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Hospital bylaws can trip up employed physicians

Doctors need to review both contracts to see how they would be affected if they lost their jobs, or their staff privileges.

By Steven M. Harris is a partner at McDonald Hopkins in Chicago concentrating on health care law and co-author of Medical Practice Divorce. He writes the "Contract Language" column. Posted May 13, 2013.

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As an employee of a hospital or private practice, you will have a formal agreement that governs the terms of your employment. In addition, if you are on the hospital's medical staff, you also will be subject to the medical staff bylaws that govern the terms of your staff membership and clinical privileges.

At the onset of an employment relationship, many physicians focus heavily on the terms of their job agreements while often ignoring the terms of the medical staff bylaws. This is problematic and could lead to unpleasant surprises, usually toward the end of the employment relationship. Both documents need to be read in conjunction with each other.

Beware of conflicting terms in your employment agreement, on the one hand, and medical staff bylaws, on the other hand. Although an employment agreement may include seemingly beneficial terms, there is often hidden language that has the effect of negating its terms by qualifying the employment agreement by language contained in the bylaws.

Some examples:

  • “In the event of a conflict between the terms of the Physician's Employment Agreement and the Medical Staff Bylaws, the Medical Staff Bylaws shall control.”
  • “Subject to the Medical Staff Bylaws, Physician may …”
  • “Except as otherwise stated in the Medical Staff Bylaws, Physician may …”
  • “Except as permitted by the Medical Staff Bylaws, Physician may …”

Effects of termination

Whether you are employed by a hospital or a private practice, your employment is probably at risk if your hospital medical staff privileges are suspended or revoked. Even if your medical staff privileges are suspended and then later reinstated, the initial suspension may nevertheless trigger termination of your employment agreement.

Therefore, it is important to understand your due process rights as outlined in the medical staff bylaws as to how your privileges can be suspended or revoked, and the procedure the hospital must undergo to make such a decision. Medical staff bylaws include a procedure for due process, including fair hearings and appeal mechanisms for medical staff decisions, such as privilege suspension and revocation.

For hospital employees and most hospital-based physicians, termination of your employment agreement, whether for cause or without cause, may be automatic grounds for termination of your staff privileges. In such a case, your due process rights under the medical staff bylaws (as it relates to your staff privileges) are waived, and you will not be afforded the fair hearing and appeal procedure typically available to office-based physicians on the medical staff.

Your employment agreement may contractually require you to resign from the hospital's medical staff upon termination of the employment relationship. This is common language: “Physician covenants and agrees that upon termination of Physician's employment with Employer (whether for cause or without cause), Physician will resign from the medical staff of Hospital X thereby relinquishing any right to due process pursuant to the medical staff bylaws.”

Some employment agreements may go even further and prohibit you from re-applying for medical staff privileges at that hospital for a stated period of time: “Physician further agrees that Physician shall not re-apply for medical staff privileges at Hospital X within two (2) years following the later of the termination of Physician's employment or the effective date of termination of such medical staff privileges at Hospital X.”

Hopefully, termination, and its effect on your employment or your staff privileges, won't be an issue. But it is worth reviewing your employment contracts and medical staff bylaws to understand how they will affect you in case some conflict develops.

Steven M. Harris is a partner at McDonald Hopkins in Chicago concentrating on health care law and co-author of Medical Practice Divorce. He writes the "Contract Language" column.

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