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Medical Group Management Disputes Can Lead to Disruption and Costly Consequences
Mismanagement in a medical group can happen, especially since managers have a fiduciary responsibility to act in the best interests of the group. What amounts to “best interests” may be literally disputable. Typically, disagreements arise over:
- Entering into a risky or bad deal with outside parties that loses money or prestige for the group.
- Mismanagement of group practice funds.
- Firing a colleague that others feel is an asset to the business.
- Hiring inept or irresponsible employees or associates.
- Personality conflicts – a management partner may turn out to be a terrible boss who robs the practice of positive energy, inhibits partners from doing good work and possibly endangering patients.
That’s just the start of reasons for disputes that we’ve witnessed at Lubin Austermuehle DiTommaso. For those in group practices, the costs and consequences of bad management are varied and potentially dire. In some instances, the entire practice may be held legally responsible for negligence on the part of those in charge.
Doctor Cheated out of Ownership Interest in Medical 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. |
Managers Do Have Recourse to the “Business Judgement Rule.”
If questioned or if a suit is brought against a manager, there is recourse to a defense known at the “Business Judgement Rule.” At Lubin Austermuehle DiTommaso, we’ve used this rule successfully on behalf of our clients.
It’s our understanding that, this duty of care requires directors and officers to act in as competent a manner as would reasonably prudent people in their positions. Officers and directors must make decisions that they believe, in good faith, to be in the best interests of their companies and must make decisions after appropriate research and due diligence inquiries. The decisions must be the products of appropriate care and thought.
At LA, the caveat of our litigation law firm, has been and always will be to provide advice and counsel to our clients based on our 20 years of experience, our thorough understanding of the law, and a great deal of “appropriate care and thought.”
Talk to us. Whether you’re a manager in a physician group, or you represent the interests of the group, we should have a frank and FREE discussion regarding your individual situation and needs. Contact us now to talk and see if our belief in results and relationships results in a good fit for you.
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