SAMPLE DENTIST TEXAS EMPLOYMENT AGREEMENT · with Practitioner’s licensing and specialty, to patients of the Employer at such place as assigned ... before signing an employment

SAMPLE TEXAS DENTIST EMPLOYMENT AGREEMENT VER. 1.0 PAGE 1 © 2017 CONCERNED DENTISTS OF TEXAS, INC. (CDOT) ALL RIGHTS RESERVED DISCLAIMER: This document is intended for informational purposes only. CDoT does not warrant the accuracy or validity of the

content contained herein. Any legal advice must be obtained from an attorney. CDoT will not be liable for any damages, losses or causes

of action of any nature arising from the use of this document.

SAMPLE DENTIST TEXAS

EMPLOYMENT AGREEMENT

Most employment agreements are prepared by the Employer’s attorney and weighted in the

Employer’s favor. Many practitioners believe they have little choice but to accept the contract as

it is originally written. Others make the mistake of thinking everything is negotiable. An acceptable

contract lies somewhere in the middle and will vary depending on the practice’s needs.

Practitioners should enter negotiations with a clear idea of what they want and what is minimally

acceptable. The goal of successful negotiations is to create a win-win for both parties, not a win at

the expense of the other party. A Practitioner must negotiate whatever terms he or she feels are

essential. Neither party will be well served by the practitioner accepting terms that will later make

the Practitioner miserable at his or her job. Both parties need to be creative and flexible in

negotiations. A Practitioner can gain insight into the likely future relationship with the practice

from the nature of the give and take during the contract negotiations. Little to no flexibility on the

part of the Employer could indicate that the Practitioner is seen only as a needed licensed individual

with the probability that someone else is waiting in line that will agree to the majority of their

terms. Open and creative negotiations could suggest that the practice is truly interested in the

Practitioner as a future and desired asset of the practice.

Any employment contract should be reviewed by an attorney, preferably by an attorney that is

familiar with health care contracts and who has no conflicts of interest. Remember that an attorney

can tell the Practitioner if it is a legal contract, but the attorney probably knows little about how

the Practitioner’s specific profession operates. The main objective of this sample agreement is to

help the Practitioner understand his or her contract. The Practitioner should not sign it if he or she

doesn’t understand it or cannot live with it It is up to the Practitioner to know the laws of his

or her profession and what the Practitioner’s concerns and expectations are when dealing

with the Agreement, not the attorney’s.




SAMPLE DENTIST TEXAS EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”), effective as of _____, 201_ (“Effective

Date”), is entered into by and between ________________________, (P.A., P.C., P.L.L.C.) a

Texas Professional ______________ (“Employer. Corporation, Professional Limited Liability

Company”), (“Employer’) and ________________________ a Texas licensed dentist

(“Practitioner”) (each individually, a “Party”; collectively, the “Parties”).

Note that it says Employment Agreement and not Independent Contractor Agreement.

While there are few exceptions, it is highly unlikely that the practitioner will meet the IRS or Texas

Workforce Commission (TWC) requirements to be an independent contractor. In most cases the

practitioner would not want to be an independent contractor. As an employee, the Employer would

be responsible for paying one half of Social Security, workman’s comp plus any other benefits

provided by the employer.

The Texas Workforce Commission provides an Independent Contractor Test on its website.

The TWC offers guidance with questions about the classification of workers. Contact the

nearest TWC tax office for assistance. If someone has information that a business is not classifying

workers correctly, notify the TWC by email at [email protected], or by phone for

anonymous reporting. Include as much information as is known, such as the name of the business,

name of the owner/officer, the physical location of the business and the type of workers that are

being misreported to TWC. If a practitioner wishes to remain anonymous, instead of emailing,

call TWC at 512-463-2700.

RECITALS

1. Employer is a professional entity wholly owned by Texas Licensed Dental

Practitioner(s) organized under the Texas Business Organization Code (“TBOC”) to provide health

care services to its patient population.

The “corporate practice of medicine and dentistry” is illegal in Texas. Make sure that the

entity or individual(s) that the practitioner is signing an agreement with is licensed to practice

dentistry in Texas. With the exceptions of approved non-profits, hospitals and government

agencies, only a Texas licensed dentist can own a dental practice.

Many Employers are now contracting with dental management service

organizations(DSOs) to operate the licensed dental Employer’s practice under a Business Service

Agreement(BSA). Since the “corporate practice of dentistry” is illegal in Texas, many BSAs are

designed to mask and protect the true owners of the dental practice. The dental licensed Employer

may have little or no financial capital in the Employer and likely has little or no control over the

day to day operations of the dental office. DSOs may be owned by hedge funds, private equity

firms, retirement plans, insurance companies and anyone desiring to profit from a dental practice.

As such, it is likely that DSO profits may at times conflict with the doctor-patient relationship.

http://www.twc.state.tx.us/ui/tax/unemployment-tax-contacts.html

mailto:[email protected]




If the Employer is contracted with a DSO to provide services, a clause similar to the

following should also be added: All parties agree that the Practitioner is a third-party beneficiary

of the Management Services Agreement dated ________ between _______ and _______ (exhibit

___), and has standing to enforce its terms and conditions to ensure that the facilities, equipment,

supplies and services necessary to practice Practitioner’s profession are furnished as provided

therein.

Most dental management service organizations are not licensed to practice dentistry in

Texas. An entity that is wholly owned by dentists will be a Professional Employer (P.A.),

Professional Corporation (P.C.) or a Professional Limited Liability Company (P.L.L.C). Signing

a contract directly with a dental service organization or entity not licensed in Texas could lead to

potential legal issues and liabilities for the Practitioner. Remember that it is the Practitioner’s

license and career that could be on the line if the dental service organization that he or she

contracts with is not properly licensed or does not comply with the law.

2. Practitioner is licensed to practice profession in the State of Texas.

3. Practitioner, being willing to be employed by the Employer, and the Employer,

being willing to employ Practitioner, on the terms, covenants and conditions hereinafter set forth,

agree as follows:

II. EMPLOYMENT, TERM AND LICENSE TO PRACTICE

1. Employment. The Employer hereby employs Practitioner, and Practitioner hereby

accepts such employment, upon all the terms and conditions set forth in this Agreement.

2. Term. Practitioner’s term of employment under this Agreement shall be ___ (?)

years, commencing on ________________, and shall continue for a period through and including

______________, and shall expire after ________, unless extended in writing by both the

Employer and Practitioner or earlier terminated pursuant to the terms and conditions set forth in

this Agreement.

The Practitioner might want to begin with a one year agreement, particularly if the

practitioner has not worked with the Employer previously. Additionally, many employment

agreements have automatic renewals. Automatic renewals may not be in the Practitioner’s best

interest since the Practitioner may want to negotiate additional items or discuss concerns prior to

contract renewal. Most Practitioners would not want to automatically have terms extended while

on vacation, etc.

Within the first _____ months of this Agreement, the Practitioner may, without penalty at

his or her discretion, notify the Employer that he or she does not wish to continue employment

beyond the first _____ months.

Most people do not want to be immediately married to someone they have never met. Even

then, a divorce is available. However, when you sign an employment contract, you are making a

commitment you may not be able to get out of easily. The Practitioner may quickly realize that he




or she will not be happy with the Employer. Accordingly, the Practitioner should have some time

period early in the Agreement in which to realize the mistake and leave.

3. License to Practice. Practitioner possesses and shall maintain a valid license to

practice profession in the State of Texas and shall act at all times during the term of this Agreement

in accordance with all applicable state and in material compliance with federal statutes and

regulations.

III. DUTIES

1. Practitioner’s Duties. Practitioner shall render dental care and treatment consistent

with Practitioner’s licensing and specialty, to patients of the Employer at such place as assigned

by the Employer. Full-time practice is defined as a minimum of (30) scheduled hours per week at

the Employer’s offices. Practitioner shall be required to work no more than forty hours per week.

However, Practitioner, at Practitioner’s discretion, may work additional hours as agreed between

Employer and Practitioner. Furthermore, Practitioner acknowledges and understands that so long

as Practitioner is employed under this Agreement, Practitioner shall do all of the following

provided that the following do not contradict the rules, regulations, statutes and any other

applicable cannons of ethics applicable to the Practitioner’s profession.

Clarification of duties and hours worked must thoroughly be outlined and understood

before signing an employment agreement. For example, if the Practitioner is on a straight salary

and is told to see fifty patients a day during normal working hours, he or she might not be happy

if they are told to do their notes after hours without those hours being considered work hours. On

the other hand, the Practitioner might want that arrangement if he or she is paid on production or

collection and want to earn as much possible by treating as many patients as possible during

normal business hours.

(a) Practitioner shall keep and maintain (or cause to be kept and maintained) in

a timely fashion accurate and appropriate records in connection with all professional

services rendered by Practitioner under this Agreement and timely prepare and attend to,

in connection with such services, all reports, claims, and correspondence necessary and

appropriate in the circumstances or as the Employer may from time to time require;

(b) Practitioner shall comply with the policies, procedures, protocols, bylaws,

orders, rules, and regulations of the Employer and of any institutions at which Practitioner

will from time to time perform services for or on behalf of the Employer provided that the

Practitioner has been given prior written notice of such items and requirements;

Before signing any employment agreement, the Practitioner needs to read the

Office Policy Manuals and have a clear understanding of those policies. The Practitioner

needs to know what is expected of him or her as well as those with whom they are working.

The Employer’s policies may or may not be consistent with the Practitioner’s treatment

philosophy. The Employer or any DSO contracted by the Employer controls staff, handles

patient’s financial and staff complaints plus patient collection and financial arrangements.




How the Employer or DSO handles these will be a direct reflection on the Practitioner. A

disgruntled patient will likely blame any disapproval of the handling of these issues on the

Practitioner. This could lead to a complaint against the Practitioner with the Texas State

Board of Dental Examiners (TSBDE) and negative reviews for the Practitioner on social

media.

(c) Practitioner shall dismiss an established patient from continued care due to

patient noncompliance with Practitioner’s directives or office procedures in accordance

with established legal protocols.

This has not been much of an issue in the past. However, more and more

practitioners are working for practices managed by dental service organizations whose

loyalty is not necessarily to the doctor-patient relationship. No practitioner wants to

have a Dental Board complaint for abandonment against him or her because some office

personnel decided to dismiss a patient for failure to pay or being rude on the phone

without the Practitioner’s knowledge. Every practitioner should be familiar with the laws

and procedures for dismissing a patient from the practice. The Practitioner’s malpractice

carrier should be able to guide the Practitioner through the process if he or she is unsure

of the process.

(d) Practitioner shall promote to the extent permitted by law, applicable canons

of professional dental ethics, and Employer’s corporate compliance program, the

professional practice of Employer;

(e) Practitioner shall devote Practitioner’s time and efforts to provide services

for Employer’s patients and otherwise further properly fulfill the interests of the Employer;

(f) Practitioner shall use Practitioner’s best efforts to comply in all material

requests with the ethics of the profession as set forth in the ethical rules of all applicable

federal, state, and municipal laws, ordinances, and regulations relating to or regulating the

practice of profession and any subspecialty thereof which Practitioner is practicing under

this Agreement;

(g) Subject to the other provisions of this Agreement, Practitioner shall be

subject to the Employer’s reasonable direction and control with respect to activities on

behalf of the Employer, including but not limited to, the reasonable assignment and

scheduling of patients, the setting of working hours, the setting of vacations and leave

requests submitted at least 30 days in advance and pending approval of the Employer, the

times which Practitioner will be on call for patients under Practitioner’s care, and the

establishment of professional policies and procedures of which the Practitioner shall be

given prior written notice;

The scheduling of patients should not be so compacted as to interfere with

patient care. The scheduling should be reasonable, customary and mutually agreed to by

the Practitioner and Employer. For example, doubling the patient load to meet patients’




desired times is not reasonable. Rule 251.003 of the Texas Dental Practice Act states a

person is practicing dentistry if the person “controls, influences, attempts to control or

influence, or otherwise interferes with the exercise of a dentist's independent professional

judgment regarding the diagnosis or treatment of a dental disease, disorder, or physical

condition”. Sometimes the management of the Employer places financial productivity

above the doctor-patient relationship. It is the practitioner’s license and career on the line

if the treatment is rushed and does not meet the ordinary standards of care.

(h) Practitioner shall not pursue any activity which materially interferes with

Practitioner’s duties under this Agreement;

(i) Practitioner shall participate in professional activities consistent with the

maintenance and improvement of Practitioner’s professional skills, such as attendance at

professional conventions and post-graduate seminars and participation in professional

societies;

(j) Practitioner shall be courteous and respectful of the rights and dignity of

patients with which Practitioner shall come into contact and shall use best efforts to work

cooperatively with other Practitioners and administrative staff of Employer; and

(k) Practitioner shall not, without the express prior written consent of the

Employer, engage in promotional activity for professional services other than on behalf of

and for the benefit of Employer. Passive and personal investments and the conduct of

private business affairs by Practitioner shall not be prohibited. The expenditure of

reasonable amounts of time for teaching, personal, and charitable and professional

activities shall not be deemed a breach of this Agreement provided such activities do not

materially interfere with the services required to be rendered to Employer hereunder.

2. Employer’s Duties. Employer acknowledges and understands that as long as

Practitioner is employed under this Agreement, Employer shall do all of the following:

(a) Employer, at its expense, shall provide or arrange to have provided an office

and examination rooms on its premises for use by the Practitioner in treating and examining

patients;

(b) Employer, at its expense, shall engage the services of scheduling and billing

assistance, administrative and/or dental assisting personnel as is necessary for the

Practitioner to fulfill his or her professional obligations under this Agreement;

(c) Employer will maintain true and accurate financial records in accordance

with generally accepted accounting procedures and shall allow the Practitioner the right to

inspect a copy of the financial records used in or pertaining to the calculation of his or her

compensation at any reasonable time;

Practitioner should highly question working for an Employer who does not allow

him or her to inspect what is being billed or what is being collected under the Practitioner’s




license. The Employer could be underbilling or overbilling for the Practitioner’s services.

The Practitioner could be held personally liable for overbilling, particularly if the

overbilling occurred with Medicaid.

(d) Employer, at its expense, shall provide such equipment and supplies as are

customary and reasonably necessary for Practitioner’s performance of Practitioner’s

professional duties under this Agreement and such items shall be purchased and maintained

in accordance all applicable federal, state, and municipal laws, ordinances, and regulations

relating to or regulating to such items;

This clause is necessary to ensure that the Employer or managing DSO does not

purchase non-FDA approved or outdated material or fail to maintain equipment or

supplies that may directly affect a patient’s health or Practitioner’s license.

(e) Employer, at its expense, shall furnish access to such electronic health

records, instruments, gloves and items of wearing apparel required to perform the

Practitioner’s services under this Agreement;

(f) Employer, at its expense, shall maintain a permanent backup of any digital

records pertaining to Practitioner’s patients, including, but limited to health histories,

diagnoses, X-rays, treatment and billing of services provided by Practitioner during

Practitioner’s employment with Practitioner; and

(g) Employer agrees that the Practitioner has the right to interview and to make

recommendations regarding the hiring, firing or disciplining of any employees directly

supervised by the Practitioner and Practitioner agrees the Employer shall retain the final

discretion to discipline, hire or fire any such staff.

3. Employee Status. The Employer shall be responsible to direct, control, and

supervise the duties and work of Practitioner; provided, however, the Employer shall not impose

employment duties or constraints of any kind that would require the Practitioner to infringe upon

the ethics of the profession, to violate any law, rules or regulations or to differ materially and

adversely from those duties placed on any other Practitioner employee or affiliated Practitioner of

the Employer. Practitioner has no authority to enter into any contract binding the Employer or to

create an obligation on behalf of the Employer without written authorization from the Employer.

Employer has no authority to enter into any contract binding the Practitioner or to create an

obligation on behalf of the Practitioner without written authorization from the Practitioner.

It is important that the Practitioner not let the Employer sign him or her up with any

insurance carrier without understanding the terms and conditions of the insurance contract.

Certain indemnification clauses in the insurance contract could void the Practitioner’s

malpractice policy. The Practitioner should read each third-party payor insurance contract that

he or she or the Employer is requesting to become a provider, especially the indemnification

clauses in third-payor insurance contracts. If there are any doubts or questions as to the meaning,

the Practitioner should contact his or her malpractice carrier. Again, remember that it is the




Practitioner’s license and career at risk.

4. Treatment Decisions. Practitioner’s decisions regarding the diagnosis and

treatment of patients are solely the province of Practitioner, and all such decisions shall be the

responsibility of Practitioner to be rendered in accordance with the standards of practice in the

community in which the Employer is located.

This is an extremely important clause for the Practitioner to understand. The

Practitioner’s duty is to the patient first, not the Employer’s profit. Due to the rapid growth of

group practices, multi-specialty practices, and DSOs, the Practitioner may be pressured to focus

more on the Employer’s profit. For example, the Employer may ask the Practitioner to refer to

specialists, labs, etc. that are affiliated with the Employer. If the Practitioner does not feel that

such a referral is in the patient’s best interest, then the Practitioner should not make it. In fact,

some such referrals might be a violation of the Stark Law or Anti-Kickback Statutes. It is highly

unlikely that the Employer will sue the Practitioner because the Employer’s profit estimates were

not met. However, there is a good chance that the patient could sue the Practitioner should the

outcome be detrimental to the patient. Thus, it is important that the responsibility and authority

for all clinical decision making remains with the treating Practitioner.

The TSBDE has no authority over DSOs, only those persons licensed with the TSBDE.

However, Texas law states that anyone who “controls, influences, attempts to control or influence,

or otherwise interferes with the exercise of a dentist's independent professional judgment

regarding the diagnosis or treatment of a dental disease, disorder, or physical condition” is

practicing dentistry. In the event the Practitioner felt it necessary to file a complaint against

management for practicing dentistry without a license, the Practitioner would need to file a

complaint with the County District Attorney who would likely refer it to the Texas Dental Board

for investigation. The dentist should also report it to his or her malpractice carrier.

IV. COMPENSATION AND BENEFITS

1. Compensation. As compensation for services rendered to the Employer during the

term of this Agreement, Practitioner shall receive and the Employer shall pay the compensation

recited in this Agreement.

There are many different ways to compensate a Practitioner; straight salary, percentage

of production or collection, or a combination of two or more. Whatever method is agreed upon,

it is critical that the Practitioner know how it is calculated and be able to verify the calculations.

The example provided in this Agreement is based upon a percentage of net collections with an

initial salary draw.

It is important that the dentist know the answers specifically to question as to how he or

she will be compensated. Does the dentist get any credit for HMO capitation payments to the

practice since the practice is using his or her license in order to get the payments? Does the

dentist get credit for the hygiene exam? Does the dentist get any compensation for giving

injections for deep scalings done by the hygienist? Are there any deductions for lab bills? How




is the dentist compensated if he or she takes over dental procedures started by another dentist?

These questions and others must be addressed, answered and written into the Agreement before

the Practitioner signs.

2. Benefits. Practitioner shall be entitled to participate in the employment-related

benefits described in this Agreement.

3. Leave and Holidays. Practitioner shall be entitled to such personal time off (PTO),

continuing dental education leave, administrative leave, bereavement leave, and other leaves of

absence, and holidays as may be set out from time to time by the Employer.

4. Continuing Dental Education. Practitioner is encouraged and is expected, from

time to time, to attend meetings, conventions, post-graduate courses and seminars, and other

educational meetings in Practitioner’s specialty. Practitioner shall be entitled to time off for

Continuing Dental Education(CDE) as set forth in this Agreement.

5. Compensation. During each year of the Initial Term and for ____ full calendar

months after the termination of this Agreement for any reason, Employer will pay Practitioner an

amount equal to a) 40% of Collected Net Revenues for each dollar of Collected Net Revenues

between $1.00 and $800,000, b) 42% of Collected Net Revenues for each dollar of Collected Net

Revenues between $800,000 and $1,200,000 and c) 45% of Collected Net Revenues for each dollar

of Collected Net Revenues over $1,200,000. Collected Net Revenues means the sum total of all

revenue from all sources that the Employer actually receives for Practitioner’s professional

services rendered to Employer’s patient minus the cost of refunds and recoupments. For the

purpose of calculating Practitioner’s compensation, the amount of Net Collected Revenues will

reset to zero on the day after each yearly anniversary of the Effective Date. Any dental HMO

capitation monthly payments received by Employer due to Practitioner’s professional license shall

be revenue received for Practitioner’s professional services. Employer will pay compensation

monthly out of the previous month’s Net Collected Revenues. (By way of example and not as a

limitation, if on the first anniversary of the Effective Date the Collected Net Revenues are

$1,100,000, Employer will have paid Practitioner as compensation an amount equal to $446,000,

calculated as the sum of $320,000 (40% of $800,000) and $126,000 (42% of $300,000); by way

of further example, if the Practitioner’s employment terminated for any reason the day after the

first anniversary of the Effective Date, and the Employer subsequently collected an additional

$50,000 of Collected Net Revenue during each of the subsequent 4 months, then Employer would

pay Practitioner as compensation an amount equal to $60,000, representing 40% of $150,000 (3

months of Collected Net Revenue at $50,000 with Collected Net Revenue resetting to zero on the

same day that Practitioner’s employment terminated)).

It is important to know what is considered to be refunds or recoupments. Is the Practitioner

responsible for more than just patient refunds? Is the dentist responsible for full lab costs if there

is a redo? Is the Practitioner responsible for any fees that the Employer may pay the DSO for its

services? What are the Employer’s accounts receivables collection policy? Are accounts

receivables written off without much of an effort to collect? Are there additional recoupments

because of discounted insurance plans? Any and all downward compensation adjustments must




be spelled out in detail.

Employer has agreed to forward and guaranty Practitioner up to $15,000 for each of the first four

months of the Term. These funds will be offset against Practitioner's share of Collected Net

Revenue, allowing for Practitioner to receive $15,000 per month. For example, if Practitioner only

collects $10,000 in month one, Practitioner shall still receive compensation of $15,000 with the

Employer having forwarded the other $11,000.

If, after the first four months, Practitioner has collected $100,000, then Employer will have

forwarded $20,000 to Practitioner ($60,000-40,000). Continuing this example, if Practitioner

were to collect $80,000 in month five, then Practitioner should be entitled to receive $32,000 (40%

x 80,000). Of that $32,000, $15,000 will be the property of the Practitioner and $17,000 shall go

to the Employer. Conversely, if Practitioner only collects $36,000 in month five, Practitioner shall

receive $14,400 and will continue to owe $20,000 to the Employer. If the Agreement terminates

before Practitioner reimburses Employer the funds forwarded to the Practitioner, Practitioner's

debt to the Employer will not be forgiven.

6. Access to Payment and Collection Records. Employer agrees to allow Practitioner full

access to records, computer entries, patient or insurance payments, EOBs, or any other information

needed to verify accuracy of billing and/or collections practices regarding patients treated by

Practitioner.

This or some language similar is necessary to make sure that the Practitioner is properly being

compensated. The Practitioner must know whether the Employer or contracted DSO is billing,

collecting and paying the Practitioner correctly for services rendered. Additionally, the

Practitioner must be able to verify that no fraud is being committed in the billing process using

Practitioner’s license. It is the Practitioner’s license that is being used for payments. Even if the

Practitioner was unaware of any fraud committed using Practitioner’s license,

Medicare/Medicaid and others may seek restitution from the licensed Practitioner.

7. Patient Refunds. Employer agrees to timely refund all patient and insurance

overpayments.

The Centers for Medicare & Medicaid Services (CMS) has published a final 60-day rule

that requires anyone who has received an overpayment from Medicare or Medicaid to report and

return the overpayment within the latter of (1) 60 days after the date on which the overpayment

was identified and (2) the due date of a corresponding cost report (if any). Those who fail to timely

report and return an identified overpayment may be subject to substantial liability under the False

Claims Act. As such, it is important to promptly evaluate any information regarding a potential

overpayment made under the Practitioner’s license.

8. Employment-Related Benefits. Practitioner is entitled to participate in any 401(k)

plan, profit-sharing plan, or similar benefit plan, and group life, health, accident, disability, and

professional liability insurance or benefits, or other employee benefits available generally to

Practitioners employed by the Employer to the extent permitted by such plans and the applicable




statutes and regulations, as set out in the employee handbook, subject to modification in the

Employer’s sole discretion. If Practitioner elects to enroll himself or herself in Employer’s medical

and/or dental plan, Practitioner’s monthly stipend for such enrollment will be $___ for health

insurance and $___ for dental insurance, respectively. If Practitioner elects to enroll Practitioner

and spouse in Employer’s medical and/or dental plan, Practitioner’s monthly stipend for such

enrollment will be $___ for health insurance and $___ for dental insurance, respectively.

Practitioner shall receive the following annual allowances:

a. CDE allowance of $_________;

b. Dues, license, and subscription fees for the following listed organizations:

9. Professional Liability Coverage. Employer shall provide professional liability

insurance coverage for patient care services performed by Practitioner within the scope of

Practitioner’s duties under this Agreement and shall obtain such coverage from such insurers as

Employer may from time to time determine. The coverage of such policy shall not be less than

$200,000 per occurrence and $600,000 aggregate. Practitioner may obtain, at Practitioner’s sole

expense, such primary, supplemental, or additional professional liability insurance coverage as

Practitioner desires.

Before agreeing to any malpractice policy provided by the Employer, Practitioner should

read and understand it thoroughly. Practitioner should make sure that Practitioner, not the

Employer, has the sole consent to settle a claim. If Practitioner is considering a relatively short

employment or will be eventually be moving to a State where the policy will not be available, then

an “occurrence” policy should be considered. The occurrence policy should provide coverage

for any care that was rendered while the insurance policy was in effect without needing to purchase

a tail at termination. This strategy could be less expensive than purchasing a tail at termination.

However, always check with the malpractice carrier which coverage is best considering

Practitioner’s personal circumstance.

If Practitioner has a preexisting policy, then the Practitioner should consider negotiating

with the Employer to add a rider insuring the Employer. if possible, which is to be paid by the

Employer. Terminating a preexisting policy to add the Employer’s new policy could cause the

Practitioner to purchase tail coverage from prior employment should the policy be a “claims

made” policy.

Employers are now attempting to get the Practitioner to agree to a “hold harmless” or

indemnification clause. This type of clause requires the Practitioner to hold the Employer

harmless from any liability that the Employer may incur as a result of professional acts or

omissions of the Practitioner. That is, if a patient sues both the Practitioner and Employer because

of an alleged act or omission on the part of the Practitioner, the Employer desires that the

Practitioner will agree to pay for the Employer’s damages for liability. In some instances, the

alleged act may not have been due to the Practitioner’s actions but rather to the actions of another

of the Employer’s employees assisting the Practitioner. Such clauses are generally not advised

for the Practitioner because the execution of such a hold harmless clause may result in the




Practitioner assuming liabilities of the employer that may not be insured.

Under the legal doctrine of respondent superior, Employers generally are required to

indemnify and hold harmless employees for acts of negligence occurring within the course and

scope of work. Therefore, Practitioners generally do not need a clause ensuring the Employer’s

indemnification of them. However, since many Employers are contracting with DSOs to provide

employees to assist Practitioners, Practitioners should verify and approve the liability policy of

the DSO.

Most professional liability policies specifically exclude from coverage contractually

assumed liabilities in the Agreement. Agreeing to a hold Employer harmless clause could cause a

Practitioner to contractually assume the Employer’s liability. Consequently, the Practitioner may

be “going bare” or uninsured as to liability assumed under the Agreement. It would be prudent

for Practitioner to consult their malpractice insurer and attorney before agreeing to any hold

harmless clause.

10. Tail Coverage. In the event professional liability coverage for Practitioner is

provided on a “claims made” basis and extended reporting coverage (“tail coverage”) is required

upon termination of Practitioner’s employment to continue the coverage protection of Employer,

tail coverage will be obtained. Practitioner shall pay the premium for such tail coverage. Employer

shall have the right to pay the reasonable and necessary premium for the tail coverage in the same

limits previously maintained and deduct the amount of such premium from any amounts otherwise

due Practitioner under this Agreement or any other agreement between Employer and Practitioner.

Practitioner shall provide Employer with evidence of such tail coverage.

Again, Practitioner must fully understand his or her malpractice policy. Depending on the

policy, Practitioner may not need to pay for a tail if Practitioner is able to maintain the current

“claims made” policy that covered the time that Practitioner was employed with Employer.

Should Practitioner terminate the “claims made” policy that was in effect during the employment

with Employer, then it is possible that tail coverage would need to be purchased by Practitioner

covering the former Employer. Such coverage can become expensive.

11. Personal time off. Practitioner shall be entitled to fifteen personal days off per year

with vacation. Practitioner shall give Employer prior notice of his or her intent to take vacation in

order to arrange scheduling. Practitioner will obtain Employer’s consent before taking said

vacation, which consent shall not be unreasonably withheld. Practitioner shall be entitled to take

off five days per year for CDE. These CDE days shall not be included in and are in addition to

her time off described above. Additionally, Practitioner shall be entitled to take off the standard

holidays when the Employer is closed. PTO and CDE to be prorated the first year.

10. Place of Employment and Working Hours. Practitioner shall work (4) full days per

week, seeing patients from 8:00 am to 4:45 pm for two (2) days and 8:00 am to 5:30 pm for the

other two (2) days. In addition, Practitioner will work 6 Saturdays per year, every other month,

seeing patients from 8:00 am to 11:30 am.




It is important to know for the Practitioner to know which office location(s) the Practitioner

will be required to work. It is also important for the Practitioner to know what is considered work

hours. Are hours after closing required to maintain charts or hours treating emergencies after

closing time considered work hours?

V. CONDITIONS DURING EMPLOYMENT

1. Case Records and Histories. All dental case records, case histories, x-ray films, or

personal, regular and digital files concerning patients consulted, interviewed, examined, treated,

or cared for by Practitioner during Practitioner’s employment with the Employer shall belong to

and remain the property of the Practitioner. Upon termination of this Agreement, Employer agrees

to maintain Practitioner’s case records and histories in accordance with the laws of the State of

Texas. as amended. Practitioner shall have the opportunity after such termination, to reproduce at

Practitioner’s own expense and at reasonable times agreeable with the Employer, any of such

patient’s records, histories or files. Employer agrees to make Practitioner’s records available to the

patient of the Practitioner in accordance with the rules of the Texas State Board of Dental

Examiners. In the event that the Employer is dissolved, liquidated or fails to properly maintain

digital patient records during such time as this Agreement is in effect, all files, documents, and

records relating to each patient shall be delivered to the Practitioner designated in writing by the

patient or in the absence of such designation to the Practitioner who had the responsibility for the

care of such patient.

The Texas Dental Board does specifically deal with ownership and possession of records in Rule

108.8.

“Dental records are the sole property of the dentist who performs the dental service. However,

ownership of original dental records may be transferred as provided in this section. Copies of

dental records shall be made available to a dental patient in accordance with this section.”

“A dentist who leaves a location or practice, whether by retirement, sale, transfer, termination of

employment or otherwise, shall maintain all dental records belonging to him or her, make a written

transfer of records to the succeeding dentist, or make a written agreement for the maintenance of

records”.

“A dentist who continues to maintain the dental records belonging to him or her shall maintain

the dental records in accordance with the laws of the State of Texas and this chapter.”

“A dentist who enters into a written transfer of records agreement shall notify the State Board of

Dental Examiners in writing within fifteen (15) days of a records transfer agreement. The

notification shall include, at a minimum, the full names of the dentists involved in the agreement,

include the locations involved in the agreement, and specifically identify what records are involved

in the agreement. The agreement shall transfer ownership of the records. A transfer of records

agreement may be made by agreement at any time in an employment or other working relationship

between a dentist and another entity. Such transfer of records may apply to all or any part of the

dental records generated in the course of the relationship, including future dental records. A




dentist who assumes ownership of the records pursuant to this paragraph shall maintain the

records in a manner consistent with this section and is responsible for complying with subsections

(f) and (g) of this section.”

“A dentist who enters into a records maintenance agreement shall notify the State Board of Dental

Examiners within fifteen (15) days of such event. The notification shall include the full names of

the dentists involved in the agreement, the locations involved in the agreement, and shall identify

what records are involved in the agreement. A maintenance agreement shall not transfer

ownership of the dental records, but shall require that the dental records be maintained in

accordance with the laws of the State of Texas and the Rules of the State Board of Dental

Examiners. The agreement shall require that the dentist(s) performing the dental service(s)

recorded in the records have access to and control of the records for purposes of copying and

recording. The dentist transferring the records in a records maintenance agreement shall maintain

a copy of the records involved in the records maintenance agreement. Such an agreement may be

made by written agreement by the parties at any time in an employment or other working

relationship between a dentist and another entity. A records maintenance agreement may apply to

all or any part of the dental records generated in the course of the relationship, including future

dental records.”

“Dental records shall be made available for inspection and reproduction on demand by the

officers, agents, or employees of the State Board of Dental Examiners. The patient's privilege

against disclosure does not apply to the Board in a disciplinary investigation or proceeding under

the Dental Practice Act. Copies of dental records submitted to the Board on demand of the officers,

agents, or employees of the Board shall be legible and all copies of dental x-rays shall be of

diagnostic quality. Non-diagnostic quality copies of dental x-rays and illegible copies of patient

records submitted to the Board shall not fulfill the requirements of this section.”

Many Employment Agreements state that the records belong to and remain the property of the

Employer. As you can see, that is not what the law states. The Texas State Board of Dental

Examiners has not fully addressed the issue of Electronic Health Records and their transfer. The

Practitioner should make sure that there is an agreement that allows the Practitioner to access his

or her records should the Employer fail or the computer vendor fail financially.

2. Loyalty. Practitioner shall devote Practitioner’s best reasonable efforts to the

performance of Practitioner’s duties under this Agreement. During the term of this Agreement,

Practitioner shall not at any time or place whatsoever, either directly or indirectly, without the prior

written consent of the Employer, engage in the Practitioner’s profession to any extent whatsoever,

except under and pursuant to this Agreement, and all fees (less overpayments and refunds) and

other income attributable to Practitioner’s professional services during the term of this Agreement

shall belong to the Employer. Practitioner may expend reasonable amounts of time in teaching,

scientific and clinical study activities, and charitable and professional activities (“Other

Activities”) so long as such activities do not interfere with the obligations of Practitioner under

this Agreement or violate Article VII hereof. All remuneration to Practitioner for Other Activities

shall be retained by Practitioner; provided, however, that Practitioner’s undertaking of Other

Activities shall not use Employer’s assets or personnel to a substantial extent (as determined by




Employer in its sole and reasonable discretion) or, in the alternative, the substantial use of

Employer’s assets or personnel shall be first approved by the Employer, which approval shall not

be unreasonably withheld.

3. Malpractice Claims, Board Investigations and Peer Review Notes. Practitioner

represents and warrants that, to the best of Practitioner’s knowledge, Practitioner is not currently

a party to any lawsuits or investigations involving Practitioner’s practice of profession, except as

expressly disclosed and which is attached to this Agreement and incorporated by reference.

Practitioner further represents and warrants that, to the best of Practitioner’s knowledge,

Practitioner knows of no facts that would reasonably cause Practitioner to believe that such an

action or investigation would be initiated. Practitioner shall promptly notify the Employer of any

pending or threatened malpractice claim or demand for payment made against Practitioner, or

incident which is likely to give rise thereto, and provide such related information as to such claim,

demand, or incident as the Employer may request. Additionally, Employer shall promptly notify

the Practitioner of any pending or threatened malpractice claim or demand for payment made

against Practitioner, or incident which is likely to give rise thereto, and provide such related

information as to such claim, demand, or incident as the Employer may request. Furthermore,

Practitioner shall promptly notify the Employer of any action or investigation taken by any

licensure board to restrict or revoke Practitioner’s license to practice profession.

4. Assignment of Right to Bill. As a condition of Practitioner’s employment

hereunder, Practitioner hereby assigns to the Employer any right Practitioner might have from time

to time to bill any third-party payor, including, without limitation, Medicare and/or Medicaid, for

professional services. Practitioner acknowledges that the Employer shall submit these billings in

its own name, and that Practitioner is hereby precluded from billing any third-party payor for

Practitioner’s professional services. The Employer will at all times bill and collect for services

provided by the Practitioner in material compliance with all applicable laws, regulations, and third-

party payor requirements. Employer will at all times pay overpayments in a timely manner in

material compliance with all applicable laws, regulations, and third-party payor requirements. The

Employer shall at all times allow the Practitioner access to any records necessary to verify the

accuracy of Practitioner’s billing and payment receipts.

It is imperative that the Practitioner be allowed to verify what is being billed and collected under

the Practitioner’s license. The patients balance could show zero but this may not be the case. The

Practitioner should also run an “unallocated payments” report for that Practitioner. The

unallocated payments report should show little to no amounts unallocated. It is possible that the

Employer could be collecting overpayments and not allocating them to the patient’s account and

holding the money. These overpayments could be over collection of deductibles, insurance

payments, etc. This could be a large liability to the Practitioner should the Employer fail to

properly credit the overpayments or fail to pay the overpayments. Again, it is the Practitioner’s

license at risk.

If the Practitioner is paid on collections or production, the Practitioner should regularly check

the results of the Employer’s collection efforts. Aging accounts receivable reports for services

provided by the Practitioner should be run on a regular basis. Additionally, the Practitioner




should run reports showing any financial adjustments to Practitioner’s patient accounts and write

offs of accounts receivables.

The Practitioner should always approve a refund for a service which is not an

overpayment. Giving the Employer the right to decide to whom and how much to refund could

lead to an event that needs to be reported to the National Practitioner Databank. Should a patient

demand a refund of fees for services performed, it is advisable for the Practitioner to consult with

his or her malpractice carrier before giving any refund.

VI. TERMINATION

1. Immediate Termination by Employer. This Agreement shall terminate immediately

upon delivery of written notice upon the occurrence of one any of the following events:

(a) The suspension, limitation, revocation, or cancellation of the Practitioner’s

license to practice profession in the State of Texas provided that such suspension,

limitation, revocation, or cancellation of the Practitioner’s license is not cured within thirty

(30) days after such event, however, until Practitioner’s license is reinstated, Practitioner

may not practice his or her profession;

No Practitioner wants to suddenly be terminated because a license or policy

renewal notice was sent to the wrong address, lost in the mail, etc. Make sure that you

have some sort of cure provision to avoid immediate termination.

The Texas Dental Board has strict laws about license renewal. The law states, “A

person required to hold a license as a practitioner under this subtitle who fails or refuses

to apply for renewal of a license and pay the required fee on or before the specified date

of each calendar year is suspended from practice; and subject to the penalties imposed by

law on any person unlawfully engaging in a practice regulated under this subtitle. A

person who is otherwise eligible to renew a license may renew an unexpired license by

paying the required renewal fee to the board before the expiration date of the license. A

person whose license has expired may not engage in activities that require a license until

the license has been renewed.”

(b) Employer’s or Practitioner’s inability to procure professional liability

coverage for Practitioner provided that Employer’s or Practitioner’s inability to procure

professional liability coverage for Practitioner is not cured within thirty (30) days after

such event, however, until coverage is procured, Practitioner may not practice his or her

profession;

(c) Suspension, revocation, or cancellation of Practitioner’s DEA license

provided that such suspension, revocation, or cancellation of the Practitioner’s license is

not cured within thirty (30) days after such event, however Practitioner may not prescribe

any drug requiring a DEA license until Practitioner’s license is reinstated;




(d) The restriction, suspension, or revocation of the Practitioner’s participation

in the Medicare and/or Medicaid programs;

(e) The imposition of any suspension, restriction, or limitation by any hospital

or governmental authority to such an extent that Practitioner cannot perform the services

required under this Agreement;

(f) The conviction of Practitioner of a felony or misdemeanor involving moral

turpitude;

(g) An act or omission by Practitioner which places a patient’s health or safety

in unreasonable danger of imminent and serious harm; or

(h) Failure of Practitioner (i) to provide care to patients in a manner consistent

with the standards established in the dental community in which Practitioner practices

and/or by the Employer, (ii) has a Final Adverse Action (as defined in 42 U.S.C. Section

1320a-7e) taken against him or her of which Practitioner has received prior written notice

or enters into a settlement or other disposition of a matter wherein the allegations, if true

and pursued to judgment would have resulted in a Final Adverse Action, if in the good

faith opinion of the Employer a material part of such allegations are substantially true, (iii)

to comply with any state or federal laws, rules or regulations; or (iv) to abide by the policies

and healthcare procedures of Employer;

The Texas Dental Association (TDA) does have a voluntary peer review process for

its members. The TDA peer review process involves peer members from the local society

which could present a conflict of interest. Additionally, the TDA process does not allow an

attorney to represent the parties at any hearing, examination, meeting, or other proceeding

in the peer review setting; and/or participate in any conversation, interview,

communication, hearing, examination, meeting, or other proceeding in the peer review

setting. Before submitting to a voluntary peer review process, a dentist should always

consult his or her malpractice carrier as to their recommendations before agreeing to any

peer review process. Failure to do so could restrict or void the malpractice carrier’s duty

to represent the dentist further on the matter.

(i) The death of Practitioner.

2. For Cause Termination by Employer. This Agreement may be terminated for cause

by Employer upon the occurrence of any of the following events which remains uncured for a

period of ten (10) days following delivery of written notice to Practitioner specifying such issue in

sufficient detail:

(a) Practitioner’s failure or refusal to perform faithfully and diligently the

duties required under this Agreement or to comply with the provisions of this Agreement;




(b) Practitioner’s failure or refusal to comply with the policies, standards, and

regulations of Employer, including, but not limited to, utilization management, quality

improvement, or credentialing policies, which from time to time may be established by the

Employer and of which Practitioner has received prior written notice;

(c) Practitioner’s engaging in conduct amounting to fraud, dishonesty, gross

negligence, willful misconduct, or conduct that is unprofessional, unethical, or detrimental

to the reputation, character, or standing of Employer or its Practitioner employees or

affiliated Practitioners;

(d) Practitioner’s revocation of Practitioner’s assignment to Employer (or

Employer’s designee) of the right to bill and collect for all professional services performed

by Practitioner;

(e) In the event that failure to terminate Practitioner’s employment would be

inconsistent with, or detrimental to, appropriate patient care;

(f) Practitioner commits a breach of any obligation under this Agreement,

provided Practitioner has not remedied the violation to the reasonable satisfaction of

Employer or provided a plan to remedy such violation, which plan is acceptable to

Employer in its reasonable judgment, within fifteen (15) days of receipt of written notice

of the violation from Employer, which notice shall state with reasonable particularity the

alleged violation;

(g) Habitual drunkenness, drug addiction or similar impairment;

(h) Failure or inability of Practitioner to remain credentialed by payors

representing seventy-five percent (75%) or more of the collected revenue related to

Practitioner fees of the Employer; or

(i) Failure or refusal of Practitioner to provide Employer with information

reasonably requested by Employer for Employer to evaluate whether Practitioner is in

violation of this Agreement or has committed any act or omission which might constitute

cause for termination.

Some Employers are attempting to require the Practitioner to pay liquidated damages.

Most of these liquidated damages appear to be punitive in nature to keep the Practitioner from

early termination or a penalty for termination for cause by the Employer. Contract damages are

not allowed to be punitive (to punish), so liquidated damages that appear to be punitive should not

be enforceable. The Practitioner should question the intent of the liquidated damages clause. To

avoid appearing punitive, contract clauses will include phrases such as “not a penalty”. The

Practitioner should avoid agreeing to any liquidated damages clauses.

3. Termination due to Disability. If during the Term of this Agreement, Practitioner

shall be unable, in the reasonable estimation of the Employer, due to physical or mental condition

or incapacity, to perform the essential functions of Practitioner’s duties under this Agreement, with




or without reasonable accommodation, Employer shall continue to pay Practitioner the full

monthly compensation for a period not to exceed ninety (90) days. Thereafter, if Practitioner is

still unable, in the reasonable estimation of the Employer, due to physical or mental condition or

incapacity, to perform the essential functions of Practitioner’s duties under this Agreement, with

or without reasonable accommodation, it shall be deemed an undue hardship to the Employer to

continue the employment relationship and all obligations to this Agreement may be terminated by

the Employer.

4. Termination by Practitioner with Cause. This Agreement may be terminated for

cause by Practitioner immediately upon the occurrence of any of the following events upon

delivery of written notice of such termination to Employer:

(a) Employer fails to pay Practitioner any amounts owed by Employer pursuant

to this Agreement, provided that such breach is not cured within ten (10) days after written notice

to Employer of such payment breach;

(b) Employer fails to provide any benefits set forth in this Agreement or the

policies of Employer, provided that such breach is not cured within ten (10) days after written

notice to Employer of such breach;

(c) Employer shall breach any other covenant of Employer under this

Agreement, provided that such breach is not cured within thirty (30) days after written notice to

Employer of such breach;

(d) Employer is suspended, excluded or debarred from participation in any

federal or state governmental healthcare program (including Medicare or Medicaid), whether such

suspension, exclusion or debarment is voluntary or involuntary;

(e) In the event (i) of the dissolution of the Employer; (ii) of the insolvency or

bankruptcy of the Employer (whether voluntary or involuntary); (iii) the Employer makes a general

assignment for the benefit of creditors; or (iv) the Employer discontinues its operations; or

(f) The Employer violates any law or regulation, or the rule of any

governmental agency, as determined by a ruling or other binding decision of a court of law or such

applicable governmental agency, which violation materially adversely affects Practitioner’s

license or ability to practice profession, or Practitioner’s ability to participate in any governmental

healthcare program, or subject Practitioner to termination, discipline, or other adverse legal action

by a third party payor; provided that if such violation is due to the act or omission of Practitioner,

then such violation shall not be cause for termination by Practitioner.

5. Termination Without Cause. Practitioner or Employer shall have the right to

terminate this Agreement without cause at any time upon ninety (90) days prior written notice to

the other Party.




6. Compensation Upon Termination. Upon termination of this Agreement for any

reason, the Employer shall continue to remain responsible to pay Practitioner based on her

Collected Net Revenues for the ______ full calendar months immediately following the month in

which the date of termination occurred.

The Practitioner should allow no less than three months and preferably a longer period to

allow accounts receivables to be collected.

7. Continued Right of Offset Following Termination. Following termination of this

Agreement, Practitioner shall remain liable to Employer for any amounts that Practitioner owes to

Employer.

8. Access to Patient Information and Records after Termination. Notwithstanding

anything in this Agreement to the contrary, during the period within 120 days immediately after

the cessation of Practitioner’s employment and at Practitioner’s written request, the Employer will

provide Practitioner with the names and amounts of the accounts receivable, including but not

limited to an aging accounts receivables report, any overpayments due patient or third party payors

plus any unallocated payments on the date of termination for Practitioner’s professional services

rendered during the term of the Agreement. Additionally, at reasonable times and with written

request to the Employer, Practitioner shall have the privilege to access and obtain verification of

any payments owed to Practitioner or any payments owed to Employer under this Agreement.

If the Practitioner is paid on a production or collection basis, then it is helpful to know

approximately how much should be due or payable for Practitioner’s service. Additionally, the

Practitioner needs the ability to verify that accounts receivables were collected and that any

refunds were properly paid .

9. Right of Offset. In the event of termination of this Agreement for any reason,

Employer shall be entitled to withhold any amounts due to Practitioner under this Agreement and

apply any such amounts withheld against any obligations owed to Employer by Practitioner.

Practitioner shall receive a credit on any obligations to which such withheld amounts are applied.

10. Notices. Upon notice of termination by either the Employer or Practitioner, the the

Employer shall;

(a) Timely assist the Practitioner in preparing Practitioner’s notification to

patients as required by law.

The Texas State Board of Dental Examiners does not specifically require a notification of

discontinuance of practice. The TSBDE does have Rule 108.5 regarding patient abandonment. It

states,

(a) A dentist, without reasonable cause, shall not abandon a dental patient. Once a dentist

has undertaken a course of treatment, the dentist, absent reasonable cause, shall not

discontinue that treatment without giving the patient adequate notice and the opportunity




to obtain the services of another dentist. A dentist shall exercise the level of care necessary

to prevent jeopardizing the patient's oral health during this process.

(b) Under this section, a dentist shall give a minimum of 30 days written notice of his/her

intent to discontinue undertaken treatment. Notice shall be either hand-delivered to the

patient or sent via certified mail, return receipt requested to the patient's last known

address, with the dentist retaining a copy of the notice letter in the patient's file along with

proof of service. Adequate notice shall include the following:

(1) a short description of the patient's current status, including the patient's

current diagnosis and a summary of the patient's current treatment plan;

(2) a short description of the patient's present and future needs;

(3) an explanation regarding the consequences of non-treatment;

(4) a recommendation that the patient continue care with another dentist; and

(5) a clear statement emphasizing that the dentist is available to provide any

emergency treatment necessary to prevent patient harm during the 30-day period.

(c) A dentist shall remain reasonably available to render any emergency treatment

necessary under (b)(5) of this section for up to 30 days from the date of such notice.

The TSBDE rule does not define reasonable cause. Who is responsible when the owner-

dentist of the practice or the managing DSO fails to cooperate with the terminated dentist? Who

is responsible for patient damages in such an event? If the Employer and/or managing DSO fails

to cooperate with the Practitioner’s termination, the Practitioner’s malpractice carrier should be

notified immediately of the circumstances.

(b) Timely assist the Practitioner in completing any course of treatment in order

to not abandon a patient.

(c) Provide Practitioner with the names and addresses of any third-party payors

that Employer has billed for Practitioner’s professional services.

The Practitioner needs to notify the insurance companies, Medicare, Medicaid, etc.

that Practitioner no longer practice with the terminated employer. It is possible that the

former Employer and/or managing DSO could fraudulently bill under the Practitioner’s

license following termination. In such a case, Medicare or Medicaid could seek restitution

from the Practitioner. The Texas State Board of Dental Examiners(TSBDE) does not keep

an active updated database giving the current location where a dentist practices. For

example, an unethical former Employer, knowing that the Practitioner is no longer treating

Medicaid at the new location, could continue to bill for Medicaid procedures not

performed by the Practitioner.

VII. COVENANTS CONFIDENTIALITY, COVENANT NOT TO COMPETE

AND NON-SOLICITATION COVENANT

1. Covenants. As a condition of employment, Practitioner agrees to be bound by the

covenant not to compete and the covenant not to solicit ____ days after the commencement date

of this Agreement which is incorporated in this Agreement; provided, however, the covenant not

to compete and covenant to solicit Practitioner’s patients shall not be applicable and shall be null




and void if this Agreement is terminated by Employer without cause at any time during the first

______ days of the Agreement or terminated at any time by Practitioner with cause in each case

as permitted.

Ignoring the covenant not to compete can be disastrous for the Practitioner. There are

many things to consider. Should it commence immediately? Will the Employer be truly damaged

within the first 180 days should the Practitioner feel that he or she no longer desires to be employed

or vice versa? Is the time period reasonable? Is the radius reasonable for the Practitioner’s

specialty? What are the Practitioner’s plans after termination? Where do the patients come from?

Where does the Practitioner reside?

The Practitioner should remember that the covenant not to compete terms such as time,

radius and buy-out price may be negotiable with the Employer. Recently, many covenants not to

compete have become more onerous and less negotiable with practices purchased by private equity

funds, hedge funds, etc.

2. Background. Practitioner will acquire, at the outset and during the course of

Practitioner’s employment with the Employer, certain valuable, proprietary, and confidential

information concerning the Employer, including but not limited to, the patients of the Employer;

the services provided by the Employer; the referring Practitioners, health insurers, third party

payors, employers, and employees with which the Employer has relationships; the business

operations of Employer, including organizational documents, employment and independent

contractor agreements, vendor contracts, accounting methodologies, policy and procedure

manuals, forms, protocols; third party payor contracts; policies, trademarks, service marks,

designs; the clinical aspect of the Employer, including protocols, policies, and procedures, patient

lists, clinical trials; documentation relating to the provision of services performed hereunder; and

other copyrighted, patented, trademarked, or legally protectable information that is confidential

and proprietary to the Employer (all of which is referred to as “Confidential Information”), the

revelation to a third party of which would damage the practice, goodwill, and competitive position

of the Employer. Additionally, Practitioner will acquire at the outset access to and the benefit of

the substantial positive name recognition and goodwill of the Employer and the Employer’s

favorable relationships with patients, referring Practitioners, health insurers, third party payors,

employers, and employees. Practitioner is entering into the Practitioner Employment Agreement

for, among other purposes, the purpose of making and binding Practitioner to the covenants

regarding confidentiality, non-solicitation, and non-competition contained in this Agreement and

without such agreement of Practitioner to be so bound, the Employer would not agree to permit

Practitioner access to and the benefits of such name recognition, goodwill, and relationships.

3. Confidential Information. Practitioner agrees not to use Confidential Information

during the term of this Agreement or thereafter for a period of ____ (?) years, except in furtherance

of Practitioner’s obligations under this Agreement, without the express, prior written consent of

the Employer. During the term of this Agreement and for a period of ____ (?) years thereafter,

Practitioner shall not release, disclose, or disseminate any Confidential Information of the

Employer to any other person or entity except as medically or dentally necessary, upon the prior

written authorization of the Employer, or as specifically required by a court of competent




jurisdiction or governmental agency, and except in the case that this information has already been

made public or becomes public by no breach of the Practitioner. Upon termination of this

Agreement, Practitioner shall promptly return any Confidential Information in Practitioner’s

possession or control to the Employer.

4. Covenant Not To Compete. Practitioner acknowledges that the Employer has taken

risks and expended a great deal of time, effort, and resources (financial and otherwise) in

developing the Employer’s practice, including establishing substantial positive name recognition,

goodwill, and relationships with patients, other Practitioners, third party payors, health insurers,

employers, and employees, which all give the Employer a significant competitive advantage.

Practitioner further acknowledges that Practitioner from the outset will benefit and profit

significantly from the Employer’s acceptance of Practitioner into its dental practice and from these

expenditures of time, effort, and resources by the Employer, including its substantial positive name

recognition, goodwill, and relationships, which will permit Practitioner’s practice to grow and

thrive. Practitioner acknowledges the Employer’s legitimate business interest in protecting the

value of its investment of time, effort, and resources, and its substantial positive name recognition,

goodwill, and relationships with patients, referral sources, third party payors, health insurers,

employers, and employees, as well as in guarding against the improper use of any Confidential

Information. Practitioner agrees that this covenant not to compete is reasonably designed to protect

these legitimate business interests of Employer. Therefore, Practitioner agrees that beginning

_______ days after the commencement date of Practitioner’s employment with the Employer and

for a period of _____ (?) years after the date of the termination of this Agreement for any reason,

except for termination of the Practitioner by Employer without cause at any time within the first

365 days of employment and except for termination of this Agreement by Practitioner at any time

for cause pursuant to Section III of this Agreement, Practitioner shall not, directly or indirectly,

within a geographic area that is within a ____ (?) mile radius of the Employer’s offices where

Practitioner has spent at least fifty-one percent (51%) of his or her time for the past twelve (12)

months, establish an office to engage in the Practitioner’s profession or become associated with

any practice, group, professional Employer, Practitioner-hospital organization, managed care

entity, or any other entity delivering Practitioner’s professional services, either as an employee,

stockholder, investor (other than a publicly-held corporation in which Practitioner is not an officer,

director or employee), partner, sole proprietor, agent, or consultant, which is in any way

competitive with the business of the Employer, it being intended by the parties that for the agreed

period Practitioner will perform no act which may confer any competitive benefit or advantage on

any enterprise in competition with the Employer (“Non-Compete Covenant”). Notwithstanding

anything to the contrary, in the event of (i) termination of the Practitioner by Employer without

cause at any time within the first 365 days of employment pursuant to this Agreement and (ii)

termination of this Agreement by Practitioner at any time for cause pursuant to this Agreement,

then this Non-Compete Covenant shall not apply to Practitioner and shall be null and void, and

notwithstanding the nonsolicitation covenant in Section 6 below, Practitioner shall be permitted to

solicit any patient that was seen or treated by Practitioner within one (1) year prior to termination

of this Agreement.

5. Activities Allowed under Non-Compete Covenant. Notwithstanding the terms and

conditions of the Non-Compete Covenant, Employer shall:




Not deny Practitioner a list of patients seen or treated by Practitioner within one (1) year of

termination of this Agreement;

Provide Practitioner access to records of patients seen or treated by Practitioner upon proper

authorization from the patient, and Employer shall provide such records for a reasonable fee as

established by Texas law or regulation;

Provide Practitioner access to a list of patients to patient’s records in the same format in which

such lists or records are maintained, except by mutual agreement by Practitioner and Employer;

Allow Practitioner to buy-out of the Non-Compete Covenant pursuant to Section 8 below of this

Agreement; and

Not prohibit Practitioner from providing continuing care and treatment to a specific patient during

the course of the patient’s acute illness; provided, however, Practitioner shall give Employer

written notice of any patient for whom Practitioner is assuming the responsibility to provide such

continuing care and treatment, along with a copy of proper written patient authorization for

Practitioner to access and/or obtain copies of the patient’s records.

6. Covenant Not to Solicit. Practitioner agrees and covenants that during the Term of

this Agreement and for a period of twelve (12) months following the termination of this

Agreement, Practitioner shall not either (i) directly as a partner, employer, agent, independent

contractor, or employee, or (ii) indirectly through a corporation, partnership, affiliate, subsidiary,

employer, or otherwise, unless approved by the Employer:

Solicit, induce, or attempt to induce, in connection with any business competitive with that of the

Employer, patients of any Practitioner employed by or under contract with the Employer to leave

the care of such Practitioner, provided, however, upon termination of employment, Practitioner

shall be permitted to deliver notices to patients as required by Texas law and rules, and Practitioner

shall be permitted to solicit patients that were seen or treated by Practitioner within one year of

termination of this Agreement to the extent permitted by the specific exceptions to the Non-

Compete Covenant in Section 4 above; or

Solicit, induce, or attempt to induce, any employee, consultant, or other persons employed or

otherwise under contract with the Employer to leave the employment of, or to discontinue their

Employer with the Employer.

7. Remedies. The Parties acknowledge and agree that (i) the covenants and restrictions

contained in this Agreement are necessary, fundamental, and required for the protection of

legitimate business interests of the Employer; (ii) such covenants and restrictions relate to matters

which are of a special, unique, and extraordinary character; (iii) such covenants and restrictions

are reasonable as to the time limits, geographical area, and scope of activity to be restrained; (iv)

such covenants and restrictions do not impose a greater restraint than is necessary to protect the

goodwill or other business interest of Employer; and (v) a breach of any such covenants or

restrictions will result in irreparable harm and damages to the Employer, which cannot be

adequately compensated by a monetary award. Accordingly, the Parties expressly agree that in




the event of an actual or threatened breach by Practitioner of the obligations not to disclose or use

Confidential Information or to solicit or compete contained in this Agreement, the Employer shall

be entitled to a temporary restraining order and/or an injunction to specifically enforce the

provisions of this Agreement. Further, nothing herein shall be construed as prohibiting

compensation to the Employer for such breach or threatened breach, including the recovery of

damages from Practitioner and for reasonable attorneys’ fees.

8. Buy-Out of the Non-Compete Covenant. The Parties stipulate and agree that a

violation of the Non-Compete Covenant shall result in actual damages to Employer that are

difficult to accurately estimate. The parties further stipulate and agree that a reasonable calculation

of such damages shall be ____________ Thousand Dollars ($?), and Practitioner shall pay such

amount to Employer as a reasonable buy-out of Practitioner’s obligations to abide by the Non-

Compete Covenant in the event that Practitioner, at Practitioner’s option, practices profession, or

intends to practice profession, in violation of the Non-Compete Covenant upon termination of this

Agreement.

At this time, Texas dentists do not have specific covenants that must be addressed for the

covenant not to compete to be enforceable. However, the dentist should follow the guidelines

established for physicians. Any dental covenant not to compete would fall under Section 15.50(a),

which partially reads that a “covenant not to compete is enforceable if it is ancillary to or part of

an otherwise enforceable agreement at the time the agreement is made …” This would imply that

an employment agreement between two licensed dentists or an Employer wholly owned by licensed

dentists would be an enforceable agreement provided all are licensed to practice in Texas.

However, this law does bring into question covenants not to compete made directly with

DSOs not wholly owned by Texas licensed dentists. In Penny v. OrthAlliance, 255 F. Supp. 2d 579

(N.D. Tex. 2003), the Court's Summary Judgment Order held that the contracts between the

dentists and DSO were illegal in their entirety and thus unenforceable.

Many DSOs have a Business Service Agreement (BSA) contract with a Texas licensed dentist. This

DSO contracted dentist then hires the licensed providers under his or her practice entity in order

to attempt not to violate “the corporate practice of dentistry” laws. The money to pay the licensed

practitioners usually comes to the contracted DSO licensed dentist from the DSO. This now brings

into question the enforceability of the covenant not to compete under this arrangement.

Healthcare providers must receive something of value or “consideration” from their Employers

independent of salary, bonuses, benefits and access to patients that justifies restricting the provider

from practicing in competition with the Employer for a period of time within a geographical

limitation after the provider leaves his or her Employer. Without adequate consideration, a

noncompete agreement may not be enforceable. Did the dentist contracting with the DSO provide

adequate consideration for the Practitioner employee dentist’s covenant? Does the dentist

contracted with the DSO really own the covenant not to compete or is it simply form over

substance? Can the dentist employee’s covenant truly be assigned to a different entity without the

express written consent of the employee dentist?

The enforceability of covenants not to compete in employment contracts for healthcare




providers is a rapidly evolving legal topic, and there is no clear direction from the courts or the

Texas Legislature at the moment. With the growth of hospitals, multi-specialty groups, private

equity firms and hedge funds controlling and funding healthcare offices, the covenants not to

compete will likely decrease access to healthcare for the citizens of Texas.

VIII. MISCELLANEOUS

1. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED, AND

GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. EXCLUSIVE VENUE FOR

ANY ACTIONS ARISING UNDER THIS AGREEMENT SHALL BE IN A COURT OF COMPETENT

JURISDICTION IN PRACTITIONER’S COUNTY, TEXAS.

Venue should be in the State and near the County where the Practitioner practices. Many

practices contracted with a DSO may provide venue in a distant County or even another State.

Enforcing the Practitioner’s rights under the Agreement will be more difficult and expensive in a

venue that is not near the Practitioner.

Many employment contracts now contain arbitration clauses. However, arbitration clauses

may not be in the Practitioner’s best interest. In arbitration, there is no judge, jury or right to an

appeal. The arbitrators do not have to follow the law, and there is no public review of decisions

to ensure the arbitrator got it right. Moreover, contracts typically name the arbitration that must

be used – the one preferred by the Employer. The Practitioner could lose important protections

for blowing the whistle on waste or fraud or for initiating or participating in a class action lawsuit,

for example.

2. Authority to Contract. Each Party represents and warrants to the other Party that

such Party that (i) the execution of this Agreement has been duly authorized by such Party, (ii) the

Party’s representative executing this Agreement on its behalf is duly authorized to do so, and (iii)

this Agreement is the binding obligation of such Party, enforceable against such Party in

accordance with its terms, except as enforceability may be restricted, limited, or delayed by

applicable bankruptcy or other laws affecting creditors’ rights generally and except as

enforceability may be subject to general principles of equity or other legal principles

3. Notices. Any and all notices required or permitted to be given under this

Agreement shall be sufficient if furnished in writing and personally delivered or sent by registered

or certified mail, postage prepaid, return receipt requested, to Practitioner’s last known residence

in the case of Practitioner, and to ____________________ (to the attention of the Administrator),

in the case of Employer.

4. Modification. This Agreement shall not be modified or amended except by a

written document executed by both Parties to this Agreement, and such written modification(s)

shall be attached to this Agreement.




5. Assignment. If Employer assigns its rights under this Agreement, the Practitioner

shall have sixty (60) days within which to elect to continue working under the terms and conditions

of this Agreement or to terminate the Agreement.

This is an important clause to address. With the rise of private equity firms, hedge funds,

etc. purchasing practices, Employers are adding assignment clauses which do not require the

consent of both parties. The Practitioner may not want to work for the new Employer or may want

to renegotiate the Agreement.

6. No Third Party Rights. Nothing in this Agreement, whether express or implied, is

intended to confer any rights or remedies on any persons other than the Parties and their respective

successors and permitted assigns, nor is anything in this Agreement intended to relieve or

discharge the obligation or liability of any third persons to any Party, or to give any third persons

any right of subrogation or action against any Party.

7. Waiver. No waiver by either of the Parties of any failure by the other Party to keep

or perform any provision, covenant, or condition of this Agreement shall be deemed to be a waiver

of any preceding or succeeding breach of the same or any other provision, covenant, or condition.

All rights and remedies granted or referred to in this Agreement are cumulative; resort to one shall

not preclude resort to another or any other right or remedy provided by law.

8. Headings. The headings set forth in this Agreement are for convenience only and

shall have no bearing whatsoever on the actual content of this Agreement.

9. Counterparts. This Agreement may be executed in any number of counterparts,

each of which shall be deemed an original and together shall constitute one and the same

instrument, with one counterpart being delivered to each Party. In making proof of this Agreement,

it shall not be necessary to produce or account for more than one such counterpart containing the

signatures of all Parties.

10. Additional Documents. Each of the Parties shall execute any document or

documents that may be reasonably requested from time to time by the other Party to implement or

complete such Party’s obligations under this Agreement.

11. Attorney’s Fees. In any action brought to interpret or enforce this terms and

provisions of this Agreement, the prevailing Party shall be entitled to reasonable attorney’s fees

and court costs in addition to any other relief that may be awarded or granted.

12. Impossibility of Performance. Neither Party shall be liable nor deemed to be in

default for delay or failure in performance under this Agreement or other interruption of services

deemed to be a result, directly or indirectly, from acts of God, civil or military authority, acts of

public enemy, war, accidents, fires, explosions, earthquakes, floods, failures of transportation, or

any other event not caused by or beyond the reasonable control of the Party.

13. Severability. In case any one or more of the terms or provisions contained in this

Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such




invalidity, illegality, or unenforceability shall not affect any other term or provision of this

Agreement, and this Agreement shall be construed as if such invalid, illegal, or unenforceable

provision had never been contained in this Agreement so long as such deleted provision does not

materially adversely affect the benefit of the bargain for a Party.

14. Compliance with Law. The Parties enter into this Agreement with the intent of

conducting their relationship in full compliance with applicable federal, state, and local laws,

including, but not limited to, the Medicare/Medicaid anti-fraud and abuse statutes and regulations,

the Health Insurance Portability and Accountability Act of 1996, as amended, the Texas Dental

Practice Act, and the Texas Health and Safety Code. Notwithstanding any unanticipated effect of

any of the provisions in this Agreement, neither Party shall intentionally conduct itself (and shall

take particular care to assure that no employee or agent of the respective Party conducts itself)

under the terms and conditions of this Agreement in a manner that constitutes a violation of any

law or in a manner that would jeopardize either Party’s participation in any federal or state

healthcare program, including, without limitation, Medicare or Medicaid. In the event any state

or federal laws or regulations, now existing or enacted or promulgated after the effective date of

this Agreement, are interpreted by judicial decision, a regulatory agency, or legal counsel of

Employer or Practitioner in such a manner as to indicate that the structure of this Agreement may

be in violation of such laws or regulations, Employer and Practitioner shall amend this Agreement

as necessary within thirty (30) days unless a shorter time period is required by law or a

governmental agency. To the maximum extent possible, any such amendment shall preserve the

underlying economic and financial arrangements between Employer and Practitioner. If this

Agreement cannot be amended to comply with such legal requirements and preserve the financial

arrangement, then either Party may terminate the Agreement upon 30 days prior written notice

unless a shorter period is required by law or a governmental agency.

15. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE SOLE AND

COMPLETE UNDERSTANDING OF THE PARTIES AND SUPERSEDES ANY PRIOR WRITTEN OR ORAL

AGREEMENTS OR UNDERSTANDINGS BETWEEN THEM CONCERNING THE SUBJECT MATTER OF

THIS AGREEMENT. THIS AGREEMENT AND ITS ATTACHMENTS FURTHER CONTAIN THE ENTIRE

AGREEMENT BETWEEN THE PARTIES CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT.

THERE ARE NO REPRESENTATIONS, WARRANTIES, COVENANTS, PROMISES, AGREEMENTS,

ARRANGEMENTS, OR UNDERSTANDINGS, ORAL OR WRITTEN, EXPRESS OR IMPLIED, BETWEEN

THE PARTIES WHICH ARE FULLY EXPRESSED IN THIS AGREEMENT.

The Practitioner needs to remember that any promises, agreements, etc. made orally or in

writing by the Employer to the Practitioner are not binding unless they are in the Agreement and

any amendments to the Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective

Date first written above.

EMPLOYER:

EMPLOYER

PRACTITIONER:

EMPLOYEE




By: Employee

Date: Date:

Name: _____________________________

Title: ______________________________