Good Intentions are not Enough for Signing on behalf of the Practice Owner

By VHMA Admin posted 12-27-2019 15:16


Consider this, the practice is expanding, and the owner is in the market for additional space. Following a long and exhaustive search, the owner is about to secure a property that ticks off all the boxes. The building has generated quite a bit of interest, the realtor is preparing a lease for your owner’s signature. As (bad) luck would have it, the owner has a medical emergency that requires immediate surgery. The lease arrives as the owner is going under anesthesia. He will be incapacitated for at least a day. The realtor is adamant about receiving a signed lease by the end of the business day.

The specifics are extreme, but practice managers are sometimes faced with circumstances in which they wrestle with whether they should sign a document on the owner’s behalf. Before putting pen to paper, there are several issues to consider--- even if you believe you are acting with the owner’s intentions in mind. In most cases, signing for another is covered by laws---not good intentions---and, without question, managers should follow the law.

Managers are held to a high standard of ethical behavior. Every day, they make decisions that affect their practices, owners, staff, clients, and patients. It is imperative that they understand and adhere to the ethical and legal standards that govern their positions to protect themselves and the practice.

Laws that control business dealings are complex, detailed, and governed by federal, state, and local laws and codes. In general, signing a document without the permission of the other person constitutes a forgery, although some may argue that in specific circumstances, signing for another is a professional judgment call.

Many managers and owners have established mutually trusting and respectful relationships. When an owner depends on the manager for much of what gets done in the practice, there may be a gradual and tacit transfer of responsibilities---without formal legal authorization---to the manager. It may be common practice for the manager to be involved with significant decisions, sign documents when the owner is not available, and act as the owner’s confidante. Given these circumstances, a manager may believe that s/he has the knowledge and support of the owner and may sign the lease described in the example by pointing out that the financial terms of the lease are extremely favorable to the future of the practice and that the new facility will provide badly needed services to the community and create many jobs. Signing seems to make sense…what could go wrong?

Hopefully, the owner recovers and goes on to live long, and the practice prospers. But there’s always Murphy’s Law: If things can go wrong, they will.

Scenario 1: Following surgery, the owner is severely debilitated financially and physically and unable to follow through on the expansion. Your name is on the lease…ouch!

Scenario 2: The owner has adopted a new outlook on life since the medical scare and decides to get out of the business and travel the world. He is furious that the lease was signed, claims that the lease is not binding because it was signed without authorization, and disputes the manager’s claim that s/he had the owner’s authorization.

The list of adverse outcomes is only limited by the imagination. If contemplating signing a document, which an owner has not explicitly authorized the manager to sign, the manager must ask, “What will my liability be and/or what is my recourse if my name is on a document that the owner is no longer capable of or willing to honor?”

As a manager, it is considered one of your primary responsibilities to follow the law and practice ethical behavior. One could even argue that to act ethically, you must act to uphold and abide by the laws that impact the practice, your position, and the industry.  

Barbara Janiak, Madison Veterinary Specialists, has been a hospital administrator for 20 years. She explained that signing responsibilities are usually spelled out in job descriptions. “Most of what I sign is related to the day-to-day operations of the hospital, including, service agreements, offers of employment, and more. I would not sign anything that is above and beyond what is spelled out in that description.”

She cautions young managers and those who are new to the field to become familiar with their job descriptions and understand what constitutes signing responsibilities related to them.

Even the common practice of signing checks on behalf of an owner should not be treated lightly. Practice Manager Kim Jacobs, Corinth Veterinary Clinic, handles the billing for her practice and, as a rule, will not sign checks on behalf of the owner. To avoid ethical issues, she tries to be proactive and prepare all checks for the owner’s signature before the owner will be out of the office.

“On one occasion, the owner left for a multi-day vacation without signing the checks. A vendor needed to be paid immediately and I could not contact the owner. I called the bank and was instructed to sign my name and add the owner’s name,” explained Jacobs.

Managers are not expected to be legal experts, but they are expected to show good judgment. Without explicit authorization to sign, good intentions are not enough for acting on behalf of the owner. Ask for advice when not sure. If you foresee a situation where you may need to sign, request authorization in advance. Before signing, clearly consider all potential outcomes. Familiarize yourself with your job description and any company policies related to signing.

Posted on behalf of the VHMA Ethics Committee