Restrictive Clauses and Medical Practice Group Disputes

Restrictive covenants are far from new. Recently, they’ve increased in number and importance in an increasingly competitive and litigious medical practice environment. At LA, we’re on the front lines of what’s happening and how courts are ruling. It’s our experience that there does not seem to be definitive and consistent court rulings as to whether signed covenants in a medical practice are enforceable. One thing is consistent, however, the importance in a dispute over covenants of having the very best litigation firm on your side, whether you are the plaintiff or defendant. It’s vitally important to have a firm like LA in your corner with deep understanding of the law and the commitment to represent you with fairness and fierceness if a court appearance becomes necessary.

In deciding whether a non-solicitation covenant has been broken and whether it’s enforceable, courts usually consider the following factors:

1. Where the solicited business is located and the proximity to the business issuing the complaint.
2. The exact nature of the business being solicited and whether there’s a legitimate claim of competitiveness.
3. The length of time the restricted covenant covers and whether that is reasonable.

An important lesson we’ve learned at Lubin Austermuehle is that you can push back against some restrictive covenants. In fact, the AMA does not look favorably on non-compete and non-solicitation agreements as stated in the AMA Code of Ethics Opinion 9.02:

“The Council on Ethical and Judicial Affairs discourages any agreement which restricts the right of a physician to practice medicine for a specified period of time or in a specified area upon termination of an employment, partnership, or corporate agreement. Restrictive covenants are unethical if they are excessive in geographic scope or duration in the circumstances presented, or if they fail to make reasonable accommodation of patients’ choice of physician.”

According to the AMA, a physician who leaves a group should notify his or her patients as soon as possible after her or his departure. Through their eyes, this is not solicitation at all and merely a good practice to follow for the health and safety of patients.

One thing is clear, not everything is clear with regard to restrictive covenants so it is very important to consult with an informed attorney when you’re signing a physician group practice agreement and if you’ve been accused of breaking a covenant. Conversely, if you’re a medical practice that feels you’ve been betrayed by a previous partner, we’re happy to discuss the situation with you. In all potentially risky situations, talk to us. Lubin and Austermuehle offers a FREE consultation where we can talk about your circumstances and you can get a sense of our ability, skills and depth of commitment to your cause. Contact us now.