Non-Disclosure Agreements (NDAs) for Healthcare Practices

Non-disclosure agreements aren’t just for those trying to hide misdeeds. Healthcare employers can use NDAs to protect their patients and confidential business information.

A Non-disclosure agreement.

A non-disclosure agreement (NDA) is a contract between two people or between a person and an organization. In it, one or both parties agree not to disclose confidential information gained as a result of employment or other business relationship. Non-disclosure agreements may contain provisions protecting multiple types of information. Importantly, NDAs are legally binding in a court of law.

The public often views NDAs negatively. We’ve all heard examples of organizations using NDAs to silence people on important issues such as public safety and abuse. However, NDAs can be vital in protecting your business and your patients. 

What Should Non-Disclosure Agreements Include?

An NDA must describe the information that is to be considered confidential. Sometimes, an employer will try to define “confidential information” as broadly as possible. In contrast, some NDAs focus on particular areas of concern, such as financial information or marketing strategies. Attorneys who develop these contracts pay much attention to their scope. A definition that is too broad (everything, everywhere, always) may not stand up in court. Meanwhile, a very narrow definition may fail to capture all the information the employer needs to protect.

The NDA should also include additional definitions of any terms that might need clarification or could be up to interpretation by a court if a party later breaches the agreement. This means that the agreement might contain definitions of terms like “intellectual property,” “trade secrets,” or “advertising strategy.” By including the definition in the NDA, it shows the court that the parties already agreed to their meaning.

The agreement will identify who is bound by the contract, such as a healthcare practice and the individual employee. It will also specify the situations in which disclosure of confidential information may be appropriate or allowed, as well as the consequences of a breach of the agreement.

See our related video, “Employment Breaches of Contract.”

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Uses for NDAs in Healthcare

HIPAA Compliance

Making a non-disclosure agreement a part of the hiring process can help healthcare facilities remain HIPAA compliant. HIPAA defines protected health information (PHI) to include patient medical records, financial information, billing records, or any other individually identifiable health information. Many, if not all, staffers at a healthcare practice will see PHI at some point. Thus, the practice employees and volunteers with access to protected health information must follow HIPAA’s rules. However, an NDA can further reinforce the individual’s duty of confidentiality. 

Business Transactions

Healthcare practices may want staff to maintain confidentiality about business transactions such as new medical facilities or in-progress mergers. NDAs can help keep these matters private, allowing practices to obtain all necessary regulatory approvals and achieve compliance before making plans public.

Medical Research

Medical professionals collect a wealth of data when testing new medications, procedures, or practice policies. NDAs help protect the information collected from subjects during research, especially when the investigators cannot fully anonymize the data. It is crucial for the integrity and value of the research data that any staff with access has signed a confidentiality agreement. Such an agreement should go hand in hand with limiting the data access to those who need it to facilitate their jobs. 

NDAs in medical research can also help protect data and findings that will be shared with individuals or organizations outside the research organization. The need for protection intensifies when data cannot be completely de-identified. One strategy is to combine an NDA with a data use agreement that outlines how others may use the data. 

Trade Secrets

Some providers or practices may develop information, programs, devices, or techniques that give a competitive advantage over the rest of the market. Therefore, they may wish to prevent competitors from learning that valuable information. NDAs provide one safeguard. 

An NDA will enable confidential information to seek action from a court to prevent anyone who steals that information from disclosing it. Remember, though, that NDAs can only be maximally helpful in guarding trade secrets if you consult an attorney before giving anyone access to the information.

Non-Disclosure Agreements in Medical Malpractice Settlements

Some providers and practices seek NDAs to protect their reputations following a medical malpractice lawsuit. For example, in a financial settlement, the provider may ask the patient to sign an NDA that covers aspects of the medical care leading to the settlement in addition to the details of the settlement itself. Such an NDA may also contain language to prevent the patient from disparaging the practice or provider. 

However, keep in mind that several states have enacted “sunshine” reforms. These laws target specific types of settlements, such as those involving minors or issues of public health or safety. Settlements covered by these anti-secrecy laws may be publicly accessible, regardless of any signed NDAs.

Get Legal Support

NDAs are not just for celebrities seeking to cover up their latest scandal. The attorneys of Jackson LLP can help you decide whether adding an NDA to your employees’ contracts helps keep you compliant with state and federal laws, protect your plans for your business, or keep trade secrets, well, a secret. 

If you operate in one of the states where Jackson LLP has licensed healthcare attorneys, reach out to us for a free consultation.

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.

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