New Law Impacts Indiana Physician Non-Competes
Thanks to a recently (and quietly) passed Bill, effective July 1, 2020, Indiana law regarding physician (doctor of medicine or osteopathy) non-compete agreements changes. The changes, described below, apply to Indiana physician non-compete agreements originally entered into on or after July 1, 2020.
By P.L. 93-2020 (H.E.A. No. 1004), a new Chapter 5.5 is being added to Indiana Code 25-22.5. A copy of the legislation is available at the bottom of this post.
To be enforceable, an Indiana physician non-compete agreement originally entered into on or after July 1, 2020 must include all of the following:
- Provision requiring employer to provide physician with a copy of any notice that concerns physician’s departure that was sent to any patient who was seen or treated by physician during the two year period prior to the end of physician’s employment or contract (patient names and contact information must be redacted);
- Provision requiring employer to provide physician’s last known contact/location information at the request of a patient who was seen or treated by physician during the two year period prior to the end of physician’s employment or contract;
- Provision providing physician with access to or copies of any medical records associated with a patient who was seen or treated by physician during the two year period prior to the end of physician’s employment or contract, upon receipt of patient’s consent;
- Provision providing physician whose employment or contract ended with option to purchase a complete and final release from the non-compete at a reasonable price; and
- Provision providing that patient medical records provided as described above must be in a format that does not materially differ from the format used to create or store the medical record in the ordinary course of business, or in paper, portable document format, or as otherwise agreed to by the parties. A reasonable fee consistent with applicable law may be charged.
Of course, the restrictions themselves must be reasonable consistent with Indiana case law.
The requirement of the option to purchase a release might be a big change for some Indiana employers. Whether a buyout price is reasonable likely will be the subject of litigation. If the buyout price is deemed unreasonable, the non-compete likely will be unenforceable. Employers should not expect a court applying Indiana law to revise the language to save the agreement, even if the agreement provides the court with such authority (see my earlier blog post).
Coming up with a “reasonable price” could be complicated, especially for employers who prefer template agreements and employ physicians in several different specialties and/or practice settings. Depending on the circumstances, such employers may be better served with a formula than a fixed amount.
In addition to the above, a new Chapter 17 (included on the document below) is being added to Indiana Code 25-22.5 that places essentially the same requirements as described in bullet points 1-3 and 5 above in the context of a departing physician, even in the absence of a non-compete.
The employment attorneys of Wooden McLaughlin LLP can assist with these and all of your employment law needs. Call us at 888-639-6151 or visit our offices in Indianapolis, Evansville, or Bloomington to schedule a consultation.
(This post summarizes complex legal issues and is not legal advice. Consider consulting with a lawyer about specific situations.)