• Margaret Curtis, MD

Physician Non-compete Agreements

If you want to get really depressed about the state of physician-administration relationships, read any internet conversation about non-compete agreements. Doctors locked into terrible jobs, or pushed out of terrible jobs and then told they can’t practice medicine in their own town, doctors out tens of thousands of dollars trying to fight NCAs in court…clearly NCAs benefit employers, not employees.

To add insult to injury, attorneys don’t sign non-compete clauses. They just take it as given that any one of them can go solo, set up shop next door and steal all the clients. They probably even high-five each other as they do this.

Until we collectively decide that we can do better than lawyers/ value our professional autonomy and refuse to sign NCAs, they will be part of most physician contracts. We are better off understanding their limits so we can negotiate them, always, and fight them, if need be.

This is a terrific summary from the American Health Law Association about non-compete clauses. It’s lawyerly and super informative. (Obviously, this does not replace advice from an employment lawyer who knows your situation. Please consult such a person if you feel you need advice.) Here are the highlights:

Courts generally don’t favor NCAs because they are a “restriction of trade”. This varies by state. Courts can decline to enforce a non-compete, or they can choose to enforce a more limited version.

NCAs must be reasonable in time and geographic area, and the employer must show that the NCA is necessary to protect a legitimate business interest. "Reasonable" has been interpreted in different ways, but in general 1-2 years is considered reasonable, five years is not. “Legitimate business interests” generally means confidential information, investment in specialized training to the employee, or customer (patient) relationships.

  • Confidential information can mean patient information (already protected by HIPPA) or administrative/business information. A physician who knows aspects of a hospital’s business strategy might reasonably be restricted from going to work for a competitor.

  • “Specialized training” is less likely to apply to physicians, because the majority of our training takes place in residency and fellowship, but could apply if you have learned a very specific procedure as an attending.

  • Patient relationships are the primary reason for physician non-competes. Interestingly, judges have ruled in favor of physicians when a non-compete would cause a physician shortage or impinge on a patient’s right to see the doctor of their choosing.

NCAs can’t restrict your right to practice a different kind of medicine. For example, if you are a CT surgeon, your prior employer may be able to prevent you from performing surgery but not from seeing patients in clinic. Nor can a NCA keep you from doing other kinds of non-clinical work, such as compliance review. An NCA may not apply if you go to work for the federal government (ie the VA or Dept of Defense).

Tips for physicians negotiating NCAs:

  • If you can get an NCA reduced (in geography or duration) or eliminated, do so. Many large groups will refuse, but it’s worth asking

  • Ask for a clause stating that, if you are terminated without cause, the NCA is nullified.

  • If you bring a patient panel with you, ask that you have the right to continue to see those patients after you leave

  • Some contracts have a “buy-out” clause that will release you from an NCA. This can be to your advantage, especially if your new practice agrees to pay all or part.

  • Do not agree that, if you contest an NCA and lose, you will be responsible for your former employer’s attorney fees.

  • If you are going to work for a practice with multiple satellite sites, ask that your NCA is only for the geographic area around your primary site.

Again, you may need an employment lawyer who is experienced in physician employment law to review your contract or to help you contest a non-compete. Although the cost can seem daunting, good legal advice can save you much more than it costs.

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