In a recent non-precedential decision, the Third Circuit Court of Appeals affirmed a lower court decision that a physician's employment agreement could be terminated by his former employer without cause. In reaching its decision, the Court rejected the physician's reliance on an offer letter that he received prior to his execution of an employment agreement. In this letter, his prospective employer indicated that the physician would be given a specified time period to obtain board certification in the United States for the specialty for which he was to be employed.
Geisinger Clinic recruited Philip Edwards, a UK-trained and licensed physician who specialized in interventional radiology, to join its employ. Although Geisinger's policy was to require any newly employed physician to be U.S. board certified for the specialty that the physician was being employed, in Edwards' case, the Geisinger Clinic indicated that it would allow Edwards to begin employment, but that he was to obtain his board certification within a four to six year period. Despite an offer letter and other correspondence between the physician and his employer that referred to this time period within which Edwards was to obtain U.S. board certification, his employment agreement did not contain any references to this time period or requirement. Moreover, the agreement provided that Edwards' employment could be terminated at any time by the Geisinger Clinic with or without cause. Approximately one year after Edwards began work, Geisinger Clinic terminated his employment.
Edwards sued his former employer for breach of the employment contract. The trial court granted Geisinger Clinic's motion for summary judgment and found that as a matter of law, the employment agreement allowed Edwards' employment to be terminated at any time without cause. In upholding the trial court's decision, the appellate court concluded that any references in the pre-employment offer letter as to the time period for Edwards to obtain US board certification did not guarantee Edwards' employment by the Geisinger Clinic for any minimum time period.
Physicians and their employers can learn several lessons from the Edwards case. First, care should be taken in drafting termination clauses in a physician employment agreement. The agreement should clearly state whether either or both of the employer and/or the employee can terminate employment, and if so, the terms and/or conditions of any such termination. In addition, the contract should indicate whether any advance notice is required prior to termination, and if terminable for "cause", the agreement should include a detailed definition of what constitutes "just cause." Finally, the agreement should also address the impact of termination of the employment agreement on any remaining obligations imposed under the agreement such as noncompetition, nonsolicitation and nondisclosure. For example, if the employer terminates the agreement without cause, will the physician continue to be bound by the noncompetition covenant that applied while the employment agreement was in effect?
The second lesson to be learned is that a physician employment agreement should indicate in clear and unambiguous language that all prior offers and discussions are "merged into" the employment agreement. Perhaps if the employment agreement in Edwards stated that the employment agreement superseded the offer letter by the Geisinger Clinic to Edwards, litigation could have been avoided. (The Court of Appeals in Edwards did not indicate whether the employment agreement contained such a "supersedence" clause). In drafting physician employment agreements, the best practice is for the supersedence clause to make a specific reference to the date(s) of the prior offer letters and/or summary of terms that are being superseded and "merged into" the employment agreement.
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