Follow us on LinkedIn to see future News.
May 9, 2023
On May 4, 2023, Indiana Governor Holcomb signed into law Senate Bill 7. The Bill amends the Indiana Code to ban non-competition agreements (non-competes) with primary care physicians and to narrow the enforceability of such agreements as to physicians practicing in other areas. The law will become effective on July 1, 2023.
The law defines “primary care physician” as a physician practicing in one or more of the following disciplines: (1) family medicine; (2) general pediatric medicine; or (3) internal medicine. Thus, effective July 1, 2023, an employer may not enter into a non-compete with a doctor of family medicine, general pediatric medicine, or internal medicine.
In addition, no physician non-compete is enforceable if (1) the employer terminates the physician’s employment without cause; (2) the physician terminates the employment relationship for cause; or (3) the physician’s employment contract has expired and the physician and employer have fulfilled the obligations of the contract.
This law becomes effective three years after Indiana enacted a law (effective July 1, 2020) that required the existence of certain provisions in a physician non-compete, including, but not limited to, a release provision and a provision allowing access to patient records. See our August 2020 article addressing that law. The release provision entitles a physician to purchase from an employer a release from the terms of an enforceable non-compete at a reasonable price. Effective July 1, 2023, if a physician elects to exercise the release option, the employer is required to negotiate with the physician in good faith to determine a reasonable purchase price. If a physician notifies an employer of the physician’s intent to elect the release option, and the parties cannot agree on a reasonable price, the physician or the employer may serve a notice of intent to pursue mediation. The statute contains provisions governing the manner and timing of the mediation.
Going forward, when assessing the enforceability of a physician non-compete, Indiana employers and physicians must be mindful of the date on which they executed the non-compete. Indiana common law will govern non-competes executed prior to July 1, 2020. Indiana’s law from 2020 will govern non-competes executed between July 1, 2020 and July 1, 2023. The new law, addressed herein, will govern non-competes executed after July 1, 2023.
The author of this article, Patricia Tsipras, is a member of the Bar of Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in Pennsylvania or Indiana or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
