Texas physicians need to know that their non-compete agreements are subject to some special requirements.
The Texas non-compete law states that unless a physician’s non-compete agreement contains certain provisions, it is not valid.
So, it is important to have a Texas attorney review these agreements for enforceability. Also, physicians need to be wary of provisions that can automatically subject them to damages if they violate a non-compete.
Finally, before signing any employment agreement, a physician should have her entire agreement reviewed by an experienced attorney. Contract provisions that seem harmful aren’t always.
Non-compete clauses, also known as covenants not to compete, have specific requirements for healthcare providers licensed by the Texas Medical Board. In this article, we’ll provide you with more information about these requirements, and we’ll show you why it is important to have a lawyer review a healthcare provider’s employment contract before you sign it.
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What Elements are Required in a Texas Physician Non-Compete Agreement?
The Texas Covenants Not to Compete Act requires specific elements in non-compete clauses related to the practice of medicine. The Act specifically states that, in order for a Texas’s doctor’s non-compete clause to be enforceable against that doctor, the covenant must:
- Not deny the physician access to a list of his patients that he had seen within a year of termination of employment;
- Give access to medical records of the patients upon authorization of the patient; and
- Provide that any access to a list of patients after termination of employment will not require the list to be offered in a format different than how they are maintained except by consent of the parties to the contract.
To be clear, these specific requirements are designed to ensure that patients receive the care they need and that a doctor’s ability to provide care for a patient takes precedence over the financial or business needs of the doctor’s employer.
If a patient wants to continue seeing a doctor for treatment, they can. Even if that doctor leaves the practice where she or he first saw the patient and moves to another practice.
Texas law prohibits a non-compete agreement from limiting that doctor’s access to his or her existing patient’s contact information or medical records.
Also, the Act expressly states that a covenant not to compete with a Texas physician has to provide that the physician will not be prohibited from providing ongoing care to a certain patient. This must be throughout the course of an acute illness even after the employment has been ended.
Additional Statutory Requirements and Prohibitions in a Physician’s Non-Compete Agreement
In addition to the requirements listed above, the Act also clarifies that any covenant that does not compete in a physician’s employment contract (or any type of non-compete agreement) must have an option for a buy-out of the covenant. The amount must be reasonable. Also, a provision should be available for an arbitrator to make a decision about the buyout price.
So, the buyout provision must allow the physician to pay a reasonable price to opt-out of the non-compete agreement.
It is also important for employers and employers alike in Texas healthcare fields to understand the requirements we have discussed pertain to a physician’s employment providing as a physician. To be clear, the requirements are not applicable to a “physician’s business ownership interest in a licensed hospital or licensed ambulatory surgical center.”
The General Requirements for Non-Compete Agreements in Texas
Non-compete agreements for physicians also must adhere to general requirements under Texas law, including the following:
- Restrictions on the geographic scope or activity scope of a physician must be reasonable to protect the business interests of the employer; and
- The physician must receive sufficient consideration.
Possible Damages for Violating a Non-Compete Agreement
Physicians who violate covenants not to compete or non-compete agreements can be subject to damages. So, if a physician does not abide by restrictions within an enforceable non-compete agreement, the physician may have to pay monetary damages. This may allow the employer to be able to seek injunctive relief (preventing the physician from continuing to work).
By having a lawyer review the terms of an employment contract, a physician may be able to avoid pernicious clauses. Also, this allows them to be aware of their obligations under Texas law.
A non-compete agreement can significantly limit a physician’s options to work as a doctor if the physician decides to leave his or her practice.
While physicians’ non-compete agreements have specific requirements that must be met in order to be enforceable. These clauses, along with other complex clauses, often appear in healthcare providers’ employment contracts. Accordingly, it is important for physicians to understand their rights and to have a lawyer review an employment contract.
We Can Review Your Physician Employment Contract Quickly and Effectively
We assist many physicians bound by non-compete agreements in Texas. Also, we are extremely familiar with Texas law governing these types of agreements. Our firm has substantial experience with this field inside and outside Texas courtrooms.
In addition to employees, we also represent companies. This makes us incredibly valuable because we know how employers can view violations of non-compete agreements.
If you are party to a non-compete agreement or have a legal matter involving a non-compete in Texas, contact us today.