The Most Ridiculous Contract Clauses You've Ever Seen

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
Old_Mil

Old_Mil

Senior Member
20+ Year Member
Joined
Nov 19, 2004
Messages
2,329
Reaction score
975
Go ahead and post them so that our younglings get a better sense of how thoroughly corporate america is out to screw the physician and the language they should watch out for.

Here's one to start:

Language in a IC physician contract that requires the IC to reimburse the staffing company for all taxes, penalties, and interest that the IRS or state may levy against the staffing company in the future due to regulatory or legal changes that result in them reclassifying the IC as an employee. This, after the IC gets to pay both sides of medicare and social security on the front end.
Members don't see this ad.
 
That's strong. I thought the indemnity clause where you have to pay the hospital if they make a mistake that leads to a lawsuit in which you're named was pretty bad.
 
Members don't see this ad :)
I was asked to sign a contract as a part-time employee that said I could not work any place else.

(That's what happens with boiler plate contracts, where one size fits all.)
 
Old_Mil said:
Language in a IC physician contract that requires the IC to reimburse the staffing company for all taxes, penalties, and interest that the IRS or state may levy against the staffing company in the future due to regulatory or legal changes that result in them reclassifying the IC as an employee. This, after the IC gets to pay both sides of medicare and social security on the front end.
Click to expand...

I had something similar in one of my contracts (contingent position where I'm at very rarely) that my attorney who reviewed the contract told me was not enforceable. There are a lot of non-enforceable clauses depending on state law. One of the hazards of CMGs using boilerplate contracts in different states.
 
Saddleshoes said:
I was asked to sign a contract as a part-time employee that said I could not work any place else.

(That's what happens with boiler plate contracts, where one size fits all.)
Click to expand...

Did you get them to change it?
 
namethatsmell said:
Did you get them to change it?
Click to expand...

I'm guessing that it's going to be increasingly difficult for physicians to get staffing companies to change the language of one sided contracts. There's currently an oversupply of Emergency Medicine "providers" with the proliferation of NPs and PAs, and with the number of residencies increasing this is only going to get worse.

As far as "unenforceable", I wouldn't feel too comfortable staking my future on the legal system. Most of these contracts also have a "we can withhold your pay if you owe us" so it would become a matter of them keeping the money they owe you and you having to sue to get it back.
 
southerndoc said:
There's no way that can be enforceable. They can put that in a contract, but it would be a PR nightmare for the company that tries to hold an IC liable for taxes it should have paid.
Click to expand...

This is likely true, but it's wise proceed with caution when reviewing contracts and letting things slide because you think they're unenforceable.

If there's something really crazy in the contract and yet you still want the job, hire a contract lawyer. If he/she says it's patently illegal (ie directly against state/federal law) than you may be safe to proceed if they won't change it to something reasonable. Otherwise, if there's any potential gray are that you're uncomfortable with, DO NOT SIGN unless the employer agrees to something that you're OK with. Otherwise you're gambling that in the future the employer won't try to screw you. And if the employer does decide to take you to task over something in the contract, you've now "lost" no matter what. Why? Because even if things go to court and you end up winning, you've lost time (weeks-months as well as possibly not being able to work when the trial is ongoing) and money (figure 25k in legal fees at a minimum to go to court) while gaining stress.

I'm sure you know all this, but for any students/residents reading, don't fall into this trap.
 
Old_Mil said:
I'm guessing that it's going to be increasingly difficult for physicians to get staffing companies to change the language of one sided contracts. There's currently an oversupply of Emergency Medicine "providers" with the proliferation of NPs and PAs, and with the number of residencies increasing this is only going to get worse.

As far as "unenforceable", I wouldn't feel too comfortable staking my future on the legal system. Most of these contracts also have a "we can withhold your pay if you owe us" so it would become a matter of them keeping the money they owe you and you having to sue to get it back.
Click to expand...

Lol, it seems I was literally typing a reply about enforcability when you posted. I totally agree.

Regarding negotiating one-sided contracts, I wouldn't let the market stop anybody from negotiating once an offer has been made. Yes things suck for us right now, but we still have value and employers know it. The way an employer negotiates can also drop major clues about what it would be like to work for them...I've walked away from jobs based on that alone and very glad I did.
 
Members don't see this ad :)
not quite what the topic is strictly requesting but:

First job out of residency was HCA/Envision. They give you (going off memory. may be off by a bit) $25 an hour psuedo-charge for malpractice. As in, they provide it and let you know how much it "costs" you but its just sort of added on top of your salary that you negotiated and then immediate subtracted. It functionally doesn't exist. But come tax time your 1099, your salary is reported as being 1.25x bigger than it actually was because those malpractice payments are considered flat payment to you and not deductions/benefits/etc. And as it turns out there isnt really *all that much* that can be done to subtract that extra $25 an hour out, tax shenanigans wise. I figured it was just standard practice though. I'm just paying taxes on more money than I actually earned but I can see the argument that it's income.

Then I worked for a friend's Locums company for a bit after leaving HCA, and worked for weatherby for a few extra shifts. So when I got those 1099s I was confused as to why I wasnt being charged for my malpractice on this and thought that my friend ****ed up the tax reporting. But he swore he didnt and it seemed like weatherby handled it the same way he did, so maybe he was right. Now I'm two years into Schumacher and they're also not charging me for malpractice insurance. and all I can think is:

why THE HELL did HCA/Envision do this to me/everyone in east florida division? Seriously. What benefit is it to them to screw me over on taxes? I guess it must be that it saves them some marginal money this way, but it cant be that much if weatherby and schumacher (neither of which are paragons of 'doing the right thing for the docs'. just regular companies) dont screw you over that way.
 
Last edited:
DocEspana said:
not quite what the topic is strictly requesting but:

First job out of residency was HCA/Envision. They give you (going off memory. may be off by a bit) $25 an hour psuedo-charge for malpractice. As in, they provide it and let you know how much it "costs" you but its just sort of added on top of your salary that you negotiated and then immediate subtracted. It functionally doesn't exist. But come tax time your 1099, your salary is reported as being 1.25x bigger than it actually was because those malpractice payments are considered flat payment to you and not deductions/benefits/etc. And as it turns out there isnt really *all that much* that can be done to subtract that extra $25 an hour out, tax shenanigans wise. I figured it was just standard practice though

Then I worked for a friend's Locums company for a bit after leaving HCA, and worked for weatherby for a few extra shifts. So when I got that 1099 I was confused as to why I wasnt being charged for my malpractice on this and thought that my friend ****ed up the tax reporting. But he swore he didnt and it seemed like weatherby handled it the same way he did, so maybe he was right. Now I'm two years into Schumacher and they're also not charging me for malpractice insurance. and all I can think is:

why THE HELL did HCA/Envision do this to me/everyone in east florida division? Seriously. What benefit is it to them to screw me over on taxes? I guess it must be that it saves them some marginal money this way, but it cant be that much of weatherby and schumacher (neither of which are paragons of 'doing the right thing for the docs'. just regular companies) dont screw you over that way.
Click to expand...
My guess is that putting it as your salary, they're "paying" you and the malpractice is now "costing them" so they can deduct all of it from taxes as a business expense.
 
My wife's contract stated that she would pay 50k if she didnt start November 1st as planned.

Obviously that was a no go and needed to be taken out, along with a lot of other things.
 
DocEspana said:
not quite what the topic is strictly requesting but:

First job out of residency was HCA/Envision. They give you (going off memory. may be off by a bit) $25 an hour psuedo-charge for malpractice.
Click to expand...
Slightly off-topic, but that seems super high for malpractice insurance. Is that a FL thing?
 
Arcan57 said:
Slightly off-topic, but that seems super high for malpractice insurance. Is that a FL thing?
Click to expand...

Id love to answer, but I have no context what my malpractice coverage for MD, WV, OH, KY costs, nor what my current non-envision coverage for FL costs. and thats because its just covered by my employer and is not built into any of my pay stubs. I signed the form once acknowledging WHAT the coverage is, and never had to think about it ever again. I only know what envision's coverage for FL cost, and (as far as I can recall) thats what it was.
 
DocEspana said:
not quite what the topic is strictly requesting but:

First job out of residency was HCA/Envision. They give you (going off memory. may be off by a bit) $25 an hour psuedo-charge for malpractice. As in, they provide it and let you know how much it "costs" you but its just sort of added on top of your salary that you negotiated and then immediate subtracted. It functionally doesn't exist. But come tax time your 1099, your salary is reported as being 1.25x bigger than it actually was because those malpractice payments are considered flat payment to you and not deductions/benefits/etc. And as it turns out there isnt really *all that much* that can be done to subtract that extra $25 an hour out, tax shenanigans wise. I figured it was just standard practice though. I'm just paying taxes on more money than I actually earned but I can see the argument that it's income.

Then I worked for a friend's Locums company for a bit after leaving HCA, and worked for weatherby for a few extra shifts. So when I got those 1099s I was confused as to why I wasnt being charged for my malpractice on this and thought that my friend ****ed up the tax reporting. But he swore he didnt and it seemed like weatherby handled it the same way he did, so maybe he was right. Now I'm two years into Schumacher and they're also not charging me for malpractice insurance. and all I can think is:

why THE HELL did HCA/Envision do this to me/everyone in east florida division? Seriously. What benefit is it to them to screw me over on taxes? I guess it must be that it saves them some marginal money this way, but it cant be that much if weatherby and schumacher (neither of which are paragons of 'doing the right thing for the docs'. just regular companies) dont screw you over that way.
Click to expand...
When i worked for HCA I had this same problem too. They also lumped scribe costs ($10/hr) in the gross as well. Fortunately there was a monthly breakdown of scribe/malpractice cost which was easily totaled at the end of the year and subtracted as a business expense. It was amazing how many of my fellow docs were unaware of this, and were grateful when I told them what to do.
 
CliveStaples said:
I've been paid by Envision and I just deduct the malpractice insurance premiums from my taxes, so it's all a wash.
Click to expand...

I pass this off to the tax man to do, so forgive me if its a dumb question: but aren't these subject to limits on how much you can deduct for one thing and/or you can only deduct the chunk above 7.5% or 10% of your AGI? so *if* I'm not wrong (and I may be), thats not a wash, thats like 33-50k extra in "taxable income" that you didnt actually get (using the example of my paycheck and the envision insurance amount. your amount may vary, obviously).
 
DocEspana said:
I pass this off to the tax man to do, so forgive me if its a dumb question: but aren't these subject to limits on how much you can deduct for one thing and/or you can only deduct the chunk above 7.5% or 10% of your AGI? so *if* I'm not wrong (and I may be), thats not a wash, thats like 33-50k extra in "taxable income" that you didnt actually get (using the example of my paycheck and the envision insurance amount. your amount may vary, obviously).
Click to expand...
There’s no limit on deductions when you’re a 1099.
 
DocEspana said:
I pass this off to the tax man to do, so forgive me if its a dumb question: but aren't these subject to limits on how much you can deduct for one thing and/or you can only deduct the chunk above 7.5% or 10% of your AGI? so *if* I'm not wrong (and I may be), thats not a wash, thats like 33-50k extra in "taxable income" that you didnt actually get (using the example of my paycheck and the envision insurance amount. your amount may vary, obviously).
Click to expand...

No, I do not believe that there is a 7.5% or 10% of AGI limit for business expenses as a sole proprietor (1099).
 
My understanding is that there is no cap on business expenses. I was able to deduct the full amount every year, with the advice of a very conservative accountant. The only issue with HCA/Envision reporting malpractice as income is that it pushes more of your income into a higher bracket. Especially annoying if you are at the 400K+ threshold.
 
DocEspana said:
I pass this off to the tax man to do, so forgive me if its a dumb question: but aren't these subject to limits on how much you can deduct for one thing and/or you can only deduct the chunk above 7.5% or 10% of your AGI? so *if* I'm not wrong (and I may be), thats not a wash, thats like 33-50k extra in "taxable income" that you didnt actually get (using the example of my paycheck and the envision insurance amount. your amount may vary, obviously).
Click to expand...

No limit. If you start deducting shady things the only downside is you may catch the curiosity of the IRS and they may look into things. But no deduction limit.
 
You must log in or register to reply here.

Similar threads

rocephinandchill
Breaking a Contract
Replies
14
Views
3K
RustedFox
RustedFox
xaelia
"2 out of every 5 healthcare providers in the U.S. are now non-physicians"
Replies
11
Views
2K
HemeOncHopeful19
H
D
Anyone ever get private malpractice?
Replies
8
Views
1K
CajunMedic
CajunMedic
D
TeamHealth Contract Negotiations and Revisions
2
Replies
77
Views
9K
emergentmd
E
Groove
The PITT
2 3 4
Replies
181
Views
17K
Apollyon
A
Top