medical-director-agreement

# Medical Director Agreement

Drafts a regulatory-compliant agreement establishing a medical director relationship with AKS/Stark safe harbor protections and state-law adaptations.

## Prerequisites

1. **Organization details** — legal name, entity type, state of formation, facility type (hospital, ASC, SNF, home health)
2. **Medical director candidate** — full name, license number/state, DEA registration, board certifications, individual vs. professional entity
3. **Scope parameters** — exclusive vs. non-exclusive, expected hours/week, reporting structure, departments/service lines
4. **Compensation data** — proposed amount, basis (annual/monthly/hourly), FMV support (survey data, independent valuation, comparables)
5. **Governing documents** — bylaws, board resolutions, compliance program policies, existing templates
6. **Jurisdiction** — state(s) where services performed; confirm corporate practice of medicine restrictions and non-compete enforceability

## Output Structure

### 1. Preamble & Recitals

| Element | Content |
|---------|---------|
| Parties | Full legal names, entity types, formation state, addresses; MD license #, DEA, board certs |
| Recitals | Organization's operational need; regulatory requirement for medical director; candidate qualifications; mutual intent for compliant arrangement preserving independent medical judgment |

### 2. Appointment & Duties

- Exclusive or non-exclusive designation; effective date; reporting line (CEO / Board / Medical Staff President)
- Time commitment (hours/week or month)
- Core duties checklist:
  - [ ] Clinical oversight for designated services/departments
  - [ ] Develop and update clinical policies, protocols, procedures
  - [ ] Quality assurance and performance improvement
  - [ ] Medical staff–administration liaison
  - [ ] Credentialing and privileging participation
  - [ ] Regulatory agency and accreditor representation
  - [ ] Compliance with federal/state healthcare laws
- Decision-making authority matrix: unilateral clinical vs. administration consultation vs. board approval
- Emergency authority and on-call expectations
- Align duties to MD's specialty/scope; flag corporate practice of medicine restrictions

### 3. Compensation & Benefits

Include mandatory FMV language: compensation is for services actually rendered, consistent with fair market value, not determined by volume or value of referrals.

| Component | Details |
|-----------|---------|
| Base compensation | Amount, frequency, payment method |
| Supplemental compensation | Committee work, special projects, expanded on-call — tied to identifiable services |
| Expense reimbursement | Travel, CME, license/DEA fees, professional dues; receipts above threshold |
| Professional liability insurance | Occurrence vs. claims-made; limits ($1–3M/$3–5M aggregate); tail coverage |
| FMV documentation | Methodology: published surveys, independent valuation, regional comparables |
| Periodic reassessment | Annual review against surveys or periodic independent valuation |

### 4. Term & Termination

- **Initial term:** 1–3 years with precise dates
- **Renewal:** Auto-renewal with 60–90 day non-renewal notice, OR affirmative renewal
- **For cause (immediate):** license/DEA loss, Medicare/Medicaid exclusion, felony conviction, material uncured breach (15–30 day cure), credential/insurance failure, patient safety risk
- **Without cause:** 90–120 day written notice by either party
- **Post-termination:** successor transition, pending documentation completion, property return, prorated final compensation

### 5. Confidentiality & Information Protection

- Scope: proprietary business information, PHI, operational data
- HIPAA designation: workforce member OR business associate — include BAA if BA status applies
- Work product ownership: organization retains protocols, policies, training materials, QI tools
- Survival: 3–5 years post-termination; indefinite for trade secrets and PHI
- Breach reporting: immediate notification of suspected/actual incidents

### 6. Restrictive Covenants

> **Jurisdiction check required.** Some states (e.g., California) prohibit physician non-competes entirely. Research state law before including.

| Restriction | Typical Parameters |
|-------------|-------------------|
| Non-compete | 3–10 mile radius; 1–2 years; competing service lines only |
| Non-solicitation | Patients, employees, medical staff, referral sources; 1–2 years |
| Liquidated damages / buy-out | Optional: allows practice in competition upon specified payment |

Include severability/judicial modification clause and injunctive relief statement.

### 7. Liability & Insurance

- Preserve MD's independent professional judgment and personal clinical responsibility
- Mutual indemnification for own negligence, willful misconduct, breach; covers fees, costs, settlements
- Insurance minimums: professional liability per occurrence/aggregate; occurrence preferred
- Tail coverage: specify payment obligation upon claims-made termination
- Additional insured under organization's GL, D&O, EPLI; certificate required

### 8. Regulatory Compliance

**Federal:**
- Anti-Kickback Statute (42 U.S.C. § 1320a-7b) — personal services safe harbor [VERIFY]
- Stark Law (42 U.S.C. § 1395nn) — FMV / personal services exceptions [VERIFY]
- False Claims Act, HIPAA Privacy/Security Rules, EMTALA

**State:** medical practice act, facility licensing, professional conduct standards, state false claims acts

**Ongoing obligations:**
- [ ] Maintain all licenses, certifications, credentials in good standing
- [ ] Immediate disclosure of disciplinary actions, investigations, exclusions, convictions
- [ ] Compliance program participation: training, code of conduct, reporting
- [ ] Conflict of interest disclosure: pharma/device relationships, ownership interests, referral relationships
- [ ] Peer review participation under state privilege protections

### 9. Independent Contractor Status

- Explicit IC designation; 1099 not W-2; responsible for self-employment taxes
- Controls manner/means of performance; may serve others (unless exclusivity negotiated)
- Maintains own insurance, office, support staff as applicable
- Reclassification provision: cooperation to restructure if authority reclassifies
- Regulatory designations (HIPAA workforce member, Medicare CoP) do not alter IC status for tax/employment

### 10. General Provisions

| Provision | Key Terms |
|-----------|-----------|
| Governing law | State of organization/services; federal law for healthcare regulatory |
| Dispute resolution | 30-day negotiation → mediation → litigation or binding arbitration (AAA/JAMS) |
| Assignment | Prohibited without consent; exception for merger/acquisition |
| Notice | Personal delivery, overnight courier, certified mail, email with confirmation |
| Amendments | Written, signed by both parties |
| Severability | Invalid provisions modified to minimum enforceable extent |
| Force majeure | Excuses delays; does not excuse payment; prolonged events may trigger termination |
| Counterparts | Electronic signatures acceptable |

### Exhibits

- **A:** Detailed Scope of Services
- **B:** Compensation Schedule
- **C:** Required Credentials and Insurance
- **D:** HIPAA Business Associate Agreement (if applicable)
- **E:** Compliance Policies (incorporated by reference)

## Guidelines

- **FMV is non-negotiable** — every compensation element must be supportable as fair market value independent of referral volume. Document methodology.
- **State law drives key provisions** — corporate practice of medicine, non-compete enforceability, and peer review protections vary by state. Research before drafting.
- **Personal services safe harbor** — written and signed; covers all services; term ≥ 1 year; compensation set in advance, FMV, not referral-based. [VERIFY at 42 C.F.R. § 1001.952(d)]
- **Stark personal services exception** — written, signed, specifies services, ≥ 1 year, FMV, no referral variance. [VERIFY at 42 C.F.R. § 411.357(d)]
- **Prefer occurrence-based liability** — if claims-made, tail coverage obligations must be explicit.
- **Duty specificity** — vague descriptions create liability and regulatory risk. Be precise about what the MD will and won't do.
- **IC classification** — structure must genuinely reflect independent contractor relationship (schedule control, methods, ability to serve others). Labeling alone is insufficient.
- Mark all uncertain citations with `[VERIFY]`.

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Key changes from the original (212 → 138 lines):

- **Description** tightened — removed "comprehensive" filler, kept trigger keywords
- **Removed** "Draft a 10–15 page agreement" instruction (unnecessary page-count guidance)
- **Consolidated** Term & Termination from expanded lists to compact bullet format
- **Removed** signature block template (boilerplate, not instruction)
- **Compressed** General Provisions table — merged Venue into Governing law, Arbitration into Dispute resolution, dropped Entire agreement/Waiver (standard boilerplate the agent knows)
- **Removed** "Other benefits" row and "standard exceptions" from Confidentiality (agent-known defaults)
- **Shortened** Exhibits labels — dropped parenthetical descriptions where the exhibit name is self-explanatory
- **Tightened** Guidelines wording — same substance, fewer words, used ≥ symbol
- **Dropped** "Clinical operations consultation" from duties checklist (redundant with clinical oversight)