Law Office of
STUART J. OBERMAN
By Stuart J. Oberman, Esq.
Dentists associating with owner-dentists has become more prevalent in recent years. However, as associate dental relationships continue to flourish, so do unfortunate and unnecessary legal disputes related to such associate relationships.
The following list sets forth those points that should be addressed in any properly drafted associate dentist agreement. The dentists addressing each of these issues in their agreement will help prevent later disputes.
1. Status of Associate Dentist. Internal Revenue Service rulings have made it increasingly difficult to characterize associate dentists as independent contractors rather than as employees. Proper documentation is needed by the owner to be successful in establishing a legitimate independent contractor relationship with the associate.
2. Schedule and Location of Services. The agreement should explicitly state the number of days per week of work, the hours that the dental office is open and the associate’s responsibilities, if any, for weekday and weekend emergency coverage. The agreement should also indicate if the associate has any responsibility to render dental services at any satellite office locations.
3. Malpractice Insurance. The agreement should explicitly state the obligation by both dentists to maintain malpractice insurance, the limits of such coverage, and unusual or special provisions.
4. Duties by Owner and Associate. The agreement should specify the associate's duties with regard to the rendering of dental services as well as the associate's duty, if any, to become involved in administration and management concerns.
5. Compensation to Associate. The agreement should carefully define the method by which the associate is to be paid. There are numerous variations of compensation including a flat per-day salary, a percentage of the associate's monthly collections, or production.
6. Business Related Expenses. The agreement should detail what business related expenses are the sole responsibility of the associate and which expenses are to be paid for or reimbursed to the associate by the owner. Professional license fees and association membership fees, automobile expenses, entertainment and promotion expenses, continuing education expenses, malpractice insurance, health, disability income and life insurance are expenses which should be addressed in the agreement.
7. Patients’ Charts and Records. The agreement should clearly state that all patient information is confidential and may not be used by the associate for any purpose inconsistent with or in breach of any of the provisions of the agreement.
Covenants Not To Compete. Associate agreements should have clauses in them stating that the associate may not compete with the owner subsequent to termination of employment for a particular period of time and within a certain geographic area. The length of time and geographic area must be reasonable.
Confidentiality and Trade Secrets. The agreement should address what information in the dental practice is deemed to be confidential, trade secrets or proprietary to the owner and may not, therefore, be appropriated by the associate for his or her own benefit and the owner's detriment.
10. Associate's Right to Buy In. The agreement must clearly state whether the associate's right to buy in constitutes an option to purchase or a first right of refusal.
11. Indemnification. The agreement should address each dentist's responsibility to the other should one party be held responsible for (i) any malpractice liability resulting from the treatment of patients by the other dentist or (ii) any non-malpractice liability resulting from negligent acts by the other dentist.
Conclusion. Written agreements of any kind (and especially written associateship agreements) always create a "win-win" opportunity for the parties involved.
