Partnership Breakup Threats to a Medical License


A medical license is the most vulnerable license in the United States. An employment dispute or a physician partnership dispute inevitable evoke the spectre of a retaliatory license suspension. A partnership breakup should simply be a busienss issue. However, the medical license is vulnerable to attack by disgruntled business partners and a bad partnership agreement will often encourage attacks on your license by your soon to be former “best friends”.

Our medical license lawyers understand the intricate … intertwined … interrelated webs of employment contracts, social politics, general political trends as they affect the safety and sanctity of your medical license and right to practice.

[We include freedom to exercise independent medical judgment under the term “right to practice” as many of the political developments result in politicians determining how your practice.]

Medical Board and NPDB Reporting is Encouraged by a Poor Contract

Many physician partnership contracts incentivize termination for cause. These contracts will provide substantial compensation to the departing partner when termination is “at-will” or without cause. The same partnership contract will provide for a different compensation system when termination is “for cause”. For cause physician termination is usually orchestrated by an attorney consulted outside the practice or by the practice adminstrator. A carefully executed plan will lead to “for cause termination”. This termination strips the doctor of goodwill, future revenues and other items of inchoate but real value. This retaliatory firing triggers a buyout under the for cause provision and will often be for “book value”. Typically “book value” is simply the depreciated value of the equipment onsite. Non-compete clauses complicate the termination process as well. A medical license defense lawyer takes a broad view of your “situational vulnerability” so that we see attacks before they are launched.

Financial Incentive to Attack Your Medical License

A major problem with this for cause firing is that the financial incentive for your former close friends and partners is to find for cause vs. an at-will parting of the ways. These same “for cause” provisions often trigger medical board reporting or at the very least reporting on credentialing applications in the future. To counter these tactics, we often file lawsuits under Labor Code section 1102.6 or Health & Safety Code section 1278.5 to undo the harm caused by a punitive “for cause” firing. However, these are after the fact remedies as these punitive actions under these physician employment contracts often trigger medical board reporting (and in extreme cases National Practitioner Data Bank reporting) long before any of the 1102.5 or other employment law remedies provide relief. The best approach is to act before the harm is inflicted.

We have seen healthcare practice sales as a trigger for punitive or business driven employment actions. If one partner opposes the sale of the practice the partners in favor of the sale will consult an attorney who maps out a campaign to document physician misconduct. The normal day to day activities of your practice start being documented in “peer reviewed” styled criticisms.

These criticisms are setting up a sham peer review or a termination for cause but they are protected to a large degree from a lawsuit by both Evidence Code section 1157 and the state SLAPP statute.

In severe cases we have seen DEA Audits, HIPAA compliance complaints, billing reviews, off label prescription reviews and other outside agency investigations targeted against an individual. While the group risks exposure as the partner or employer, an outside investigation often triggers an immediate internal suspension for patient safety. It is a nuclear option but we are seeing it increasingly utilized.

The bottom line is that your medical license is your Achilles’ heel. It is a point of attraction for attack and your greatest vulnerability. It is the point of attack for personal disputes, marital discord, business disputes unrelated to your medical practice and to professional competitors as well.

Review Your Partnership Contract for Termination Landmines

A physician contract lawyer needs to view a potential contract or an existing medical contract without “rose colored glasses”. What does this contract do in the case of a business conflict ? Does it encourage threats to the MD’s license ? Does it require documentation of complaints and progressive discipline before contract termination for cause ? Does it have a mechanism for internal review before suspension and before any license impacting conduct takes place ? And finally, does it provide for resignation while under investigation through a mechanism that bypasses the reporting provisions for the NPDB and/or Medical Board?

Put differently, viewed through the lens of a medical credentialing attorney, how do we see your contract as impacting future employment should this partnership or employment relationship fail. Not only are we concerned with the current impact, but physician credentialing is a lifetime process. It is like the old saying, “Friends come and go but enemies accumulate.” Medical credentialing accumulates red flags and the structure of your current contract may affect what is or is not disclosed in a new credentialing or employment scenario.

Another common and long used tool is the disruptive physician approach. E-mails to HR, warnings from HR and even anonymous complaints can fill a file with sufficient negative information to justify a disruptive physician peer review, suspension and termination. The disruptive physician approach requires some connection between the alleged bad personality and patient care. This is the weakness of the approach as there can be some difficulty in connecting personal frictions with potential harm to patients.

Do you feel safe because:

“Well I contacted the best medical lawyer in Los Angeles and he told me …..”.   

Well don’t be so certain that you are safe.  Here are some recent press releases from the United States Department of Justice.

Fifteen Texas Doctors Agree to Pay over $ 2.8 Million to Settle Kickback Allegations

Flower Mound Hospital to Pay $18.2 Million to Settle Federal and State False Claims Act Allegations Arising from Improper Inducements to Referring Physicians

Those 15 doctors and the hospital likely had the best medical lawyers available to review their work. 

We take a very conservative approach to medical-business ventures.  We often disagree with the legal opinions that read: “This opinion is no guarantee …”.   The lawyer disclaimers are red flags because although we admit that many of these aggressive practices are lucrative and successful, the failures are devastating to the physicians involved.

The (Truly) Best Medical Board Attorneys in California are Conservative & Careful

Our legal team is the best physician defense team in the state. We have trial lawyers whose hundreds of jury trials and thousands of contested hearings separate our team for the rest. We see the chess board many moves down the line and we adapt to change and unforeseen circumstances based upon decades of experience representing doctors.

Call our California medical license lawyers at (925) 283-1863. You will reach a real person in the office if you call during business hours. Alternatively, fill out the brief contact form below.

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