Forty years after its founding as a single-site democratic group, the physician-owned practice group of which I am a part added additional contracts in 2022. The sites where our group gained contracts already had fantastic physicians working there, alongside whom our partners would be proud to work. During the process of our group’s transition into these new sites, we unfortunately found that many physicians in our area were limited in their right to work in their home community after employment when the previous contract ended. As we progressed in our transition into these sites, a couple of questions arose:
Explore This IssueACEP Now: Vol 42 – No 01 – January 2023
- Were these “non-compete” clauses enforceable for emergency physicians?
- Even if they were enforceable, do former employers historically pursue enforcement? What could our group do to help support these fellow emergency physicians?
To help our group answer these questions, we reviewed the typical structure and use of these contractual clauses within our specialty.
Contracts Between Employers and Emergency Physicians
Contracts between employers and emergency physicians that limit the right to compete after employment ends are common and subject to close scrutiny when challenged. Post-employment non-compete clauses limiting physician practice in a geographic area, non-solicitation provisions restricting treatment of former patients and solicitation of colleagues, and confidentiality provisions are all types of restrictive covenant agreements. Such provisions can be found in a wide range of contracts, including employment and independent contractor agreements as well as partnership agreements. These provisions contrast from “non-interference with contract” clauses that generally prohibit contracted emergency physicians from conspiring to control the emergency department management contract themselves or conspiring with others to do so.
Legislative approaches and the courts’ willingness to enforce non-competes vary widely between states. California, for example, has declared most post-employment competition restrictions to be unenforceable and void. Other states, like Florida and Texas, are more sympathetic to enforcing these contracts by granting the courts power to revise or “blue-pencil” provisions deemed unreasonable. An excellent survey of the national landscape by William Millard, MD, can be found as previously published in ACEP Now based on his peer-reviewed report in the Annals of Emergency Medicine.
Our group found it helpful to gather local legal opinions. The attorneys at Kravitt, Hovel, and Krawczyk suggested, “In every jurisdiction which entertains the possibility of enforcing such anti-competitive provisions, the employer must at least articulate a protectable interest justifying that restriction.” They went on to describe that the party attempting to enforce the provision needs to show it is necessary either to: