Physicians Should Be Careful Before Resigning in Lieu of Termination From a Hospital

By: Jesse Adam Markos, Esq.
Wachler & Associates, P.C
7/9/24

Health care providers employed by a hospital or on staff at one, who believe that they will be terminated, may try to get ahead of that decision by resigning in lieu of termination. At first glance, a resignation under such circumstances may appear to be an option that offers greater dignity and minimizes professional harm. However, in today’s highly regulated environment, there is often very little benefit to resigning. In fact, a resignation can, on its own, create significant problems for providers as it can trigger the filing of a report to the National Practitioner Data Bank or Michigan’s Department of Licensing and Regulatory Affairs regarding termination, peer review actions or other reportable events.

While a resignation in lieu of termination always has the potential to damage a provider’s reputation, it can have a disproportionately adverse impact on providers employed by or on staff at a hospital as hospitals are required to report certain actions. For example, pursuant to the Michigan Public Health Code, a hospital that employs, contracts with, or grants privileges to a provider must report certain actions to LARA, including disciplinary action that results in a change of employment status or a case in which a provider resigns or terminates a contract instead of the hospital taking disciplinary action against them.

A hospital is also required to provide the facts underlying the resignation. Once notified, LARA will then decide whether or not to pursue disciplinary action. Obviously, in a situation where this develops, there has been very little gained by the provider in choosing to resign. Moreover, by resigning the provider will likely be relinquishing their right to challenge and appeal any adverse findings by the hospital at a fair hearing with appropriate due process protections.

A hospital is also required to report certain actions to the Data Bank. The Data Bank is a system that collects and discloses certain adverse information about health care providers. Reportable actions include the resignation of clinical privileges while under investigation or to avoid an investigation. An adverse report can significantly impact a provider’s career as State licensing authorities, hospitals and other health care entities search the Data Bank when investigating qualifications. A response that contains an adverse report can result in a denial of credentialing, loss of hospital privileges, loss of licensure, and exclusion from participation in health plans.

Deciding whether or not to accept an offer to resign can be a complex situation to navigate. Many factors affect how the outcome of a termination or resignation plays out and there are endless hypotheticals that might be part of an individual situation. However, a health care provider’s ability to accept such an offer is significantly more complicated compared to other professions. As a result, those faced with such a decision should consult with an experienced health care attorney to help manage their options. For additional information or assistance, contact Wachler & Associates at (248) 544-0888.