The knotty issue of physician non-competition and non-solicitation agreements continue to surface with some restrictions going so far as to prohibit a physician from having any contact with his own patients after termination of the physician’s employment with a hospital or physician group. Frequently, little or minimal attention is paid to by an employed physician to the precise wording of non-competition and non-solicitation provisions at the beginning of an employment relationship. Often the physician has little bargaining power at the beginning of the relationship and every expectation that things will work out fine.Some few states ban non-compete provisions for physicians outright. Most states will enforce them if they meet minimum standards of reasonableness as to time, scope and circumstances. Almost all look to the impact on the physician. Arizona looks at all the circumstances including the impact upon patients.
In Valley Medical Specialists v. Farber, D.O., 982 P.2d 1277 (Az. 1999) the Arizona Supreme Court reviewed a restrictive covenant agreed to by Dr. Steven Farber contained a 3-year restriction on practicing within 5 miles of any office maintained by Valley. The court recognized that Valley had a legitimate property interest in its referral sources to protect, but that its interests in enforcing this restriction was outweighed by the likely injury to patients and the public in general. The court in making its decision didn’t even reach the impact upon De. Farber if the restrictions were upheld.
The Arizona Court of Appeals below had determined that the covenant not to compete did not violate public policy because other pulmonologists were available to take Dr. Farber’s place. The Arizona Supreme Court disagreed.
It [the Court of Appeals opinion] ignores the significant interests of individual patients within the restricted area ... A court must evaluate the extent to which enforcing the covenant would foreclose patients from seeing the departing physician if they desire to do so. (Citations omitted).
Valley Medical Specialists v. Farber, D.O., supra at 1285.
The court stressed the fact that the American Medical Association has consistently taken the position that non-competition agreements between physicians impact negatively on patient care and that AMA ethical opinions impose certain obligations on physicians to communicate with their patients to assure safe continuity of care during a transition to another physician. See AMA ETHICAL OPINION NO. 8.115. If a physician-employee is faced with a covenant that proscribes contact with his patients should stay with the practice and the employer refuses to modify the non-compete, it might be wise to stand on a provision that no provision in the agreement will require the physician to engage in improper or unethical conduct. If an employer refuses to include that kind of a provision in an employment agreement the prospective employee aught to be looking elsewhere.
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