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Diagnosing Causes of Physician Group Disputes
There’s no question about the potential value these days of physician practice mergers. When signing merger agreements, however not all physicians in these groups pay attention to the potential for disputes that arise over any number of reasons, including:
- Personality conflicts: Personalities clash all time and sometimes there is nothing in an agreement as to the procedures that should ensue and, if the partnership does breaks up, there may be no clear, documented agreement regarding distribution of assets.
- Addition of new equity partners: If there’s nothing in the agreement regarding addition of new equity partners, there may be a dispute over the impact on shares held by partners in the existing group.
- Change of heart about partnership: The partnership may sign a contract with a physician that includes an option to become a formal partner, but later on, one of the partners may change his or her mind and won’t allow the transition to happen. That can easily result in litigation.
- Buy-Out Clause Is Left Out: A conflict may occur because a partner wishes to be bought out, but there’s no agreement or understanding regarding procedures, including details on how distribution of the departing partner’s shares should be handled.
- Unethical behavior by a partner may cause a huge dispute.
- Lack of merger agreement: No mechanism exists in the current agreement for a merger with another practice.
Transcript:
| We represented a medical doctor who had just after medical school agreed to be employed at a certain medical practice. And as part of her employment agreement, she would be granted a membership interest, an ownership interest in the practice itself after a certain number of years. Right before that period of time lapsed, the controlling members of that business sort of froze her out and let her know that they weren’t, in fact, going to make her part of that business and honor the terms of the contract. At the same time, they turned around and filed a lawsuit against her for allegedly breaching her covenant not to compete that was also part of the employment agreement. We were asserting claims; they were asserting claims against us. The entire thing went to trial and we prevailed on all the claims, recovering substantial damages award and also a judgement that she did not breach the covenant not to compete because they had, in fact, breached the employment agreement first. So that was a complicated trial as well, we hired an expert to value the particular business interest that she was supposes to receive. Ultimately, like I said, we did prevail and our client was, again, very happy with the result. |
The ample room for conflict is why we recommend the services of our attorneys at Lubin Austermuehle DiTommaso. If you want to go to court, know that we are fierce and formidable advocates with a long and substantial track record of success. To save time, pain and money, we always recommend exploring alternative legal avenues first, including, negotiation, arbitration and an equitable settlement. CONTACT US for a FREE consultation where we can get to know your needs and you can become familiar with a firm that puts its trust in results and relationships.
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