Forty years after its founding as a single-site democratic group, the physician-owned practice group of which I am a part added additional contracts in 2022. The sites where our group gained contracts already had fantastic physicians working there, alongside whom our partners would be proud to work. During the process of our group’s transition into these new sites, we unfortunately found that many physicians in our area were limited in their right to work in their home community after employment when the previous contract ended. As we progressed in our transition into these sites, a couple of questions arose:

• Were these “non-compete” clauses enforceable for emergency physicians?
• Even if they were enforceable, do former employers historically pursue enforcement? What could our group do to help support these fellow emergency physicians?

To help our group answer these questions, we reviewed the typical structure and use of these contractual clauses within our specialty.

Contracts Between Employers and Emergency Physicians

Contracts between employers and emergency physicians that limit the right to compete after employment ends are common and subject to close scrutiny when challenged. Post-employment non-compete clauses limiting physician practice in a geographic area, non-solicitation provisions restricting treatment of former patients and solicitation of colleagues, and confidentiality provisions are all types of restrictive covenant agreements. Such provisions can be found in a wide range of contracts, including employment and independent contractor agreements as well as partnership agreements. These provisions contrast from “non-interference with contract” clauses that generally prohibit contracted emergency physicians from conspiring to control the emergency department management contract themselves or conspiring with others to do so.

Legislative approaches and the courts’ willingness to enforce non-competes vary widely between states. California, for example, has declared most post-employment competition restrictions to be unenforceable and void. Other states, like Florida and Texas, are more sympathetic to enforcing these contracts by granting the courts power to revise or “blue-pencil” provisions deemed unreasonable. An excellent survey of the national landscape by William Millard, MD, can be found as previously published in ACEP Now based on his peer-reviewed report in the Annals of Emergency Medicine.

Our group found it helpful to gather local legal opinions. The attorneys at Kravitt, Hovel, and Krawczyk suggested, “In every jurisdiction which entertains the possibility of enforcing such anti-competitive provisions, the employer must at least articulate a protectable interest justifying that restriction.” They went on to describe that the party attempting to enforce the provision needs to show it is necessary either to:

1. Prevent the use of trade secrets or other confidential information, or
2. Protect its “customer” or referral relationships.

Bradden Backer, JD, from DeWitt LLP concluded, “The unique nature of emergency medicine creates a strong argument for challenging the enforceability of post-employment limitations on such practitioners’ ability to compete. Unlike many physicians, emergency medicine specialists usually do not have extended or repeated business relationships with patients. They also seldom secure patients through referral sources. Nor do patients customarily seek out a particular emergency room physician when faced with a medical emergency. Accordingly, a former employer may well have difficulty justifying the need to bar a departing emergency physician or similarly focused health care provider from working nearby or assisting former patients.”

Despite these characteristics of the practice of emergency medicine that challenge the enforceability of restrictive covenants, if non-compete clauses exist, they certainly still apply significant pressure on the contracted physician. Even if the risk of a successfully enforced non-compete is low, the risk of having to endure such arduous legal procedures and steep financial ramifications may sway any emergency physician away from continuing to practice in their hometown. In our experience, the mere presence of non-compete clauses in agreements with the previous contract holder put all parties—the hospital, our group, and the individual physician—at risk of litigation.

Given the potential repercussions to the individual physician and the lack of damages to the employer, both ACEP and the American Academy of Emergency Medicine (AAEM) oppose the use of restrictive covenants in employment agreements. ACEP outlines this clearly in its policy on Emergency Physician Rights and Responsibilities, stating, “Emergency physicians have the right to be free from restrictive covenants that restrict their ability to practice medicine, for a period of time or in a geographic area, upon termination of employment or a contract. Such restrictions are not in the public interest.” AAEM includes this in its Policy on Ethical Business Practices in Emergency Medicine by stating, “No member shall engage another emergency physician in a contract that includes restrictive covenants, due process waivers, or a non-reciprocal right of termination without cause.”

The Advocacy-Based Approach

Ongoing advocacy is needed at the state and federal level to ensure that legislators understand the full scope of consequences for restrictive covenants, especially for hospital-based physicians, such as emergency physicians. What’s more, the atypical character of physician-patient relationships in the emergency department context warrants a particularly critical assessment by courts when considering limiting the post-employment competition of such practitioners.

Importantly, non-compete clauses should be removed from employment or partnership agreements with emergency physicians. Rather, groups who spend significant resources to recruit emergency physicians can continue to have mechanisms to outline repayment processes for employment agreements involving a recruited emergency physician who moves onto another opportunity more quickly than the contracted time frame. ACEP members are oftentimes in positions of influence and leadership in various practice environments. Make it a priority to review the language in the contracts that your institution or group offers to prospective or currently contracted physicians.

Groups that do happen to transition into contract management of new emergency departments should offer temporary flexibility and support to physicians who may want to stay in their communities despite restrictions imposed by non-competes. For example, if physicians can temporarily work at a remote site within the new contract-holding group, that may allow for return to their home site after the term of a non-compete has expired. In addition, an offer of legal support might be an attractive recruitment tool for a physician unsure of the legal ramifications of changing employers while remaining within their home community.

Lastly, for physicians who are negotiating terms and conditions for a new employment or partnership agreement, prioritize focusing on removal of non-compete clauses. Although the conditions may not always allow for it, weigh the presence or absence of a non-compete clause as an important deciding factor if you have the luxury of considering multiple job opportunities.

Dr. Maurer is physician with Emergency Medicine Specialists in Milwaukee and chief medical officer for ConsenioHealth.