Not all non-compete agreements are created equal. Those for physicians and surgeons practicing in Texas, for instance, must address certain areas that may surprise you.

If a physician or surgeon is practicing under license by the Texas Medical Board, then any non-compete agreement between that individual and an employer must:

  • Not deny the practitioner access to the list of patients seen or treated within one year of termination of the contract or employment.
  • Allow access to the medical records of a practitioner’s patient (with the patient’s authorization) and allow any copies of medical records to be available for a reasonable fee as established by the Texas Medical Board under Section 159.008, Occupations Code.
  • Provide that the list of patients or those patients’ medical records be accessible in the format by which those records are usually maintained (unless both parties mutually consent otherwise).

Additionally, the agreement cannot prohibit the individual from continuing care and treatment to a patient if that patient has an acute illness. The only stated exception to these points is for a physician or surgeon with a business ownership interest in a licensed hospital or licensed ambulatory surgical center.

The physician or surgeon must also be given the opportunity to buy out the non-compete agreement for a reasonable price. If a price can’t be agreed upon, an arbitrator will need to set the price. This particular point was tested (and retested) recently by a Beaumont-area clinic. In the end, Beaumont’s Ninth District Court of Appeals essentially determined that when a physician decides to ignore a buy-out clause within a non-compete agreement and competes anyway, that individual may be forced by the court to pay the buy-out as a penalty for competing.

What’s more, not including a buy-out clause for a physician or surgeon could void the entire non-compete agreement altogether. This painful lesson was learned by LasikPlus of Texas in 2013, when a licensed ophthalmologist working for the company decided to leave the group and open his own competing laser eye center just two miles away from the LasikPlus clinic. The lack of a buy-out clause caused the court to deny the clinic’s breach of contract claim and the ophthalmologist was allowed to compete with LasikPlus in its own “backyard.”

These are excellent reason to be sure non-compete agreements with physicians and surgeons include a solid, reasonable buy-out clause in addition to following the rules above. And don’t forget the other standard non-compete elements we outline in our previous post, Is Your Texas Non-Compete Agreement Enforceable?

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The BTD Blog is a legal resource about issues important to Texas employers. The blog is written by Amy Beckstead, Jana Terry, Connie Ditto, and Sara Garcia, who are all attorneys at Beckstead Terry Ditto PLLC.