How Many Locations Should a Physician Non-Compete Apply To?
Ideally, a physician’s non-compete should only apply to the physician’s primary practice location. The primary practice location is generally considered the location where the physician generates the majority of their charges. A non-competition clause for a physician is a legally binding clause that prohibits the physician from working within a defined geographic area for a specific period.
One Location vs. Multiple Locations
Many employers will attempt to attach the geographic restriction to as many locations as possible (if the employer has multiple locations or the job requires work at other medical facilities). The physician should reject this and attempt to limit the geographic restriction to two locations at most. Customary locations the employer will attempt to attach the physician’s non-compete to include:
- Primary Office
- Other Employer Offices
- Primary Facility (Hospital, ASC, etc.)
- Other Hospital owned facilities
Geographic Restriction Radius
The geographic restriction for any non-compete is determined “as the crow flies” which is the most direct distance between two points (not driving distance).
Breaking an Agreement with Non-Competition Law
Physicians with non-competition agreements in their contracts were originally restraints of trade. Thus were invalid on the grounds of public policy at common law. However, many restraints of trade incidents to contracts were upheld based on the rule of reason. Thus, restrictive covenants between dentists’ non-compete after employment termination are generally enforceable. That is as long as it is reasonable.
However, there are a few states which prohibit non-compete clauses. Please review your state laws for non-compete rules and regulations. That is to see the specific rules for your state. The general test for reasonableness of these clauses holds that on employment termination. A covenant that restrains an employee from competing with his former employer is reasonable if:
- The restraint is not more than required to protect the employer,
- It does not inflict any untold hardships on the employer, and
- The restraint is not harmful to the public.
Non-Competition for Employees
For instance, a non-competition clause with a business was considered unreasonable in Ohio. That was after judicial review when they noted that a provider’s sub-specialty was uncommon. It would be harsh if they enforced the restrictive covenant. That’s since the hospital that precluded him from practicing was only one of the few institutions in the area where he could practice his specialty.
Thus, in Ohio, covenants restraining providers from competing with their employer upon termination are considered unreasonable. Suppose:
- It inflicts hardship on the doctor
- Harmful to the public
- Demand for the doctor’s health care expertise is important for the community. And if the doctor’s services are important for the public’s health, care, and treatment.
However, in general, non-competition clauses for doctors are enforceable. That is as long as they protect some of the employer’s legitimate interests. Having a non-compete review by a lawyer can assist in avoiding legal issues.
When a Practice Can Enforce
Many ask are non-compete agreements enforceable by a business. The agreement is enforceable as long as a non-compete is well-written. Serves the employer’s interests but is not broader than necessary. Many myths have come about regarding non-compete agreements. It’s much better to be safe and sure about any agreement you sign as an employee.
Agreements that are Too Restrictive
Some non-compete agreements are very restrictive. It can mean the state will limit the enforceability of the agreement or if fully enforced. The employee may find it almost impossible to get work in the field after leaving that job. Non-compete agreements can stop a person from working in the same industry that he just left. It can mean that after years of education and learning skills, they can’t find a similar job with comparable pay in a specific geographic area. Suppose without properly written and phrased non-competes. Professionals won’t be able to find work freely or be able to change employers when they need to. A non-compete agreement has real-life consequences.
When Courts Won’t Enforce a Noncompetition Clause
Whenever signing a non-compete, there has to be a value given to the employee in exchange for signing the agreement. An exchange of value for a newly hired employee is typical when he gets hired for the job. Employees who get employed must make some other valuable consideration, or they can’t enforce the non-compete. The courts also won’t enforce an agreement when it restricts the competition for too long a period. Usually, 12 months is considered normal. It could vary from business to business. The courts may not enforce non-compete agreements if it restricts someone from working in a large territory. Often, the towns, counties, or cities are listed. But suppose an area is too wide, it would be unfair and therefore not enforceable.
Medical Employment Agreement Review
Contracts are a pervasive and obligatory part of nearly all company and legal transactions. Well-drafted contracts help to enumerate the following:
- Responsibilities of the involved parties
- Divide liabilities, protect legal rights
- Ensure future relationship statuses.
These touchstones are even more crucial when applying their roles to the case of a provider employed by:
- A hospital
- Medical Group
- Other health care provider
While contract drafting and negotiation can be long and arduous, legal representation is a must to protect your rights.
The present-day conclusion is simple: A provider should not enter into any contract without having a physician’s contract reviewed by legal counsel.
There’s too much risk for providers to take contract matters into their own hands. In addition to the specific professional implications. Contract terms can significantly impact a provider’s family, lifestyle, and future. There are many essential contract terms and clauses which can present complex and diverse issues for any provider, including:
- Non-compete clauses
- Verbal guarantees
- Insurance statements
Additionally, often the most influential terms and clauses in any employment contract are the ones that are not present. The advent of productivity-based employment agreements. Any provider must have an employment agreement reviewed before the execution. Attorney Robert Chelle has practical experience drafting and reviewing provider contracts for nearly every specialty.
Who Can Benefit From Contract Review?
- New residents
- Attending doctors
- Doctors entering their first employment contract
- Established doctors looking for new employment
You can ensure that you’ll fully understand the extensive and complex wording in your contract. That’s by employing an experienced attorney for your representation. You’ll be in a better position to decide whether you want to enter into the agreement by completely understanding the contract. That will affect your career life for years to come.
The financial benefits gained from having your contract reviewed and negotiated by an experienced healthcare attorney, outweigh the review cost. You are a valuable resource, and you should be treated and respected as such. Attorney Robert Chelle will personally dedicate his time to ensure you are fully protected. Assist you in the contract process to fairly represent your interest.
Every contract is unique. However, nearly all contracts for health care providers should contain several essential terms. Suppose these crucial terms in the contract are not explicit in contracts. In that case, disputes can arise when there’s a disagreement between the parties regarding the specific term. For instance, if the provider is expecting to work Monday through Thursday. Then, an employer expects the provider to work Monday through Friday. Still, the specific workdays are absent from the Agreement. Who prevails?
Physician Contract Checklist
Spelling out the details of your job is crucial to avoid contract conflicts during the term of your employment. Below is a checklist of basic terms that contracts should contain (and a brief explanation of each term):
- Practice Services Offered: What is the clinical patient care duties? Are you given time to review administrative tasks? How many patients are you expected to see (like in pediatrics)?
- Outside Activities: Are you permitted to pursue moonlighting or locum tenens opportunities? Do you need permission from the employer before you accept those practice-related positions?
- Practice Call Schedule: How often are you on call (after-hours office call, hospital call (if applicable))?
- Base Compensation: What is the annual base salary? What is the pay period frequency? Does the base compensation increase over the term of the Agreement? Is there a yearly review or quarterly review of compensation?
- Productivity Compensation: If there is productivity compensation, how is it calculated (wRVU, net-collections, patient encounters, etc.)? Is there an annual review?
- Paid Time Off: How much time off does the job offer? What is the split between vacation, sick days, CME attendance, and holidays? Is there an HR guide?
- Continuing Medical Education (CME): What is the annual allowance for CME expenses, and how much is the amount of time off offered?
Assistance and Bonuses
- Dues and Fees: Which financial expenses are covered (board licensing, DEA registration, privileging, AMA membership, Board review)?
- Relocation Assistance: Is relocation assistance offered? What are the repayment obligations during the termination of the Agreement before the expiration of the initial term?
- Signing Bonus: Is an employee signing bonus offered? When is it paid? Do you have to pay it back if you leave before completing the initial term? Are student loans paid back? Is there a forgiveness period for student loans?
- Professional Liability Insurance: What type of liability insurance offers (malpractice): claims-made, occurrence, self-insurance?
- Tail insurance Insurance: If tail insurance is necessary, who is responsible for paying for it after the termination of the Agreement?
Concerning Contract Termination
- Without Cause Termination: How much notice is required for either party to terminate the Agreement without the case?
- Practice Post Termination Payment Obligations: Will you receive production bonuses after the Agreement termination?
- Non-Compete: How long does the non-compete last, and what is the prohibited geographic scope?
- Financial Retirement: Is a financial retirement plan offered?
- Non-Solicitation: How long does it last, and does it cover employees, patients, and business associates?
- Notice: How is the notice given? Via hand delivery, email, US mail, etc.? Does it have to be provided to the employer’s attorney?
- Practice Assignment: Can the employer assign the Agreement?
- Alternative Dispute Resolution: If there is a conflict regarding the contract, will mediation or arbitration process be utilized? What is the standard attorney review process for conflict? Who decides which attorney oversees the process?
Contact Chelle Law
Suppose you have questions about claims-made or occurrence coverage and your current malpractice insurance. Are you interested in having your physician employment agreement reviewed? Contact Chelle Law today.
Other Blogs of Interest
- Is 10 Miles a Reasonable Restriction in a Physician Non-Compete?
- Is a 2-Year Physician Non-Compete Too Long?
What Is a Non-Compete for a Physician? | Physicians Non-Compete
What is a non-compete in a physician contract? Of all the things in a contract besides compensation, this is probably the area I discuss the most with the physicians I’m reviewing their contracts. It can have enormous ramifications on a professional’s career depending upon several factors that we’ll get into. Let’s do some basics as far as non-competes go. In most physician contracts, there’ll be restrictive covenants. Restrictive covenants are things that the physician can’t do when the employment contract ends. Standard restrictive covenants would be a non-disparagement clause. You can’t badmouth the employer in some way. In the non-solicitation clause, you would be prohibited from actively soliciting patients, employees, other physicians, independent contractors, and business vendors from the employer. And then there would also be a non-compete.
What Does Non-compete Prohibit Health Care Providers From?
The non-compete essentially prohibits the physician from working within a specialty for a period in a certain geographic area. Let’s get into the details of that. First, in every contract, in the non-compete, there’ll be a section that details what the physician can’t do. That means it’s an internal medicine physician working as a hospitalist. The non-compete would state that the physician can’t work as a hospitalist for some time within the specific area. One thing to consider here is if you are in a specialty where you can do different things, let’s take the internal medicine physician as an example. They could do primary care. They could do urgent care, ED, and be a hospitalist.
If the non-compete says you can’t practice medicine within that area, that can pose problems if the physician needs to be in that area. So, you want to ensure that it explicitly states your specialty for the employer. Suppose you’re a hospitalist. Then, it just needs to say, the physician can’t work as a hospitalist within that area, within that time, not the practice of medicine. For many physicians who can do multiple things, an easy way around the non-compete, although maybe not a perfect scenario, could for a year do something else. And then, after that year, they return and work within their desired specialty. That’s the first thing. What does it entail? Is it the complete practice of medicine, or is it just in your specialty? It should be just in your specialty.
How Long Is the Non-compete?
Next, how long is the non-compete? Well, most non-competes are in a year. Many employers will stretch it out to two years. I don’t think anything above two years would be enforceable anywhere. If you are a physician, you do not want a non-compete for longer than one year. It’s just a fair amount of time. I think, no, this is state-specific, right? I’m giving you a broad outline of this. I can’t go through all the states in this video, but most courts have held that one year is the limit that they would consider a reasonable non-compete length. If you have a non-compete, you want to limit it to at least one year, nothing beyond that.
Geographic Restrictions of a Non-Compete
And then the geographic restriction. It is probably the most important one. Once again, generally, anywhere between 5 to 15 miles would be considered a reasonable non-compete. Now, in some states, they’ll push it for whatever reason. The Midwest states seem to put more than that. So, 20 miles is not uncommon. It would be best if you also thought about your location. Twenty miles in a rural location completely knocks you out of a city is very different. More than 20 miles in a big metropolitan area can knock out many potential opportunities.
Maybe you’re a cardiologist in a small town in a smaller state, and it says 20 miles from your office. Well, there may not be another office you could even get into within those 20 miles, so that doesn’t matter. Let’s say you’re in Phoenix, where I am, and 20 miles here could potentially knock out hundreds, thousands of jobs. So, you would like to limit it to a small geographic restriction. I’ve seen so many variations. It could be by county. In the south, they seem to use counties more than just mileage; typically, it’s as the crow flies. If it says you can’t practice within your specialty for one year within 10 miles of the office, it’s not a Google map road of 10 miles. It is as the crow flies. So, stick a pin in it, 10 miles around that. That’s how it’s calculated.
Non-Compete Matters to Most Health Care Providers
For many people, a non-compete might be the most important thing in a contract. On some others, it might not matter. For physicians who are in a city that they don’t have any ties to, they’re just there for the job. They don’t care if they’re there after the fact, then we would spend more capital on getting different things changed in the agreement. Maybe the compensation or providing tail insurance or something like that. But suppose you are a physician who is moving to an area to be near a family, or maybe you have a family. In that case, you don’t want to pull your kids out of school and move them across the country. Well, then, the non-compete could be the absolute most crucial thing.
How Negotiable Are Non-competes?
If you’re with a private physician practice, I find much more leeway in negotiating the non-compete. Many larger hospitals and healthcare networks may say, take it or leave it. We’re not going to deal. I also find that some of those big hospitals change their non-competes frequently. We have a vast healthcare network where I live. Every year, it fluctuates between different mileage and whether you can join a private practice, which goes back and forth. You certainly have leverage in getting that changed in some instances. Still, honestly, I wish I had a better answer for you. But in some cases, it’s going to be a take-it-or-leave-it offer.
So, you need to think about, alright, what’s the most important to me? And then you always have to get to the point where once again. Suppose you have to stay in a community. Then, you won’t have any options to practice under the terms of the non-compete. You have to figure out a way to move on. Some jobs are not worth it. And if you accept a job, you’re accepting the non-compete, they are enforceable, and there are only a few states where it’s not enforceable. When you sign that agreement, you need to understand that that non-compete will likely be enforced if necessary, and whatever terms you agree to are the terms that will hold.
Non-Compete Negotiation Tips
Lastly, if you are negotiating a non-compete, you may offer some concessions in other areas. For instance, with the non-solicit, it may say you cannot attempt to solicit patients, employees, or whatever. Well, you could say, for example, I agree not to hire, not just solicit. I will not hire any employees or any other physicians or independent contractors. That way, you’re less of a threat. If you’re in a primary care type specialty, you will open a new office. The biggest concern of any employer is they bring a physician in, leave, then take all patients and employees, and that old employer is stuck. Maybe giving somewhere else might be worth the employer agreeing to amend the non-compete in some way. So, those are the basics of a physician’s non-compete.
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