Last updated on November 1st, 2017 at 03:29 pm
by Frank Recker, D.D.S., J.D.
In this MGE Weekly Webletter, we warmly welcome our guest columnist, Frank Recker, DDS, JD. Dr. Recker practiced general dentistry in Cincinnati from 1971-1985 and served as a member of the Ohio State Dental Board from 1979-1986. In 1986 he entered the full time practice of law. His primary areas of practice are professional licensing matters before state regulatory agencies, malpractice defense, and other litigation involving health care professionals. He advises health care professionals and national professional associations in risk management, First Amendment, and other related issues. He lectures nationally on these and related topics and has advised and represented hundreds of health care professionals throughout the United States in a multitude of legal matters. He also serves as general counsel for several national professional dental organizations. Dr. Recker has been helping MGE clients for years and was the attorney whom Dr. Winteregg worked with when he added an associate as well as when he sold his practice.
While written contracts with dentists as employees or independent contractors are essential, several areas to be addressed in such agreements are of particular importance. These include addressing proprietary information, reimbursement methodologies, and restrictive covenants.
(Related: Buying a Dental Practice? Acquire Your Practice the Right Way)
It is very important to delineate in any written agreement that all information contained in the employer’s dental office is proprietary, confidential, and/or privileged. Examples include patient records, appointment books (written or computerized), all computer data, hardware, software, financial records and even patient forms utilized in the practice. Such a clause prohibits the removal, copying or use of such information by any former employee. The only exception would be related to a right to obtain a copy of such records to defend a malpractice suit or other legal action, or for verification of employee compensation as noted below.
Reimbursement formulas range from a percentage of production, to a percentage of collections, or a stated per diem with a periodic reconciliation based on an agreed percentage. And normally any related costs (such as lab fees) are deducted from the gross amounts produced or received, before applying the percentage received by the employee. By doing so, neither the employer nor the employee is “paying” for the lab bills, as the “number” utilized for compensation purposes reflects the lab fee deduction.
Furthermore, the contract should state the rights afforded to a dentist employee relative to inspecting, copying, or verifying production or collection data. It should also specify how long payments based on receipts would continue to be received by the former employee after termination of employment, and how long the terminated employee has a right to obtain any compensation related information. Typically, a dentist paid on collections should be able to continue receiving such payments for 90-120 days after termination, with corresponding rights to obtain copies of the relevant AR reports for that period of time.
Of course, one of the most important aspects of a written employment agreement relates to the “non compete” clause, reflecting how long, and for what distance, a former employee must refrain from practicing in a specified geographic area. Generally speaking, the longer a dentist is an associate/employee, the more risk presented to the employer should the dentist leave the practice. An agreement should acknowledge the fact that the employer has a right to protect against “unfair competition.” In effect, the longer a dentist is employed before terminating the employment relationship, a larger “non compete” zone, and for a longer duration, are justified. The use of an “escalating” non-compete time period and mileage radius are often a reflection of this reality.