Health Industry: Leaving a Practice?

By Sharon Russell, Claims Manager, MDA National.

Do you have a legal obligation not to disclose or use confidential information obtained from your former practice?

In order to consider your obligations to your former practice it will be necessary to determine if you were engaged as an employee or an independent contractor.

Whilst many arrangements purport to be principal/independent contractor relationships, the Courts will look at the facts behind any such agreement to determine the true nature of the relationship. The Courts will consider aspects such as control and expectation of work, how it is performed, hours of work, the payment method and equipment use.1

In Boyar v House of Life,2 Fair Work Australia determined that a locum alternative medicine practitioner was an employee of the Traditional Chinese Medical Practice. In reaching this decision, the Commissioner stated the "single most important factor" in determining the type of relationship was that at all times the patients remained patients of the practice.

It is therefore likely that a large number of arrangements entered into by medical practitioners would be viewed as employment relationships.

In Australia employees owe certain fiduciary duties (a fiduciary duty is an obligation to act in the best interest of another party) to their employer, including an obligation of good faith. This includes not disclosing or misusing confidential information, which was obtained during the course of employment. This applies even when there is no expressed confidentiality or restraint clause in the contract.

The information generally, however, should be truly confidential as opposed to knowledge, skill and experience that a medical practitioner has acquired. In a recent case,3 the Federal Court of Australia stated:

The entitlement of an employee to use information obtained in the course of employment after leaving that employment will depend upon the nature of the information, and the manner in which it is obtained by the employee. The general rule is that, after the employment relationship has ended, a former employee may use know-how obtained in the course of the prior employment. He may not, however, use information of a confidential nature.

The situation is different if the information in question, even though it is not strictly speaking confidential information of the employer, is deliberately taken or copied by the employee while the employment relationship persists for use after the employment relationship ceased: Faccenda Chicken Ltd v Fowler [1987] Ch 117 at 136. In that case, a former employee was prevented from using the employer's know-how or non-confidential information that might otherwise have been available for use after termination of the employment relationship, because the information and the advantage that flowed from it was obtained through dishonesty.

In the context of a medical practitioner, this could include taking patients' details with the intention of contacting them either during or after leaving the practice and encouraging them to see the practitioner at their new practice.

It is important to bear in mind that the scope of what constitutes confidential information can be broadened by the terms of an employment contract.

That said, medical practitioners must also consider their professional and ethical obligations to patients when leaving a practice. This would include ensuring appropriate arrangements have been made for a patient's ongoing care. It would therefore be reasonable to inform patients that the practitioner is leaving the practice and to assist in facilitating arrangements for ongoing care, as opposed to actively soliciting patients and encouraging them to see the practitioner at their new practice.

In contrast, independent contractors do not owe a fiduciary duty to their principals, so the obligations owed to a former principal, in the absence of a written agreement, are less onerous. However, the Courts still may provide remedies to prevent unauthorised use of information, if it is found that the information was confidential, it was disclosed in circumstances indicating an obligation of confidence and damage or loss was suffered as a result of the information being disclosed or used.

MDA National recommends that Members exercise extreme caution if you consider that there is a possibility that you might use confidential information obtained from your former practice. If an issue arises, please contact MDA National for advice.

1 Independent Contractors and Employees – Fact Sheet, Australian Government, Fair Work Ombudsman Website- www.fairwork.gov.au.
2 [2011] FWA 7953
3 Spotless Group Ltd v Blanco Catering Pty Ltd (2011) 93 IPR 235