Leaving for a New Practice? Here’s What Healthcare Professionals Need to Know
What are your legal considerations when leaving one healthcare practice for another? Before you end your employment, keep these constraints and obligations in mind.
Are you a healthcare provider ready to move on to your next opportunity? We understand that it can be overwhelming to think about the professional and legal implications of moving from one employer to another.
In our experience, healthcare practitioners are not always familiar with the contractual and ethical obligations involved in leaving a medical practice. Meanwhile, employers often have an attorney in their corner and may not hesitate to press upon those obligations. To make a smooth exit, you’ll need to think through your plan. Know the legal implications before, during, and after you leave your current healthcare role so that you can prepare accordingly.
Read Your Contract
Before taking any other steps, read your employment contract. This agreement may take several forms. For instance, you may have signed an offer letter or a more formal contract before starting employment. However, note that these may not be the only documents that legally bind you. For example, your employer may also have an employee handbook that you are contractually obligated to follow. All of these documents could dictate the terms of your exit.
Below is a list of critical contractual issues to address. Remember that every contract is different, and yours may not include some or any of these items.
What are your notice obligations?
Most contracts set forth the amount and type of notice that you need to give your employer before leaving — if any at all. You’ll find this in a provision that mentions the “term” of the agreement.
You have likely heard of giving your “two weeks ’ notice,” but don’t assume that two weeks is standard to all employment situations. Sometimes employers require 30 days or 14 “business days.” Recognize these crucial distinctions. Finally, even if your contract is silent about the notice required, your employer’s policy handbook might also include a notice provision you need to consider.
Are you bound to a non-competition clause?
A non-compete clause is a restrictive covenant — a promise to refrain from taking a specific action. In a typical healthcare non-compete clause, the employee agrees not to work with a competing business or start a similar practice for a specified period and within a certain distance of the employer.
Non-compete agreements have been under scrutiny for many years from both the courts and lawmakers alike. For example, you might have read about the executive order that President Biden recently signed or about the new laws in some states that limit their enforceability. Illinois recently amended the Freedom to Work Act, curtailing the use of non-competition clauses in some employment contexts.
Many people believe that non-competes give employers too much leverage over employees who have less negotiating power and financial resources. Others view them as the only way employers can protect their business interests and maintain a degree of control over their client base. In the healthcare context, these competing views have an additional layer, as one must consider the impact of a departure on patients, too.
Despite the criticism, you should still know whether your contract includes a non-competition clause, understand that it probably is enforceable, and determine if a prospective new job opportunity falls within the geographic scope of the non-compete. Our website has materials regarding non-compete clauses, and we have made a video to encapsulate the legal implications involved with this type of restrictive covenant.
Are you bound to a non-solicitation clause?
Like non-competes, a non-solicitation clause is a restrictive covenant that limits employees’ actions. Generally, a non-solicitation clause prevents employees from soliciting their former employer’s workforce, patients, or both. Solicitation generally requires a targeted act by the employee to convince a patient to obtain services from somewhere other than the employer’s practice.
What constitutes solicitation, and how do such restrictions intersect with patient choice? This is a nuanced question that a judge or jury would consider if challenged in court. In another article, we discuss non-solicitation clauses and how to navigate the line between soliciting patients and abandonment. Again, what matters is that you check whether your contract has a non-solicitation clause, consider your employer’s restrictions regarding contacting clients or taking clients with you, and determine whether you can notify clients where you are heading.
What’s your professional liability insurance coverage?
Ensure that you understand your professional liability insurance coverage before leaving your employer. For instance, your policy may cover only claims made during your time with the employer. In this scenario, if an event occurs during your employment term but the claim is filed after you leave, the policy will not cover the claim.
To prevent such a gap, you might need to procure a supplemental endorsement policy (also referred to as “tail coverage”). Tail coverage insures you against claims made after your employment term has ended. Some practices will agree to pay tail coverage in certain circumstances, so it’s crucial to understand your obligations.
Does your contract specify how you must notify the practice if there is a change in coverage? What are your obligations if a lawsuit arises? These are the kinds of questions you need to ask about your liability coverage. Then, with assistance from counsel, you can determine if your contract answers them.
Do you have any repayment obligations?
Be sure to consider any repayment obligations you may have. For instance, did you receive a sign-on bonus conditioned on your commitment to stay at the practice for a certain length of time? If you leave before that specified time, you may have to pay a portion of that bonus back. Similar terms may be placed throughout the contract — another reason it’s critical to read the document in full.
Understand Your Ethical Responsibilities
We understand that you likely entered healthcare to provide quality care to patients. Unfortunately, ending your employment relationship affects patients and raises questions about your ethical duties.
What are your patients’ needs?
Take necessary steps to ensure that your patients’ needs are met as you transition out of your current role. As you know, you still have an ethical obligation to provide adequate care for your patients and engage in the proper transfer of care even as you depart. Consider your profession’s standard of care and any ethical duties, notice requirements, or recommendations from a medical board, nursing board, counseling board, or other authority. For example, your state’s regulations may recommend or even require that your patients receive a certain amount of notice before you leave.
Communication is key. Provide other professionals with the patient information necessary for the continuation of care as needed. However, be careful when communicating your departure to patients. A non-solicitation clause may restrict what you can say. If this is the case, work with the employer to ensure that patients are properly notified and moved to an appropriate provider’s caseload.
Are you at risk of patient abandonment?
Patient abandonment arises when a failure to respond to a patient’s need occurs. First, a patient-provider relationship must exist. Once that relationship is formed, abandonment occurs, under Illinois law, when a patient is injured and the provider “refuses to treat [the] patient [while] needing further treatment, without giving the patient a reasonable time to find substitute care.” Thus, before you leave, consider if you have any high-needs patients and what special considerations they would require if they learned of your exit.
Know Who Owns or Has Access to Patient Information and Intellectual Property
Most employment contracts set forth that patient charts and other records generated during the provider’s employment are the employer’s property. Confidentiality clauses extend to more than patient information, however. Any information considered practice assets could fall under the definition of “confidential information.” This means you cannot used or disclose the information outside the employment relationship.
You may be wondering: how does the Health Insurance Portability and Accountability Act (HIPAA) come into play? Don’t the Right of Access provisions of HIPAA allow for providers to see patient information? The short answer is no, not necessarily. HIPAA does not entitle providers access to their former employers’ patient information and records after termination. However, the employment contract may outline the rights you have to request records of patients you’ve treated.
You should also consider other materials other than patient information. For example, most contracts will restrict employees from taking notes, papers, lists, records, and intellectual property related to the practice and its activities. This means you should not expect to take or copy any materials associated with the practice, nor should you download any trade secrets or proprietary business information to use in your next endeavor.
What is in Your Contract?
Are you a healthcare provider considering a new job that contains a non-compete or non-solicitation clause? Are you currently subject to such restrictive covenants but want to resign nonetheless? Or perhaps you are an employer, and you realized that your contracts are missing important provisions. A healthcare attorney can help you assess your rights and responsibilities and look for opportunities to discourage future lawsuits. If you’re in one of the states where we practice, schedule a complimentary phone consultation with one of Jackson LLP’s healthcare attorneys.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.