Can You Break a Noncompete Agreement?

Leigh Page

Disclosures

November 19, 2018

In This Article

How Noncompetes Actually Work

The noncompete clause is at the heart of the restrictive covenant, and it can vary widely in breadth depending on the state and the particular employer or partnership.

Noncompetes typically last 1-3 years. They are limited to 2 years by statute or by the courts in Florida, Louisiana, Ohio, Oregon, Tennessee, Arkansas, and Wyoming.[11] Connecticut limits them to 1 year.[12] But a 5-year limit has been upheld by courts in Kentucky.[13]

Noncompetes define the area in which they are enforced, either as a radius of miles around a central point or by counties. One rule of thumb limits them to where 75% of your patients come from, Adler says.

In cities, she says, courts may limit the radius to just a few miles. This means that departing physicians might be able to find a new job without moving their homes. But in many cases, the allowed distances are so large that physicians would have to move. Courts have allowed physician noncompetes with radiuses of 50 miles in Texas,[2] Kentucky and West Virginia,[13] and 30 miles in Georgia.[14]

In addition, health systems and large practices often count many different sites as part of their noncompete area, which can add up to vast swaths of territory. Courts often allow multiple sites, but they tend to limit them to places where the physician actually worked. In this way, an Indiana court reduced a noncompete area of more than 35 counties to three counties.[4]

In addition to stopping you from having an office within the restricted area, the noncompete might also prevent you from doing any kind of work within that area, such as surgery at a hospital.

According to the wording in some contracts, "if you perform surgery at a hospital in the restricted area, you would be violating the noncompete, even if your office was outside of the territory," Cantrell says. "It's up to the judge to decide whether this is valid."

What if physicians take up another line of work in their new jobs, such as orthopedic surgeons opening sports medicine practices? Some courts have ruled that physicians can only be prevented from using the skills they used at the former job. For example, an Indiana court overturned a covenant barring an ophthalmologist from taking medical histories.[15]

How Nonsolicitation Clauses Work

Because employers and partnerships are most concerned about losing patients, the nonsolicitation clause can be the most effective part of the restrictive covenant.

The clause also prevents physicians from taking away staff from their former jobs, but courts are more likely to uphold that provision than the patient solicitation provision, according to Richard C. Kraus, an attorney at Foster Swift in Lansing, Michigan.

"The nonsolicitation clause gets dicey for the doctor," he says. "It states exactly what is considered solicitation. You may not be allowed to contact patients by mail or by phone."

It's been noted that you might also be barred from telling patients about the new practice during an appointment, assuming that this could be found out. Some nonsolicitation agreements even stop you from any advertising in the geographic area, even if it's not directed toward former patients, Eckerle adds.

In many courts, physicians wouldn't be considered soliciting if their former patients just showed up at their new place of work. It's easy enough for a former patient to Google the physician. But Cantrell says a flood of former patients coming over might strengthen the former employer's case against the departing physician.

Indeed, some Florida courts honor clauses that ban acceptance of old patients, says Mavrick. He points to a 2010 Florida opinion,[16] but he notes that many Florida judges have yet to share this view.

Physicians are often concerned that honoring the nonsolicitation clause would force them to violate abandonment laws, which prevent them from dropping patients without helping them find a new doctor. But Cassidy, the Pittsburgh lawyer, argues that satisfying abandonment laws is the duty of the employer or practice, and not that of the departing physician.

"The employer is obligated to send your patients a letter stating that you're leaving the organization and providing the patient with a new doctor," he says. "However, they probably would not provide the doctor's new location."

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