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Noncompete clauses for MDs may see limits

Published: Thursday, Feb. 9 2006 10:19 a.m. MST

A bill setting limits on the use of noncompetition clauses in doctor contracts passed out of a House committee Wednesday after the bill was reworked.

A substitute for HB92 was passed out by the House Business and Labor Standing Committee by an 8-3 vote, with at least one legislator remaining concerned about the state getting involved in setting such limits for one profession.

HB92 would limit the use of noncompetition clauses in doctor contracts signed after July 1. The contracts would be invalidated if they imposed a restriction on the rights of a doctor to practice within a particular geographic area unless the contract is for the sale of the doctor's practice or if the contracts impose financial penalties on a doctor for "terminating a professional relationship."

The substitute bill permits financial penalties when a doctor leaves a practice and permits a contract to limit a departing physician's ability to solicit patients from an existing practice.

Specifically, contracts may restrict a doctor from directly soliciting patients of a practice with which he is no longer affiliated. But a patient may request information about the departing physician and may get a written notice about the departure and new contact information for the doctor. Medical records also can follow the departing doctor at the patient's request.

"Yes, the burden should be on the physician for what he or she signs onto," said the bill's sponsor, Rep. Rosalind McGee, D-Salt Lake. "However, situations do arise when a noncompete provision interferes with patient care or places undue hardship on the physician and his family."

"So we are laying out in pretty clear detail what could and could not be done with the termination of a doctor or if they were to leave and what their contracts can and cannot have with respect to their employment agreements. Is that accurate?" asked Rep. Michael Morley R-Spanish Fork.

"That is correct," McGee replied.

Morley later voted against the bill.

"I'm still a little concerned with that fact that with these highly educated individuals who have had considerable education and training, that we're carving out their profession specifically and dictating to them terms of contracts that they can or cannot enter into and under what conditions they can bill or can't bill, and it can't be just between two consenting groups as they negotiate a contact in good faith at the front end," Morley said.

Some states have limited physician noncompetition agreements, and a few have implemented complete bans.


E-mail: bwallace@desnews.com

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