Philadelphia Medicine Summer 2019 - 21

p h i l a m e d s o c  .o rg

Freedom to Flourish

There has been recent legislative activity in some states newly
seeking to limit non-compete laws. Legislation was introduced
in 2018 in Pennsylvania and Vermont to void non-competes
in a manner akin to California. A bill recently introduced in
New Jersey included a one-year post-employment limitation on
non-competes. While these new initiatives have not yet passed
as law, the trend toward more limitations on non-competes
seems to be gaining ground.

Limitations on Physician Non-Competes8
In some states where non-competes are otherwise lawful, they
may not be enforceable against physicians. This has been the
case in Massachusetts9 since 1977 where contract provisions are
void if they restrict a physician from practicing medicine in any
geographic area for any period after termination of a partnership,
employment or professional relationship. Delaware10 and Colorado11 enacted similar laws in the 1980s although both of those
states permit the imposition of competition damages (known
as liquidated damages).12 In 2015, New Mexico13 enacted a law
that resulted in non-compete provisions being unenforceable
against physicians (and other health care practitioners) unless
the agreements are between shareholders, owners, partners or
directors of a practice, although the law does permit liquidated
damages. And, in 2016, Rhode Island14 enacted a law like the one
in Massachusetts restricting physician non-competes, but with an
exception for the sale and purchase of a physician practice and
limitation on the non-compete for a maximum of five years. *

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In addition to state laws related to physician non-competes, the American Medical Association has weighed in on the controversy in Ethics
Opinion 11.2.3.1, taking a position similar to many states essentially
requiring that non-competes must be reasonable. Some physician specialty
societies/associations have also weighed in including the American Academy of Emergency Medicine which published a White Paper on restrictive
covenants after its July 16, 2007 Board of Directors meeting concluding
that post-contractual restrictive covenants in physician contracts violate
public policy and medical ethics, and have the least applicability in
emergency medicine.
9
Mass. Gen. Law Ch. 112 §12X.
10
6 Del. Code Ann. §2707
11
Colo. Rev. Stat. §8-2-113.
12
Liquidated damages are usually specified in a contract at the time the
parties enter into it and often based on annual compensation paid to the
physician.
13
N.M. Stat. §24-1l-1 et. seq.
14
R.I. Gen. Laws §5-37-33.
8

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Summer 2019 : Philadelphia Medicine 21


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Philadelphia Medicine Summer 2019

Table of Contents for the Digital Edition of Philadelphia Medicine Summer 2019

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