(B) has been seen or treated by the physician during the two (2) years preceding the termination of the physician`s employment or the expiration of the physician`s contract. Although doctors` employment contracts vary in terms of form, duration, duration and conditions depending on the type of employer and the state of the agreement, one aspect that is almost certain in every doctor`s employment contract is the non-compete obligation (also known as a restrictive agreement). Whether it`s a hospital position, a university appointment, or a recourse in private practice, a physician who accepts a job offer can almost certainly expect to be bound by a non-compete clause at the time of termination. Whether a non-compete obligation is enforceable and to what extent it can effectively restrict a doctor`s right to work is a difficult one. In most states, courts require that non-compete obligations be considered on a case-by-case basis when challenged, meaning that there are often no “clear rules” about what is allowed. However, some states have recently created relevant laws with guidelines on how employers can and cannot restrict the behavior of their medical staff. Because Lauth O`Neill is based in Indianapolis, this article focuses on recent updates to Indiana law that are having a significant impact on doctors and employers in that state. On July 1, 2020, important new non-compete requirements for Indiana physicians went into effect, including mandatory language that allows a physician to obtain “full and final approval” of a non-compete agreement “at a reasonable price.” The Act also contains several provisions regarding the notices that employers must provide to patients and physicians when a physician`s employment relationship has ended or the contract expires. These requirements apply to all non-compete obligations entered into on or after 1 July 2020. In the midst of a lengthy “Act to Amend the Indiana Health Code” (HB 1004 or the “Act”) recently signed into law by Governor Eric Holcomb, the relevant provisions provide that as of July 1, 2020, physician non-compete clauses are unenforceable unless they contain all of the following provisions: The Indiana Administrative Code requires physicians: However, to inform patients of their departure, the employer may send this notice to patients on its own terms.
The trial court found that the Indiana Administrative Code Dr. Krueger had “obliged” “to inform his former patients in writing that he had changed practice groups.” The provision requires that a podiatrist “adequately notify a patient or persons responsible for caring for the patient in writing when the podiatrist withdraws from a case so that another physician can be employed by the patient or by those responsible for the patient`s care. A podiatrist should not abandon a patient. Any prohibition on the solicitation of a non-compete obligation therefore goes too far if it prevents a doctor from fulfilling his obligation to contact his former patients. The first part of the second division of the new chapter 5.5 of the Act deals with retiring physicians. Under this section of the Indiana Code, the wording of an agreement must include a provision requiring a physician`s employer to provide the departing physician with a copy of all notices of discharge from the physician “sent to any patient seen or treated by the physician during the two (2) years preceding the physician`s departure.” The names and contact details of patients must be withheld from any copy of the communication provided to the departing physician. In fact, the new law is a good thing for Indiana doctors. This is really just an additional burden for employers if they want their doctors to be bound by a non-compete obligation. Doctors should do nothing but sit down, say nothing, and hope that their future employers have missed the memo on the new update (and, of course, have their employment contract reviewed by Lauth O`Neill).
In 2008, the Indiana Supreme Court ruled that bans on physicians with medical practice groups are not in themselves contrary to public policy and enforceable if the restriction is otherwise appropriate. One hundred. Ind. Podiatry, P.C.c. Krueger, 882 N.E.2d 723, 725 (Ind. 2008). Indiana is in good company — a number of states already have laws that restrict or impose additional requirements on non-competing health care providers, including Massachusetts, Connecticut, New Hampshire, Rhode Island, Wyoming, Arkansas, Nevada, and New Mexico. Although the new law in Indiana was originally proposed in early January, it could affect the availability of doctors as a result of the COVID-19 pandemic that has occurred since then. • a provision empowering the physician to consult all notices of departure sent by the former employer to the physician`s patients; The non-compete obligations for physicians must contain several other provisions relating to the termination of employment or the expiry of physicians` contracts.
b. The geographic scope should be limited by radius and not by county. The court indicated, and the dissent further emphasized, that the relevance of geographic scope should be measured by radius rather than by county. Eventually, Dr. Krueger left northern Marion County and settled in Hamilton County, just ten minutes from his former main practice location. Having a circular line separating these two sites means very little to most patients, and more importantly, it`s the distance patients have to travel to receive medical care. The Court proposed that a radius approach would not only increase the likelihood of applicability (if it was related to the practice(s) in which the physician provided services), but would also increase the value of non-compete obligations for employers` practices and protect their interests more effectively. Texas has a physician non-compete clause that has a similar buyback provision at a “reasonable price.” But Texas law also provides for an alternative buyback at a price “determined by a mutually agreed arbitrator or, if an agreement is impossible, a court arbitrator whose decision is binding on the parties.” A related issue is how the imposition of value on the buy-back option affects the employer`s ability to enforce the restriction, which, as a form of injunction, requires proof that the employer does not have an adequate financial remedy.
The law here responds that if the physician refuses to exercise it, the buy-back option cannot be used in a way that limits the application of fair remedies such as the employer`s application of the non-compete obligation. One of the most pressing new dilemmas created by the law concerns the demand for redemption. The Code tells us that a physician whose employment relationship has ended or expired “must have the opportunity to obtain a complete and definitive exemption from the terms of the enforceable prohibition of competition with physicians at a reasonable price.” In other words, the physician must have the ability to pay a sum of money to his employer instead of being bound by the non-compete obligation. This is not surprising, since buy-back provisions in the non-compete clause are very common, but what is a “reasonable price”? No one knows. In this sense, this requirement creates more questions than answers. In particular, the law specifies that if a physician does not use the buyout, the employer is not limited in its ability to exercise fair remedies to enforce it (i.e., an injunction). This is an important clarification because the presence of a buy-back option theoretically refutes the argument that an employer would suffer “irreparable harm” in the event of a breach of the non-compete obligation, a prerequisite for the continuation of an injunction. The Act also provides that if the physician decides not to exercise the buy-back option, “the purchase option provisions may not be used in any way to limit, prohibit or otherwise restrict the employer`s equitable remedies, including the employer`s enforcement of the physician`s non-compete agreement.” In other words, since the employer retains fair remedies, if the physician decides not to redeem, he or she can seek an injunction to enforce the agreement and prohibit the physician from engaging in activities that allegedly violate the terms of the non-compete agreement. Ultimately, this provision anticipates and prohibits a physician`s potential argument that a breach of the agreement cannot cause irreparable harm to the employer, since a reasonable price for a full dismissal may be offered. Employers who plan to enter into non-compete obligations with physicians as of July 1, 2020 should ensure that agreements comply with the provisions of the law in order to be enforceable.
Of course, these agreements must also be closely tailored and promote a legitimate business interest in meeting Indiana common law requirements for restrictive covenants in general. This is especially true given Indiana`s refusal to fairly reform overly broad agreements and limit the change in the “blue pencil” doctrine (see here for a brief explanation of the blue pencil doctrine). .
