Four Winston-Salem, N.C., pediatricians are attempting to ditch their lucrative employment contracts with Novant Health, claiming the system breached the pacts.
The case resembles that of a group of Queens, N.Y., pediatricians that sued Long Island's North Shore Health System earlier this year, alleging its members were coerced into abandoning employment deals that provided them with above-market compensation (Feb. 22, p. 3).
In the more recent case, the North Carolina doctors claim Winston-Salem-based Novant violated their contracts by lowering base salaries, establishing productivity targets and imposing administrative practices that interfered with good patient care.
According to the suit, the eight-hospital system hastily merged the practice with two others, failed to consult physicians on key administrative and clinical decisions, and increased the patient volume for each physician.
"We thought we had a contract that guaranteed us control over the medical issues and over the running of the practice," said Cyndy Lively, one of the physician plaintiffs.
The suit, filed in Forsyth County (N.C.) Superior Court, seeks termination of noncompete agreements in order to allow the doctors to return to private practice and back pay of more than $17,000 apiece.
Novant spokesman Michael Massoglia said the system intends to file a counterclaim. He declined to answer questions about the case.
"We regret that this happened," Massoglia said in a prepared statement. "We feel strongly that we have a sound basis for taking the actions that we did."
William Sayers, M.D., president of the Novant Health physician division, told the Associated Press that the pediatricians received a "substantial amount" for selling their practice assets and "now it appears that they want to benefit twice" by abandoning the employment deals.
Neither side would disclose how much the physicians received for the November 1995 sale of their practice, Pediatric Associates, to Carolina Medicorp. Carolina Medicorp merged with Charlotte, N.C.-based Presbyterian Healthcare in mid-1997 to form Novant.
Five-year employment agreements signed at the time of the sale provided the physicians with initial salaries ranging from $160,000 to $220,000, with annual raises pegged to the average for all system employees. Three of the four physicians have earned more than $200,000 per year. Nationally, the average pediatrician earns total annual compensation of $140,000.
An attorney for the physicians, Benjamin Dean, said his clients initially tried to resolve the issues and work through the expiration of their contracts in November 2000. But he said Novant failed to correct alleged contract breaches.
The salary cuts and other measures came as Novant has attempted to correct a negative operating margin posted in its first fiscal year, ended June 30, 1998. Novant lost $40 million on its network of more than 300 employed physicians and dentists, according to Fitch IBCA, a New York-based rating agency.
"Novant has repeatedly said that the physicians were walking out and abandoning patients, and that's simply not accurate," Dean said.