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July 20, 2023
Since July 2016, Connecticut has restricted non-competition agreements with physicians. Among other restrictions, physician non-competition agreements can be no longer than one year in duration and extend no farther than 15 miles in geographic scope.
The State has made two changes. First, effective July 1, 2023, Connecticut further restricted physician non-competition agreements. Second, effective October 1, 2023, the restrictions will apply to physician assistants and advanced practice registered nurses.
What hasn’t changed under the new law?
Physician non-competes must be separately and individually signed and are enforceable only if they are: (a) necessary to protect a legitimate business interest; (b) reasonably limited in time, geographic scope, and practice restrictions; and (c) otherwise consistent with law and public policy.
Physician non-competes are unenforceable if: (a) the employment agreement or contract (though not one made in anticipation of, or as part of, a partnership or ownership agreement) expires without renewal, unless, prior to expiration, the employer makes a bona fide offer to renew the agreement on the same or similar terms and conditions; or (b) the employment or contractual relationship is terminated by the employer, unless it is terminated for cause.
What’s new?
Revised definition of 15-mile geographic restriction
Previously, Connecticut law specified that the 15-mile geographic restriction on a physician’s non-competition agreement ran from the “primary site where such physician practices.” It defined “primary site” as either: (a) the site where a majority of the revenue derived from the physician’s services is generated; or (b) any other office, facility, or location where the physician practices, as the parties mutually agree and identify in the non-compete. The new law eliminates the revenue component and now requires that the 15-mile radius run from “any single office, facility or location where such physician practices, as mutually agreed to by the parties and defined in the covenant not to compete.”
More restrictions on larger medical practices
Furthermore, non-competition agreements between a physician and a group practice of 36 or more physicians that is entered into, amended, extended, or renewed on or after October 1, 2023, will not be enforceable if: (a) the physician does not agree to a proposed material change to the compensation terms prior to or at the time of the extension or renewal; and (b) the contract expires and is not renewed by the employer, or the employment or contractual relationship is terminated by the employer, unless done so for cause.
Restrictions applied to PAs and APRNs
The new law extends many of the same conditions and restrictions that apply to physicians to non-competition agreements entered into, amended, extended, or renewed on or after October 1, 2023, with physician assistants (PAs) and advanced practice registered nurses (APRNs). However, the statutory provisions related to PAs and APRNs do not contain the carve-out for practices of 35 or fewer physicians.
Employer Takeaways
Health care employers should review their non-competition agreements to ensure compliance with the new law:
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 Connecticut, Pennsylvania, 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.
