Joseph Rugg's Health Law Blog

Following up on the October 11 post, the following is a checklist to use as a starting point for dealing with either a practice breakup or a departing physician.  The list is not exhaustive, and each practice will have its own special issues to address.  Breaking up is definitely not for sissies.

Review of Available Documents:

A.        Employment Agreement/Independent Contractor Agreement

B.        Office Sharing Agreement

C.        Organizational Documents

i.          Bylaws/Operating Agreement

ii.         Minutes/Consents

D.        Shareholder/Member Agreements

E.         Buy/Sell or Buy-Out Agreement

F.         Employee Manual/Policies and Procedures

G.        Office Lease Agreements

H.        Bank Loan Agreements

I.          Equipment Leases

J.          Provider Contracts

K.        Hospital Agreements

i.          Recruiting Agreements

ii.         Provider Services Agreements

L.         Business Agreements

i.          Billing Company

ii.         Advertising Agreements

iii.        Staff

iv.        In-Office Ancillary Services

Issues:

1.      Office lease obligation

a.       Is the lease in default?

b.      Is the lease personally guaranteed?

c.       Assignment/Sublease issues

d.      Duty to mitigate

2.      Bank loan

a.       Is the loan in default?

b.      Is the loan personally guaranteed?

c.       Is the physician responsible for a portion of any outstanding debt pursuant to a shareholder or other agreement?

3.      Medical equipment leases

a.       Is any lease in default?

b.      Are there any outstanding medical equipment leases which are personally guaranteed?

c.       Is the equipment in good condition, or have any value?

d.      Does the departing physician need the equipment?

4.      Professional liability insurance

a.       Is tail coverage necessary?

b.      If so, who has to pay for it?

5.      Is there a Hospital Recruiting Agreement with an Income Guaranty, Expense or Incremental Cost Reimbursement?

a.       Will the departing physician continue to practice within the hospital service area?

b.      What are the parties’ continuing obligations?

c.       Who keeps the departing physician’s accounts receivable?

d.      Retention of items purchased with hospital funds?

6.      Non-compete/Damages upon Competition

a.       Does the non-compete violate applicable state statutes?

b.      Does the non-compete violate common law restrictions on scope, damages, etc.

7.      Notice to/Solicitation of Patients

a.       What are the applicable provisions of the applicable state’s physician regulatory board?

b.      Is there an agreement regarding patients upon termination?

c.       Is there a non-solicitation agreement?

d.      Duty of Loyalty/Fiduciary Duty of Departing Physician

i.      Was the departing physician a director/manager or just an employee?

ii.      Did the departing make arrangements to compete prior to departure, and if so, did the departing physician utilize practice resources?

e.       Who drafts the Notice to Patients?

i.      Who has the list of patients?

ii.      Which patients are notified?

iii.      Who bears the costs?

8.      Non-solicitation of staff

a.       Was the departing physician a director/manager or just an employee?

b.      Did the departing physician solicit staff members to leave the practice prior to departure in contemplation of competing with the practice, and if so, did such arrangements damage the practice?

9.      Confidentiality/Trade Secrets

a.       Is there a confidentiality agreement?

b.      If so, is it necessary for protection of the practice and is it reasonable in its terms?

c.       Is there truly confidential information or trade secrets?

10.  Fiduciary Duty/Duty of Loyalty

a.       Is there an applicable state statute regarding fiduciary duty?

b.      Has the departing physician acted in good faith and in a manner reasonably believed to be in the best interests of the practice

c.       Employees owe the employer a duty of loyalty and must not, while employed, act in a manner that is contrary to the employer’s interests.

11.  Continuity of Care

a.       Is there a coverage issue?

b.      Applicable state statutes or regulations of the physician licensing board

12.  Medical Records

a.       Is there an agreement regarding medical records?

b.      Applicable state statutes or regulations of the physician licensing board

c.       Costs

13.  Provider Issues

a.       Is the departing physician credentialed individually?

b.      Contact federal/state programs as to change in practice/physician status

c.       Contact any managed care organizations as to change in practice /physician status

14.  Completion of all outstanding billing

a.       Completion of all patient charting

b.      Completion of billing records

c.       Proration of global billings

15.  Collection of Accounts Receivable

a.       Is there an agreement regarding accounts receivable?

b.      Does the departing physician have any rights in accounts receivable?

c.       Does the departing physician have any liability for costs of collection?

16.  Distribution of Jointly Held Assets

17.  Assets of the Practice

18.  Other business ventures

19.  Call Coverage

20.  Employee Benefits

21.  Health Insurance

a.       When does coverage terminate?

b.      Is the departing physician entitled to an extension of benefits?

22.  Life and Disability Insurance

23.  Retirement Plan Benefits

24.  Paid Time Off and Reimbursement of Business Expenses

25.  Notify Referral Sources of Change in Practice

26.  Who owns Pager Numbers?

27.  Who owns Cell Phone Numbers?

28.  Securing Computers and Electronic Data

a.       Network user ID to be deleted or disabled

b.      Disable or delete Windows login account on personal computer

c.       Remove access or delete all passwords

d.      Disable or delete e-mail account

e.       Disable or delete voice-mail account

29.  Return of Personal Property of the Practice

a.       Laptop

b.      Cell phone, PDA or pager

c.       Security pass

d.      Building and office keys