Physician Liable Under Contract To Repay Income Guarantee and Attorneys’ Fees

The need for physicians to carefully review and understand contract language before signing an employment contract was highlighted in a recent Kentucky Court of Appeals unpublished decision.   The decision, Alzadon v Highlands Hospital Corporation, Inc. and Consolidated Health Systems, Inc. (No 2012-CA-000102-MR) was issued August 8, 2014.   Jose W. Alzadon, MD, was hired by Highland’s Hospital Corporation, Inc. (Highlands) as a general surgeon.  According to the Court of Appeals decision, as part of his employment agreement, Dr. Alzadon was provided an income guarantee for the first year, provided he completed two years of employment as a general surgeon.   However, after only two months Highlands received multiple complaints regarding Dr. Alzadon which set in motion a series of events resulting in Dr. Alzadon losing his privileges at Highland and a finding by the Kentucky Board of Medical Licensure that disciplinary action was warranted against Dr. Alzadon’s medical license.

In addition, pursuant to the Agreement and subsequent court decisions, Dr. Alzadon became liable not only to repay the income guarantee, but also all reasonable attorneys’ fees which, in this case, amounted to $67,015.17- almost a quarter of the original income guarantee payment.  According to the Kentucky Court of Appeals decision, the Agreement signed between Highlands and Dr. Alzadon provides:

[Alzadon] agrees to pay upon demand all out of pocket

costs and expenses incurred by [Highlands] in the

servicing, administration, or collection of any

indebtedness evidenced by this Note, including

reasonable attorneys’ fees, to the extent permitted by law.

 

While the specific facts surrounding Dr. Alzadon’s case may not seem applicable to many physicians, the contract language and enforcement by the court should be seen as a warning sign for all practitioners.  The breakdown of employment relationships is not uncommon, and practitioners should carefully consider the language of any contract and what he/she may become liable to pay to the employer.    For example, language regarding the payment of the employer’s attorneys’ fees should be carefully scrutinized-is it limited in applicability?  Is it limited in terms of being “reasonable” attorneys’ fees?  These are just some of the issues that arise and should be carefully considered before an employment contract is signed.

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