Medical Contract Attorneys for Texas Healthcare Providers

We Draft and Review Medical Director Agreements, Call Coverage Contracts, and Independent Contractor Arrangements – and We Defend Them when Disputes Arise

Most healthcare contracts are drafted by the other side's attorneys. The hospital's legal team wrote the medical director agreement it just handed you. The third-party biller drafted the billing agreement you're about to sign. The staffing company's standard form call coverage contract was not written with your interests in mind.

That's exactly why you need an attorney review before you sign – not after a dispute has already started. 

Each contract type carries its own set of legal requirements, shaped by federal and Texas-specific rules, such as the federal Stark Law, the False Claims Act, and EMTALA. Texas law adds its own conditions through the Texas Covenants Not to Compete Act, the Texas Health Care Program Fraud Prevention Act, and the Texas Patient Solicitation Act. Overlook any of these, and a routine agreement can become a compliance problem.

At Hendershot Cowart P.C., we've drafted and reviewed medical contracts for Texas physicians and healthcare businesses for nearly 40 years. We know where these agreements create compliance exposure, how they can infringe upon clinical decision-making, and where language that seems standard is anything but.

Call (713) 783-3110 or contact us online to schedule a medical contract review.

On This Page

• Medical Director Agreements
• Call Coverage Agreements
• Management Services Agreements
• Independent Contractor Agreements for Healthcare Providers
• Medical Space and Equipment Lease Agreements
• Medical Billing Agreements
• Arbitration Agreements in Medical Contracts
• When Medical Contract Disputes Arise
• Talk to a Medical Contract Attorney 

For a full overview of our Texas healthcare law services, visit our Houston healthcare and medical law attorneys page.

Medical Director Agreements

A medical director agreement is a contract under which a licensed physician provides administrative oversight, clinical supervision, and policy direction to a healthcare entity – rather than direct patient care. Medical spas, IV hydration clinics, weight loss clinics, ambulatory surgery centers, compounding pharmacies, home health agencies, and dialysis facilities all commonly require a physician medical director.

In Texas, these agreements serve a specific legal purpose. Texas's corporate practice of medicine doctrine prohibits non-physician-owned businesses from employing physicians or directing clinical services. A properly structured medical director agreement is how those entities establish a compliant physician relationship. Get the structure wrong, and the entire arrangement can be unwound – with consequences for the physician's license and the entity's operating authority.

What a Compliant Medical Director Agreement Must Include

Federal fraud and abuse laws impose specific requirements on medical director compensation. The Anti-Kickback Statute and the Stark Law each require that physician compensation arrangements satisfy conditions designed to ensure that medical director fees are not being used to disguise payments for patient referrals. To satisfy the applicable safe harbors and exceptions, a compliant medical director agreement must:

• Be in writing, signed by both parties, and identify all services to be provided
• Cover a minimum term of one year; if terminated early, the parties may not re-enter the same arrangement during that first year
• Set compensation in advance at fair market value – not based on the volume or value of referrals or other business generated between the parties
• Not aggregate more services than are reasonably necessary for the arrangement's legitimate business purpose
• Expressly preserve physician independence in all clinical decisions

The compensation requirement is the one most frequently violated. In January 2026, home health provider Traditions Health, LLC agreed to pay $34 million – including more than $22.6 million in restitution – to resolve allegations that its medical director arrangements with referring physicians in Texas and Oklahoma violated the Anti-Kickback Statute and the Stark Law. According to the settlement, physicians were paid as medical directors for services they may have failed to perform, that may not have been reasonable and necessary, or that were rendered before the parties had signed a written agreement – the same documentation gaps and compliance errors that our attorneys check for when reviewing a medical director arrangement. 

What We Review and Negotiate

Our attorneys evaluate medical director agreements for Texas physicians and healthcare entities on both sides of the arrangement. Key provisions we address include:

• Scope of administrative duties – whether the listed responsibilities are realistic, documentable, and consistent with what the HHS-OIG considers legitimate medical director services
• Compensation structure and fair market value support – particularly where the fee is tied to hours, productivity, or a flat monthly figure without independent valuation
• Performance expectations with goals and outcomes clearly articulated
• Termination rights – notice periods, for-cause triggers, and what happens to services in progress when the agreement ends
• Indemnification and malpractice obligations – who bears liability if a clinical oversight decision becomes the subject of a claim
• Non-compete agreements – physician non-competes are subject to strict requirements. To be enforceable in Texas courts (as of September 1, 2025), they must include a buy-out provision, not exceed one year in duration, be limited to a five-mile radius from the physician's primary practice location, allow continued treatment of patients with acute illnesses, and provide access to patient records
• Compliance with the Texas prohibition against the corporate practice of medicine (CPOM) – whether the agreement preserves physician control over all clinical decisions and does not allow the entity to direct, supervise, or evaluate clinical staff

Call Coverage Agreements

A call coverage agreement governs a physician's obligation to be available and respond to hospital emergency department calls during assigned periods – including telephone consultations, in-person evaluations, inpatient follow-up care, and any additional services clinically required. 

Under EMTALA, Medicare-participating hospitals are required to maintain a written on-call list of physicians capable of providing stabilizing treatment for emergency conditions. Hospitals create that duty by making call participation a condition of medical staff membership through the bylaws. Because bylaws cover general professional obligations, not the business, financial, and logistical terms of coverage, a separate call coverage agreement is still necessary – and it needs to align with the bylaws it depends on.

What We Review and Negotiate

Our attorneys review and negotiate call coverage agreements for the terms that determine whether the arrangement works day to day and holds up under scrutiny, including:

• On-call schedules and response times – clearly defined rotation obligations and response time requirements, and how conflicts with elective surgery scheduling during call periods are handled
• Compensation – per-diem, per-shift, or hourly pay set at fair market value; because on-call pay creates a financial relationship with a referring physician, we evaluate it for Stark Law and Anti-Kickback Statute compliance
• Integration with medical staff bylaws – making sure the agreement cross-references the bylaws rather than conflicting with them
• Backup coverage – contingency plans for when the on-call physician is unavailable
• Liability and malpractice coverage – indemnification provisions, malpractice insurance requirements, and who bears the cost of tail coverage after the relationship ends
• Credentialing-based termination rights – ensuring loss of medical staff privileges automatically ends the coverage obligation, rather than leaving a physician technically bound to a contract they can no longer perform

Many of these same terms are also at the center of call coverage disputes – whether a physician actually failed to respond, whether compensation is adequate for a high-burden specialty, liability for outcomes during a call period, and termination tied to a loss of privileges – which is why the agreement warrants careful review and negotiation before you sign.

Management Services Agreements for MSO Structures

Texas's corporate practice of medicine doctrine prohibits non-physicians from owning a medical practice or employing physicians to provide clinical care. The management services organization model is the legally recognized structure that works within that prohibition – separating the business of healthcare from the practice of medicine.

Under a compliant MSO structure, a physician-owned professional entity (PA or PLLC) controls all clinical services, and a non-physician-owned MSO handles all non-clinical operations: billing, staffing, marketing, technology, facilities, and compliance support. The two entities are connected by a management services agreement that defines what the MSO does, what it gets paid, and – critically – where its authority ends.

What a Compliant MSA Must Include

To satisfy both the Anti-Kickback Statute's management services safe harbor and Stark Law's personal services exception, the management services agreement must:

• Be in writing, signed by both parties, and cover all services to be performed
• Remain in effect for at least one year
• Set compensation in advance at fair market value – not as a percentage of the practice's revenue or tied in any way to referral volume
• Define the scope of services with specificity – vague service descriptions are a compliance red flag
• Preserve complete physician control over all clinical decisions, staffing, and medical protocols
• Be commercially reasonable – the arrangement must make business sense independent of any referral relationship

A poorly drafted or improperly priced MSA is not just a contract problem – it's a federal fraud and abuse exposure. Read our complete guide to Management Services Agreements.

Independent Contractor Agreements for Healthcare Providers

Many physicians, physician assistants, and nurses work as independent contractors rather than employees – through locum tenens assignments, staffing agency engagements, or direct arrangements with hospitals and group practices. The independent contractor agreement governing that relationship defines the scope of services, compensation, intellectual property ownership, termination rights, and malpractice obligations.

Signing a form contract drafted by the engaging entity without legal review is one of the most common – and costly – mistakes healthcare providers make.

If you've received an employment agreement rather than an independent contractor agreement, see our physician employment contract review page.

Healthcare-Specific Provisions We Review

As a firm with both business law and healthcare regulatory experience, we review physician independent contractor agreements for issues that general contract attorneys may miss:

• Anti-Kickback Statute and Stark Law compliance for arrangements involving referral relationships
• CPOM compliance – whether the arrangement appropriately preserves clinical autonomy
• Licensing and credentialing requirements – a valid Texas medical license and any applicable exclusion screening against the OIG's excluded-provider list and the National Practitioner Data Bank
• On-call duty obligations – scope, compensation, and how call assignments are made
• Malpractice coverage and tail obligations – who pays, at what limits, for how long
• Non-compete and non-solicitation provisions – under Texas law, physician non-competes entered into or renewed after September 1, 2025, are subject to a one-year maximum duration and a five-mile geographic limit, and non-solicitation clauses are treated the same way. Notably, including a non-compete in an independent contractor agreement can itself undermine contractor status by suggesting an employment-level degree of control.
• Termination rights and notice requirements – particularly in short-term or locum arrangements where notice periods affect pending patient care obligations
• HIPAA and confidentiality obligations
• Intellectual property – ownership of research, publications, and any clinical protocols developed during the engagement

Employee vs. Independent Contractor Classification Risk

Entering into an independent contractor agreement with a physician does not automatically establish an independent contractor relationship. Under Texas and federal law, what matters most in defining the relationship is control – specifically, whether the engaging entity has the right to control how the physician performs the work, not just the outcome. 

The designation in the contract matters, but the actual working relationship matters more. A hospital that labels physicians as independent contractors for tax purposes but exercises employment-level control – setting schedules, directing clinical protocols, evaluating performance, or restricting the physician's ability to work with other facilities – faces simultaneous exposure under:

• IRS employment tax assessments for misclassified workers
• FLSA liability for unpaid overtime, minimum wage, and liquidated damages, plus Department of Labor investigation and enforcement
• Texas Workforce Commission unemployment compensation assessments
• Loss of the Anti-Kickback Statute's employee safe harbor, requiring the arrangement to instead qualify under the personal services safe harbor

A Note about Non-Competes in Independent Contractor Agreements

In a 2025 decision, the Fourth Circuit Court of Appeals pointed to a staffing agency's use of non-competes as one factor supporting a $9 million judgment for misclassifying contract nurses as employees under the Fair Labor Standards Act. The court argued that requiring a non-compete signaled control over the nurses' ability to accumulate profit independent of the agency and prevented nurses from seeking other employment. That case arose outside Texas, but the reasoning is being watched closely by staffing agencies and healthcare employers nationwide.

Because of this tension, we help clients weigh whether a narrower non-solicitation agreement accomplishes the same protective goal without adding unnecessary misclassification risk.

Medical Space and Equipment Leases

Lease arrangements between physicians and hospitals, health systems, or other referral sources are among the most scrutinized financial relationships in healthcare. That scrutiny exists because below-market rent from a hospital to a physician – or above-market rent from a hospital to a physician who refers patients there – is one of the most commonly used mechanisms for disguising illegal kickbacks.

Both the Stark Law and the Anti-Kickback Statute impose specific requirements on space and equipment lease arrangements between healthcare providers. To fall within the applicable safe harbor or exception, a lease agreement must:

• Be in writing, signed by all parties, and cover the specific space or equipment leased
• Have a term of at least one year
• Specify rental rates set in advance at fair market value, independent of the volume or value of referrals
• Be commercially reasonable – the arrangement must make business sense even if neither party referred a single patient to the other

Percentage-of-revenue rent arrangements are a common compliance failure. A lease where the physician pays the hospital a percentage of collections – or where the hospital pays the physician above-market rent at a facility where the physician refers patients – creates Anti-Kickback Statute exposure regardless of how the agreement is labeled.

Our attorneys review and draft space and equipment lease agreements for physicians, group practices, ambulatory surgery centers, and other healthcare entities, ensuring the terms satisfy both Stark Law exception requirements and Anti-Kickback Statute safe harbor conditions.

Medical Billing Agreements

Most medical practices outsource some or all of their billing functions to a third-party billing company. The agreement governing that relationship is not a standard vendor contract – it carries healthcare regulatory compliance obligations that, if unaddressed, can expose the practice to fraud investigations, Medicare audits, and False Claims Act liability.

A billing error by your third-party billing company is your billing error under federal law. The practice's name is on the claim.

What Your Billing Agreement Must Include

A compliant billing services agreement should establish:

• Specific scope of services – which claims and payer types the billing company will submit, follow up on, and appeal
• Fee structure set in advance at fair market value, not as a percentage of collections in arrangements that could create Anti-Kickback Statute exposure
• Representations and warranties that the billing company will comply with applicable billing, coding, and reimbursement rules
• Business Associate Agreement provisions under HIPAA, along with parallel obligations under the Texas Medical Records Privacy Act, including data security and breach notification requirements
• Reporting obligations – what data the billing company must provide, and how often
• Audit rights – the practice's right to review billing records and documentation at any time is critical to monitor for fraud and improper billing. 
• Performance standards – denial rates, follow-up timelines, and claim submission deadlines
• Indemnification requiring the billing company to reimburse the practice for losses caused by its billing errors, coding mistakes, or fraud
• Termination rights covering ownership of billing records, accounts receivable, and how disputes are resolved when the relationship ends

Billing agreements that fail to set compensation in advance, lack written terms, run for less than a year, or allow compensation to fluctuate with collections risk running afoul of Anti-Kickback Statute and Stark Law requirements. 

Additionally, providers are responsible for all claims submitted under their taxpayer identification number – with or without an indemnification clause. If a billing company's fraud goes undetected because the practice ignored warning signs, the practice can still face False Claims Act liability. Indemnification provides a contractual path to seek reimbursement for fraud losses, but it is not a substitute for oversight. 

Learn more about Physician Liability for Medical Billing Company Fraud & Negligence.

When the Billing Company Fails to Perform

Billing company failures – missed submission deadlines, unaddressed claim denials, coding errors, and improper billing leading to recoupment demands – can cause serious financial damage to a practice. When those failures breach the services agreement, legal remedies are available, including breach of contract claims, demand for corrective action, and recovery of financial losses caused by the failures.

Those remedies depend on what the agreement says. Practices with vague billing agreements, no performance standards, and no audit rights have fewer options when the relationship breaks down. Before engaging a third-party biller, have the agreement reviewed. After a failure occurs, document it systematically and consult counsel before taking any action that could affect your legal position.

Arbitration Agreements in Medical Contracts

Medical contracts often include arbitration agreements requiring disputes to be resolved through binding arbitration. Whether an arbitration clause actually holds up depends on how well it's written. Courts look at the clarity of the clause, how broadly it's drafted, and whether its terms are fundamentally fair to both sides.

A well-drafted arbitration clause should specify:

• A broad, clearly written scope covering any dispute arising out of or relating to the agreement, including claims that arise after termination
• A named arbitration provider and its governing rules – the American Arbitration Association, JAMS, or the American Health Law Association's dispute resolution service that has particular healthcare experience
• The number of arbitrators, the seat of arbitration, and the governing law
• Mutual obligation, binding both parties to arbitrate equally, rather than a one-sided clause that only restricts the physician or contractor
• How arbitration costs and fees are allocated between the parties
• A provision allowing judgment on the award to be entered in a Texas court, plus a severability clause so an invalid provision doesn't unravel the entire arbitration agreement

When Medical Contract Disputes Arise

Common disputes we arbitrate or litigate in the healthcare contract space include:

• MSO and DSO fee disputes and management agreement terminations
• Medical director termination and compensation claims 
• Non-compete and non-solicitation enforcement
• Independent contractor scope-of-services disagreements and indemnification conflicts
• Billing company breach of contract and recovery of financial losses
• Disagreements over whether an on-call physician failed to respond (triggering EMTALA and contractual penalties)

If a dispute has already arisen, visit our Healthcare Litigation page.

Talk to a Medical Contract Attorney

If you've been asked to sign a medical director agreement, you're structuring an MSO arrangement, your call coverage contract is up for renewal, or a business relationship has broken down and you need to understand your options, call our Houston healthcare and medical law attorneys at (713) 783-3110 or contact us online.

Most contract reviews are fixed-fee engagements, which cost a fraction of what it costs to litigate the terms later.

If you've been asked to sign a medical director agreement, you're structuring an MSO arrangement, or a business relationship has broken down and you need to understand your options – call (713) 783-3110 or contact us online.