Expecting Mothers Are Latest Victims of Physician Non-Compete Agreements

Recent developments in Pennsylvania provide yet another compelling example of why non-compete agreements in the healthcare sector should be void as against public policy.  In late December, five obstetricians who were affiliated with the University of Pittsburgh Medical Center (UPMC) gave notice that they intended to leave the system to go work for rival Highmark and West Penn Allegheny Health System Hospitals (WPAHS).  The obstetricians sought to give six months’ advance notice.  They had no intention of making an abrupt departure, leaving their patients stranded.  Unfortunately, UPMC did not share those concerns.  UPMC immediately severed ties with all five doctors and revoked their hospital privileges.  Because of non-compete clauses in their respective contracts with UPMC, four of these doctors will be prevented from practicing medicine in Allegheny County for the next year.

To be clear, we are dealing with doctors and their patients, not just contracts and dollar figures.  And in this situation, we are dealing with pregnant women, childbirth and infant children.  A number of expecting mothers in Allegheny County, Pennsylvania may suddenly find that their obstetricians – doctors with whom they had developed a relationship – can no longer provide them with care during this critically important time.  There is something disconcerting about attempting to justify this outcome based on the sanctity of contract.

After all, there is nothing inherently good or sacred about contracts.  Some contracts are enforceable and others are not.  After all, one cannot contract to engage in illegal conduct.  And although it rarely happens, contracts can be deemed void as against public policy (not illegal, but still against public policy).

The UPMC situation in western Pennsylvania is yet another example of why more states should join the likes of Delaware, Massachusetts, Alabama and Tennessee in holding that physician non-compete agreements are per se unenforceable.  But states should go beyond medical doctors:  The rule should also include nurses and other providers of medical services.  In short, a private bargain between two parties (employer and employee) should not be allowed to trump the public good.  In such instances, the relationship between doctor and patient (and the patient’s health) must take precedence over the supposed sanctity of any contract.

Of course, such reform will take time and necessarily will come at the state level.  In the meantime, there may be other grounds for pushing back against non-compete agreements in the healthcare sector.  Putting aside arguments of pure public policy (good or bad) and turning to something slightly more concrete, some of these cases give rise to concerns about market concentration and possibly even antitrust exposure.  This is not idle speculation.

Last year, when the Reno, Nevada market for cardiologists became too concentrated, the Federal Trade Commission stepped in.  Renown Health, the dominant player, had nearly 90% of the cardiologists in Reno.  Nearly all of those doctors had non-compete agreements.  This did not sit well with the FTC, which launched an investigation of Renown.  Eventually, the FTC agreed to drop its investigation and Renown agreed to let ten cardiologists out of their non-compete agreements.  Where the facts warrant it, physicians defending non-compete cases – or faced with non-compete dilemmas – should consider alerting the FTC to their plight.  And at the very least, lawyers defending these cases should consider the possible utility of bringing in evidence of market concentration where that concentration is particularly high.

Jonathan Pollard is a trial lawyer and litigator based in Fort Lauderdale, Florida.  He focuses his practice on cases involving employment disputes, antitrust and business torts.  He has a particular interest in non-compete cases.  He represents clients in Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Jupiter, Fort Myers, Tampa, and Orlando.