It was his first job out of residency, and perhaps he was naïve. Did the senior urologists take too much advantage of him?
Dr. P, 32, was a new graduate from a respected urological residency program. He was considered well-trained, but not a star, in the field of general urology. His first position was with a multispecialty clinic, where he worked with several other urologists. It was malpractice insurance coverage after he left the clinic’s employment, so-called “tail coverage,” that resulted in a lawsuit.
Before he got the job, Dr. P had interviewed several times, driving up with his family to the clinic from where he was training. At the last interview, he was made a healthy job offer of $120,000 for the first year, with the prospect of renewal and an increase after that. He was presented with a “standard contract” for one year’s employment written by the clinic’s own lawyers. Without too much thought, he signed it. He did, however, check the salary figure, which was correct. It turned out to be the only thing in the whole contract in his favor.
Working on weekends
Dr. P had a mixed year. While the patients liked him, he found that the call burden was unequally distributed, with many of the weekends and holidays coming his way. Since he had a young family, he began to resent the situation a month into his contract.
Nevertheless, he worked hard during the year, and became friends with several of the other staff clinicians who also practiced on salary. They made cryptic references to his predecessors, who they said followed the trend “work them to death, then kick ’em out,” a reference to the one-year tenure of many junior associates in urology and other specialties.
Dr. P grew nervous as the time approached to renew his contract, and finally the day came. It was a Monday morning, and he had worked the previous weekend, taking call as usual. The chief of urology called him into his office, and broke the news to him that he would not be renewing his contract. Dr. P was disappointed, but not surprised.
The next piece of news, however, came as a shock. The chief explained that because his contract would be terminated, he would be required to purchase tail liability insurance to cover the clinic for claims made after he left. “Read the contract for yourself,” the chief urged him. “You’ll see what I’m talking about.”
Later, Dr. P did just that, finding a clause that read, “Should either party terminate the employment agreement, the employee will be responsible for purchasing the ‘tail’ of the liability insurance policy.” He felt embarrassed that he had not noticed this provision before. He consulted a business lawyer, who told him: “We’ll fight it. Give me a retainer of $15,000.
If we win, we might get compensated for the fee.”
Dr. P hired the lawyer to pressure the clinic but not file suit. When his contract expired and he moved to a new location, he re-fused to buy tail coverage. Then came another shock: When the clinic sent his final paycheck, for $10,000 less taxes, $9,000 had been deducted for tail coverage. His lawyer was adamant: “We must file a lawsuit to get that money back. Give me another $5,000.” Dr. P complied. A week later the lawyer filed suit in the lower trial court.
To speed things along, the lawyer filed a motion for summary judgment with the court, which set a hearing date. Dr. P traveled over 1,000 miles to attend the hearing, which was held near the clinic. The judge listened to the lawyers give their verbal presentations, read the contract carefully, and then ruled in favor of Dr. P. He learned later that the judge was a patient of the clinic, although not of the urology section. The clinic was ordered to pay Dr. P the $9,000 it had withheld, and also to cover his legal expenses.
The judge’s reasoning
The judge had interpreted the contract to mean that Dr. P would have to pay for tail insurance if the contract was terminated prematurely, but if the term of the contract expired “naturally” (i.e., by the passage of time) after one year, he did not have to pay for tail insurance. The judge awarded attorney’s fees because he considered the clinic’s case to be unreasonable and put forward simply to avoid paying the full contracted salary.
Like Dr. P, many physicians try to avoid lawyers’ fees—and entanglement with lawyers in general—by reviewing contracts themselves and deciding what is appropriate and what is not. This is not a good idea. Business lawyers are trained to analyze contracts, especially to conceive scenarios of what might go wrong, and allow for these contingencies. They are well worth their fee.
But declining to sign a contract before it has been reviewed by your lawyer can create an awkward situation. Just the suggestion of involving an attorney can create an atmosphere of distrust in a sit-uation that had heretofore been cordial. One solution is to ask, “Could I think about this contract overnight?” Or you could say, “I would like to have this reviewed before I sign it, because I don’t know much about contracts.” Since a competent lawyer can review a contract in an hour or so, you can return to the employer within a day if you have hired an attorney in advance.
Though malpractice cases are generally heard by a jury and involve immense preparation and the hiring of expensive expert witnesses, employment contract cases are more cut-and-dried. They are usually heard by a judge, who decides how a “reasonable person” would interpret the intention of the parties involved at the time of the signing. That’s why contract disputes are quickly resolved, or settled in case of true ambiguity.
Unlike malpractice cases or other tort cases, contract disputes often involve the awarding of attorneys’ fees to the winning side, a factor that does much to encourage settlement. In many cases, the contract allows for this; in other cases, such as this one, the judge may award attorneys’ fees if the losing party’s case was unreasonable or seemed to be put forward to avoid paying the full contracted amount.