“Clean Sweep” Clauses Can Sweep You Out of Business

Heads up on this Common Clause in Physician Employment Agreements

Can a contract provision automatically revoke your hospital medical staff privileges upon termination? Can it be for an unlimited period of time? The short answer is “yes.” These provisions are called “Clean Sweep” clauses and are common. You should proceed with caution when considering whether to agree to this provision.

A “Clean Sweep” clause is a provision in a physician employment agreement stating that upon termination of the agreement, usually for any reason, there is an automatic termination of hospital medical staff membership and/or clinical privileges. These provisions typically waive your right to a fair hearing.

When it comes time to terminate the agreement, these clauses may pose a problem for physicians who want to keep their medical staff membership and/or clinical privileges. Many courts, including California, have upheld “Clean Sweep” clauses including those that contain a waiver of fair hearing rights.

If the circumstance under which you are being terminated is due to the hospital entering into an exclusive contract for services with another party, then the Illinois Hospital Licensing Act may apply.  Under this Act, the hospital must provide 60 days prior notice of the effect on your medical staff membership and/or privileges. If you want to request a fair hearing, you must do so within 14 days after the notification date. If a hearing is requested, the hospital is required to commence and complete a hearing within 30 days after the request.

The American Medical Association (“AMA”) chimed in on this topic and created a policy narrowing when a “Clean Sweep” clause should be used. Although not legal authority, AMA Policy H-255.950 states that an employed physician generally should not be required to resign clinical privileges or medical staff membership held during the term of employment unless an independent action of the medical staff calls for such action, and the physician has been provided an opportunity for due process under the medical staff bylaws. The AMA’s policy recommends that automatic termination of medical staff membership and/or clinical privileges following the termination of an employment agreement is only tolerable if three conditions are met. Those conditions include:

1. The agreement is for the provision of services on an exclusive basis;
2. Prior to the termination of the exclusive contract, a hearing is held by the medical staff, allowing the parties to express their views on the matter, and subsequently, the medical staff makes a recommendation to the governing body on whether to terminate the contract or not; and
3. The contract explicitly states the medical staff membership and/or clinical privileges are automatically terminated upon termination of the agreement.

Physicians should look out for “Clean Sweep” clauses and take the above conditions into consideration before signing an employment agreement.   In addition, it is common for a “Clean Sweep” clause not to include a specific length of time in which your privileges are relinquished or when you can reapply for privileges. It is important to try to nail down a time frame for when you may re-apply for privileges. Meaning, change the time frame from an indefinite one to a finite one. 

If your employment agreement includes a “Clean Sweep” clause, it is prudent to consult an attorney to make sure you completely understand what you are agreeing to and the potential risks if you do agree.

For further information contact us.