Scot Sauder, Esq. Senior Associate University Counsel Lead - PowerPoint PPT Presentation

Scot Sauder, Esq. Senior Associate University Counsel Lead Attorney, Health Law Group Office of University Counsel, University of New Mexico March 22, 2011

 Memorializes the parties’ agreements ◦ Doesn’t leave the terms to the parties’ respective recollections  Extends the Statute of Limitations  In the case of a governmental entity, enables the non-governmental entity to enforce the agreement  Required if you want to fall within the Anti- Kickback “safe harbors” and is required to get into an exception under the Stark laws and regulations

 Must have – ◦ an offer, ◦ an acceptance of that offer, ◦ consideration passing between the parties  Each party must have some obligation to do something for the other party (i.e., pay money, do some act, no do some act)  In other words, must have a “meeting of the minds”

 Who are the parties to the contract? ◦ Does the person or company with which you may contract have the capacity to contract with you? ◦ If you are dealing with a company (i.e., a professional corporation or a professional association), does the person signing the contract have the authority to bind the company to the terms of the contract?  Does the person need Board of Director approval? Approval of partners in a partnership? Approval of the members of LLC?  What is the term of the contract? ◦ When does the term begin? ◦ When does the term end? ◦ Can the contract be terminated during the term?  If so, how and on what grounds? With cause? Without cause? ◦ Is the contract an “evergreen” contract?

 What are the terms of compensation or other consideration to you? ◦ If an employment contract, does the agreement cover terms under which incentive compensation will be paid, employee benefits such as health, retirement, and other benefits ◦ Is it absolutely clear?  When payment is to be made?  How payment is to be made?  Do you have to invoice or do something else to get paid?  Does the agreement condition your employment on anything? ◦ Obtaining membership on a particular medical staff and clinical privileges at a particular hospital? ◦ Obtaining and maintaining licensure, Board certification?

 The “miscellaneous” provisions in a contract are often overlooked . . . at your peril! ◦ Integration clause – keeps oral testimony out about understandings you may have had with the other party prior to signing the contract ◦ Choice of law – decides what state’s laws apply . . . not all are the same ◦ Where notice is to be sent if something has to happen under the contract ◦ Governmental-type provisions  If a hospital contract, the no inducement to refer language can save the contract and services performed under it from attack for health care fraud and abuse purposes  Records availability provisions impose obligations on you  Eligibility to participate in governmental programs impose obligations on you

 Non-solicitation provisions – ◦ Keeps you from soliciting employees or patients of the practice ◦ Must be time limited ◦ May have liquidated damages consequences ◦ Try to negotiate down the time period covered and the amount of potential damages  Non-competition Agreements ◦ In right to work states, these are frowned upon by the courts ◦ They are enforceable in New Mexico, if the reasonable in geographic scope and length of the prohibition  The geographic scope needs to reasonably tailored to protect the economic interest of the employer  The time limit of the prohibition must also be reasonably tailored to protect the economic interest of the employer  Should have a buyout provision

Income guaranty arrangements  Hospital guarantees a certain level of income to the physician for a period of time to ◦ enable the physician to develop his or her practice Amount of income guaranty must be based upon actual additional incremental ◦ incurred in recruiting and employing the doctor Cannot compensate for non-incremental additional expenses such as unused exam  rooms or square footage allocations For rural hospitals and health professional shortage areas, the per capita amount of  aggregate practice overhead (not to exceed 20% of the practice’s overhead) can be included if it is replace a physician who retired, relocated, or died within the previous 12 months Amount of income guaranty must not be based on or related to the volume or value ◦ of referrals to the hospital Contract must be for a term of not less than 1 year ◦ Payment of relocation expenses  Hospital pays for the cost of relocating a physician to the locale of the hospital ◦ Payment amount must be based on the cost of relocation ◦ The physician must actually relocate from an area outside the hospital’s geographic ◦ area to within the hospital’s geographic area Lowest number of contiguous zip codes where the hospital draws 75% of its patients  There is an alternative, more expansive definition to enable rural hospitals to more  effectively recruit physicians

 Federal law (Stark) now allows – ◦ Reasonable non-compete provisions ◦ Restrictions on moonlighting ◦ Non-solicitation provisions (see above) ◦ Requirements that the physician treat both Medicaid and indigent patients ◦ Requirements that the physician not use confidential information about the practice he or she is leaving ◦ Provisions requiring repayment of practice’s losses (from your practice) that are not made up for by hospital recruitment payments ◦ Reasonable liquidated damages if the physician leaves the practice and remains in the community

Any questions?