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Physician Employment Contracts: Hidden Terms

physician employment contractBy: David Davidson

Over the past few years, it seems like physician employment agreements are getting shorter and shorter.  While I applaud all efforts towards efficiency and economy, you should not always take those documents at face value.  For example, I recently reviewed a one page employment contract for a client.  That single page basically said, “We are hiring you as our employee for a term of one year, with an annual salary of $$$.”

At first glance, the simplicity of that document might seem refreshing.  That’s especially true if you’re worried about how much time it’s going to take for your lawyer to get through it!  My client’s second glance revealed a multitude of unanswered (and essential) questions.  There was no mention of expected duties, schedules, standards, renewals, terminations, insurance, benefits, vacation time, sick leave, CME, etc. in the employment contract  However, when we reviewed the contract together, we discovered that although those points were not even referenced on that single page, they were still legally, “in there.”

Towards the end of the document, there was a somewhat innocuous statement that generally read, “The parties agree that the terms of Employee’s employment shall be governed by Employer’s Bylaws, Rules & Regulations, and HR Policies for Physicans which are incorporated herein by reference.”  So despite the short contract, it also contained whatever was found in those “incorporated” documents.

Interestingly, my client was not provided with copies of any of the referenced documents.  Instead, the prospective employer provided a link to access the materials online.  When we pulled up the documents, we discovered that the Bylaws were 30 pages long.  The Rules & Regulations were 20 pages, and the HR policies were 50 pages.  So our simple one page contract suddenly totaled over 100 pages.  And in those materials, we discovered some unexpected provisions regarding renewals, termination and daily operations of the practice.  We could then approach the prospective employer with a request to specifically address those areas in the body of the contract, notwithstanding the provisions of the incorporated documents.

The practice of “incorporation by reference” is not new.  It is not inappropriate, unethical, or illegal (as long as the provisions incorporated are inherently legal).  But it is a shorthand way to include a lot of material in an otherwise short document.  So when you see outside documents incorporated in an agreement, remember the Latin, Caveat Medicus – Let the Doctor Beware!

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