it can involve several damages. There could be lost profits for what they would’ve expected that employee to generate during those 60 days. They could also go after the replacement value. They could go after the employee if they had to find a costly short-term replacement. There could be damages for recruitment fees in trying to find that employee’s replacement. They could maybe go after them to get back a signing bonus, relocation assistance, licensing fees, and credentialing if they’re a healthcare provider.

So, if you break a contract, you walk out and don’t fulfill the terms of the legal agreement. The professional may be liable for several things. When I’m having a consultation with somebody unhappy, they say, well, these are all the things the employer is not doing right. They’re not paying me my bonus in time, or they’re making me work more than that in the contract, or I have to take twice as many calls as they said I would. Okay, just because they’re doing it or breaking the contract doesn’t mean you can leave and then cite that as a reason. 

What Should You Do If Your Employer Is Breaking a Contract?

If you believe the employer is in breach of contract, you need to provide them with written notice that states you are in breach of contract for these reasons. And then typically, there’d be some language that states you can cure the breach, usually somewhere between 15 to 30 days. And if the employer does fix the problem, then the employee cannot terminate the contract for-cause.

If you can terminate it for-cause, usually, it can be immediate. You give the employer written notice that they’re in breach of contract and if the employer does nothing. It would be the option of the employee to terminate it immediately. That is simply different than the employee just breaking the contract. It would be best if you went through it to protect yourself under the terms of the legal agreement. And even if the employer is not fulfilling their terms, you still must give them notice. You still must wait for the cure period. Then if they fix whatever the problem was, you still can’t just break the contract and jump immediately to a new position.

How to Ensure Your Safety if You Need to Break an Employment Contract

To protect yourself, read the contract, see how the contract can be terminated either for-cause or without-cause termination, and follow the requirements. Suppose you must give 60 days’ notice to terminate the agreement without-cause. In that case, you must provide 60 days’ notice, or you can potentially open yourself up for a lawsuit in damages. Lastly, there will be a section in the contract that states how to give adequate notice. What I mean by that is it will say to provide proper notice. You must send certified mail, hand delivery, a written letter to the address of the business or the attorney of the firm, or whatever. 

If you don’t give adequate notice, It is not considered a proper termination. It means you don’t follow that notice section. And in that scenario, the employer can say, “Well, you owe us another 60 days until you give us effective notice.” So, follow the termination section, and follow the notice requirement. In that way, you can avoid paying anything back to the employer or damages for lost profits, recruitment fees, etc. I went over it at the beginning of the video.