YARMOUTH, Maine - Imagine losing $500,000 in business to the unethical shenanigans of an employee with little or no conscience.
That, claims a respiratory provider who asked to remain anonymous, is exactly what happened to her when a full-time respiratory therapist/salesman, unbeknown to her, also was working full time for another provider.
“He would say anything to get patients to convert to the other company,” said the provider. “He said my company was bankrupt, that I was dead or that we had closed and that I owed him a lot of money.”
Industry watchers say that is exactly why owners should require all employees to sign non-solicitation contracts prior to starting work.
“We recommend that for all our clients,” said healthcare attorney Elizabeth Hogue. “It says they agree they won’t solicit patients of the company while they are working there and for a period of time after they leave.”
In most instances, Medicare prohibits cold-calling beneficiaries to solicit their business. But there are ways to skirt that regulation, making non-solicitation contracts a must-do, Hogue said.
This particular case is rather complicated, but in short, the provider is suing for $500,000 the ex-employee and accomplices. The charges: soliciting and converting 13 respiratory patients to other HMEs, diverting business totaling $100,000 and stealing equipment.
The case goes to court next month. The outcome will depend on how the judge interprets the state’s business law.
Right-to-work laws in some states invalidate non-compete contracts, which is why this provider didn’t have one in place. Most states, however, allow non-solicitation contracts, Hogue said.
“You don’t want to go into something expecting everyone to do you wrong,” she said. “But there are a lot of things that, as a small business person, you must protect yourself against.”
When it comes to a non-solicitation contract, reasonableness is key. It has to clearly define what you are protecting - your patients or referral sources, for example, said attorney Neil Caesar, president of the Health Law Center in Greenville, S.C.
“You rarely have to fight someone on this stuff, but it’s not so uncommon that you have to wave [the contract] around at them,” he said. “People try to solicit, but they almost always stop when you catch them. You rarely have to take them to the mat.”