6 Ways to Free Yourself From a Noncompete Agreement

Mark Crane

Disclosures

September 29, 2011

In This Article

Where Noncompetes Don't Hold Up

5. Selective enforcement. Let's say a practice has 2 previous associates who left and opened up their offices in the same area. The practice never took any action against them. Courts will be reluctant to enforce the noncompete on a third doctor. There is a need for evenhanded treatment.

"I'd argue that since the practice didn't care enough to enforce the clause before, it can't be that important to do it now," says Harris. Indeed, courts have held that selective enforcement means the practice may have waived its rights to noncompete protection. "It would be inequitable to permit the employer to now rely on a noncompete which it has so blithely ignored in the past," one court held.

6. Buy-out provisions. Texas law requires that a practice must set a reasonable amount for a physician to buy his way out of a noncompete clause. Often, that could be as much as a year's salary. "In some cases, it might be worth it for a doctor to pay the money and then become a free agent," says Harris.

The Kansas Court of Appeals in 2008 upheld a contract that restricted a family physician from practicing for 3 years in the same county as the group she left unless she paid the clinic 25% of her earnings during those 3 years after her termination.

In another case, the Kansas Supreme Court upheld a noncompete against 4 surgeons who left a practice. Two surgeons were barred from practicing in the same county and a third couldn't practice within 75 miles for 2 years. The only doctor with a buyout clause was allowed to continue running his new practice but only if he paid the agreed amount to buy out his contract.

"Negotiations about noncompete are more complicated these days," says Adelman. "It's a sign of the times that legal issues are so embedded in virtually all healthcare transactions. That's why it's wise to get advice before signing any agreement. If they're reasonable and written properly, noncompete clauses will be upheld. It's easier to negotiate beforehand than try to convince a judge to overturn a contract a few years later."

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