Ask Me MD: Medical School for the real world
Ask Me MD: Medical School for the real world
Kyle Claussen, JD - COVID-19 Physician Contracting
Dr. Verret talks with Kyle Claussen of Resolve, a national physician contract review firm. Kyle talks about changes he has seen in physician contracts during the time of COVID including unilateral contract changes and changes in new contracts. For more information about Resolve, visit them at http://www.resolve.net
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Ask Me MD, medical school for the real world with the MD Dr. D.J. Verret.
D.J. Verret, MD, FACS :Greetings and thank you for joining us again for another edition of Ask Me MD, medical school for the real world. I'm Dr. DJ Verret. And today we're going to be talking with Kyle Claussen,of Resolve, a national physician employment review organization, about physician contracts in the time of COVID. We'll be talking to Kyle right after this. Welcome back to Ask Me MD, medical school for the real world. I'm Dr. DJ Verret. And today we're joined by Kyle Claussen, of Resolve, a national physician employment contract review firm. And we're going to be talking with Kyle about in physician employment changes he's seen during COVID-19. Kyle, thanks for joining us.
Kyle Claussen, JD :I appreciate you having me.
D.J. Verret, MD, FACS :So I guess the the big question, you guys have a national reach how has COVID-19 been affecting physician employment?
Kyle Claussen, JD :Well, I think it's been different by, you know, each location. But certainly we're seeing a lot of employers and a lot of your listeners probably can attest to this, that had issued, whether it was paid cuts or complete furloughs during you know, the middle to late spring, where the contracts themselves call for certain compensation, they just decided that with the the pandemic and with the, you know, the kind of stay at home orders and shutting down elective cases and things like that, that they were just going to make these unilateral cuts across the board. So a lot of positions out there, a lot of your listeners probably had some type of compensation reduction, some type of, you know, retirement component that wasn't matched, or a bonus that wasn't paid out. Those things were were frequently showing up in our inbox, and then on our radar, you know, over the last four or five months,
D.J. Verret, MD, FACS :And I would totally agree with you. I've seen a lot in the physician message boards about those same things happening. The the question I see asked quite often and I'm going to pose to you is are employers actually allowed to modify contracts unilaterally like that?
Kyle Claussen, JD :Well, first of all, it's going to be very specific to the contract, you know, to each individual contract, but most of the contracts that we see can only be modified in writing. And it has to be a writing that's signed by both parties. So the default rule, probably, you know, for your contract or for your listeners contracts would be that they can't do that. And so the question then becomes, well, if the contract doesn't authorize them to do that, and they did it anyway, you know, is that legally justified? Do they have some type of defense that would go along with that? Or is it just pure breach of contract?
D.J. Verret, MD, FACS :And as you were kind of mentioning, I'm assuming it really is contract dependent, though. So it'd be fairly important to take a look at your own contract before really answering that question.
Kyle Claussen, JD :Yeah, correct. You got to take a look at it. And there are even if the contract, you know, said that they have to modify it in writing signed by both parties, you know, there are some legal defenses to when contracts are just impossible to perform. And so if, you know, on these message boards, sometimes you may see in possibility as a defense or impracticality or frustration of purpose, you know, sometimes we call it those, those are defenses. I mean, they are legal doctrines that are out there, they have to show some type of unexpected occurrence or unexpected event which this pandemic would I think, account for that, and then it would be, you know, just extremely unlikely or impossible for them to perform underneath of it. I think that's that's a burden that falls to the employer to make that argument. And and also, I think it's questionable on whether or not that argument holds up, because most of these places came back to work that, you know, within the next two or three months, and so to say it was impossible to continue on for that short period of time. I'm not sure what would be a winner.
D.J. Verret, MD, FACS :Have you seen kind of on that front? Have you seen any, any legal doctrine or legal cases out there that have kind of spoken to those issues or have any claims come through yet in the court? It's probably a little bit too early, I would guess but but I figured I'd pose the uestion.
Kyle Claussen, JD :Yeah, I haven't personally seen them doesn't mean that they're not out there. But certainly we're getting questions I think from a lot of, you know, physicians, especially if it's a lot of physicians are underneath one of them. on whether or not there's some type of class or group action, you know, against them for this loss compensation. Interestingly, the, the employers are adapting, you know, from March until now, you know, the new contracts that we're seeing have what's called a force majeure clause in them and the force majeure clauses, one that says that there's, you know, an act of God, the contracts no longer has to be enforced, and they can terminate it immediately. And the acts of God usually would involve things like natural disasters, you know, hurricanes fires, you know, things like that, well, pandemic is one of the things that would fall underneath that category. And so I can say, zero percent of the contracts I saw before March had that paragraph in them, and now nearly all of them do. So, you know, legal departments, and employers are certainly adapting in this environment as well.
D.J. Verret, MD, FACS :So if one of those modifications does happen, and it's in the contract, it shouldn't have happened, you know, kind of those assumptions there. What options do physicians have in dealing with those kinds of unilateral changes?
Kyle Claussen, JD :Yeah, I think it depends on your situation, I think it's a tough spot to be in, because a lot of these employers came with an email or with an amendment that said, Here's your new comp rate, you know, it's an across the board cut, and everybody has to sign it by Monday, or else, you know, we're gonna let you go. And even if it's not enforceable, right, there's the employer probably is still going to follow through on that and let you go. And then you're in a position where you've got to file for breach of contract and find a new job and, you know, do all those things. If it's possible for you to continue to work without signing anything, you know, that's that's kind of step one is you want to delay and kind of keep your rights to, to enforce the contract as long as you can. I also don't think that it hurts right now, to have some options, you know, on the table, if you haven't been paying attention to the market, and knowing you know, where you can maybe fall, if your current employer does let you go, I think that's, you know, a little bit dangerous, I think you need to have a good idea of what's out there.
D.J. Verret, MD, FACS :One of the responses I see a lot on the message boards is, is get a lawyer or lawyer up front and talk to your lawyer, which I firmly believe is a is a great idea. But you know, one of the things I always I always wonder when I I talk with an attorney is how long is this going to take? If we go down a legal pathway? How much is it going to end up costing me? And potentially if I'm in this case, if I'm still with that employer? How does that end up affecting our working relationship? I mean, how do you kind of counsel physicians that are coming to you when they're considering legal action? In, you know, what do you tell them? And what maybe other other framework Do you give them for evaluating which way they want to go?
Kyle Claussen, JD :What you just described to me sounds like a cost benefit, you know, type of analysis. And I think that's important. Anytime there is a breach of contract, and whether you're deciding, you know, should you move forward on the action or not, you know, I don't want to quantify what a 20% pay cut is, if that's what happens, you know, over two or three months? And is that number worth going through a lawsuit, which, you know, the employers have deeper pockets than any individual would. And they're also in a position where they are going to adamantly and aggressively probably defend that position. Because if they lose on yours, they lose on the other 200 employed physicians if they did the same thing, too. So I think you have to be very committed to that. And I think it would have to be $1 amount that was was worth the time and the energy lawsuits are not quick, you know, to, to go through that entire official process. I mean, it's going to be years, you're not talking about months before you would recover? And will, you know, will the relationship fall apart during that during that lawsuit? I think the answer is most likely it will. And that's, that's true of any lawsuit, you know, you can't sue your employer and then continue to have a good relationship, but at the same time, they're likely going to want you to part ways and vice versa, you probably want to part ways as well. So I think the most common time when you'll see somebody actually see we're actually pushed to that degree is when they're going to transition and move on where they don't need to protect that relationship anymore. That being said, when you when you say lawyer up and we also have seen things where if you send back, you know, some official communication, and if it's on an attorney's letterhead that occasionally they will back off, and they will keep your compensation where it was where it was set to because they know they don't have the contractual right to do that. So I think there's certainly benefits on it, I think before you file a full blown lawsuit, so you'd really want to crunch the numbers and see if it's worth it.
D.J. Verret, MD, FACS :One of the other things that I see asked quite often is if the employer unilaterally changes by contract in violation of what we had, does that end up negating a non compete clause that's in the contract as well. Any thoughts on that?
Kyle Claussen, JD :Yeah, yeah, I would hope it would. Again, most non competes that we see you know, prior to us offering suggestions and edits. are structured, where they apply no matter how the contract ends. You know, it says termination for any reason. And so a termination for any reason would include a breach of contract by the employer. Now, do I think a judge would likely enforce that? Probably not. But you're still going to have to go through the process to find out because the default language is probably drafted against you in that situation unless you've got those carve outs already built in.
D.J. Verret, MD, FACS :So I guess what you're saying is well is make sure on the front end, before you get into any of these situations, or something else you can ever imagine. Make sure to talk to somebody to try and get those contracts in order for all these unforeseen circumstances.
Kyle Claussen, JD :Correct. I mean, what's interesting to me is that COVID is just, you know, drawing attention to something that I think was important before anyway, I mean, the non competes and all these all these terminologies and like in a contract, you want to make sure they're clear. And you're planning for kind of worst case scenarios. I think COVID is just making a lot more people quickly aware that there was problems in their documents, and so that what you just said is exactly right. If you can solve it up front, you have a lot less worry later on.
D.J. Verret, MD, FACS :So what would you actually counsel a physician entering a new contract to look for, to kind of prevent unforeseen problems in the future at least provide a framework that's favorable to them to deal with those kinds of issues?
Unknown Speaker :Yeah, so that all of the COVID type problems really revolve around termination of the contract and modification of the contract. So for starters, you want to make sure your contract has the language that says this can only be modified in writing, you know, with both of us signing off on it, you want to make sure that there's no force majeure clause or any other clause in there that would allow them to immediately change the contract in the event of a pandemic, or any other, you know, change in the law type of language. I think you want to make sure your non compete and your tail coverage components, and any repayment of signing bonuses or retention bonuses have some forgiveness and waivers in the event they have to terminate, you know, for COVID, or if they're in breach of contract. And then aside from just the the contract itself, and anybody entering into a new contract, you need to have multiple options. And we had talked about this a little bit before, but I think it's really wise to have two or three, when you're looking at a contract nowadays, because we've had some that have fallen apart at the end, we've had employers put hiring freezes on, you know, right when somebody was going to sign. And so those are just things that are unforeseen, that are different now than they were last year at this time. And so you really want to make sure you're planning for that.
D.J. Verret, MD, FACS :When we talked a little bit before we started recording about some of the change in, in the interview landscape you're seeing maybe Can you kind of relate that again, for our listeners?
Kyle Claussen, JD :Yeah. So you know, we, as a company that reviews contracts, you know, our timeline kicks in after the interviews happen, right. So they go on site, they interview and once they get a document, they usually engage our services. With the graduation, you're running, generally, June 30, to the July one date, you would generally see a lot of interviews having happened already or in the process, and all the people that we're talking to, you know, are doing virtual interviews, or are postponing them until later in the fall. And so I think that is going to create some urgency as well, once all those interviews kick in, you know, your there's going to be this scramble by maybe a heavier demand or more, you know, voluminous number of candidates looking at positions, trying to lock those up, because you still have this entire class of residents coming out. There's still healthcare needs everywhere. I don't think that companies or employers are not going to hire, but I think it's going to be a condensed season, I think that could cause you know, again, some panic if you're not preparing for that.
D.J. Verret, MD, FACS :And you'd also kind of mentioned to me, when you're looking at doing interviews, make sure you stack them together, so you know what your options are, and then are able to better negotiate contracts. Can you kind of give your thinking behind that again, for our listeners?
Kyle Claussen, JD :Yeah, I can. So like anything else, if you've got two parties that are discussing, you know, the negotiation of a car or, you know, an employment contract, at some point, you get to the end of the negotiation, and the other side wants an answer, right. And so if you have all of your interviews stacked together, it's very easy for you to compare those side by side and to make a good decision and not have to drag anybody on and not feel any time pressure from making a decision if you've got them spaced out. But the frequent problem that we see is that one employer will say, Hey, I have to have an answer on whatever the end of the month and your next interview isn't scheduled until the end of the month. And so you almost have to lose one of your options before you know if you have option two and that's not a situation that's very advantageous for you as the as the interviewer. So If you can package them together as much as you can, it just gives yourself more leverage in that process. And obviously, right now, you know, leverage is something that's more important than ever.
D.J. Verret, MD, FACS :And I'll just throw this kind of softball to you. At what point should people start talking with an experienced contract attorney, health care contract attorney, I should say about what they're looking at.
Kyle Claussen, JD :If you're leaving training and going into, you know, your first job, or if you just, you know, you're transitioning, I would recommend doing that before you're doing any type of on site interview. And the only reason is because most compensation discussions will happen at some point while you're on site. And there's a, there's some anchoring that happens if they throw out a number and you kind of nod or you say, yes, it sounds okay, if you don't have an idea of what fair market value should look like. And if you don't know what a normal, you know, kind of contract terms, what you should expect, you can kind of anchor yourself into a position that that is harder to negotiate from. So I think the earlier the better, doesn't mean that there's a lot of communication or a lot of need for back and forth until you actually have the document. But I think just having an idea of what the numbers look like, and also having somebody to bounce ideas off of is really important.
D.J. Verret, MD, FACS :And I kind of rephrase that question a little bit limiting it to an experienced healthcare contract attorney, but lawyers kind of like doctors have subspecialties, correct?
Kyle Claussen, JD :Yeah, absolutely. I mean, for me, personally, I all I do is healthcare, employment law. And so if if somebody came to me for a bankruptcy, I wouldn't be very qualified to do that. And the same thing would be true of any other, you know, Attorney, if they practice in family law, or intellectual property law. That's not who you want to review in your, you know, physician employment contract or your health care, contract. So you need to make sure you got somebody specialized attorney specialized, just like doctors do, like you said, and there's plenty of good options out there. So I mean, it's, it's not a selfish plug for me necessarily. It's just saying, make sure you find somebody that's qualified.
D.J. Verret, MD, FACS :I was always really appreciate the advice, some some great things to think about in a time that presents some unique challenges. But, you know, it sounds like a lot of the challenges physicians would encounter here are actually could could have been prevented with some blanket statements that are kind of expected in some contracts, though.
Kyle Claussen, JD :Yeah, correct. I mean, I think there are certain, you know, folks that didn't have any compensation issues. They didn't have any concerns on their non competes because they did a good job in negotiating them up front. And I think it's everyone else that didn't, you know, folks that didn't even have an attorney look at it at all. They just signed off on the dotted line that are now finding out why that's such a bad idea.
D.J. Verret, MD, FACS :We've been speaking with Kyle Clawson of resolve, a national physician employment contract review organization, about physician employment agreements during the time of COVID. You're listening to ask me MD medical school for the real world. I'm Dr. DJ Verret. Thanks for joining us. Make it an awesome week.
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