Indiana

Non-Compete Agreements and Dentists (and Doctors)

"The court then examined the policies of the American Medical Association (AMA), which has taken the position that physicians? noncompete agreements have a negative effect on health care and are not in the public interest. The AMA has held the view for many years that non-compete agreements restrict competition, disrupt continuity of care and potentially deprive the public of medical services.

The court also found it curious that, despite the AMA?s stated position, a majority of courts continue to apply a 'reasonableness' standard in evaluating noncompete agreements among physicians, similar to the evaluation of such covenants in commercial contexts. Nevertheless, several states, emphasizing public policy concerns, have applied closer scrutiny to non-compete agreements involving physicians (for an example, see Valley Med. Specialists v. Farber4). Also, three states in recent years have enacted statutes totally prohibiting non-compete clauses in physicians? contracts. In other states, antitrust statutes have been interpreted as prohibiting non-compete clauses among physicians."

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The court concluded its analysis by holding that public policy considerations such as the right to freedom of choice in physicians, the right to continue an ongoing relationship with a physician and the benefits derived from having an increased number of physicians practicing in a given community all outweigh the business interests of an employer. As a consequence, the covenant not to compete was declared void. Although most courts continue to enforce physicians? non-compete agreements, more and more courts today are holding these covenants unenforceable for public policy reasons. In some instances, this has spread to other health care providers.⁶ At present, however, we are not aware of any cases involving dentists whose agreements have been held void because they were judged to be in conflict with public policy.

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Full post as published by Indiana Civil & Business Lawyer on April 19, 2009 (boomark / email).