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COVID-19: Employers cut doc pay and bonuses: What’s your recourse?


 

Employed physicians have had to take large pay cuts, give up bonuses, go on leave, or have even been terminated. In many cases, these actions violate their contract. How can they fight them?

Michael D., MD, a colorectal surgeon employed in a large surgical practice in Georgia, is still trying to make sense of a late-night directive from the practice, received in late March.

The practice had just started seeing a steep decline in appointments because of the COVID-19 pandemic. In a hastily arranged group phone call at 11:00 p.m., the CEO told the group what would have to be done.

They would be taking a 50% reduction in salaries, their bonuses for work already done were being withheld, and they would have to use their paid time off (PTO) in order to get their full March salary.

“It’s been over 2 weeks now, and still we’ve seen nothing formalized in writing,” said Dr. D., who asked that his name not be used because he was told that, under no circumstances, should anyone talk to the media.

“They have not told us anything more since then,” he said. “There’s just been a lot of hearsay and speculation.”

Dr. D. has been in touch with employed physicians at other practices, and their experiences run the gamut. One doctor at a large multispecialty group said his salary hadn’t been reduced at all, but a cardiologist was just told he will be laid off in 60 days.

Asking for big sacrifices

As the pandemic has intensified, employed physicians have started to see massive changes in their payment arrangements. They have had to take large pay cuts, give up bonuses, go on leave, and have even been terminated.

“In my 11 years of work on physician contracts, I have never seen changes as drastic as these,” said Kyle Claussen, a physician contract attorney and CEO of Resolve, a company that advises physicians on their careers. The company is based in Columbia, Mo.

He has heard from more than 100 doctors about these proposed changes in their contracts and related matters. Even graduating residents, he said, are being told that the start dates for their new jobs will be delayed.

In many cases, these actions violate the employed physicians’ contracts, said Ericka Adler, a physician contract attorney at Roetzel & Andress in Chicago.

“Some employers are acting out of desperation and are not making legally sound decisions,” Ms. Adler said. “It’s especially upsetting when they do not try to even talk to or work with the doctor first.”

Employers making unfounded unilateral changes

Ms. Adler said some employers are simply issuing a letter to all doctors. “It goes something like, ‘Just to let you know, we are cutting compensation effective immediately,’ and this may apply across the board to all doctors,” she said.

“But the problem with letters is that this is a contractual matter,” she said. “The employer needs to renegotiate each doctor’s contract.”

Employers might insist that the unilateral changes are based on terms in the contract, but this is usually unfounded, both lawyers said. A “force majeure” clause in contracts would allow the employer to set aside terms under certain specified emergencies, and the pandemic might be one of them. But Mr. Claussen said force majeure clauses are rare in physician contracts, and Ms. Adler said she has never seen one.

Lacking a force majeure clause, employers may try to turn to a common law doctrine that allows employers to set aside a contract when it is impossible to perform its terms, owing, for example, to “an unexpected intervening event.” But this tactic is also questionable, says Ms. Adler, who also represents the employer’s side of the contract. “This is a very high standard and unlikely to be satisfied,” she said.

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