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We sit down with Dennis Hursh, a health law attorney with decades of experience representing physicians in their interactions with hospitals. Dennis shares eye-opening stories of how hospitals use restrictive contracts and aggressive tactics to retain physicians—sometimes even against their will. We explore why these situations occur, what they reveal about the health care system, and what physicians can do to protect their careers and autonomy.
Dennis Hursh is a veteran attorney with over 40 years of experience in health law. He is founder, Physician Agreements Health Law, which offers a fixed fee review of physician employment agreements to protect physicians in one of the biggest transactions of their careers. He can also be reached on Facebook and LinkedIn.
He discusses the KevinMD article, “The legal trap every doctor needs to know before signing a contract.”
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Transcript
Kevin Pho: Hi, and welcome to the show. Subscribe at KevinMD.com/podcast. Today, we welcome back Dennis Hursh, a health care attorney. Today’s KevinMD article is “The Legal Trap Every Doctor Needs to Know Before Signing a Contract.” Dennis, welcome back to the show.
Dennis Hursh: Oh, thanks. It’s good to be here.
Kevin Pho: So let’s jump right into your most recent article. What led you to write it in the first place, and then talk about the article itself?
Dennis Hursh: Well, I’ve been doing this for about 40 years, and from time to time, a physician will call me and say, “Look, you’ve got to look at my contract. I don’t see where I can get out of it in less than three years.” I’ve had many instances where they’ve said, “I really like it here, but my spouse’s mom is sick, and we want to move back home. You know, it’s nothing against these folks, but I just want to move home.” And we look at it, and the agreement doesn’t have a “without cause” termination clause.
So, for 40 years, I’ve been saying, “Don’t worry about it. Nobody wants a physician who doesn’t want to be here. We give them adequate notice,” and everybody always says, “OK, fine. Hate to see you go, but I understand.” Then I had two cases in a row where there wasn’t a “without cause” termination. In one case, well, actually in both cases, they got a better deal, but in one case, it was a really horrible situation.
So, we did the same thing we always do. He wanted to give 90 days’ notice. I convinced him to give five months’ notice, saying, “Look, I’m leaving this state.” Well, we got an email from the general counsel saying, “That’s a breach of the agreement,” which was technically true. There was no ability to get out sooner. I said, “Well, we’re leaving anyway. So what are you going to do about it?” Not that confrontational, of course.
A few days later, I got an email saying we had to repay the signing bonus. That was contractually clear. Many times, they have amortization of a signing bonus, but this one was flat. If you don’t stay for four years, you have to repay the entire signing bonus. We didn’t think much of that, as I had warned my client it was coming.
Then, a couple of hours later, I got another email from the general counsel saying, “Oops, no, that was in error. This is a breach, and we’re going to hold you to your agreement.” There was no offer to settle. A few days after that, I got a FedEx package in the mail. It contained two letters. One was a letter to the physician saying, “This is a breach, and we’re holding you to your agreement,” again, with no offer to settle. The other was a letter to the general counsel of the hospital he was planning on joining, saying, “This physician has a contract that doesn’t expire until December of 2025, or whatever, and you are interfering with our contractual relations if you hire this physician.”
Now, I’ve been doing this for 40 years, and the only time I’ve ever seen that argument before was in a covenant not to compete. You know, somebody has a covenant saying, “I won’t compete within 20 miles,” and they go to work within that radius, and the current employer sends a letter like that. I’ve never had a situation where they said, “If you hire my guy.” Well, the general counsel at the new hospital just laughed it off, saying, “Yeah, recruiting. You’re going to sue me for recruiting? OK, good luck with that.”
But ultimately, we decided he was just going to stay. So they succeeded in getting a physician who didn’t want to be there to stay for almost another year. It’s just crazy. Then the next case that came up, literally right after, was a very bad situation. The hospital was breaching. The physician wasn’t getting adequate support—things like three surgical cases scheduled, but they only had two sets of instruments sterilized, and traveling staff each time, with no physician. It was just a horrible situation.
He got a better deal, talked to the CEO, and said, “Look, I want to leave in about eight months.” The CEO was very understanding, saying, “We understand; you’ve got to take care of your family.” A couple of days later, though, he got a demand for over 400,000 dollars, saying, “We think these are damages. So as long as you pay us 400,000 dollars, we’re OK with you leaving.”
Now, you should realize it is reasonable for a hospital to get some damages. If you come in on a Friday and say, “I’m not coming in Monday,” it’s going to create chaos. They’ll have to reschedule patients, hire locum tenens, and all of that costs money. So, I’m not arguing that you should be able to just walk off. But with that much notice, they should be able to reschedule and rehire, frankly, in five months.
This hospital where the physician is breaching has been recruiting. It’s obvious to me that if you’ve been recruiting for six or seven months and aren’t getting anyone, maybe I’m just a genius, but I think you’re probably not paying enough. It seems really obvious to me. You’ve been trying to get this surgeon, but if you’re offering minimum wage, well, you’re not going to get anyone.
But this hospital is digging in, and literally, they came back and said, “We thought it was magnanimous to offer 400,000 dollars, but we’re willing to settle for 147,216 dollars and 12 cents,” or something like that. So, I asked, “Where did that number come from?” They refused to say. That’s the number.
So, once again, this physician will probably end up paying something to get out, but it’s crazy to me that you would want a physician who doesn’t want to be there. And apparently, that’s the case now.
Kevin Pho: To be clear, these are cases where a physician initially agreed to practice in a current job for X number of years, three, four years, and then wanted to get out before that initial commitment. Is that correct?
Dennis Hursh: Correct. And whenever I review a contract, that’s always one thing I try to get in—a “without cause” termination—because things do happen. You may absolutely love it here, it may be the best place to work, but if your mom gets really sick, you may want to go home. It doesn’t matter how happy you are here. There are a lot of reasons you may want to leave that position, so it’s really important that you have that option without being threatened with a breach of contract.
Kevin Pho: So, when you say “without cause,” for those who aren’t familiar with that terminology, could you briefly explain it?
Dennis Hursh: Any contract will always say that if you lose your medical license or your medical staff privileges, we can terminate you—that’s for cause. You did something wrong, and we feel you’re breaching. But the contract should also have a clause that lets you leave, giving reasonable notice, for no reason. It’s not about the hospital breaching or doing horrible things; it’s just that I have my reasons, and I want to leave in 90 days or 120 days. Every contract should have that, no matter how devoted you are to the employer, because things come up, and you may want to leave.
Kevin Pho: So, what are you advising physicians to do? Because I assume that this scenario can come up more frequently, especially since every physician commits to a certain practice or job for X amount of years upfront.
Dennis Hursh: Yeah, I think it’s just critical that you get a “without cause” termination. I know one employer that has been so stubborn and just refuses to put it in. Honestly, my advice is that if they’re not willing to agree to a “without cause” termination, you should keep looking. That’s scary to me. If I’m so unsure about how our relationship is going to unfold that I don’t want to give you the ability to leave under any circumstances for three years, you’ve got to wonder, “How pleasant is the working environment going to be?”
Kevin Pho: Just to be clear, let’s go back to that scenario where a physician wanted to move out of state, and that employer refused to let him do it and sent you that FedEx notice. What are the repercussions if the physician just left anyway?
Dennis Hursh: Well, they could come after him for damages. The damages would be based on the fact that they tried to recruit, but while he was gone, they couldn’t recruit, so they had to hire locum tenens. The damages would be the difference between what they paid the locum tenens agency and what they would have paid the physician.
A lot of physicians say, “Oh, I’m not too worried about that—locum tenens don’t make that much money.” OK, they don’t, but the locum tenens agencies do make a lot of money. It’s expensive to replace a physician.
Kevin Pho: You mentioned that you had two of these cases back-to-back. Are they really outliers, or is this something you anticipate will become part of a broader trend?
Dennis Hursh: I think it might be a trend. Again, it could be an outlier, but I’ve been doing this for 40 years, and I’ve never had this come up until now, and then two in a row. I think the physician shortage is getting so bad that they’re thinking, “I don’t care if you like it here or not, I want you here.” Physicians, unfortunately, can be given the short end of the stick. You do that to a janitor, and he’s not going to clean well. He’ll come in late and not do all his duties. Physicians, on the other hand, will keep doing 100 percent—they’ll keep doing everything they can for their patients. So, if I’m an administrator, I might say, “What’s the downside here?” An unhappy physician? So what? They’ll keep killing themselves for their patients, which works out for the institution.
Kevin Pho: Now that you’re advising physicians to make sure they have a “without cause” termination clause in their contracts, are you generally successful in getting employers to include it if it’s not already there?
Dennis Hursh: Over the years, yes, I usually have been successful. I do think it’s an issue related to the physician shortage that some employers just say, “No, we want this physician here, no matter what.” But yes, in general, you can get it included, particularly if the physician makes it clear that they may not join without a “without cause” clause. You do a list of things you’d like, and some they’ll give you, and some they won’t, but if you really stand firm on that, most places will put it in.
Kevin Pho: So, it sounds like most places are relatively reasonable, but it’s the more draconian places that might refuse and potentially trap the physician there.
Dennis Hursh: Yes, that’s my position. But the one draconian place I’m thinking of is a major national institution. It’s not like a small hospital in a rural area. It’s a huge institution that employs thousands of physicians. So, it really is a big deal if they decide, “You signed a three-year sentence, and that’s what you’re going to serve.”
Kevin Pho: Going forward, are there any other red flags similar to this one that physicians need to look out for? Or is there something you foresee on the horizon?
Dennis Hursh: No, I think this is the biggest one. It’s the general stuff—make sure they’re paying for tail coverage, that they’re paying you fairly. But even if this seems like the dream job, you should still have a way out.
Kevin Pho: We’re talking to Dennis Hursh, a health care attorney. Today’s KevinMD article is “The Legal Trap Every Doctor Needs to Know Before Signing a Contract.” Dennis, as always, let’s end with your take-home messages for the KevinMD audience.
Dennis Hursh: Again, read your contract. I’m a little biased because I review physician employment agreements, but I really think you should have an attorney review it so you can find out what the implications are of what’s in the agreement, and sometimes more importantly, what isn’t in the agreement. If there’s no mention of a “without cause” clause, a physician might not even think of it. They might say, “I looked at everything, and everything in there seemed OK.” But it pays to have your employment agreement reviewed, in my opinion.
Kevin Pho: Dennis, as always, thank you so much for sharing your perspective and insight. Thanks again for coming back on the show.
Dennis Hursh: It was a pleasure. Thank you.
