Latest / AHF Podcast / Cut for time: Surgeons and Contracts (with Joel Matta, MD)

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Cut for time: Surgeons and Contracts (with Joel Matta, MD) · AHF Podcast

0:24
Joseph M. Schwab: Hello everyone and welcome to the AHF Podcast.
0:28
Joseph M. Schwab: I'm.
0:28
Joseph M. Schwab: I'm your host, Joe Schwab.
0:31
Joseph M. Schwab: My guest today needs almost no introduction.
0:34
Joseph M. Schwab: Dr.
0:34
Joseph M. Schwab: Joel Matta is joining me from Colorado to help kick off a new series in the podcast.
0:40
Joseph M. Schwab: Lorne Michaels, the legendary producer of Saturday Night Live, has had the unenviable task for almost 50 years of deciding what sketches get aired and what sketches don't.
0:51
Joseph M. Schwab: And so many sketches are used at the show's rehearsal, that Michaels often makes decisions at the last minute.
0:57
Joseph M. Schwab: Before the live show begins, sketches that are cut for time are often not seen by the main audience, but so many of them had such good material that Michael's even created a whole separate television series around them.
1:11
Joseph M. Schwab: It ran from 2013 to 2019.
1:14
Joseph M. Schwab: While the same thing can happen when putting together a meeting program for one reason or another, talks may end up getting cut for time.
1:22
Joseph M. Schwab: But thanks to the new AHF podcast.
1:25
Joseph M. Schwab: Cut for time series.
1:27
Joseph M. Schwab: That doesn't mean they don't get their own opportunity to be heard among as many passions.
1:33
Joseph M. Schwab: Joel Matta feels strongly about the relationship between surgeons and industry, and an important part of that relationship is the contract.
1:42
Joseph M. Schwab: Dr.
1:42
Joseph M. Schwab: Matta has as much or more contract experience as any surgeon innovator out there, and today he's here to share his thoughts about the contracting process with us.
1:54
Joseph M. Schwab: Joel, welcome to the AHF Podcast.
1:58
Joel Matta: Joe.
1:59
Joel Matta: And thanks for organizing this.
2:02
Joel Matta: Kind of the point of view I'm bringing about is that, uh, I'm in favor of the, uh, individual surgeons maintaining their legal right and the con contracting and, uh, not getting yourself into problems.
2:17
Joel Matta: So, um, right now I'm at Steadman Clinic, so contracting with industry important considerations.
2:23
Joel Matta: This is just a, uh.
2:26
Joel Matta: Not unusual image about a contract with.
2:28
Joel Matta: Here are the contracts sitting on the trigger for a mouse trap ready to ensnare the victim.
2:35
Joel Matta: So, uh, just as you, uh, go through this process of contract, it can be with industry, with other entities.
2:43
Joel Matta: I just wanted to point out a few.
2:46
Joel Matta: Simple principles that I'd like to follow, and I'm not an attorney.
2:51
Joel Matta: If you come to HF this year, as I'll mention, you will have a chance to talk to my attorney, free of charge.
2:57
Joel Matta: Theresa Ford will be at the meeting.
3:00
Joel Matta: She's gonna have her own desk that I'm gonna sponsor just for your information to get to, uh, talk about these issues.
3:09
Joel Matta: So some of the.
3:10
Joseph M. Schwab: talking with surgeons, she'll be, she'll have the ability to talk with surgeons about contracting questions and things.
3:17
Joel Matta: Absolutely.
3:18
Joel Matta: Yeah.
3:18
Joel Matta: So you can already see that.
3:20
Joel Matta: Maybe I'm not good to talk about this'cause I can't even spell contract, but, um, at the top of the page.
3:27
Joel Matta: But, uh, some of the things that you didn't get in a contract are consulting agreement.
3:33
Joel Matta: Uh.
3:33
Joel Matta: This is a, uh, fee for service agreement basically, where you do a task for an entity, you put in a certain amount of time, you get paid on an hourly basis.
3:44
Joel Matta: There can be product development agreements.
3:47
Joel Matta: Uh, these are.
3:49
Joel Matta: Can be based on time, but they can also be based on a royalty situation.
3:54
Joel Matta: Uh, one thing that comes up is just publications.
3:57
Joel Matta: So you're gonna get, if you agree to do a book chapter for a publisher or a few even publish a paper for an academic journal, uh, you can get this contract to sign.
4:08
Joel Matta: Uh, it can be important for you to look at it.
4:12
Joel Matta: Also, sometimes just educational events and, uh, educational events that you're gonna go to.
4:18
Joel Matta: Maybe as a participant, maybe you're gonna be one of the faculty, and these can be from a cadaver lab to maybe a, uh, breakout session, uh, at a meeting, uh, where you may or may not get paid, but you may be asked to sign an agreement.
4:35
Joel Matta: So before you sign, just consider this when you get a uh, contract or an agreement from an entity.
4:44
Joel Matta: This agreement is written by the entity's attorney, and you need to make an assumption that the agreement is one sided in its intent.
4:52
Joel Matta: So.
4:54
Joel Matta: Maybe there's some benevolent entities out there, but in general, the attorneys are hired, uh, to protect the rights of the indi of the entity you're contracting with.
5:05
Joel Matta: So.
5:06
Joel Matta: This is right away.
5:07
Joel Matta: You need to be somewhat suspect of the content and take a look at it.
5:12
Joel Matta: So, uh, before you sign, rule number one I'd say is read the agreement.
5:18
Joel Matta: And I don't know how many surgeons I've talked to that, uh, for instance, there's an agreement before an educational event or we're both consultants for the same company.
5:27
Joel Matta: And I said, did you read it?
5:29
Joel Matta: No, I didn't read it.
5:30
Joel Matta: I just signed it as their standard agreement.
5:32
Joel Matta: Well, uh, there can be problems.
5:36
Joel Matta: Now the so number one rule, read the agreement.
5:41
Joel Matta: Secondly, with the agreements do not accept liability and especially when you see the word indemnity.
5:48
Joel Matta: So if you're provide, asked to provide indemnity or says you indemnify entity, uh, this is something.
5:56
Joel Matta: You shouldn't be signing.
5:57
Joel Matta: So, uh, the basic principle is you're gonna get paid a certain amount, maybe in this fee for service agreement, but consider also that the amounts you're getting paid probably isn't bigger than if you just stayed home and did your normal job.
6:13
Joel Matta: So there may not even be a net benefit.
6:16
Joel Matta: So you shouldn't have a net liability or risk by signing the agreement.
6:23
Joseph M. Schwab: Hmm.
6:23
Joseph M. Schwab: Are there, are there different ways that they use, uh, that they use the term indemnity, Joel?
6:28
Joseph M. Schwab: Or does it always indemnify the entity?
6:32
Joseph M. Schwab: Uh, or does it sometimes indemnify the surgeon.
6:36
Joel Matta: Yeah, it can indemnify the surgeon actually.
6:38
Joel Matta: I mean the, uh, uh, for instance, some, uh, product development agreements, uh, that I've been part of the, uh.
6:48
Joel Matta: Entity.
6:49
Joel Matta: Like some, one of the big entities like, um, let's say, you know, Stryker, Zimmer, uh, Zimmer Biome, or, uh, j and j MedTech, there should be clauses in the product development agreement that they're gonna indemnify you or they're gonna protect you from liability.
7:07
Joel Matta: So, for instance, with the, we all know that, um, j and j had to deal with quite a bit with the metal on metal bearing and, uh.
7:19
Joel Matta: This was, some of the designers were actually protected by the agreements, so they did indemnify'em, but you'll also see the other way where you are asked to, I was recently got one, uh uh.
7:35
Joel Matta: Product development agreement that, uh, I'm working through with my attorney, but there was clauses that I was supposed to, in some cir circumstances, indemnify the company, but you shouldn't be doing that.
7:47
Joel Matta: I mean, especially just picture this, you've got a company worth billions of dollars and you're gonna indemnify him, so you shouldn't be doing this.
7:57
Joseph M. Schwab: Do you always recommend legal counsel review contracts, or is that the way you have it done?
8:03
Joel Matta: Uh, I don't always do it.
8:04
Joel Matta: I mean, let's say, you know, I'm gonna show you a couple examples.
8:09
Joel Matta: Like, uh, you're, um, asked to do a, um.
8:15
Joel Matta: A cadaver course.
8:17
Joel Matta: I'm show you an example of a company later on with that debt where I didn't call the attorney.
8:21
Joel Matta: Lemme show you a couple examples.
8:23
Joel Matta: I didn't call the attorney.
8:24
Joel Matta: One was, uh, you know, just for this one day thing, you know, you're gonna teach people about cadavers or there's gonna be a, uh.
8:33
Joel Matta: Ask to give a lecture and they're gonna give you a temporary consulting agreement to give to the lecture.
8:38
Joel Matta: It's not gonna be worthwhile for me financially to, you know, get my attorney involved and for me to spend a lot of time.
8:46
Joel Matta: But still, you need to look at the agreement.
8:49
Joel Matta: And, uh, one option too that I've seen in situations like that is just as if you have, um.
8:57
Joel Matta: Onerous language, I just cross out the section and initial it and then sign the agreement, which they may or may not accept that, but.
9:06
Joel Matta: Uh, I'll talk a little more the the next point.
9:09
Joel Matta: So I'm just kind of launching in here.
9:10
Joel Matta: I'm gonna talk a little more about indemnity, these IP things as we go on.
9:15
Joel Matta: But, um, one question you have to ask yourself, do you wanna give away ip?
9:20
Joel Matta: It's not necessarily wrong to give away, this is your choice.
9:24
Joel Matta: You see, uh, you know, maybe you're giving away some ideas that could produce future income.
9:30
Joel Matta: The main rule I'm saying is don't accept liability or a liability or indemnity.
9:35
Joel Matta: But, um, many of the consulting agreements, particularly with the, uh, uh, big implant companies already made, they're gonna have clauses that.
9:46
Joel Matta: You working for them, uh, means that they appropriate the IP that you disclose during the time of the consulting agreement now another
9:57
Joseph M. Schwab: the, is the intellectual property, correct?
9:59
Joseph M. Schwab: That's what IP
10:00
Joel Matta: Correct.
10:00
Joel Matta: Yeah, that's what I'm talking about.
10:02
Joel Matta: We should define that.
10:03
Joel Matta: Intellectual properties.
10:05
Joel Matta: So one of the ways I look at, for instance, the intellectual property, uh.
10:11
Joel Matta: The fee for service or consulting agreement is that when they're paying me for an hour of my time, they got me for an hour of my time.
10:19
Joel Matta: They don't get my IP too just'cause I, I worked for an hour.
10:23
Joel Matta: They already got the me hour of my time.
10:25
Joel Matta: I'd be given my time.
10:26
Joel Matta: They don't get the ip, uh, for free.
10:30
Joel Matta: Now, maybe, uh, maybe they want you to.
10:35
Joel Matta: Work.
10:35
Joel Matta: Some company wants you to work on your some product and they're gonna pay you on a fee for service basis.
10:43
Joel Matta: Maybe the product isn't gonna make much money.
10:46
Joel Matta: Maybe, maybe you're better off getting a fee for service agreement, getting paid for your hourly time than you are, let's say, getting a royalty of one half of 1% of the sales.
10:58
Joel Matta: That's just a business decision.
11:00
Joel Matta: Uh, you have to make.
11:02
Joseph M. Schwab: Yeah.
11:03
Joel Matta: But, um, you know, consider legal counsel.
11:06
Joel Matta: Read the agreement.
11:08
Joel Matta: Uh, consider legal counsel.
11:10
Joel Matta: Now, a lot of times when you get the agreement, you'll get it in an email and, uh, it'll say the email would be introduced to something like this.
11:20
Joel Matta: Uh, this is our standard agreement.
11:22
Joel Matta: Call us if you have any questions.
11:25
Joel Matta: Okay.
11:25
Joel Matta: Well, first of all, uh.
11:29
Joel Matta: I'm not gonna call them.
11:30
Joel Matta: If I don't understand the language, I'm gonna call my attorney.
11:33
Joel Matta: Okay?
11:33
Joel Matta: So, and one thing to keep in mind is that the agreement, and this sounds stupid to say, but the agreement means what the agreement says.
11:45
Joel Matta: So for instance.
11:47
Joel Matta: I've called a company, you know, that sent me the agreement and I've told them, talked to their, um, let's say marketing who sent it out.
11:55
Joel Matta: And I said, I don't really like this language in this section, this paragraph.
11:59
Joel Matta: I don't like the language.
12:01
Joel Matta: And I, they say, why don't you like it?
12:03
Joel Matta: I tell'em.
12:03
Joel Matta: They say, well, what this really means.
12:06
Joel Matta: Blah, blah.
12:07
Joel Matta: And I said, okay, if you wanna cross out what the agreement says and put in the agreement what you just told me over the phone, I'll sign it.
12:16
Joel Matta: Okay?
12:17
Joel Matta: But what you just told me over the phone isn't what the agreement says.
12:20
Joel Matta: So if you come to some legal, the BA basic thing is, you know, blah, blah.
12:25
Joel Matta: And the company, this individual told you, well the comp, this really what it means if you come to a legal dispute with them.
12:34
Joel Matta: What they told you over the phone two years previously isn't gonna mean shit.
12:38
Joel Matta: What, what means, means something is what the agreement says.
12:43
Joel Matta: So you, you have to, uh, stick to that, you know, what the agreement says, what the exact wording is.
12:53
Joel Matta: The other thing I've heard from companies too, call'em if you have any questions.
12:57
Joel Matta: They say, well.
12:59
Joel Matta: We've, we've never really enforced this clause.
13:03
Joel Matta: It's just in there just to emphasize to you how important it is to, let's say, not share IP or something.
13:12
Joel Matta: I said, well, if you, if you don't plan to enforce it, just take it out, not sign it.
13:16
Joel Matta: Okay?
13:17
Joel Matta: But you get all kinds if you follow the suggestion, you know, call us if you have any questions.
13:24
Joel Matta: You're gonna get all kinds of stuff you see.
13:27
Joel Matta: But keep in mind.
13:29
Joel Matta: The key is what does the agreement say, and if you don't understand the language, uh, talk to your attorney about it.
13:36
Joel Matta: You see
13:37
Joseph M. Schwab: Yeah.
13:38
Joel Matta: you're not gonna get the information from the company.
13:40
Joel Matta: That's correct.
13:42
Joel Matta: Now I wanna just explain what indemnity means as we're going back to, uh, that.
13:47
Joel Matta: So when you agree to agree to indemnify an individual or identify indemnify a company or an entity, you are agreeing to act like an insurance company and your.
14:01
Joel Matta: Typically the way it's written, you're an insurance company that provides unlimited financial protection to the entity if such and such circumstances occur.
14:13
Joel Matta: And this circumstances that you'll see far, and I'll show you a couple contract examples later, but the, uh, circumstances may be.
14:24
Joel Matta: Very ill-defined by the contract, and they may be quite inclusive, you see?
14:30
Joel Matta: So what do I do when I'm asked to provide indemnity?
14:35
Joel Matta: Uh, when I get a contract?
14:36
Joel Matta: Well, one of the, uh, initial responses I'll often make is say if I sign the agreement, uh, with the indemnity clauses, I'm signing under false pretenses.
14:49
Joel Matta: Why is that?
14:50
Joel Matta: Because I'm pretending to be an insurance company with unlimited financial resources.
14:55
Joel Matta: Okay, well, I'm not, okay, so you're asking me to indemnify you.
15:01
Joel Matta: I even if I wanna indemnify you, I can't.
15:03
Joel Matta: So I can't sign the agreement'cause I'm pretending to indemnify you and I've no financial capability to do it.
15:08
Joel Matta: Okay?
15:10
Joel Matta: Now the other thing I'll tell the uh, companies, I said, look.
15:16
Joel Matta: If you wanna get an indemnity insurance policy to cover these occurrences, there's no insurance company in the world, including Lloyd's of London, which will provide an unlimited indemnity policy.
15:29
Joel Matta: Okay?
15:29
Joel Matta: You can't get this anywhere.
15:31
Joel Matta: Okay?
15:31
Joel Matta: You're asking me to give it to you and you can't get it from the biggest insurance company in the world, you know?
15:38
Joel Matta: So the hold, uh, it's actually kind of stupid, really.
15:44
Joel Matta: It's just.
15:46
Joel Matta: You know, you're, you're signing something under false pretenses saying you can do something.
15:50
Joel Matta: You can't, you're pretending to do something.
15:54
Joel Matta: They can't get indemnity from anybody else.
15:56
Joel Matta: So even though you're an individual and you think, well, who am I?
16:00
Joel Matta: I am nobody.
16:00
Joel Matta: And, uh, this is one cause that I've found, you can probably, in most cases, get'em to drop the indemnity clause just because of these reasons you see.
16:11
Joseph M. Schwab: Is this, um, I'm curious, Joel, is this an abundance of caution on your part, or have you seen situations where companies have enforced these indemnity clauses on surgeons that you're aware of?
16:28
Joel Matta: I'm not aware of a specific case, but you know, it's things like this.
16:33
Joel Matta: This is the kind of thing that they'll say, uh, you know, we've never done this.
16:37
Joel Matta: We don't plan to do it.
16:38
Joel Matta: Well then throw it out.
16:39
Joel Matta: You know, it's a little more than caution and, uh, I'll show you one, one agreement later on.
16:45
Joel Matta: That's a little more than caution.
16:46
Joel Matta: You know, I think that attorneys like clauses like this because it opens the door for more situations.
16:54
Joel Matta: They can sue people in or more situations, they can create illegal action.
16:58
Joel Matta: You see?
16:59
Joseph M. Schwab: The attorney representing the entity you're saying, or
17:01
Joel Matta: yeah.
17:02
Joel Matta: The attorney representing the entity.
17:03
Joel Matta: Yeah.
17:04
Joel Matta: And so
17:04
Joseph M. Schwab: Yeah.
17:05
Joel Matta: the final thing that I just say should ask yourself what you're basic is, why should I risk my entire net worth?
17:12
Joel Matta: This is basically what you're doing.
17:14
Joel Matta: You're getting paid$500 for an hour of your time, and you're risking your entire net worth.
17:20
Joseph M. Schwab: A lot of especially, um, independent practitioners, uh, will have created companies around their practice.
17:29
Joseph M. Schwab: And, and while that.
17:31
Joseph M. Schwab: That company, uh, obviously can have significant assets, um, and significant liabilities, um, to a certain extent.
17:38
Joseph M. Schwab: Aren't some of those created to protect the, the individual's net worth?
17:44
Joseph M. Schwab: And does that help in these situations or not so much?
17:47
Joseph M. Schwab: I.
17:48
Joel Matta: Yeah, I don't know all the legal parts of that, but I, I think it is correct that if you have your company, your entity around that can, uh, you know, specifically one form of a company.
17:59
Joel Matta: It's called an LLC, uh, limited Liability Company.
18:04
Joel Matta: So.
18:05
Joel Matta: Part of those are established, so you're not, uh, the company is taking the risk, not the individual that, uh, owns the assets or, uh, manages the company, you see.
18:17
Joel Matta: But, um, but this is, uh.
18:23
Joel Matta: Uh, something that comes up, I see it again and again in agreements is the, uh, indemnity clause.
18:30
Joel Matta: Like for instance, uh, here in Vail, Colorado, we a lot of times hire people to plow driveways and during the wintertime, which most of us do in our neighborhood.
18:41
Joel Matta: I got the, uh, agreement from the guy, small businessman in plows the driveway.
18:46
Joel Matta: Well, basically it had these indemnity clauses and if you took the meaning of the contract he sent is that if he was driving the couple miles on the road up the hill to my property and ran, ran over somebody and killed them, I would be responsible.
19:04
Joel Matta: Because, uh, the, uh, he was on the way to do the job at my house, you see?
19:11
Joel Matta: And so I'm just saying this, these clauses like this are not, they're not just in the contracting here, but you can find it in a lot of little things like this that, uh, you know, I don't wanna, I'm gonna pay you to plow, plow the driveway.
19:26
Joel Matta: You know, you, you gotta be responsible for your, any damage you create.
19:31
Joel Matta: You know, I'm away here during the driveway or something, but it's, it's kind of, uh, I think one thing going on in our society, and I, I can see it happening to physicians a lot.
19:42
Joel Matta: I, I call, call the game pass the liability.
19:46
Joel Matta: You see where you're trying to pass the liability onto somebody else.
19:50
Joel Matta: The, uh.
19:53
Joel Matta: Uh, it was a while back, uh, a a OS had, uh, instructional course faculty lecture.
19:59
Joel Matta: I haven't been on it for a few years.
20:01
Joel Matta: I'm not sure what the current agreement says, but it had some language that those lecturing for at the, in the instructional course, lectures in indemnify the A A OS against lawsuits.
20:17
Joel Matta: Should the, uh, a OS get sued because you did something like copyright infringement.
20:23
Joel Matta: Okay,
20:23
Joseph M. Schwab: wow.
20:24
Joel Matta: so I threw a bomb.
20:26
Joel Matta: What I did is I, I wrote a letter to everybody on the instructional course lecture and I said, don't sign it.
20:33
Joel Matta: You know, so I figured if I could complain, nothing's gonna happen, but if I throw a wrench in the works, they're gonna fix this.
20:39
Joel Matta: I think I threw a wrench.
20:42
Joel Matta: They did.
20:43
Joel Matta: But I was barred from the faculty that year and, uh, they were really an, you know, the president was angry with me and everything, but they fixed it, you know, but it, it came out, the reason they had that clause, I.
20:59
Joel Matta: That the instructional course faculty for a OS and we're all members of a OS, keep that in mind.
21:05
Joel Matta: We are a a OS, the instructional course faculty.
21:08
Joel Matta: We had to indemnify our own entity because this was a demand put upon a a OS by the insurance company for a OS.
21:18
Joel Matta: So basically, the insurance company was requiring that the insured indemnify them.
21:25
Joel Matta: Part of the reason they did this is they have been sued over a copyright infringement thing.
21:30
Joel Matta: I didn't think somebody in their instructional course handout had made photocopies of some book chapters or something, you see?
21:38
Joel Matta: And they, they got ensued.
21:39
Joel Matta: So now they, their solution was to tell the.
21:43
Joel Matta: Faculty, the a OS members to indemnify the A A OS, you know, and that was basically to indemnify the insurance company.
21:52
Joel Matta: See?
21:53
Joel Matta: So some of these things you can imagine happening, like, uh, maybe copyright infringement or the thing I'm talking about, the guy plowing the driveway or the small companies.
22:06
Joel Matta: And I'll show you one example, I think later on too, that I was asked to sign indemnity and didn't do it.
22:13
Joel Matta: Okay.
22:14
Joel Matta: We can.
22:15
Joel Matta: So anyway, I don't think you should provide unlimited indemnity to any individual or entity you contact with.
22:22
Joel Matta: I've of these indemnity clauses, I've gotten a couple of the big companies to take'em out of their contract.
22:29
Joel Matta: Um, consulting fee for service agreements.
22:34
Joel Matta: Uh, I mentioned this a little bit, but you're paid for your time, so you wanna give up your IP for, for free.
22:40
Joel Matta: You know, and this is kind of a choice, you know, I mean, you're not incurring liability, but.
22:47
Joel Matta: You just have to decide is what they're paying you per hour, uh, you know, worthwhile that you give'em IP to help develop products Or is the IP a separate item?
22:58
Joel Matta: I like to keep the IP a separate item from time, you know, so, um.
23:04
Joel Matta: Uh, because a lot of the consulting agreements that they're built around, I mean, the reason I have the consulting agreement with the company is, is more to participate in the educational venues you see,
23:15
Joseph M. Schwab: Yeah.
23:15
Joseph M. Schwab: Yeah.
23:16
Joel Matta: so you can make a choice, try to tailor your agreement to be focused on the educational aspects you provide, not not giving free IP to the company.
23:29
Joseph M. Schwab: So if you're specifically working with a company on, uh, on, for instance, a, um, a new, uh, prosthesis, um, and there's intellectual property involved, but there's also your time involved, right?
23:40
Joseph M. Schwab: Your ideas don't come without time.
23:42
Joseph M. Schwab: Do you generally try to structure those contracts that there is, uh, compensation for both of those aspects, or if you're dealing with intellectual property, do you ignore the time component of it?
23:57
Joel Matta: Yeah, if I'm dealing with, uh, uh, ip, uh, and it's something to do with the tax laws too.
24:03
Joel Matta: You can contact, uh, you know, ask your attorney, ask your accountant even that if they, uh, let's say you're developing a new hip prosthesis and they're paying you hourly to develop the hip prosthesis, well then, uh, you've, you've already been.
24:21
Joel Matta: Paid for your ip and then the royal you receive will probably be taxable as, uh, regular income.
24:28
Joel Matta: Whereas if you just, all your time is for free and the whole transaction is a transaction of intellectual property, then you can claim it as a capital gains because, uh, you know, you traded something you already owned.
24:44
Joel Matta: For some something else.
24:46
Joel Matta: So it's actually a capital gains and the taxation of capital gains income is of course lower than, uh, taxation of regular income.
24:56
Joseph M. Schwab: So this might be a case by case basis, depending on what you're developing.
25:00
Joseph M. Schwab: Huh?
25:01
Joel Matta: Yeah.
25:01
Joel Matta: And some of the companies, uh, you can, you can kind of have it, uh, both ways in a way that if you, uh, you know, spend, you know.
25:13
Joel Matta: Days and many hours over the course of a couple years developing a product.
25:17
Joel Matta: And the company, uh, never markets a product.
25:22
Joel Matta: It can be in your contract that you are paid for your time, you know, as if it's a, uh.
25:28
Joel Matta: Fee for service agreement, you see?
25:30
Joel Matta: But if the product actually goes to market and you're gonna get a royalty on it, you may be better off, you're probably gonna be better off tax wise if you're never paid, uh, for the time you spent developing the product.
25:43
Joseph M. Schwab: Okay.
25:44
Joseph M. Schwab: Interesting.
25:45
Joseph M. Schwab: So there's ways to be flexible with those contracts.
25:48
Joel Matta: Yeah, yeah.
25:49
Joel Matta: There is.
25:50
Joel Matta: And, and some of these things are maybe cost neutral to the company, one thing I was gonna bring up too, about the, uh, fee for service agreements.
25:58
Joel Matta: A lot of'em have, when you give an educational, uh, presentation, and you should read this part of it, that, uh, some of them say that, um, the, uh, entity that you gave it for now owns all of the material.
26:16
Joel Matta: And it may even have some clauses about IP connected.
26:20
Joel Matta: The imperial material presented.
26:22
Joel Matta: It says that it, it may say it owns all the copyrights, potential copyright to the material presented.
26:29
Joel Matta: You see?
26:30
Joel Matta: So, um, I.
26:32
Joel Matta: You probably are gonna wanna reword something like that because this is something you created.
26:38
Joel Matta: I mean, you own most of it.
26:40
Joel Matta: You, you spent some time, they paid for you for the time.
26:43
Joel Matta: But you know, probably as most of us do, you're gonna resort a lot of slides.
26:48
Joel Matta: You're gonna maybe tweak it a little bit for this particular occasion, but most of it's stuff that's.
26:54
Joel Matta: Come from the knowledge that you've built up over years in orthopedics and, uh, you wanna be able to, to use it.
27:04
Joel Matta: So, uh, so anyway, if you sign a standard agreement, you may, uh, not only give up, uh.
27:13
Joel Matta: You know your time, but you might give up your ip.
27:15
Joel Matta: You might give a pre ownership of presentation materials, and worse, you might even indemnify them for use.
27:25
Joel Matta: Of the materials, like, um, so my suggestion is don't give up IP for free.
27:31
Joel Matta: And then also you can allow a non-exclusive license for the entity to use your presentation.
27:38
Joel Matta: So yes, after you talk at such and such meeting, they can use your presentation, but it's a non-exclusive license.
27:47
Joel Matta: Uh, they have to do it.
27:50
Joseph M. Schwab: Hmm.
27:52
Joel Matta: There was one, uh, some years back and I got the company to change it.
27:57
Joel Matta: I won't say the company's name, but, um, they had, uh, clauses as far as your fee for service agreement.
28:05
Joel Matta: First, any IP or ideas you disclose, they automatically own.
28:10
Joel Matta: And then it goes on further to say, if they, let's say, take your idea for a new product, and they, um.
28:19
Joel Matta: Make the product and they get sued by some entity, uh, for, uh, you know, copying something or patent infringement.
28:29
Joel Matta: You indemnify the company for loss, so stole your ip.
28:34
Joel Matta: Secondly, if they your IP and got sued for it, you have to pay all their legal costs.
28:39
Joseph M. Schwab: Oh my goodness.
28:41
Joseph M. Schwab: Oh my
28:41
Joel Matta: Yes.
28:42
Joel Matta: So there was the, the one, uh, company involved.
28:46
Joel Matta: Uh, it was some years back.
28:49
Joel Matta: It was, uh, and, um, maybe 15 years back, and I called the other consultants.
28:54
Joel Matta: I said, did you read the agreement?
28:56
Joel Matta: Do you know what it means?
28:57
Joel Matta: They said, no, I didn't read the agreement.
28:58
Joel Matta: I just signed it, you know, and, uh, so I ended up meeting with the president of the company about this, and finally it got changed.
29:07
Joel Matta: The, their initial offer was, uh.
29:10
Joel Matta: Well, your indemnity is li limited to a million dollars.
29:14
Joel Matta: And I said, well, this just shows how stupid your agreement is.
29:17
Joel Matta: You pay me 500 and I risk a million.
29:19
Joel Matta: You know, I mean, why would I?
29:21
Joel Matta: So, um, anyway, read the agreement.
29:27
Joel Matta: Okay then, uh, I was gonna just bring up a maybe to close here, uh, examples of a couple recent documents I was asked to sign.
29:37
Joel Matta: Okay.
29:38
Joseph M. Schwab: Yeah.
29:38
Joseph M. Schwab: Let's look at it.
29:39
Joel Matta: Yeah, here was a, um, I was gonna teach, so I'm a consultant for the company.
29:45
Joel Matta: I'm gonna teach at a cadaver lab, and then, um, I get a, uh.
29:51
Joel Matta: Document that I signed before the cadaver lab, and it's reasonable waiver of liability and hold harmless agreement, which means, you know, if I get stabbed by a knife or you know, somebody runs a drill it through my hand, I'm accepting the risk.
30:07
Joel Matta: Okay?
30:08
Joel Matta: But what actually happens is this, uh, agreement goes beyond waiver of liability and wholeheartedness.
30:15
Joel Matta: This says.
30:16
Joel Matta: I agree to indemnify, defend, hold, harmless.
30:19
Joel Matta: I've crossed out the company name for many claims that may arise from my participation in this course or another course.
30:28
Joel Matta: Well, this is potentially a risk.
30:32
Joel Matta: I mean, you, you are in a cadaver lab, okay?
30:34
Joel Matta: And we got sharp stuff.
30:36
Joel Matta: We got, you know, knives, we got power equipment.
30:40
Joel Matta: Is it possible for me to.
30:42
Joel Matta: Hurts somebody you know, or for them to contract the disease'cause they're on a knife or drill that through their hand.
30:48
Joel Matta: Demonstrate, of course, you know, you can't sign this.
30:51
Joel Matta: finally after getting the other faculty involved, the company deleted this clause, but they were actually also asking the participants were all being told to sign this agreement.
31:02
Joel Matta: You see, and the participants weren't even getting any financial compensation.
31:07
Joel Matta: They're there to learn, and I can see how they can release liability, but they, they shouldn't indemnify the company and.
31:15
Joel Matta: Uh, and I'm, I'm putting the name of the company here because you can find this on their website.
31:20
Joel Matta: It's public information and it says VI Labs.
31:24
Joel Matta: Agreement to teach or go work at their lab.
31:28
Joel Matta: So again, it's called a waiver and release of liability agreement.
31:32
Joel Matta: Now it says in the agreement, I agree to defend indemnify, hold ticus group harmless, free and clear, glanced to any and all demands.
31:42
Joel Matta: Claims, you know, it goes on and on and that's what I mean.
31:46
Joel Matta: These things go on and on.
31:47
Joel Matta: So this is a company that's not that big.
31:50
Joel Matta: Vitus Labs, you know, and you, you do something in their lab and hurt somebody and they sue Vitus S labs.
31:57
Joel Matta: You think Vitus slabs not gonna come after you.
32:01
Joseph M. Schwab: Interesting.
32:01
Joseph M. Schwab: So what do you think they mean by defend here?
32:04
Joseph M. Schwab: I, I'm kind of curious about that.
32:07
Joel Matta: Well, that means, uh, I interpret as a legal defense.
32:12
Joel Matta: You see,
32:13
Joseph M. Schwab: Yeah.
32:13
Joel Matta: you're gonna have to do a legal defense, you see?
32:16
Joel Matta: And so the thing that comes up is, uh, let's say, but the essence of this is too, let's say, uh, somebody at your table said, uh, you know, you.
32:32
Joel Matta: Let's say it's a spurious, stupid lawsuit.
32:35
Joel Matta: You know, like they said, the, the individual claims, well, you, uh, you know.
32:43
Joel Matta: Stressed me out.
32:44
Joel Matta: You've applied great stress that has caused me anxiety for weeks afterwards by belittling me during the lab or something.
32:51
Joel Matta: Okay, so it's a stupid suit.
32:52
Joel Matta: It isn't gonna go anywhere when you indemnify.
32:56
Joel Matta: So you're, you're indemnifying them against all claims demand.
33:01
Joel Matta: So even if it's something stupid, indemnify means you're gonna pay the legal costs.
33:07
Joseph M. Schwab: Right.
33:08
Joel Matta: They had to get their attorney involved to defend it or something, you know?
33:11
Joel Matta: So So there, there are probably some of the big companies probably not gonna go after you.
33:18
Joel Matta: I think something like size of Ticus Labs, potentially they could, you see, um, the um, uh, stuff like that going on.
33:30
Joel Matta: Okay.
33:30
Joel Matta: Now.
33:31
Joel Matta: I'll just get a, I've got one more, just example.
33:34
Joel Matta: So there was, uh.
33:36
Joel Matta: I was asked before one of the big meetings to come early.
33:40
Joel Matta: We were gonna have like a several hour session teaching anterior approach lectures on anterior approach.
33:46
Joel Matta: This was, uh, initiated by a company that wants to sell drapes for anterior approach.
33:52
Joel Matta: So my job show up, give a lecture, they're gonna give me a fee for giving a lecture.
33:56
Joel Matta: I'm not gonna endorse the drape.
33:58
Joel Matta: I'm just gonna talk about how I do an your approach, but.
34:02
Joel Matta: In order to give the lecture, I'm given a, uh, consulting agreement with, uh, indemnity provisions also, uh, that, uh, IP provisions that, uh.
34:18
Joel Matta: You know, it could extend, I'm involved in anterior approach, you know, so I mean, if I wanna develop some drape with somebody else, you know, could, this could be sticky, you know.
34:29
Joel Matta: And then also that, uh, the presentation materials they own, uh, they claim ownership.
34:37
Joel Matta: And I indemnify'em for use of my presentation materials.
34:42
Joel Matta: So this is just to give a lecture, but, uh.
34:46
Joel Matta: Anyway, I crossed out the company name.
34:48
Joel Matta: I won't go into it, but just kind of how some of the stuff reached consultants, indemnity consultants, shall indemnify, defend, hold, harmless, uh, company, and its shareholders, directors, affiliates, officers, employees, representatives, XI against all was liabilities, damages, demands, claims, suits, actions cause of cause of action, costs and expenses of any kind of a third party claim.
35:12
Joel Matta: You know, so this is this tip, pretty typical language.
35:16
Joel Matta: And then, uh, the, um, IP section, intellectual property, all ideas, inventions, discoveries, designs, prints, plans, data improvement, derivative.
35:28
Joel Matta: So if you under improve on their thing or they claim you derived, uh, this is all owned by the, uh.
35:39
Joel Matta: The entity plus you, uh, indemnify'em for using your stuff.
35:43
Joel Matta: So
35:44
Joseph M. Schwab: it's easy to see, just reading this language, why so many people would want to skip this over, right?
35:50
Joseph M. Schwab: I mean, it's just, it's so obtusely written and, and can be difficult to parse through for somebody who's not as used to it as you are.
35:59
Joel Matta: Right.
36:00
Joel Matta: Yeah.
36:00
Joel Matta: And consultants shall without further consideration, disclose all inventions promptly to assign inventions to cooperate and do all things necessary to system.
36:11
Joel Matta: You know, it's like I.
36:13
Joel Matta: I'm just gonna show up and give a talk.
36:15
Joel Matta: You know, I'm talking about Angel approach.
36:17
Joel Matta: I don't know, I don't even know what your product is.
36:19
Joel Matta: I'm not gonna sell it, you know, uh, you know, it's just, uh, it, it goes on and on.
36:26
Joel Matta: But, um, anyway, so just to kind of sum up, read the agreement, I say don't accept liability, especially, don't agree to indemnify entities.
36:37
Joel Matta: Consider ip, you know, is fee for service enough for you or.
36:42
Joel Matta: I do wanna protect your IP and of course, consider legal counsel and, uh, at our IHF 2025 meeting, appetite for disruption, which I have of course, uh, June 6th to 7 20 25.
36:59
Joel Matta: Uh, I'd say a 10 to hf.
37:02
Joel Matta: We want you to, and there you can meet and ask questions with Theresa Ford.
37:07
Joel Matta: She's my attorney for a number of years.
37:09
Joel Matta: Uh, with the contracting, look at the elements of contracting, and she's gonna be in the AHF, uh, exhibit area.
37:18
Joel Matta: She's gonna have a desk.
37:19
Joel Matta: She's gonna answer questions, uh, give information free of charge.
37:24
Joel Matta: Uh, another thing I didn't mention in the presentation is the issue of compliance, whereas his Department of Justice regulations.
37:33
Joel Matta: That, uh, government or contracting with companies, usually the big companies are pretty up on this.
37:38
Joel Matta: You don't get into trouble, but you can, I end up ident, uh, contracting with a little company that maybe isn't, uh, up on compliance and potentially get, uh.
37:51
Joel Matta: You don't wanna get in trouble with the DOJ, but that's what a client's about.
37:55
Joel Matta: And a good attorney will help you main, make sure your agreements are compliant with, uh, uh, department of Justice guidelines.
38:04
Joel Matta: Also,
38:05
Joseph M. Schwab: And Theresa, uh, who's gonna be at the AHF where does she practice out of?
38:09
Joel Matta: uh, she practices and she's now in the state of Washington.
38:14
Joel Matta: Outside Seattle.
38:15
Joel Matta: She started in Texas, down in Houston.
38:18
Joel Matta: But she has, uh, a number of clients all over the country and communicates by, uh, like you often do with attorney's email and phone.
38:28
Joel Matta: And, uh, if somebody specializes in.
38:33
Joel Matta: Physician contracting.
38:35
Joel Matta: I'm sure there's other attorneys out there too, but I mean, she's known in the industry, so if she, uh, is in discussion with, uh, somebody at the big implant companies, they know who she is and that she's knowledgeable in, in this area.
38:50
Joseph M. Schwab: you know, we do such, We have such an intersection of, of innovation, technology, industry and surgeons at the AHF meeting in general.
38:58
Joseph M. Schwab: It's gonna be fantastic to have her there as a resource.
39:02
Joel Matta: I think so.
39:02
Joel Matta: Yeah.
39:02
Joel Matta: Everybody should stop by, say hi, and if you have any questions.
39:07
Joseph M. Schwab: So Joel, it sounds like if I'm hearing you correctly, like in a lot of areas in contracting, you are your biggest advocate.
39:16
Joseph M. Schwab: Is that right?
39:17
Joseph M. Schwab: And then secondarily, you know, have somebody who can advise you if you don't know what the language means.
39:25
Joel Matta: Yes, that's correct.
39:26
Joel Matta: Yeah.
39:26
Joel Matta: I mean, you have to be an advocate.
39:28
Joel Matta: Uh, sometimes, uh, talking to Theresa, she gets a little frustrated with some of her clients because she thinks they, they give in too easily.
39:37
Joel Matta: Like they, uh, say, well, it's, they're not gonna enforce that, or, yeah, we can, I'll sign it, no problem.
39:44
Joel Matta: And, uh, the, um, it's surprising sometimes.
39:49
Joel Matta: I mean, I'm, uh, you know, better.
39:52
Joel Matta: Better known, obviously, than a lot of the young surgeons who are going to be involved in contracting.
39:59
Joel Matta: But still, you have to, don't be afraid to speak up and question things in a contract or just say, you, you can't do this.
40:09
Joel Matta: You know, like, um.
40:11
Joel Matta: Good.
40:11
Joel Matta: I would personally, I guess I'm on a little, uh, mission that I'd like to see these indemnity clauses just disappear because, uh, they're basically nonsense.
40:22
Joel Matta: You know, individuals can't indemnify these big companies and it's, um, not, uh, good for you to risk your and tire net worth over something like, uh, going to a cadaver lab to teach or learn.
40:40
Joseph M. Schwab: Yeah.
40:41
Joseph M. Schwab: Which is a, can be a, a tremendous career builder for a young surgeon.
40:45
Joseph M. Schwab: Um, I, I do think it's gotta be difficult for some young surgeons in practice who aren't, you know, don't have the reputation of a Joel Matta, like you said, um, are gonna feel some pressure to accept some of these clauses, um, that, you know, uh, in theory won't put them at risk.
41:06
Joseph M. Schwab: But like you said, what's written in the contract is what's written in the contract.
41:10
Joel Matta: Yeah, I think you're absolutely correct, Joe.
41:12
Joel Matta: And that's, uh, when I'm talking about this game, they call pass the liability.
41:18
Joel Matta: I think we're targets, you know, we're targets because acting as an individual, you know, sometimes it's difficult to say, do we really have power against, uh, some big company?
41:29
Joel Matta: You know.
41:30
Joseph M. Schwab: Yeah.
41:31
Joel Matta: And, uh, and they can just say, well, screw that guy.
41:34
Joel Matta: We'll get somebody else.
41:36
Joel Matta: So it is a, a little difficulty, but I think maybe just bringing up some of these questions and, uh, you know, companies that.
41:46
Joel Matta: You know, in the contracting process, be it a publisher, be it an implant company, be it, you know, some other, some commercial entity, if they keep hearing this again and again, you know, I, I think, I think it's can potentially disappear or change.
42:04
Joseph M. Schwab: So is there any room for just saying, as surgeons, maybe we just don't work with companies anymore, or is that something that, um, you know, doesn't do us good in the long run?
42:18
Joel Matta: I'd like to think that I've, uh.
42:22
Joel Matta: Made an important contribution to, uh, human health and wellbeing by working with companies that, uh, getting, uh, you know, beneficial products available, uh, for use in medicine, I think is one way to make a contribution to medicine.
42:41
Joel Matta: So, um, you know, I.
42:45
Joel Matta: I'm, I'm not in favor of stopping to work with companies or commercial entities.
42:51
Joel Matta: It's been, and I think it's a little bit sad in the way that, uh, sometimes, um, it's almost talked about, like, it's, it's shameful.
43:01
Joel Matta: You're making money from products or something, or it's shameful.
43:04
Joel Matta: You're working with com.
43:05
Joel Matta: This, there's kind of this little undercurrent I sense sometimes, you know, but, um, I think it's actually, I.
43:14
Joel Matta: Important function.
43:16
Joel Matta: You know, and I, I believe in capitalism and medicine.
43:19
Joel Matta: I think capitalism advances medicine.
43:22
Joel Matta: I think the for-profit aspects of it are very important in advancing innovation and products.
43:31
Joseph M. Schwab: Joel, I, I couldn't agree with you more, and I, I can't thank you enough for the time that you've shared with us and for being, um, for being the pioneer, first of all, in the anterior approach, but now being the pioneer in the AHF podcast series on cut for time, I, I couldn't think of anyone better than to give us our first talk in this series.
43:52
Joel Matta: Well, I'm still a little miffed'cause I got cut, Joe.
43:54
Joel Matta: You know, I mean.
43:56
Joseph M. Schwab: That's fair.
43:57
Joseph M. Schwab: That's fair.
43:58
Joseph M. Schwab: I can't do anything about, well, I suppose I could do something about that.
44:03
Joel Matta: I'm happy we're doing this.
44:04
Joel Matta: And I think the, uh, uh, you know, what you've been involved in we wanna do is make the, uh.
44:10
Joel Matta: AHF website, uh, educational source also.
44:14
Joel Matta: And, uh, whether or not you call this talk education, I think it certainly, uh, should get people's mind working.
44:23
Joel Matta: You know,
44:24
Joseph M. Schwab: Yeah.
44:25
Joseph M. Schwab: Well, thank you so much, Joel.
44:26
Joseph M. Schwab: I really appreciate having you on this episode of the AHF Podcast.
44:32
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44:38
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44:43
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44:50
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45:04
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45:07
Joseph M. Schwab: I'm your host, Joe Schwab, asking you to keep your hips and contracts happy and healthy.