Medical Employment Agreements

 Physicians, whether newly licensed, or well established, often find that their allegiance and patronage can be in great demand.  This is because hospitals, pharmaceutical manufacturers, ambulatory surgery centers, ancillary service providers and medical device manufacturers are prohibited from prescribing medically necessary products and services without a physician’s prescription.

Those who depend upon a physician’s referral, often desperately seek to capture a stream of referrals by way of employment, medical directorships, “consultant” agreements, and other contracts in which a non-physician entity forms a relationship with a physician.  Physicians must vigorously protect themselves against liability under state and federal law.  Unless carefully structured, a physician can find himself in violation of Stark Law or the Anti-Kickback Statute.

Medical Employment agreements differ from ordinary contracts, normally encountered by employment lawyers.  In the ordinary case, parties to an employment contract are free to contract for personal services, subject only to the laws of contract and “free-market” principles. In the case of health care, the laws of “supply and demand” do not apply. The person prescribing the treatment, (supply) and the person accepting treatment (demand) are joined in the transaction by a third party payor.  Both AMA Rules of ethics as well as  state and federal law prohibit kickbacks, and conflicts of interest in the prescribing of services, medication and devices.

Any physician contemplating entering into any form of employment agreement, joint venture, medical director agreement, or other contract, must consider hiring an experienced health lawyer, such as Martin Merritt, to review the contract for compliance with state and federal law. Martin Merritt has provided experienced representation to physicians for 25 years, and is available for consult to physicians who have been approached or solicited by non-physician entities.




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