Contracts: Managing your practice

November 6, 2018

Contract claims in a plastic surgery practice more typically arise from operating your office and surgical practice and with your employees and contractors, rather than from patient care. It is important to have written agreements with all of the care providers, independent contractors and employees in your practice, including other physicians and aestheticians.

 

These agreements should cover work-related obligations and requirements, ethical and legal standards of conduct, confidentiality and HIPAA requirements, and other safeguards in the workplace and legal obligations. The agreement should be explicit that confidential patient information is the property and responsibility of the practice, and cannot be taken for any purpose, nor to solicit business from patients of your practice. In the plastic surgery practice environment, aestheticians and other contract care providers may quit and take confidential patient information to their next place of employment. This is a direct HIPAA violation, and HIPAA imposes on you a duty to retrieve and protect such information. 

 

Having a protective clause in your employment agreement prohibiting such an act is an important preventative (and cautionary) practice. Seek legal advice to develop an office policy manual outlining appropriate and expected care, as well as restricted and prohibited acts. Utilize an updated employment agreement for staff similarly outlining required and prohibited behavior.

 

In the patient context, contracts can cut both ways. From the physician’s perspective, a contract with the patient may provide for arbitration of various future claims by the patient. In most cases, arbitrated claims remain private and do not take place in a public forum, though state law may still require you to report any such claim to the licensing agency or board. From the patient’s perspective, breach of contract claims are often related to breach of warranty claims when the patient’s medical outcome fails to satisfy their expectations. Breach of contract claims can be easier to make and prove than claims of negligence or malpractice; in a breach of contract claim, the patient only has to establish that a contract was made, that the doctor failed to fulfill the terms of that contract (for instance, that their results failed to satisfy their expectations), and that they suffered damages. In a negligence claim, by contrast, the patient has to establish that the doctor had a duty of care, that the doctor breached that duty, and that the patient suffered damages. 

 

Doctors are increasingly relying on outside service providers and independent contractors to care for their patients, including aestheticians, contract nursing and operating facility staff, and other related personnel. Though these contractors are not employees, you may well be liable for their negligent acts or omissions in their care or interactions with your patients. Independent contractors are not entitled to any benefits through your practice, usually carry their own liability insurance, and you do not have to make payroll contributions on their behalf.

 

Your written agreements with them should explicitly state that contract personnel are not employees, that they are not agents of your practice, and that they should have their own liability insurance coverage.  For the law to consider them independent contractors, you cannot totally manage their daily work, or cover them with insurance like the other employees. The issue of “control” over their work product is an important factor in labeling them as independent contractors or employees, and the language used in their agreement is not conclusive. Other factors that will be considered in classifying these providers as independent contractors are whether they may be discharged at any time; whether they control the time, place and manner of delivering services to you; whether they operate as a separate business; whether they have a substantial investment in their business that subjects them to risk of financial loss; whether you provide the tools and materials for them to provide services to you; whether they were previously an employee of yours; and whether the services performed are part of your regular business operations. All of the factors need not be present in order for a proper classification to be made. Be aware that there are significant penalties for misclassifying employees as independent contractors, and that California has begun to crack down on employers for such acts. 

 

You should consult an attorney to establish appropriate best practices in the use of such agreements for various personnel. You need to regularly check the status of their licenses, their malpractice history and claims made against them, and the quality of their work. should continually check on their licenses, malpractice history, insurance coverage and quality of their work. The issue that will concern you the most is whether you will be responsible for their alleged negligence should a claim be made. The independent contractor is liable for their own negligence, while the employee’s acts are your responsibility. 

 

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