By Adam D. Kemper, Esq.
Depending on which side you ask (i.e., the employer or the individual physician), you may hear two different perspectives on the legitimacy and necessity of non-competition agreements for physicians.
On the employer side, the argument is that the business provides specialized training on its unique method of providing patient care and medical services, spends a lot of money on marketing and building an infrastructure to generate leads for new patients, builds relationships with its patients and referral networks, compensates its physicians very well, and because it wants to retain its physicians and deter them from joining competitors.
Healthcare business owners understandably do not want to spend all the time and money to train physicians and/or to generate patients for the physicians to wind up “stealing” the medical practice’s business model and/or patients.
From a physician’s perspective, they want what everyone wants – freedom to do what they want, where they want, and in an unrestricted fashion. Physicians spend countless hours handling challenging patient scenarios in unique settings and would like the flexibility to consider alternative settings which better suit their individual goals and interests without jeopardizing losing their ability to service patients.
Regardless of anyone’s perspective or opinion, as of today, restrictive covenants for physicians in Florida are still legitimate, enforceable, and pretty commonplace in the healthcare setting.
The key omission from these perspectives is whether these agreements impair patient care?
Many physician employment agreements also contain non-solicitation provisions which typically restrict the physician from “soliciting” former patients of the practice for a period of time post-employment (i.e., typically between 1-2 years).
Some non-solicitation provisions are written in such a way to prevent (or at least deter) the physician from servicing or accepting such patients altogether for an extended period of time.
Thus, as a practical matter, if a physician leaves a medical practice, patients of such physician will be left with the option of working with a new physician from the same medical practice or trying to continue receiving service from the departing physician at the risk of the departing physician potentially violating his or her agreement.
In Florida, restrictive covenant agreements are governed by Florida Statutes (Chapter 542) and can be enforceable so long as the provisions are supported by at least one legitimate business interest (i.e., the protection of trade secrets, valuable confidential information or professional information, substantial relationships with specific patients, patient goodwill associated with an ongoing business or professional practice, or extraordinary or specialized training) .
While there are sentiments at the federal level to outlaw non-competes altogether and in Florida, Governor DeSantis did pass a law in 2019 (Fla. Stat. 542.336) which prohibits certain forms of restrictive covenants in the healthcare setting (i.e. where there is a medical “specialty” involved and an entity that essentially employees all physicians in that specialty within the same county), the vast majority of healthcare settings are not covered by this new statutory limitation.
As such, medical practice owners and employers in healthcare can and still enter into restrictive covenant agreements as a regular part of their employment process.
Interestingly, for attorneys (in the State of Florida), non-competition agreements are prohibited as the Florida Bar rules have clear prohibitions against restricting a lawyer’s right to practice and a client’s right to choose its attorney.
Notably, Rule 4-5-6 of the Rules Regulating the Florida Bar states that a lawyer shall not participate in offering or making:
(a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement; or
(b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.
In the Comments to this Rule, the Florida Bar also notes that “an agreement restricting the right of lawyers to practice after leaving a firm not only limits their professional autonomy, but also limits the freedom of clients to choose a lawyer” and that “severance agreements, on the other hand, that contain punitive clauses, the effect of which are to restrict competition or encroach upon a client’s inherent right to select counsel, are prohibited.”
Further, Rule 4.5-8 (b) (which is the rule which governs procedures for lawyers leaving law firms) states that “Clients have the right to expect that they may choose counsel when legal services are required and, with few exceptions, nothing that lawyers and law firms do affects the exercise of that right.”
Thus, the Florida Bar quite clearly takes into account client interests in that prohibits agreements which in any manner interfere with the rights of a lawyer to practice and/or which affect client rights to choose counsel when legal services are required.
For healthcare, the question becomes why is there a different standard for physicians and patients?
Are healthcare practitioners overlooking patient care when it comes these agreements?
Patients will ultimately have to decide what is best for them through their votes and actions.
Adam D. Kemper, Esq., Managing Partner of The Workplace Law Firm, PLLC, can be reached at (561) 805- 3529 or akemper@theworkplacelawfirm.com or visit www.theworkplacelawfirm.com.
