Little Health Law Blog
As a business and healthcare litigation firm focused exclusively on advising and representing health care providers, we work virtually every day with contracts that involve non-compete agreements and other forms of restrictive covenants. Almost all physician employment, for example, will involve a physician employment agreement that contains a restrictive covenant. Typically, a restrictive covenant will apply to prohibit certain competitive activities both during the employment and for some agreed period following employment, often one to three years. The details of such agreements can vary dramatically and, contrary to the impressions of many medical practice owners and employed physicians, there are not “standard” provisions for duration, geographic scope, etc. Further, Georgia and South Carolina case law and relevant statutory provisions are subject to interpretation, about which reasonable minds can often differ.
As a healthcare law firm, we are exposed to agreements on the transactional end, when the parties get married (i.e., when they sign the contract), and when they divorce (i.e., when the employment ends). If a non-compete issue is raised at the end of the relationship, the implications for employer and employee can be severe and, in unfortunate cases, devolve into litigation. For a highly compensated physician, whose ability to ply his/her trade following many years of education and training is suddenly impaired by the signed contract, whether to proceed with certain employment opportunities (that might violate a non-compete agreement) can make for a highly stressful decision-making process. Some factors that physicians may consider follow.
Should you determine if the non-compete agreement is enforceable?
Because our healthcare law firm often handles employment-related disputes and litigation (for employers and employees alike), we follow developing trends in employment litigation. Employment discrimination lawsuits continue to make headlines in the healthcare industry. Between 2018 and 2019, numerous allegations regarding doctors, nurses, and administrative staff have resulted in litigation challenging existing employment practices of large network hospitals and small practices. For managers and owners of physician practices or small businesses, employment concerns should be regularly discussed with legal counsel.
Providing access to high quality services to patients in rural areas is an ongoing challenge in the U.S. Throughout our country, a large percentage of citizens living in rural areas are less healthy than their peers in urban areas, as rural citizens lack access to healthcare providers in their small communities as well as personal financial resources and transportation options that would allow them to travel to larger cities where top-quality or specialty medical services are offered.
Consulting legal counsel to review a physician’s employment agreement before a dispute arises may increase a doctor’s negotiating power and help obtain better working conditions. Employment agreements contain many provisions, which may include: compensation arrangements, arbitration clauses, terms defining the scope of liability insurance, and non-compete agreements. As physicians in the workplace are tending to move away from working in solo practices, we are finding that hospital, health system and other corporate employment agreements containing non-compete clauses are becoming more prevalent.
As the opioid epidemic continues to cause death and create economic hardships within the nation, criminal prosecutors and law enforcement agents have increased their focus on prosecuting and pursuing severe penalties against doctors, pharmacists, nurses and other healthcare providers as a deterrent for providers who would prescribe opioids in excess. For example, earlier this month, a doctor in Kansas was sentenced to life in prison after distributing prescription drugs that caused the death of his patient. Steven Henson, a physician based in Wichita, was convicted of numerous criminal charges after prescribing opioids in amounts that could lead to addiction and economic hardship, after his patient died from overdose. According to the Department of Justice, Henson prescribed maximum-strength opioids in dangerous quantities. Evidence showed that he wrote prescriptions for patients without a medical need and without providing a medical exam. He also post-dated prescriptions and prescribed them in return for cash.
Legislation controlling self-referrals has created a complex road map that can leave doctors with questions regarding their ability to use business agreements to promote lab work and advanced imaging technology for their patients. For physicians, the rules and regulations of self-referrals for imaging can create headaches and lead to fines.
The Trend: Mandatory Arbitration
The highly anticipated “AseraCare” decision (United States v. GGSNC Admin. Serv. LLC) is still pending before the Eleventh Circuit Court of Appeals. The court is considering “whether a mere difference of opinion between physicians, without more, is enough to establish falsity under the False Claims Act.” To provide some context, the U.S. District Court evaluated the “falsity” element of the False Claims Act in the context of a hospice provider’s “clinical judgment” that a person meets the standard to be eligible for the Medicare Hospice Benefit. The requirement is that a patient be eligible for Medicare Part A and be “Terminally Ill” as defined by the regulation. “Terminally Ill” requires that the hospice Medical Director make a determination that the prognosis of the patient indicates a life expectancy of 6 months or less. So the issue is whether or not the “battle of expert opinion,” without some additional element, is enough to establish that a patient is not terminally ill rendering the subsequent Medicare reimbursement submissions false or fraudulent.
Of the “fraud and abuse” laws, the three decades old Ethics in Patient Referrals Act, 42 U.S.C. § 1395nn, dubbed “Stark Law” after Congressmen Pete Stark who sponsored it, can often be the most challenging to properly interpret and apply, easily leading to head scratching. The law as originally enacted was simple in concept: to remove any financial motivation for doctors to send their patients for unnecessary testing that could raise health care costs and/or result in bad health care. Now often subject to much criticism and even calls for repeal, Stark Law’s is often viewed as confusing, which is ironic because Congressman Stark intended for the law to create “bright line” tests that would provide clear guidance to physicians about what self-referral arrangements are unlawful. Instead, the evolution of the law over the years, including implementing regulations, advisory opinions and court cases have rendered proper interpretation and application of the law debatable and unpredictable in some circumstances.