Article Contributed by Christopher L. Richard, Gilpin Givhan, PC
Imagine you’re selling your practice . . . or leaving your practice . . . or retiring. You want to continue to have access to the patient records you’ve maintained through the practice over the years, and in fact, you have an obligation to do so. Under Rule 540-X-9-.10(1) of the joint guidelines of the Alabama State Board of Medical Examiners and Medical Licensure Commission, physicians are required to retain medical records “for such period as may be necessary to treat the patient and for additional time as may be required for medical-legal purposes.”In addition, you must provide patients notice and a reasonable opportunity to request their records or request that they be transferred to another practice. It used to be you would maintain physical copies of these records in your practice office, a secure storage area, or by some other means. However, your patient records are now stored in an electronic health record (“EHR”) system maintained by a third-party vendor. Your third party vendor is planning to charge you a regular monthly service fee for the entire duration of time you have to keep the records. The alternative is an exorbitant one-time fee for you to obtain a copy of the digital patient records maintained in the EHR system. Neither option is particularly good, but the scenario provides an important opportunity to examine key contractual provisions you and/or your counsel should pay attention to when negotiating EHR and other vendor contracts.
I Have the Need . . . for Legalese
Contracts, especially vendor contracts, can be filled with
overly-complicated, legalese-ridden language that tends to earn attorneys their
fair share of grief. However, a good portion of this language is born out of
experience and necessity. For one, attorneys tend to loathe repeating (or
allowing) the same mistakes more than once (“Fool me once, shame on you; fool
me twice, shame on me,” as the saying goes). Unfortunately, attorneys cannot
anticipate every possible scenario that might unfold, but we often attempt to
ensure that contractual provisions at least provide clarity in situations where
past ambiguities have turned into disputes.
Secondly, attorneys do their best to memorialize what are often extremely complicated arrangements between their clients. Complicated structures frequently require complicated descriptions. Otherwise, a contract may be lacking in meaningful standards and may be no more useful that the “handshake” agreement that started the contract negotiation process.
With the (perhaps) optimistic notion that attorneys craft
documents out of necessity according to the principles above, consider the
following contractual provisions that are worth the extra attention in the
contract negotiation process.
Important Contract Provisions
Ownership of Records;
Rights to Use. It should go without
saying that you and your patients are the owners of your patient records,
regardless of whether they are stored in, or on, your vendor’s software and/or
hardware. Be wary of any contractual language that seems to give ownership
rights in your patient records to the EHR vendor. By that same token, consider
what rights your EHR vendor reserves to use and/or disclose information stored
on their system. When intense scrutiny of tech company privacy practices is
layered on top of HIPAA and increasingly restrictive state, federal, and
international privacy laws, it’s worth an extra look to ensure you’re not
allowing your EHR vendor to take any actions that would impact your obligations
under applicable privacy laws.
Harmless/Limitation of Liability. Experience
tends to show that contracting parties will listen and respond to reasonable
concerns, especially when they are trying to earn your business. The same
principles apply to the remedies provisions of vendor contracts. For instance,
the initial contract presented may require you to “indemnify, defend, and hold
harmless” the vendor against a host of liabilities that may be incurred by you
or the vendor. It is almost always a reasonable request to have the
indemnification language be mirrored between the parties. In other words, if
you are required to indemnify the vendor for your negligence, gross negligence,
or willful misconduct, they should be willing to indemnify you for their
In addition, the contract may limit the amount of damages
recoverable to the total amount of payments you make for the vendor’s services
under the contract, or the number of payments in a given time period (e.g., one year or the term of the
contract). These limitations are not uncommon, and they are not necessarily
unreasonable. However, it’s not the kind of limitation you want to discover
after you’ve encountered some significant financial harm and are expecting the
other party to cover all the costs. Similarly, it would be untenable to accept
unlimited potential liability to your EHR vendor when they are putting fairly
extensive limits on their liability to you.
Provisions. Now, back to where we started: what happens
when you are attempting to terminate your practice or a relationship with an
EHR vendor? As an initial matter, it’s worthwhile to consider your options to
terminate the contract before the term is over. All too often, I’ve seen
clients stuck in long-term contracts with little or no option to terminate.
Obviously this is a matter of economics for the vendor. They have up-front
investment costs that have to be recouped over the life of the contract, which
hopefully (for them) is a long term. However, consider options to terminate the
contract for “good cause.” It’s also worthwhile to consider including an
illustrative list of items that constitute “good cause,” in an effort to avoid
arguing about what “good cause” means when you elect to terminate the contract.
In addition, consider a no-fault termination provision, which may be acceptable
to both parties if there is a reasonable notice period before the contract can
Lastly, consider what your options are to preserve the
records or get them out of the EHR system upon termination of the contract. In
the example above, you may be caught between a rock (continued EHR service fees
for the required record retention period) and a hard place (a costly one-time
fee to obtain a copy of the records). Again, these deal points can (and should)
be negotiated on the front end of the arrangement with the EHR vendor,
especially if you foresee a change in your practice (e.g., retirement) in the near future. An acceptable solution likely
looks different for each individual physician or practice, and their respective
vendors, and could vary based on the timing (early vs. end of contract term)
and reasons (retiring vs. transferring to new vendor) for terminating services.
Concepts like these should be considered to address this issue and other
contractual issues on the front end of the agreement, rather than when the
relationship has soured or ended.
The contracting process can be tedious, frustrating, and at
times can seem unnecessary, especially if both parties “seem to be on the same
page.” However, there are great benefits to a well-conceived contractual
relationship. These may include robust and meaningful standards of performance.
They may also include reasonable provisions and limitations on indemnification,
liability, and damages, or even a plan for what happens when the relationship
is terminated. At any rate, they should be tailored to meet the parties’ needs
and should be a help, rather than a hindrance. They simply require some
attention from the parties on the front end of the contract.Please
note that the information
provided in this article does not, and is not intended to, constitute legal
advice; instead, all information, content, and materials contained herein are
for general informational purposes only. Readers are encouraged to contact their attorney to obtain advice with
respect to contract negotiations or any other particular legal matter.
 Although there is no
specific retention period, the Board of Medical Examiners suggests keeping
patient records for at least 10 years or otherwise consulting with the
malpractice liability carrier to determine an appropriate record retention