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Nov 27 2013

Wisconsin Court: Immediate Termination of Physician for Cause Not Permitted Under Contract

The Wisconsin Court of Appeals recently held that a health system could not immediately terminate a physician for cause under its contract with the physician.

The health system alleged that the employed physician attempted to modify medical records after the physician allegedly misdiagnosed a patient. The health system decided to immediately terminate the physician, as it claimed that the physician committed an incurable breach of his employment contract.

The employment contract permitted termination immediately on the occurrence of one of seven events, without cause upon 90 days’ notice, or upon a material breach or violation of the terms of the employment contract so long as the breaching party had 30 days to cure the breach.

The health system argued that it could immediately terminate because the physician’s actions were not curable. The court disagreed. It said that the “without cause” provision in the employment contract allowed the health system to terminate the agreement without having to later prove to a jury that it had cause to do so. This did not mean that the “without cause” provision only governed situations where there was no reason for termination. The court also said that the health system could have negotiated a term that permitted immediate termination for the physician’s conduct.

The court’s opinion is a reminder that a physician’s incurable breach may still subject a hospital or health system to liability in absence of a provision permitting immediate termination as a result of the incurable breach.

A copy of the opinion is here.