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lawdawg_1

"No Treat" Provision in Physician Employment Agreement

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Hi, all.

 

A physician entered into an employment agreement with a small solo practice in Texas.  She's going to exercise her right to terminate her contract without "cause".  However, she will be subject to certain restrictive covenants such as a non-compete.  Interestingly, there is a non-solicit prohibition but only with respect to employees.  There is NOT a customary non-solicit provision with respect to the practice's patients.  In Texas, non-compete's and non-solicits are generally enforceable.  She plans to open her practice outside the non-compete territory and solicit her former patients.

 

What is interesting in this contract is that it states that she may not "advise, counsel or treat" any patient of Employer treated by Employee" other than those patients who are in the course of an acute illness.  In essence, this is stating that although she's not prohibited from soliciting her former patients, she can't treat a former patient who comes to see her as a result of her solicitation.  She has evidently contractually agreed to this prohibition.


Is this enforceable?  I have searched case law and the Texas Medical Board rules and can't find anything on point.  The GC office at the TMB told me there is no ethical violation here.  It seems to me that a patient should be able to see the physician of their choice.  Can anyone point me in the right direction?

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One would have to look at all of the relevant language in the contract to be able to reach a conclusion.

However, such covenants can be enforceable in Texas if they meet all of the relevant statutory requirements.

 

As follows (the most important parts I put in boldface):

 

Texas Business & Commerce Code, Title 2, Chapter 15

Sec. 15.50. CRITERIA FOR ENFORCEABILITY OF COVENANTS NOT TO COMPETE. (a) Notwithstanding Section 15.05 of this code, and subject to any applicable provision of Subsection (b), a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.

(b) A covenant not to compete relating to the practice of medicine is enforceable against a person licensed as a physician by the Texas Medical Board if such covenant complies with the following requirements:

(1) the covenant must:

(A) not deny the physician access to a list of his patients whom he had seen or treated within one year of termination of the contract or employment;

(B) provide access to medical records of the physician's patients upon authorization of the patient and any copies of medical records for a reasonable fee as established by the Texas Medical Board under Section 159.008, Occupations Code; and

(C) provide that any access to a list of patients or to patients' medical records after termination of the contract or employment shall not require such list or records to be provided in a format different than that by which such records are maintained except by mutual consent of the parties to the contract;

(2) the covenant must provide for a buy out of the covenant by the physician at a reasonable price or, at the option of either party, as determined by a mutually agreed upon arbitrator or, in the case of an inability to agree, an arbitrator of the court whose decision shall be binding on the parties; and

(3) the covenant must provide that the physician will not be prohibited from providing continuing care and treatment to a specific patient or patients during the course of an acute illness even after the contract or employment has been terminated.

(c) Subsection (b) does not apply to a physician's business ownership interest in a licensed hospital or licensed ambulatory surgical center.

 

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Are you viewing the "no treat" provision as a covenant not to compete?  There is a separate non-compete provision in the physician's contract and I'm aware of Sec 15.50.  I have concluded that the non-compete complies with Sec 15.50.

 

The non-compete has a 10 mile radius and she will setup her practice 11 miles away.  So the question becomes can she see and "advise, counsel and treat" those patients who see her at her new practice location?

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I'm trying to wrap my head around the question.  The doctor agreed that she will not treat any patient she saw during her employment unless it involves patients suffering from an acute problem (which would obviously go away in a reasonable period of time).  But she intends to solicit patients she has seen during the course of her employment.  Why would she solicit patients she has covenanted not to treat?

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25 minutes ago, RetiredinVA said:

I'm trying to wrap my head around the question.  The doctor agreed that she will not treat any patient she saw during her employment unless it involves patients suffering from an acute problem (which would obviously go away in a reasonable period of time).  But she intends to solicit patients she has seen during the course of her employment.  Why would she solicit patients she has covenanted not to treat?  

The question is whether the covenant not to compete is enforceable?  

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38 minutes ago, cbg said:

When you showed the covenant not to compete to a local attorney in your state, what did that attorney say?

The “no treat” provision is not a covenant not to compete.  There is a covenant not to compete provision and that provision is enforceable in these circumstances.

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My point is that only an attorney in your state who has personally viewed all the relevant documentation can say whether it is enforceable or not.

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21 hours ago, lawdawg_1 said:

Are you viewing the "no treat" provision as a covenant not to compete?  There is a separate non-compete provision in the physician's contract and I'm aware of Sec 15.50.  I have concluded that the non-compete complies with Sec 15.50.

 

The non-compete has a 10 mile radius and she will setup her practice 11 miles away.  So the question becomes can she see and "advise, counsel and treat" those patients who see her at her new practice location?

I do view it as a covenant not to compete. It is an agreement that the doctor will not provide services to 'customers' (patients) of the medical practice that the doctor used to be associated with. And so at a minimum it would need to be evaluated against the requirements of section 15.50.  

But as I said above, one would have to look at all of the relevant language in the contract to evaluate its enforceability.

 

 

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