The U.S. healthcare reform agenda seeks to expand patient choice and access, improve quality, and control costs. This Article argues these goals should govern enforceability of physician non-compete and non-solicitation agreements (restrictive covenants). Most jurisdictions apply a reasonableness test to assess the enforceability of physician restrictive covenants. Some jurisdictions hold physician non-competes per se invalid. Courts applying the reasonableness test often disrupt continuity of care and harm patients; continuity of care is key to patient health. Moreover, physicians departing a practice have an ethical obligation to notify patients of the physician's departure and how to transfer to the physician's new practice. Courts have heavily scrutinized a physician's notification to her patients to determine whether the physician crossed the nebulous line from fulfilling notification obligations to improper solicitation. Wary of liability for breach of a non-solicitation agreement, doctors will likely avoid fulfilling their obligations to notify patients, effectively preventing the patient from continuing treatment with her doctor. This Article articulates a model framework for evaluating restrictive covenants that protects patients and furthers healthcare reform goals. First, practices should be required to allow departing physicians to access patient info to fulfill patient notification obligations; courts should refuse to enforce non-solicitation agreements prohibiting physicians from soliciting their own patients. Otherwise, non-solicitation agreements potentially sever doctor-patient relationships. Next, courts should refuse to enforce restrictive covenants in a way that disrupts continuity of care or interferes with the doctor-patient relationship; courts should clarify that non-competes can only restrict the location where a physician practices and cannot prohibit a physician from treating her patients. Finally, states should enact transactional incentives to lower costs to patients and expand patient choice and access by making covenant enforcement turn on the extent to which the covenant supports healthcare reform goals. Current frameworks fail to incentivize providers to: (1) accept lower reimbursement coverage such as TRICARE, Medicare, and Medicaid and (2) reduce patient costs. This Article's model provides these incentives.
Judy Ann Clausen, Regulate Physician Restrictive Covenants to Improve Healthcare, 108 Ky. L.J. 111 (2020)