A Litigator’s Perspective of Physician Non-Competes – The Dos and Don’ts

March 21, 2018

 The Dos and Don’ts

ByrdAdatto has written many articles on physicians entering into non-compete agreements with their employers. In these agreements, physicians are customarily restricted from practicing medicine in a defined territory surrounding the employer for a set amount of time after termination of the employment relationship. However, in Texas, physicians non-competes have their own unique requirements under Section 15.50 of the Business and Commerce Code.

ByrdAdatto is grateful to have this article contribution from guest author Elisaveta “Leiza” Dolghih.  Leiza routinely assists companies with bringing and defending non-compete disputes.  She has successfully worked with medical practices to enforce non-compete agreements, as well as defended physicians accused of such violations.  Because ByrdAdatto is a transaction based law firm and does not litigate non-compete and non-solicitation lawsuits, we are thankful to have a litigator’s perspective on these matters.  Finally, we as attorneys love disclaimers, so please note that this article does not express any opinions of ByrdAdatto and should not be construed as legal advice.  If you have questions, please contact Leiza directly for litigation matters.

 Physician Non-Competes – The Dos and Don’ts

 Physician non-compete agreements in Texas are treated differently from other non-compete agreements and are subject to their own set of rules.  Here’s a quick overview of the Dos and Don’ts when it comes to drafting and enforcing such agreements by medical practices:

  1. Do make sure that the non-compete agreement does not deny the physician access to a list of patients whom he or she had seen within one year of termination of employment.
  2. Do make sure the non-compete agreement provides access to medical records of the physician’s patients upon authorization of the patient for a reasonable fee established by the TMB.
  3. Do include a buy-out clause in the non-compete agreement that allows the physician to buy out the covenant not to compete for a reasonable price or a price determined in arbitration.
  4. Do allow the physician to provide continuing care and treatment to patients during the course of acute illness, even after the employment terminates.
  5. Do allow physicians to consult with an attorney prior to signing the non-compete agreement.

While the list of “Dos” mostly comes the from the mandatory requirements spelled out in the statute governing the non-compete agreements in Texas, the list of “Don’ts” is based on the most common mistakes I see medical practices make with respect to the non-compete agreements:

  1. When drafting non-compete agreements, don’t overreach in the geographic area covered by the agreement by including a territory in which you do not have any legitimate business interest.
  2. Similarly, do not make the buyout amount so high that it becomes unreasonable.
  3. Do not wait to enforce a non-compete agreement once you find out it is being breached as a significant delay may prejudice the ability to get an injunction against the physician.
  4. Do not expect to recover your attorney’s fees in enforcing the non-compete agreement; as a general rule, employers cannot recover those in Texas in non-compete disputes.
  5. Do not take any actions, such as making disparaging statements about the departing physician, withholding unauthorized deductions form the final paycheck, or interfering with the physician’s right to notify his or her patients of the departure, that can affect your ability to enforce the non-compete agreement.

When it comes to non-compete agreements, an ounce of prevention is worth a pound of cure.  Making sure that you have a well-drafted, reasonable non-compete agreement and swiftly enforcing such an agreement can protect your medical practice from unfair competition and avoid protracted and costly litigation.

For additional questions or comments regarding this article, please contact Elisaveta “Leiza” Dolghih.  If you have any questions on drafting of a physician non-compete, email us at info@byrdadatto.com.

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