Physician Recruitment: Recruited Doc Bites Group in Arkansas.

Many physician recruitment efforts are three party arrangements where a physician group either solicits a hospital to help support a newly recruited physician or a hospital solicits a group as a place to practice for a new physician recruited by the hospital. Typically in these deals the group agrees to accept the recruit into its practice and to accept a guaranteed income payment from the hospital for a year.  The recruit accepts a salary from the group.  The hospital’s subsidy covers expenses and some level of income for the first year less the production of the recruit.  The recruit is required to remain practicing in the hospital’s market for two or three additional years. The amount of any subsidy is folded into a note which is forgiven by the hospital each year prorate to the fulfillment of the practice requirement.  The recruit and the practice group are jointly and severally liable on the note as it is forgiven.

If the recruit leaves before the end of the forgiveness period he or she is sued by the hospital for the balance of the note. Normally the hospital only sues the recruit because it does not want to annoy its medical staff which refers patients to it.  In Baptist Health v. Todd P. Smith, M.D. v. Robert Casali, M.D., Central Arkansas Vascular Surgery, P.A., No. 07-2684 (8^th Cir. 2008) Dr. Smith, the recruit,  successfully cross claimed for contribution against his group and the principal of the group Dr. Casali on the note because they had signed the note as joint and several obligors. But wait, said Dr. Casali and his group, under

Arkansas

law the doctrine of contribution is based upon principles of equity and that the equities between the parties must be equal in order to give relief.  This is something like the “clean hands” doctrine that one seeking equitable relief must have clean hands before the court will intervene to grant equitable relief.

Dr. Smith intentionally breached his relationship with

Baptist

Hospital

and therefore caused the liability himself said Dr. Casali. Without announcing what the evidence before the trial court was the court of appeals indicated that both sides presented evidence regarding the equities and it was a matter of credibility and the exercise of judicial discretion in reaching a conclusion. The appellate court found no abuse of the trial court’s discretion in providing equitable relief to Dr. Casali. One suspects that there might have been some evidence of Dr. Casali’s involvement in Dr. Smith’s decision to move to

Texas

.