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Physician Non-Compete Agreements

Hamil Little is a Georgia-based business and healthcare law firm with offices in Atlanta and Augusta, Georgia. Our health law practice is focused on representation of healthcare and closely held businesses and professionals. We often represent healthcare employers or physician employees with regard to covenants not to compete.

Physician Non-Compete Agreement Law Firm

We have represented medical practices and physician employees with regard to non-compete agreement issues, including the following types of engagement:

  • Negotiating non-compete agreement provisions
  • Drafting non-compete agreement provisions
  • Analyzing non-compete agreement provisions under applicable law with regard to enforceability
  • Litigating non-compete agreement provisions to determine enforceability

Physician employment will typically be pursuant to a written contract that contains a non-compete agreement as well as other restrictive covenants.  Additionally, certain other relationships or transactions may warrant consideration of a non-compete agreement. For example, the acquisition of a medical practice may call for restrictions on the seller’s ability to compete with the practice following the sale; or a hospital system may contract with a physician or other healthcare provider and require a non-compete agreement as a condition.

Generally speaking, non-compete agreements are utilized to prevent an employee from leaving and then setting up shop next door and competing in an unfair way. The fact that a non-compete agreement has been signed does not mean it is truly fair or legally enforceable, however. The question of enforceability is a matter of state law, and the particulars of state law as concerns non-compete agreements often vary. In some states, by statute, physician non-compete agreements are not lawful or are severely restricted. In most states, physician non-compete agreements are not prohibited by law but will be enforced by the courts only upon showing that the agreement is neither unreasonable nor contrary to public policy.

There are pros and cons to a non-compete agreement for both the healthcare employer and the physician. For hospitals, large practices or other healthcare businesses seeking to employ a doctor, the advantage is obvious: the non-compete facilitates the expansion of the medical practice while reducing the risk that the doctor might leave the practice with a large portion of the patient base. The disadvantage to the employer of a physician non-compete agreement is that generally speaking, non-compete agreements are disfavored by courts and their enforceability is highly fact-specific and difficult to predict.

For the physician employee, the disadvantage of a non-compete is the restraint on career/work options following the employment and the potential hardships that such restraints would create. In particular, the possibility of having to move himself and his family to a different geographic location that is outside the parameters of the non-compete agreement to avoid conflict and a court proceeding to determine the agreement’s enforceability. On the other hand, some circumstances make a non-compete agreement a positive for a physician. For example, a doctor will typically have a much easier time selling his medical practice if he assures the buyer through a non-compete agreement that he will not compete with the business after the sale within parameters defined by the agreement.

Where a non-compete agreement is subject to enforcement in court, the standards of applicable state law must be applied to the evidence by the trial court to determine whether the agreement will be enforced. Although the particulars will often vary from state to state, generally speaking, a non-compete agreement will be enforced if it is deemed by the court to be reasonably drawn as necessary to protect a legitimate business interest of the employer, without undue hardship to the physician employee. The undue hardship leg of the analysis focuses on the reasonableness of the geographic scope of the agreement, the duration of the agreement, and the range of activities that are prohibited. A non-compete agreement that applies during the employment (a “moonlighting” provision) will almost always be enforced. But post-employment restrictions will typically be subject to much more significant scrutiny.

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