When a physician is going about looking to move to a new hospital or other medical organization, there is a period of good feeling when the doctor knows that he/she is wanted by the facility. This usually occurs during a series of meetings with people at the facility and everyone is polite, charming and, all in all, as agreeable as possible. When that mating dance is over, the doctor is welcomed into the fold as a wonderful new and greatly valued addition to the group. It is then that the contract is put in front of the doctor; just a formality is the way it is presented. Usually, the contract is twenty pages or more, and the doctor routinely reads about five percent of the verbiage. The most important parts, in the eyes of the doctor, are how much is the compensation and how much notice has to be given in advance to terminate the contract. The rest of the document is not reviewed and certainly, the ramifications of the language are not appreciated by the doctor. But, you know, the contract has been written by the lawyers for the facility and they have drafted it to be as favorable as possible to the facility. This situation can lead to a very, very unhappy ending for the doctor should this employment love affair end sometime in the future. Accordingly, in my view, it is exceedingly important for the doctor to read every word in the contract and understand the possible outcomes if there is a desire in the future to leave the organization.
In this article, I will discuss only one of the areas that I think deserves a great deal of attention and understanding. I am discussing the contract language about a restrictive covenant. This concept is usually placed about 12 pages into the contract and is often never read by the doctor, much less is its meaning appreciated. This covenant says that for a specific period of time after the ending of the contract, the doctor agrees not to practice medicine at any location that is within a particular distance from the employing facility and its affiliates. Now, these covenants must be “reasonable” both in the length of time and the amount of the distance. But, if there is an argument about those matters, they may have to be decided in court, and that is a very expensive proposition that any individual physician wants to avoid. Also, there is often language that says the losing side of any legal argument is required to pay the legal expenses of the winning side. Again, this is not an attractive position to be in if you are an individual fighting against the law firm retained by the medical facility.
I have seen covenants that give the amount of time as two years and the distance is twenty miles from the facility in the suburbs of New York City and one half a mile within the City of New York. But, how to measure the distance? These contracts often couch the distance in terms of the “radius” from the facility. This means “as the crow flies” and is very different from the distance that Google shows as the “driving distance” between two points. Accordingly, if the doctor wants to move from one facility to another, Google might show that the new proposed place of employment is twenty-two miles from the current employer, but the “radius” puts the new facility within the twenty-mile distance. So, if your employer wants to enforce the covenant you, the physician, must decide if you want to move and risk a court fight, the result of which cannot be known with certainty, or to give up the opportunity at the new position.
You truly want to avoid the situation that I have outlined above, and the way to do that is to be aware of the problem and deal with it before signing the contract. These issues are negotiable, but only if you have read the contract and understand what impact the language might have on your future. You then can attempt to either eliminate the covenant language altogether or to at least decrease the time and/or the distance involved.
