Transcription:
Part 2: Employment Agreement Clauses and Practice Model Considerations

VO: This podcast is intended to provide information only on certain risk management topics, and is not to be construed as providing legal, medical, or professional advice of any form whatsoever. Because federal, state, and local laws vary by location, nothing in this podcast is intended to serve as legal advice or to establish any standard of care. Legal advice, if desired, should be sought from competent counsel in your state.

Dr. Julie Goldberg: Hello and welcome back to Forecast, the new podcast series designed to help dental students move forward in their practice. Brought to you by Fortress Insurance, the leading professional liability insurance coverage provider for dentists. Not familiar with Fortress yet? Get in touch with Fortress and find an agent by visiting our website at dds4dds.com. That's DDS, the number 4, DDS.com.

I'm Dr. Julie Goldberg, the Education Program Developer at Fortress Insurance. And before we dive into this episode, exploring the common types of employee agreements, let's recap what we talked about in our first episode. My guest last time was Stephen Pavkovic, an attorney and nurse and risk manager with Fortress is here with us again. Welcome back, Stephen. We made it through our inaugural episode, and I'm so excited to be back for another.

Stephen Pavkovic: Yeah. Thank you very much, Julie. It's great to be back and bring this relevant information for dental students as they begin their careers.

Host: Well, thanks for being here. Why don't we start by having you recap what we discussed in last week's episode before we get into today's content.

Guest: Last episode, we talked about the importance of dental students utilizing a professional support team during this transition to their professional practice. The support team could include professionals such as contract and employment lawyers, insurance agents and brokers, certified public accountants and others.

For our listeners, the Fortress agents who work in the states where you plan to practice can also be a helpful source of information during this transition. We also discussed a high level overview of a few key foundational concepts and clauses in employment agreements or contracts such as the relationship among the parties, the role of contract negotiations, the importance of liability coverage in those contract negotiations. And also, as a take home message from last session, and also one which is applicable today, it's important that, if you do not understand any portion of the employment contract, the most prudent course is to delay signing of that agreement until you've obtained that clarification. This clarification may come from the other party to the contract, your network of trusted advisors and/or a qualified attorney hired by you to review the contract on your behalf.

Host: Thanks for that recap, Stephen. So for our listeners, a quick tip, you can go back and listen to previous episodes if there's any information that you've missed. But Stephen, what are we going to cover for our listeners today?

Guest: Today, we're going to continue a discussion with a few more common employment agreement clauses or terms. However, before I start, I wanted to share a reminder that I'm providing general information about employment contracts. Since employment contracts involve the application and interpretation of state law and other considerations related to each practice, each listener should consult with a competent counsel in your state regarding any employment contract questions.

Host: Stephen, that's a really important reminder. Can you tell our listeners what our topics are for today?

Guest: Sure. The topics are restrictive covenants, third party agreements, buy-in clauses, hold harmless and also termination clauses.

We'll start first with restrictive covenants, also known as a non-compete clause. This clause permits an employer to protect or restrict access to the practice interests by limiting what a dentist can do after the dentist employment ends. Since one of the most valuable resources for any practice is their patients, a restrictive covenant can prohibit direct communication between the dentist, the former employed dentist, and the patients of the practice, even after the dentist no longer works for the practice.

Host: That's really interesting, Stephen, and important to acknowledge. Now, is there typically a timeframe included in the contract related to this restrictive covenant?

Guest: Yes, restrictive covenants are defined by what's considered a reasonable amount of time during which a former employee dentist cannot practice dentistry within a specific reasonable geographic area. The restrictive covenant may also identify whether a former employee is prohibited from such things as recruitment of the practice employees, or contacting the practices' referring providers.

Host: Stephen, what does it mean in a contract related to restrictive covenant when something is reasonable?

Guest: As with the other contract terms, here the term reasonable is determined by the specifics of each practice situation and the applicable state law. For example, the reasonableness of a geographic restriction may be quite different in a population-dense area such as Miami as compared to Missoula. The same is true for time restrictions in a restrictive covenant. As a reminder, restrictive covenants can be negotiated as part of the other employment agreement terms. And your professional team of advisors can be very helpful with this analysis.

Host: Okay. Thanks, Stephen. So, the second topic we're going to cover is third party agreements. What do dental students need to know about those?

Guest: Regarding third party agreement, an employment contract may have a seemingly benign clause requiring the employee to follow the requirements or sign on their own third party agreements with certain specific medical or medical dental insurance plans. For example, the practice you're being employed by may require dentists to sign a participating provider agreement and agree to the same terms as the practice regarding the fees, patient rights, and dental staff responsibilities. In general, this is relatively standard stuff. However, it can impact your employment and your practice. As with the other portions of an employment contract, it's important to know exactly what you are signing.

Host: So, Stephen, can you provide another example of a third party agreement?

Guest: Sure. Regarding a third party agreement clause, an employment agreement may require that a dentist will meet all of the third party requirements as listed on the third party's provider manual or a similar document. These manuals can be incorporated into the employment agreement by reference, and dentists should review and understand any participation requirements established by the third party before signing any employment agreements.

Host: So, moving on to that third type of clause, what can you tell our listeners about buy-ins?

Guest: Essentially, buy-in clauses are agreements to purchase an interest in a practice, including the benefits and liabilities that come with it. These can be complicated and, as with the other topics we've discussed, are also very specific to the details of each practice and employment scenario. Again, before signing a buy-in clause, a critical evaluation of your situation from your professional advisors can be invaluable.

Host: So Stephen, I believe we have one or two more common employment clauses to discuss today. What are those?

Guest: A hold harmless clause is one of those, and a hold harmless clause is entered into between a dentists and their employer through which a dentist agrees to hold the employer or the practice harmless for any work that is done. This seems simple enough as it would make sense that if you did something wrong, you are responsible for it.

Host: So Stephen, what might this mean for a new dentist then?

Guest: A hold harmless clause means that if the practice gets sued because of your actions, you are accepting responsibility to defend yourself and to defend the practice for those actions.

Host: Stephen, can you give our listeners a distinct example? It might be easier to understand that way.

Guest: Sure. Let's say a dentist is hired by a dental practice. In the employment agreement, the dentist signs a clause promising to defend, indemnify and hold the dental practice harmless from any and all claims arising out of or related to delivery of dental treatment provided by the dentist. This means that if a patient makes an allegation regarding the care of the dentist, that the dentist is promising to be responsible to defend their own actions and any allegations against the dental practice. The costs may include hiring an attorney and possibly even experts to represent and defend the dental practice. The dentist may also agree to pay for any claim or lawsuit losses incurred by the practice because of the dental treatment provided by the dentist.

There are two problems withhold harmless clauses. First, the clauses may create obligations, costs, and potential liabilities for which the dentists would otherwise not be responsible under the laws of the state they are licensed in. Normally, each party to a lawsuit is responsible for paying the cost of defending their own negligence. But a hold harmless clause may mean that you have agreed to pay for someone else's negligence too. Second, the obligations and liabilities become contractually assumed obligations. And in most professional liabilities insurance policies contractually assumed liabilities are not covered. This means that the dentist can be held personally responsible to pay for the defense of the dental practice and, as we mentioned, potentially any awards arising out of litigation.

Host: Thanks for that explanation, Stephen. I believe we have one more employment contract clause type to cover.

Guest: Correct. The final topic for today is a termination clause, which is a good one to wrap up on. Let's face it, dental professionals and employers can terminate employment for a lot of reasons, including personal and professional ones. Understanding the contents and the mechanics of a termination clause can remove or reduce the surprises, and also provide for a smoother transition for both the employer and the dentist. These clauses do so by defining clearly stated rights and duties with language about the causes for termination, possible notice requirements or other requirements related to termination. As a reminder, some of those requirements may also involve participation in a restrictive covenant.

Host: Great. So as we wrap up our time for today, what are the key takeaways our listeners should keep in mind from today's episode?

Guest: Sure. I urge our listeners to really begin their professional careers with their eyes wide open regarding the content of the employment contracts in order to protect your professional interests, it's vital for dentists to review and understand the contents of any employment agreements before signing. For most dentists, this review and understanding will involve the expertise of an attorney and other professionals regarding attorney review. Professional liability issues and employment contract clauses involve very specialized area of law, often with many unique requirements as determined by each state.

Given how hard you've worked to get to this point, I would not recommend contacting your old college roommate who is now a probate attorney, as the sole source for your legal representation during your employment contract negotiation and review.

Host: Yeah, that's a great overview and wrap up, Stephen. Thanks again for joining us for this episode and delivering information on these really important topics. And to you, our listeners, tune into our next episode where we will start a two-part series on malpractice. Be sure to tune in next time.

VO: Do you want to learn more or do you have a specific question to ask? Contact Fortress Insurance through our website at dds4dds.com. That's DDS, the number 4, DDS.com.