Physician Non-Competes: Disfavored (but Not Disregarded) by the Law
Saturday, May 28, 2011
While they represent a type of contract, non-competition restrictions are not viewed in the same light as other contract terms.
Photo: Christopher F. Cariño
That is because the law generally disfavors restraints on trade and unreasonably preventing people from earning a living. As one court noted, “to prohibit a man from continuing his employment upon which his livelihood depends, is a most drastic and terrible thing.”
As it applies to the medical profession, courts are even more reluctant to enforce such restrictions. By restricting physician mobility, the restriction not only affects the doctor’s livelihood, but also could affect the public’s access to medical care. Citing this rationale, the American Medical Association has acknowledged the peril of such overreaching arrangements.
Although it may be easy to find harsh critiques of non-competition restrictions, courts balance this trepidation against an individual’s freedom to contract. Weighing these two competing interests, most states reach a middle ground, and will enforce a non-competition restriction, if it is “reasonable.”
Determining what is reasonable is very fact intensive. However, a court likely will consider the following:
- The legitimate business interest of the employer (e.g., confidential information and customer goodwill);
- Whether the time and geographic limitations are reasonable (e.g., is the geographic limitation broader than where the employer does business?);
- The scope of the prohibited activity (e.g., is the physician prohibited from activity beyond what he or she performed for the employer?); and
- The effect on the patient-physician relationship, or on the patient’s choice of physician.
There exist few bright line rules in this area of the law, and, as noted above, each case has its own unique facts for a court to consider. Being aware of the contours of the law, however, will assist you in crafting a reasonable and fair restriction, and also provide some guidance when exploring future employment opportunities.
Chris Cariño is an attorney in the Labor and Employment Practice Group of Brouse McDowell in Akron.
MD News May/June 2011, Cleveland/Akron/Canton
woukd love to see the AACU , or other groups even make a policy statement opposing non competes as not in the interest of the public good. I recognize the investment some practices or facilities make in bringing someone on board, however, a remuneration or $$ amount would seem to be more reasonable solution to recover the "investment" say in the first 2-3 yrs than disrupt a family, patient -MD relationships with ridiculous non compete ; futhermore, with the move to ACOs , many MDs will belong to one or the other ACo in the area..therefore , if you are at one and prohibited from working at the other after a reasonable time you would be forced to pick up and go. I don't see how that serves anyone but the initial partner