![]() Typical matters for an exit / severance agreement are:ġ. Word #2 to the wise: Consider using an exit / severance agreement (discussed next) to require that the practice give financial data, and permit inspections, that make clear its calculation of post-termination payments.Įxit / severance agreements are useful when a physician leaves a practice to tie up loose ends and prevent misunderstandings, all of which can lead to litigation. Word #1 to the wise: The latter 2 items (pro-rated share in bonuses and retirement plan contributions) frequently create timing issues, specifically, whether the termination date falls before or after vesting in the particular payment. Second, there might be (i) compensation owed for the physician’s share in accounts receivable or collections (ii) a pro-rated share in year-end bonuses and (iii) a pro-rated share in the practice’s contributions to the physician’s retirement plan. First, there is salary owed to the date of termination plus accrued vacation pay. When a physician leaves a practice, usually the practice will pay compensation after the termination date. For more information, read Shareholder buy-sell agreements for medical corporations. Once again, beware any non-competition or non-solicitation clauses in the buy-sell agreement. ![]() The buy-sell agreement also will provide for the share price, either by an accounting formula or through an arbitration process. Medical groups frequently require a mandatory buy-back of shares. If the practice has a shareholders buy-sell agreement, check it for any buy-back of the physician’s shares in the practice. Lastly, beware any non-competition or non-solicitation clauses in the employment agreement for more information see Physician employment and independent contractor agreements and also Termination clauses in physician employment and contractor agreements. Further, if the practice must pay deferred compensation, the practice might try to offset its damages against the compensation to be paid. Usually the practice wants to recover the costs of hiring a temp physician to cover for the departing physician’s absence until the practice replaces him or her. The consequence of failure to give the contracted notice is that the employer / practice might sue the physician for breach of contract. Most physician employment agreements require a notice period before termination of employment. The latter 2 contracts become important if the physician wants to continue to practice medicine.Įmployment Agreement. Review managed care contracts, the employment agreement and the shareholders (buy-sell) agreement if you have one. Both the physician and the surviving practice should look over their contracts when the physician leaves.
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