What makes a medical noncompete agreement enforceable in Texas?
Running a medial practice takes tremendous amounts of time and energy, and you often have to do things that you would rather not have to do. One of these unpleasant aspects of business ownership is having to terminate the employment of a physician or other medical professional in your employ. You may be worried that they will use their knowledge of your practice to directly complete against you and steal clients away from you. What can you do about this? Are noncompete agreements for medical professionals enforceable in Texas?
Noncompete agreements and medical professionals
The Texas Business and Commerce Code has a section dedicated specifically to the enforceability of noncompete agreements in the medical industry. According to the law, you are allowed to make physicians in your employ sign a noncompete agreement to prevent them from competing against you to a certain extent. However, this agreement has certain requirements that must be met before it will be enforceable.
The agreement must allow the physician to have access to a list of patients they have treated within one year of their employment. It must also allow that physician to access those patients’ medical records. The agreement must not prevent the physician from continuing to treat patients with acute illnesses, even after their termination.
Finally, the law requires you to provide the departing physician with the opportunity to buy out of the non-compete agreement. If you and the departing physician are unable to agree on a reasonable price for the buyout, you will have to submit the matter to arbitration in order to determine an appropriate amount for them to pay.
The reasonableness requirement
Even if you meet all of the above requirements, there’s a chance that a court could still determine that your noncompete agreement is unenforceable. The key to creating an enforceable noncompete agreement is to limit its scope to a reasonable geographic area and a reasonable time limit.
In evaluating the reasonableness of an agreement, courts balance its utility to your practice with its fairness to the departing physician’s ability to support themselves. If a restriction is too long, or covers too large of an area, the court is likely to invalidate it.
Dealing with competition from former partners or employees is a challenge to any business, and medical practices are no different. With a carefully tailored noncompete agreement, you can buy yourself some time to prepare for that eventuality after terminating one of your associates.