Health Law Pointers - Volume XV, No. 2

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Terminating a Patient Relationship for Failure to Pay

In general, there are four (4) ways to terminate a physician-patient relationship: (1) by mutual consent; (2) by the patient unilaterally with or without cause; (3) by the physician; and (4) when the physician services no longer are needed.

For a physician to terminate the relationship for the patient's refusal or inability to pay for the reasonable medical bills for services rendered, adequate precautions should be taken. The patient should be afforded adequate notice and the opportunity to find another (i.e. successor) doctor. Failure to do this may give rise to a claim of abandonment, which is a breach of the physician's duty of continuing treatment. Certain exemptions may limit the physician's ability to terminate the relationship for failure to pay, such as his or her awareness that the patient (i) is in extremis or requiring emergency care, (ii) falls within a protected class or (iii) has declared bankruptcy.

The State Board of Medicine offers little guidance in the event a physician wishes to discharge a patient for failure to pay for services, as there is no express prohibition against taking such action. The general AMA policy on billing is Opinion 6.05, “Fees for Medical Services,” but this policy does not address whether a physician might refuse to see a patient due to unpaid bills. However, Opinion 8.11, “Neglect of Patient,” makes it clear that “[O]nce having undertaken a case, the physician should not neglect the patient.” Refusing to see a patient may be considered “neglect” unless the physician appropriately terminated the relationship. Opinion 8.115, “Termination of the Patient-Physician Relationship” specifically requires “notice to the patient, the relatives or responsible friends sufficiently long in advance of withdrawal to permit another medical attendant to be secured.”

The AMA standard is consistent with the proper procedures recommended by many attorneys and malpractice carriers:

(1)         Having discussions with the patient prior to deciding to terminate the relationship;
(2)         Delivering written notice of termination;
(3)         Providing at least thirty (30) days' notice of termination;
(4)         Including an authorization for the release of medical records to another doctor; and
(5)         Explaining that the physician will only provide emergency services to the patient until a successor is identified.

Notwithstanding this, if the physician is subject to a managed care contract, the contract should be reviewed to assure compliance with any contractual obligations.

Medical Practice Issues Involving a Physician Approaching Retirement
As a senior physician approaches retirement, the desire to work long hours may diminish for several reasons. Perhaps the physician seeks a different lifestyle, intends to spend more time with his or her family, or wishes to assist an aging parent or needy child. Others may no longer wish to work a full day or every day, engage in more complex or risky surgical procedures or take calls. The ability of a medical group to accommodate a physician's interest in reasonable adjustments to their practice or part-time employment may make a difference between continued success in business and failure.

Almost everyone agrees that it is better to plan ahead and work out specific policies that will govern the arrangements. Written arrangements assure consistency in approach and treatment, and minimize the potential for confrontation. Any written plan should address the following key concerns:

(1)       Compensation          Should there be minor adjustments in existing compensation plans or a shift in the method of payment?

(2)       Benefits                   Certain employee benefit programs are defined by statute or by the written plan itself, while other benefits such as PTO, allowances, T&E reimbursements, license fees and other entitlements may be more susceptible to change.

(3)       Office Expenses      Office overhead may be shared equally, allocated based on productivity or other measures, or be characterized as a personal expense. The question is whether a change in working conditions should result in a change to overhead expense sharing arrangements and, if so, how?

(4)       Call Coverage          Many practices allow senior physicians to take reduced calls as a prerequisite for many years of service. Other groups require the senior physician to reimburse the other physicians for the diminished responsibility.

(5)       Public Relations      Nothing frustrates patients more than surprises, and it is particularly unsettling if little or no notice is provided to patients and referral sources of the physician’s change in schedule or availability. Continuity of care concerns must be addressed.

            Despite good intentions, sometimes events intervene, such as an unwanted accident or disability. Rather than attempt to cope with a physician's sudden unavailability on an "ad hoc" basis, the medical group would be well advised to develop appropriate written guidelines for the disability of a physician. Many of the same concerns applicable to the aging physician are also relevant here. However, we recommend that any disability planning should define the event of disability and address the impact of the receipt of disability proceeds by the physician from a privately-held disability insurance policy.

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