Medical practices, like many businesses, are interested in maintaining clients (i.e., patients) even after a physician may leave the practice. However, restricting a physician’s ability to practice medicine raises concerns outside of the normal employment context because of the special nature of doctor-patient relationships. Some states completely prohibit non-compete agreements with physicians. But other states, like Texas, impose additional requirements in order to make a physician non-compete enforceable.
Texas Non-Compete Law: General Guidelines
Under Texas law, a non-compete agreement is enforceable if it meets two requirements:
- The agreement is ancillary to or part of an otherwise enforceable agreement (like an employment agreement) at the time the agreement is made.
- The agreement contains reasonable limitations as to time, geographical area, and scope of activity to be restrained. These limitations cannot impose a greater restraint than necessary to protect the goodwill or other business interests of the employer.
Texas case law provides guidance on what is considered a “reasonable” limitation and what constitutes goodwill or business interests sufficient for protection. Notably, both can vary widely among industries and professions.
Additional Requirements for Physician Non-Compete Agreements
In addition to the requirements discussed above, a physician non-compete must also meet several other requirements under Texas law. In order to be enforceable, physician non-competes must also:
- Allow a physician access to a list of the patients she has treated in the year preceding her separation from the practice.
- Provide the physician access, with patient consent, to the patient’s medical records.
- Allow for the patient lists and records to be provided to the physician in the format in which they are ordinarily maintained, unless otherwise agreed upon by the parties to the agreement.
- Contain a provision providing the physician an option to buyout of the non-compete at a reasonable price, or, upon agreement, for a price set by an arbitrator.
- Allow the physician to continue the care and treatment of any existing patients with acute illnesses. This applies even after the contract or employment has terminated.
Questions about a Physician Non-Compete Agreement?
Navigating a non-compete, especially involving a physician, can lead to a number of legal questions. Rogge Dunn Group has the answers. The Firm has handled numerous employment disputes involving non-compete agreements in Texas and throughout the country. For more information, contact us here.