HOW TO GET OUT OF A PHYSICIAN NON-COMPETE AGREEMENT
A Non-Compete Agreement/Contract?
Also known as non-compete clauses, a covenant not-to-compete is a restrictive covenants usually made between employees and employers and used to protect the employer’s trade secrets, practice or procedures from being shared with competitors or used to compete against the organization by the physician after his disengagement from service. Non-compete can be achieved by restricting a physician who is opting out of his employment or partnership contract from working for a competitor or starting a new business in:
- A geographical area
- A specific time-frame
- A particular field of operation
Explaining a Typical Physician Non-Compete Agreement
It could be perplexing to the layman why an employer would want to prevent a physician from carrying on a different health enterprise or using his skills for another healthcare employer in the service of humanity. However, the facts still remain that like most organizations who want to protect their business from fierce competitions, healthcare employers also make use of non-compete clauses to protect their business.
Non-compete clauses for physicians is usually made on the basis of protecting the employer’s legitimate interest. This will usually involve restraining the employee-physician or partner-physician from further treatment of the hospitalist’s clients and protection of the employer’s reputation or goodwill.
A typical physician non-compete agreement will be to restrain the physician from working for a competitor or starting an healthcare enterprise in a narrowly defined geographical area and within a specified time. For instance, Dr. Shelly may be prohibited by the non-compete clause from practicing or working for another healthcare employer within a five-mile radius of the current employment for one year after disengagement from the current employment.
When Things Go Sour – How to Get Out
For most physician non-compete agreements, there is usually a “buy-out clause”. This is to provide an alternative to litigation on whether the restraint covenant is enforceable or not. So, the employee-physician who wants out may pay the sum stated or agree with his prospective employer who would then pay the “buy-out” clause.
In cases where there are no “buy-out” clauses or the physician is not willing or capable to pay off the former employer, different approaches will have to be taken. One way is to look at the wordings of the clause and take advantage of the loopholes (there may be really large loopholes you cannot see until you get an healthcare attorney to look at it for you). Another approach may be to renegotiate terms with your former employer and the last way out will be to approach the court for a declaration that the non-compete clause is unenforceable against the physician. Non-compete contracts are usually regulated by state laws and they vary on different points of the subject. A restraint of more than two years is “reasonable” under some state laws and may be “unreasonable” under others. However, one thing is fundamental to sidestepping every non-compete clause – it all depends on the kind and context of words used.
For a physician that wants out of a non-compete agreement, the first step should be to locate and hire an experienced healthcare attorney to have a look at the agreement and proffer professional advice before taking any step. This is because he is more familiar with factors such as state laws, case law and the contract wordings.
Are Non-Competes for Physicians Enforceable in Indiana?
Knowing the delicate nature of services physicians provide, can these kind of agreements be enforced in Indiana? As of this moment, there is no specific law prohibiting the enforcement of physician non-compete in Indiana. Thus, the court has the discretion to enforce a non-compete clause or void it. The attitude of Indiana courts to physician non-competes is to disfavor it and the employer has the burden to prove that it is reasonable and should be enforced. Each case is usually treated on its own merits. However, the courts will often decide based on the following factors:
- If the clause protects the legitimate business interest of the employer
- If the physician would be able to earn a living should the restriction be enforced
- The reasonableness of the restriction with regard to the time-frame and geographic location and scope
- Public policy; how the enforcement would subsequently affect members of the public (patients) and the practice of medicine
These competing interests would be weighed by the Judge before a determination would be reached as to the clauses enforceability.
Loosening The Hold of Indiana Physician Non-Compete Law
The fear of lawsuits scares many physicians who have signed non-compete clauses from trying to pursue a job within the restricted area. Here are four ways you can get out of your non-compete restraints:
Ask for a Waiver/Renegotiate: Some employees often dread their employers than to ask for a waive of the non-compete or request a renegotiation. Some physicians have gotten out of non-competes this way. Your employer may not even be willing to sue or be aware your non-compete is unenforceable.
Breach of Terms: If your employer has breached any of the terms in your employment contract or non-compete agreement, then you may have a ground to void the covenant.
Unreasonable Terms: Courts generally disfavor physician non-competes. If the terms are absurd, this becomes a very good ground to void the contract. Your physician contract attorney can give you professional advice on this but only he court has the last say.
Public Policy: If the contract affects the rights of patients to receive treatment from you as their physician or restricts you from earning a living at all, the court will likely not enforce the non-compete clause.
It is advisable that before you sign a new employment contract with a potential employer or set up your own practice or even give up just because you have a non-compete, you should get a physician contract attorney to review the contract terms for you. You may actually have nothing to worry about.
If you have questions about Indiana Non-Compete Law contact Chelle Law.
