The Missouri Court of Appeals recently interpreted a physician’s employment contract and found that she was entitled to compensation for services rendered while employed with the hospital, but for which payment was not received until after her last date of employment.
First, the Court noted that the physician’s contract made clear that the hospital would compensate her “in consideration of providing services hereunder and for agreement to the non-competition restrictions in the Contract.” This provision had a major impact on the interpretation of the parties’ agreement as it related to compensation, according to the Court.
A separate provision in the employment contract specified that the physician’s base compensation began with “collections.” Collections would first be reduced by three percent, and then “practice expenses” would be subtracted from that amount. The difference would be the physician’s base compensation.
Importantly, the Court said that its review of the entire agreement resulted in a legal conclusion that the hospital in the first place has the right to receive all revenues from patients, and then it is separately obligated to compensate its employees, regardless of the source of funds for that compensation. Thus, the Court noted that the fact that the amount of a physician’s compensation reflects money collected from his or her patients does not mean the hospital may avoid its obligation to pay physicians based on a reference in the employment contract that the hospital retains all “revenues.”
In conclusion, the appeal court found that the physician had demonstrated a breach of the contract by the hospital and that she was entitled to damages in the amount of $33,995.64.