What Do Hospital Non-Compete Agreements Look Like in Texas?

Many major hospital chains in Texas require their physicians to sign non-compete agreements.

Despite all the talk about how the federal government is going to ban all non-compete agreements, until that happens (which is not very likely), hospitals will continue to require non-compete restraints from their physicians and will continue to enforce such agreements.

Not all hospital non-compete restraints are reasonable or are likely to be enforceable in court. However, until somebody challenges their restraints in court and obtains a declaration that their non-compete is not enforceable, hospitals will continue to use these “take it or leave it” restraints with their physicians.

So what do these restraints look like at different hospitals?

Christus

During the Term and for two (2) years after the expiration or termination of this Agreement, without the prior written consent of Employer, Physician will not provide professional medical services similar to the Services within a twenty-five (25) mile radius of the [specific location of the hospital or clinic where the doctor worked].

Baylor Scott & White

(i) During the Original Term and any Extended Term of this Agreement, and for a period of twenty-four (24) months after its termination, expiration or non-renewal (or for the maximum period permitted by law, whichever is less), the Physician will not engage within the “Relevant Geographic Area”, on his or her own behalf, or as an employee, contractor or agent of any individual, partnership, corporation or association or in any other capacity whatsoever, in the practice of medicine in the medical specialty of Hepatology in an office practice, an outpatient clinic, ambulatory care clinic, hospital or other site which is essentially equivalent to a physician’s office practice or hospital (but specifically excluding an emergency room in a hospital or continuing care and treatment to a specific patient or patients, upon the patient’s written consent, during the course of an acute illness).

(ii) The phrase “Relevant Geographic Area” as used herein means the geographic area including the Dallas/Fort Worth metroplex and a twenty-five (25) mile radius of its outer physical limits. The Dallas/Fort Worth metroplex is located within the state of Texas and consists of the following Texas counties: Dallas, Tarrant, Kaufman, Ellis, Denton, Collin, Wise, Parker, Hood, Johnson, Rockwall, Hunt Van Zandt and Somervell. In the event that such geographic area exceeds the maximum area permitted by law or for any other reason does not state an appropriate geographic area within which the provisions of this Section shall apply, then within the maximum geographic area as renegotiated by the parties in good faith or as reformed by a court

UT Southwestern

Accordingly, in exchange for this consideration, and ancillary to this Appointment Agreement, by your signature below you will agree that upon termination or expiration of employment from the University you will not engage in the practice of [medical specialty] whether directly or indirectly, in the area enclosed by a 25 mile radius from the University’s primary location at 5323 Harry Hines Blvd., Dallas, Texas for a period of two (2) years.

Are these non-compete restraints enforceable?

Whether such restraints are enforceable depends on many factors that I have previously discussed here. Additionally, while the restraints may appear reasonable in some cases, I have found that several hospitals’ non-compete agreements contain major defects or legal gaps that render them unenforceable.

Physicians should always try to negotiate their restraints and have an attorney review their agreements before signing, or, when they consider their options upon leaving the hospital.

If you want to learn more, you can listen to this podcast where I discuss various issues related to physician non-compete agreements.

Leiza Dolghih is the founder of Dolghih Law Group PLLC.  She is board certified in labor and employment law and has many years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403.

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