The Indiana legislature has taken one step closer to joining three other states in completely prohibiting physician non-compete agreements. The new statute is a result of a 2008 Indiana Supreme Court case which questioned whether physician non-compete agreements should be per se void as against public policy. The Court ultimately decided that these types of agreements can be enforceable if the restrictions were “reasonable” by limiting the geographical scope to the area in which the physician had patient contact. However, the Court also discussed the public policy concern of restricting patients in their physician of choice.
Indiana’s new law, which takes effect on July 1, 2020 attempts to strike a balance between the right of the patient to choose his/her physician and a practice group’s right to prevent unfair competition. The new law requires all future physician non-compete agreements to contain particular language that, among other provisions:
1) requires the employer to provide notice to all patients of the physician in the prior 2 years and provide the physician with a copy of each notice; and 2) requires a provision providing the physician an opportunity to purchase a release from the terms of the non-compete agreement at a reasonable price.
This new law leaves several questions open to interpretation, including what constitutes a “reasonable price.” Physicians and physician practice groups should seek the advice of counsel when drafting these non-compete agreements to ensure all statutory requirements are present and appropriate specificity is incorporated. For questions or assistance, contact Andrew E. Skinner at (812) 425-3592 or at aes@fine-hatfield.com.
