What is the Relevance of “Location” in Physician Contracts
Will all the locations that the employer owns or is affiliated with apply? Which location is your primary location? In the interpretation and application of which location applies in a contract gets very very tricky, according to Florida Law. Florida Courts do not typically strike an improper non-compete provision, instead they are allowed to modify it, which is great for employers and not so good for employees. Most physician employment contracts are written to include any locations the employer owns or is affiliated with. However, there are ways to narrow down the locations that apply to the non-compete: As a healthcare entity many have several subsidiaries and affiliated entities, it is important to expressly mention which facilities are physician's primary locations, this helps limiting the restrictive covenants and making sure that they don't apply to all of the employer's facilities.
It is also wise to request your employer to determine in the contract how many working hours per year are expected for each working location.
For a court to uphold a restrictive covenant, its term must be reasonable in duration. The right of a physician to compete is frequently restricted for a period of two years by restrictive covenants in employment agreements. Because they offer the employer enough time to find a replacement for a departing physician and shield the employer's business from unfavorable competition during that time, courts have typically maintained two-year time restrictions. However, do not assume the courts will uphold a two-year time limit in your employment agreement. That will depend on the specifics of your situation, such as the position title, duties, and involvement across the organization.
Location is also relevant when it comes to the restrictive covenants, consider setting time limitation, for instance it is important to negotiate the Non-compete provisions so it only applies to locations where the physician has been practicing in the last 6 or 12 months of employment, and for a minimum amount of time per month.
The geographic range of a restrictive covenant will also be considered by the courts. Generally, most practitioners employ a distance radius that covers 70% of their patient base as the extent of their geographic restriction. However, this greatly relies on the specifics of each scenario.
Nevertheless, it may also be fair for a rural practice to have a restricted covenant with a 50-mile radius versus for an inner-city practice to have a radius of several miles. A radius of five to fifteen miles from the practice will likely be recognized as reasonable in a suburban practice context.
Which location is your primary location?
A Non-Compete clause for a physician is a legally binding clause that prohibits the physician from working within a defined geographic area for a specific period. The primary practice location is generally considered the location where the physician generates most of their time and it should only apply to that location.
Will all the locations that the employer owns or is affiliated with apply?
The geographic restriction will be written by many employers to cover as many regions as feasible (if the employer has multiple locations or the job requires physicians to work at other medical facilities). This should be rejected by the physician, who should instead try to narrow the geographic restriction to locations actually worked.
Typical a physician's non-compete will be tethered to the Primary Office, other offices of the employer, facilities managed by the employer or different hospitals, and so on.
It is imperative to note that the shortest path between two points, is used to calculate the geographic restriction for any non-compete, the distance between the two points not driving distance, instead it is aerial miles.
Reasons to retain an attorney:
Most physicians do not understand the intricacies and ramifications of physician employment agreements. To review and negotiate a contract that does not limit the future of a young physician, it is best to get legal help earlier in the process to navigating the 5 most important things.
- Long lasting consequences of Non-compete
- Compensation is not clear or fair market value
- CME (Continuing Medical Education) benefits are not clearly listed – (association dues, license dues, course registration, and travel expenses)
- You may be restricted from serving on certain insurance panels
- You may have to relocate out of the area.
What does it cost to Have an Attorney Review a Physician Contract?
Our firm reviews physician contracts:
- Option 1 - for $1,250, and we will give you insights on what and how to negotiate, and conduct a background check on the employer.
- Option 2 - Some physicians prefer for us to negotiate their contracts, ask us about fees if that is your preference.
Here is an informative webinar on How Experienced Physicians Negotiate Employment Agreements.
Hosted by the South Florida Hospital News and Reporter.
Ben Assad Mirza is a Florida attorney with a finance background, who has negotiated from both sides of the table, reach out to Ben Assad Mirza by calling or texting to (954)445-5503, or email me at [email protected]
Ben Mirza is not only an attorney but was formerly a CPA, with a masters of public health. There are over 100,000 attorneys in Florida, less than 500 of whom were ever Certified Public Accountants, and even less have the trifecta combination of law/finance/strategic healthcare background. The benefit of this combined and layered skillset works well for clients who want an advocate to approach the issues holistically.