Managing your moonlighting

Before you embark, review all your contracts thoroughly.

By Bruce D. Armon | Legal Matters | Summer 2013

 

For physicians who “moonlight,” their lives may be anything but tranquil. Aside from the personal challenges when a physician moonlights, there are many professional issues that must be addressed before and during the moonlighting opportunity.

What is moonlighting?
Some people refer to moonlighting as the unsupervised practice of medicine by residents before the completion of residency. Approximately 10 years ago, the Accreditation Council for Graduate Medical Education (ACGME) enacted common duty hour standards for every accredited residency program, including the well-known requirement that a resident have a workweek no greater than 80 hours, averaged over a four-week period.

But there are many physicians—aside from residents and fellows—and other professionals who moonlight to supplement their professional experience and to make extra income.

What you must do before beginning to moonlight
There are several critical steps for any physician who wishes to moonlight.

First, review your current employment agreement (assuming you have one). The employment agreement may have a very direct prohibition, such as, “Employee may not provide any clinical services for any entity besides Employer regardless of whether Employee is paid for the same without the express written permission of Employer.”

If there is language like this in your employment agreement, do not moonlight because it may cost you your main job.

Even if there is not a direct prohibition in your employment agreement, there may be language in the employer’s policies and procedures governing moonlighting opportunities. Most employment agreements require the employee to abide by the employer’s policies and procedures. Before you engage in moonlighting, be sure to review the current copy of your employer’s policies and procedures. Look to see if there is a blanket moonlighting prohibition or some other level of restriction.

Second, review the restrictive covenant in the employment agreement for your primary employer. Many physicians assume the restrictive covenant only applies to opportunities once the current employment is complete. This may not be the case. A restrictive covenant that states, “During the term of Employee’s employment and for two years following the termination or expiration of this Agreement, Employee shall not…” applies during and after the employment is complete. In this situation, you should understand the radius and restrictions in the noncompete.

Radius is fairly straightforward: miles, zip codes, counties, city blocks, etc. in which the employee may not provide certain clinical services.

The scope of services covered by the noncompete is also relevant. For instance, assume you are an internist with a largely outpatient based practice. A moonlighting opportunity presents for you to provide hospitalist-only services for a local community hospital. If the restriction in your primary employment agreement prohibits you from providing any internal medicine services, you will be precluded from taking advantage of the hospitalist moonlighting opportunity. If the restriction applies only to outpatient services, however, you could engage in the hospitalist activity assuming there are no other restrictions in your employment agreement.

If you think there is a possibility you would like to engage in moonlighting, you must address the moonlighting language in your primary employment agreement before you execute the employment agreement.

What a physician must do as part of the moonlighting activity
When presented with a moonlighting opportunity, a physician should ask for and review the moonlighting employment agreement. While the contract may not be as detailed as the primary employment agreement, it should clarify certain key provisions: scheduling; term and termination; compensation; and professional liability coverage.

Moonlighting by definition is a second job. A physician must know when he or she will be scheduled for the moonlighting job and ensure it does not conflict with the physician’s primary schedule. No one can be in two places at once. If a physician is on call for the primary employment, it will difficult if not impossible to tend to duties for another employer at the same time.

Some moonlighting opportunities have a regular schedule (such as every third weekend) and others are scheduled on an ad hoc basis when mutually agreed.

In addition to knowing your work schedule, you should understand the proposed length of the engagement. As your primary job responsibilities change or you are presented with new employment, you need to make sure your moonlighting endeavors remain in compliance with your principal employer.

Most physicians take on a moonlighting opportunity for the chance to earn some extra dollars. Be sure to understand how much you are paid for your moonlighting. Are you paid an hourly wage? Are you paid a wage for each “shift” worked? If so, make sure the shift is clearly defined. Are you paid based upon collections received for your efforts? Are you entitled to any bonus, and if so, are there any defined criteria to achieve the bonus, and are these realistic?

Professional liability coverage may be the most important element in any moonlighting arrangement. It would be highly unusual for the primary employer to provide professional liability coverage in the event the physician is sued (rightly or wrongly) for something that occurred during the moonlighting hours.

A moonlighting physician needs to be sure:

• The moonlighting employer is paying for professional liability coverage for the moonlighting activities;

• The physician knows the amount of coverage being provided; and

• The moonlighting employer is paying for the tail professional liability policy if the insurance is not provided on an occurrence basis.

A physician should never be in the position of having to purchase a tail policy to provide insurance coverage for activities that are part of a moonlighting engagement.

Nonclinical moonlighting considerations
Not every moonlighting opportunity is necessarily a clinical engagement. Lecturing, teaching, writing articles or providing consulting services each use a physician’s clinical skills even though the activities are not clinical, per se. Similarly, developing electronic medical record software or creating a new medical device or other intellectual property activities may have tremendous economic value to the physician without being direct clinical endeavors.

In addition to understanding what is permissible or prohibited from a clinical standpoint with respect to moonlighting activities, a physician should understand who retains the right to intellectual property developed and remuneration obtained from clinically related activities.
Serving as an expert witness (for defendants or plaintiffs) could be a lucrative source of income for a limited amount of work. A physician’s primary employer may view these types of activities as prohibited if the physician is doing work adverse to a member of the physician’s primary employer (for example, working for plaintiff’s counsel as an expert in which the defendant includes an affiliate of the physician’s primary employer).

Likewise, if a physician writes an article or develops a new medical device exclusively during periods when the physician is not providing scheduled services for the physician’s primary employer and uses no resources of the employer to do the same, the physician’s primary employer may have grounds to ownership of such activity depending upon the language in the employment agreement or the employer’s policies and procedures. If contract language provides, “Any remuneration and ownership related to any clinically related activity shall be the property of the Employer if such item(s) is produced, developed or refined when Employee is employed by the Employer.”

If a physician is interested in working on clinical or clinically related matters while employed by another employer, the physician is advised to ensure these activities are specifically excluded from the purview of the employer now and in the future.

Moonlighting is part of the journey
Like the stars in the sky, there are no limits to the opportunities that an entrepreneurial physician may pursue. It is imperative for the physician to ensure that the primary employer will permit such opportunities and the moonlighting employer can protect the physician’s time, interests and efforts accordingly.

Bruce D. Armon (barmon@saul.com) is managing partner of Saul Ewing’s Philadelphia office and co-chair of the firm’s health law practice group.

 

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